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Salaries Get Chopped for Many Americans Who Manage to Keep Jobs

• MattGaiser 6y ago
  How much of employer comfort with this has to do with the stimulus checks? Say your pay was cut by 10% and you make the median personal income of $30,000 a year? If May was when your pay was cut, you are still making the same for the year.
  • Simulacra 6y ago
    Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that, or raise prices on consumers. Bringing us right back to where we started.
    • zelon88 6y ago
      So the argument against UBI is that capitalists are greedy? But that is the problem UBI is supposed to solve. You have a strawman situation because it comes from the obvious side of the aisle who doesn't want UBI, but ignores the fact that with UBI would come a motley of other regulations against exactly this type of predatory capitalism that created the need for UBI in the first place. Don't worry, if UBI gains steam; nobody will forget what caused it and corporate shareholders won't be able to wiggle themselves free.
    • tgb 6y ago
      I'm not 100% convinced on UBI but that's not the case. Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. Unemployment, whether permanent or temporary, becomes more do-able.
      • zdragnar 6y ago
        Assuming UBI is funded through taxation, that is a net loss to everyone but employers and UBI administrators; whether through income or VAT taxes, you end up with less.
        • tgb 6y ago
          That's clearly dependent upon how (or who) you tax. Someone with no income will not have a net negative. And a yacht tax would fund a (miniscule) UBI that benefits everyone but the rich and yacht builders. But the main point is that you gain something nonfinancial: more options or a stability. For the record, to the extent to which I support UBI, I support my own net income decreasing to support others on it and I think any tax plan that does not involve some upper-middle class and middle class Americans paying more than they receive would be financially unviable.
          • Simulacra 6y ago
            Can I have some of your net income largess?
            • Simulacra 6y ago
              No seriously, if you're giving away net largess, can I have some?
      • Simulacra 6y ago
        Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000. Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market?
    • yarrel 6y ago
      The entire point of UBI is that it reduces your need for waged employment. If employers cut your wages, UBI means that you don't have to work for them. Putting you very far ahead of where you started. (This is the "basic" part of UBI.)
      • Simulacra 6y ago
        But at what point does “cut wages” equate to a null benefit from the UBI?
        • cardiffspaceman 6y ago
          If you earned exactly the UBI before the UBI started, you now have no fiscal requirement or incentive to keep that job. If your employer cut your wage to zero... you might not even have reported to work to hear about it. So that's a benefit. For most employment, especially lower-paid, I would say there is a hassle factor, and if a job doesn't pay UBI plus hassle compensation, it won't seem like a good deal to keep that job.
          • klmadfejno 6y ago
            Right, but we need those lower paid jobs to be done so we either outsource them to countries without UBI or we pay people more to do them, raising the price of goods such that the UBI is no longer sufficient to be basic... Likely a mix of both. Seems to me the inevitable future of UBI is a guaranteed below the wage that's too low to be liveable and an economy with fewer jobs for poor people. The outsourcing is a big deal for exactly the point you list. In order to get someone with no need for income to survive to work an unpleasant job, you'll need to pay them a pretty good sum because otherwise they'll spend that time investing in themselves (or just not working). Improving labor relations for the poor is a nice idea, but all that newfound employee leverage is worth exactly nothing if the process is moved to another country.
            • Simulacra 6y ago
              A UBI makes it much easier to outsource.
    • danans 6y ago
      That incorrectly assumes completely inelastic labor and consumer product markets in response to UBI, which is false. With UBI, laborers - especially lower skilled laborers - are less incentivized to take any job just to survive, which can increase the cost of labor for the employers, and also increase the production of most consumer goods purchased with UBI - basics like diapers and cereal - which are not supply constrained, but demand constrained. Even rents might not be increased if UBI allows people to support themselves better in less expensive, typically rural areas, thereby reducing demand somewhat on housing in more expensive areas. It could, coupled with targeted investment, even enable an economic rebirth of smaller towns by bringing purchasing power back to them.
