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Pay cuts, freezes becoming widespread

Associated Press reports that the white-collar pay cuts Caterpillar announced in December are catching on. I’m sure you’ve heard by now that President Obama (I like saying that, sorry) has frozen pay for everyone earning over 100k at the White House. From Yahoo News:

A wide range of employers have followed suit. In some cases, they’re imposing pay freezes or cuts to avoid immediate layoffs, though economists say such steps tend to lead to layoffs anyway. In other cases, employers are cutting or freezing pay and laying off workers.

“It’s a real tectonic shift,” Terry Connelly, dean of Golden Gate University’s Ageno School of Business, said of pay freezes and cuts. Such steps, which once affected mainly union workers, are spreading to white-collar industries, he said.

“The extraordinary pace of layoffs has shifted people’s internal calculations to the point where they are not only willing to take a pay cut to save their own job but also take a freeze to save their co-worker’s,” Connelly said.

I suspect a lot of companies are finding that in their relentless quests for efficiency in the past 15 years, they cut all the fat during the fat years and now, when times are tough, they have a hard time finding any people they can spare without damaging the business.

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Tom Mangan posted at 7:28 am January 22nd, 2009 |

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