What Would You Give Up To Save Your Job?

Posted by: Cathy Arnst on March 22, 2009

The AIG executive bonuses make a nice target for the recession-fueled rage of those of us who don’t get million dollar payouts. But far more workers out there have the opposite problem: If they aren’t losing their jobs outright, they are being asked to take paycuts, unpaid furloughs and other givebacks in an effort to avoid unemployment.

Hewlett-Packard put employees on an extended furlough over the holidays, then announced pay cuts between 2.5% and 5% in February. Siltronic, of Portland Ore., furloughed employees for two weeks around Thanksgiving, then began an extended furlough in late December. Union members at The Denver Post, well aware that their only competitor, The Rocky Mountain News, just went out of business for good, voted to approve a new contract that includes wage cuts of 6% to 9%, higher health-insurance premiums, seven days per year of unpaid furloughs and a suspension of employer contributions to 401(k) retirement plans. The Indianapolis Star reported that in a survey of 245 large U.S. employers conducted in February by Watson Wyatt, a Washington consulting firm, half have instituted a hiring freeze, cut wages, shortened workweeks and taken other steps short of a layoff. Said the article:

Some business consultants are urging their clients to engage workers in the process and ask them for ideas. “Not only will that make them more amenable to sharing wage cuts or reducing hours to avoid layoffs, but you might be astounded at the ideas they come up with that reduce costs,” said Ann Latham, president of Uncommon Clarity, a Massachusetts consulting firm.

Well, how thoughtful, letting us have some say on how to destroy our bank accounts and retirement funds.

To explain the sarcasm, let me give you my back story. I was once chairman of the Newspaper Guild unit of a former employer, and if there is one thing a union negotiator learns it is that givebacks are almost never returned to the workers who gave them up. Also, it’s a rare upper management that makes similar sacrifices. As the Macon Telegraph reports:

Budget cuts have forced thousands of state employees to take unpaid furloughs, but Georgia’s top elected officials have not seen their salaries cut. That includes the governor, lieutenant governor, speaker of the House and legislators.

Not to get all Joe Hill on you, but I have to wonder: why does management always try to take its mistakes out of the hide of the working man?

Nevertheless, I understand how an unpaid vacation might not sound so bad if the alternative is losing your job. The Wall Street Journal even ran an article recently about staffers who volunteer to take an unpaid furlough in an effort to help take pressure off the payroll.

So what do you think? Are furloughs and pay cuts a good tool for retaining workers for when the good times return, a sure way to ruin morale, or a secret war against the American worker (as a recent Mother Jones dispatch suggests)? To give you a sense of what companies are thinking, keep reading to see the full Watson Wyatt survey.

Companies are making cutbacks in salary expenses through a number of measures. Here's a summary of the type of cuts, the percentage of companies that have made the change and the percentage expected to take such action:

Made Expect

Freeze hiring 56% 10%

Lay off workers 52% 13%

Reduce seasonal hiring 44% 9%

Freeze salaries 42% 14%

Raise employee costs
for health care 22% 24%

Cut salaries 7% 4%

Reduce 401(k) match 12% 12%

Reduce hours 13% 8%

Source: Watson Wyatt, based on February survey of 245 large U.S. employers

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