      • Simulacra 6y ago
        But UBI is not isolated to anyone part of the country. If you want to have a UBI in one city, it makes perfect sense that a person is going to want to move there. Free money, is free. The point I think you missed is that despite the cheerleading for a UBI, capitalism is going to negate that rapidly. If prices rise by the amount of the UBI, then you’re just spending that money but your overall financial stability is still negated. If you know that everyone is receiving thousand dollars a month from the government for free, why not raise the car price $1000? Why not raise the rent $1000? The Fantasy of a UBI requires that you completely ignore economics, and put blind faith in the rest of the system to go along.
        • danans 6y ago
          > If you know that everyone is receiving thousand dollars a month from the government for free, why not race car price is $1000? Competition from other car-makers, which is precisely capitalism. Otherwise it would be illegal price collusion. > Why not raise the rent $1000? You can only do that if supply/demand in your area supports that, and that's often because of local restrictions on increasing housing (i.e. as seen in a variety of exclusive Bay Area hamlets). With UBI, more people would be able to choose not to inhabit these supply-constrained housing markets, which might actually temper rents in those areas. If every place implements excessive supply constraints on housing, that would again be collusion - which is another issue that should be addressed simultaneously.
    • deleted 6y ago
      [deleted]
    • cma 6y ago
      > Bringing us right back to where we started. Not really, since someone working no time or half-time still gets more money under that regime.
      • Simulacra 6y ago
        That is true, so long as the employer does not cut their pay to rock bottom, and their landlord does not raise their rent, and the price of services and goods do not also increase UBI only makes sense in a completely static economy where nothing rises. There has never been a successful economy in the history of mankind that has been able to do that.
        • ClumsyPilot 6y ago
          You don't need a static economy for UBI to be effective, your whole idea of suppliers charging more just because they know you have more money is flawed. Thats not how real life works, your rent does not increaae when you get a raise, prices don't increase just because wages grew this year.
          • csharptwdec19 6y ago
            IDK if I fully agree with that. Possibly pedantic, definitely anecdotal, but I've always felt like the best time to buy a laptop or home appliances was right between Xmas and Tax season. For some reason it seemed like the sales just weren't as good during peak Rebate time...
          • Simulacra 6y ago
            Rent does not increase when yo get a raise, of of course not, my landlord doesn’t know that I got a raise. But if my landlord knows that everyone is getting universal basic income, then what do you expect them to do? Leave profits on the table? Your argument does not consider actual economics or societal behavior. It assumes real life will be simple: take from one to redistribute to the rest and all will be well. Yet you’ve shown zero facts or resources to back that up. UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
    • klmadfejno 6y ago
      This is probably the opposite of what would happen. If you have free living wages, especially for low level jobs, you're incentivized to try and get a better job rather than working minimum wage in unpleasant occupations. That is, now that avoiding starving to death is off the table the employers need to increase the leverage of their compensation enough to offset the opportunity cost of learning a more valuable skill, so wages will increase. The problem is that the increase in wages will necessitate higher prices to the point at which the UBI is not longer sufficient on its own, so the above mentioned effect falls off, and you find some sort of equilibrium at which poor people still need to work to survive. It's not crazy to imagine the long term impact being what you suggest though. Right now you need, say $100 paychecks to survive. In a universal non basic income, you might only need to earn $50 + your UnBI. The cunning capitalist observes here that the poor need fewer wages to live and so they get... fewer wages.
      • Simulacra 6y ago
        But we haven’t seen any of that. People who were put on unemployment found they were making more not working, than people who are working, And they were quite happy to stay at home and not work.. They will take the free money that’s handed to them. I own a rental property, and I can guarantee you that if I know my tenant is earning extra money a month free from the government, I’m going to increase his rent. Why not? There’s no law against it.
        • kube-system 6y ago
          Nobody is suggesting that UBI should be as much as an existing job + $600.
          • Simulacra 6y ago
            So what should it be? $500? $100? UBI can only succeed if business and commerce goes along with it. Otherwise, all you’ve done is incentivize business to go after that money that consumers now have.
            • 6y ago
    • colinmhayes 6y ago
      You're thinking of EITC, which would have major employer capture since it distorts labor supply. UBI has much less capture and would likely lead to less people working instead.
    • chrisco255 6y ago
      Or it just causes inflation and it's a wash...unless it causes hyperinflation, in which case it's a catastrophe.
      • egypturnash 6y ago
        Not if you, I dunno, actually resume taxing rich people and giant corporations? Create money, put it into the economy at the bottom. Take it back out when it bubbles up to the top, and destroy it. Kind of like how your body creates red blood cells that bounce around transporting oxygen for about three months before breaking them down again.
        • redisman 6y ago
          Funny how an obviously failed system (trickle down economics) is seen by the general public as valid but the opposite somehow will almost certainly destroy the economy. Even though the lower 50% of earners actually do spend the money they get on necessities rather than hoarding it in offshore accounts.
          • egypturnash 6y ago
            I think it's mostly seen as valid by people who get all their economic advice from places with an agenda set by the richest 1% of the population? Funny how that works out.
      • ClumsyPilot 6y ago
        The inflation boogeyman is a bit rotten. There has been hardly any inflation in developed economies for the last thirty years. Japan and Germany have negative interest rates. Yet the political wisdom of the day says that you can print money to bail out the banks, you can print money to inflate the stock market and yhats fine, but as soon as you try any kind of UBI\ help the poor, inflation will come for us all.
        • aianus 6y ago
          The political wisdom is correct, poor people receiving UBI will actually spend that money and increase the velocity of money. That is genuinely more likely to cause inflation than bailing out a bank facing margin calls on its credit default swaps. UBI is great, but if it's paid for by printing money instead of redistributing it, it will absolutely cause inflation.
    • dragonwriter 6y ago
      > Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that Your employer is going to pay as little as the market will bear. UBI raises the minimum the market will bear for any given work (while simultaneously lowering the minimum wage necessary for any minimum level of income for an employed person) because of the declining marginal value of income. So, plausibly, it both increases wages for those who are and would otherwise be working and makes more people minimally employable (if the minimum wage is reduced to keep the minimum full-time income including UBI at the same level as pre-UBI.)
  • zelon88 6y ago
    Companies who use the government to subsidize their pay in this manner should be taxed into oblivion. Same with employers who keep employees in the safety net to cut costs. And honestly if a company feels the need to cut the salary of a $30k employee, please point them out so I can never shop there again.
    • downerending 6y ago
      This seems to be happening at a local state employer. Basically, it's a way to extract some dollars from the feds and put it in the state's coffers. Not sure how to feel about that, or if it really matters.
      • dvtrn 6y ago
        Not sure how to feel about that, or if it really matters. Speculation incoming: I would think it'd matter to whatever incumbent power at the state level gets called out on it and has to answer to angry constituents wondering why their government allowed a local agency to effectively squat on usable Federal dollars. takes off rose-tinted glasses, remembers he lives in Illinois Hey wait a minute
      • MattGaiser 6y ago
        My provincial government openly did this. They laid off all sorts of workers to put them onto the federal books.
        • Overtonwindow 6y ago
          The point of a business is to make money and cut costs.
          • claudiulodro 6y ago
            > My provincial government
            • 6y ago
  • Simulacra 6y ago
    In order for a UBI to be viable it means others must pay. Where one person must pay, they will then in turn work to offset that cost by raising prices or cutting costs elsewhere. The only way the UBI works is an a theoretical model, once it’s put in the actual practice, it fails. Just like Finland did.
• stu2b50 6y ago
  I'm not saying what the article is describing isn't necessarily happening, but cmon do a little more research than that. Their entire evidence is bringing up that Lyft and The Container Store Group reduced salaries for the period. They didn't even say by how much. Even if the labor statistics for the pandemic months isn't here, having your article backbone be "anecdotal data" from 2 companies, neither of whom hire that many people to begin with, makes all the conclusions extrapolated a little doubtful, even if they end up being true.
  • MattGaiser 6y ago
    They have more evidence than that. They cite both a Federal Reserve survey as well as a VC fund and an investment bank.
    • tehwebguy 6y ago
      Also like nonstop posts on r/legaladvice asking if people have legal recourse for pay cuts (they don't)
  • seltzered_ 6y ago
    I think that's the thing, it might be too early to actually find any real published data on this. People will salary cuts will still be paying their rent/mortage and possibly spending more during this time. Still doesn't hurt to leverage anecdotal data. You may not know until there's later reports on net savings rate.
    • alistairSH 6y ago
      Anecdote... My employer suspended most promotions and merit increases. They also suspended the 401k match. I assume by the time things are back to normal, I'll be out 9-12 months of matching, and will be 18 months without a merit increase. Any longer than that, and I'll be shopping for another position elsewhere. (and they only get that much leeway because it's a nice place to work, I walk to the office in normal times, and simple inertia of a 20 year career there).
  • 6y ago
• BurningFrog 6y ago
  Bryan Caplan's theory is that this is because people WFH now. https://www.econlib.org/from-telework-to-flexible-wages/ https://www.econlib.org/from-telework-to-flexible-wages/
  • deleted 6y ago
    [deleted]
  • spankalee 6y ago
    The problem is that my expenses have gone up because of remote working, and my employers have gone down. I don't even have a proper work-from-home office, so if this is permeant I'll need to upgrade my home. I should be getting paid more, not less.
    • MattGaiser 6y ago
      Why have your expenses gone up? That's unusual.
      • quickthrowman 6y ago
        Poor guy probably got fed for free at the office. I can’t think of any other reason, aside from more toilet paper usage at home.
        • deadmutex 6y ago
          Maybe increased HVAC or other electricity costs? Let's give the benefit of the doubt here.
        • x0x0 6y ago
          Needing an office. Lots of people in sfbay and nyc structure their living situations around not spending lots of time at home. That has been upended. My company is allowing people to become permanently remote, if they want. However, after covid, if you go full or mostly remote, it will be a hard requirement to have a dedicated room for an office. That is probably incompatible with living in most of the bay area.
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• deleted 6y ago
  [deleted]
• vkou 6y ago
  My wife had her hours cut by ~50%, in an industry that has zero revenue since the start of Covid, and will not be rescued by re-opening - or anything short of a vaccine. Yes, zero. She can't understand how she still has a job. She's still getting paid her full, normal salary. I'm not sure if the company owners are praying for a small-business relief hail mary fund, if they are going into debt with no plan to pay it back, if they are motivated entirely by wishful thinking, or if they don't want to let their employees down. Whatever the case, it is both very generous of the owners, and very concerning.
  • ed25519FUUU 6y ago
    She should start looking now. We're only one month into forced shelter-at-home, and there's very little to say things will change in the future.
    • vkou 6y ago
      She's looking... Forward to a couple of months, maybe a year or more of unemployment. The job market is horrific at the moment, unless you want to be doing gig delivery, or warehouse work. There, only the work conditions are horrific.
  • Consultant32452 6y ago
    There was already a small business bailout. Basically, you got a small business loan, and if you met certain criteria, it became a grant. The criteria was something like 80%+ has to go to salaries, maybe some other things. So if you managed to get in early and get one of those loans, you can pay your employees for a while at no cost to you. This was called the Paycheck Protection Program, or PPP if you'd like to research more.
    • vkou 6y ago
      There was, and the overwhelming majority of PPP funds were looted by franchises of Fortune-500 corps. The amount of corruption and favoritism that went into handing those funds out was mind-boggling, too, with banks prioritizing giving this money to companies that had outstanding loans with them - instead of solvent, well-ran small businesses. What wasn't plundered by friends, cronies, and the Fortune 500 was used up in a matter of days. I have no idea if this business got a cent of PPP money. We certainly haven't heard about it - and I'd figure the employees would have been told if 'funding was secured'. That small business bailout was a drop in a bucket. Is another one coming, or are just going to bail out big businesses, going forward?
• PHGamer 6y ago
  My employer had us go on a reduced work week for 5 weeks. thankfully we are back to full time now but our 401k match has been removed. No idea what will happen later in the year but i bet merit increases get removed as well.
  • rescripting 6y ago
    Similar situation at my company. 401k match was removed (I doubt it ever comes back) and merit increases were cancelled. Thankfully bonuses are still happening but I think that's because they were approved by the board before the new year. I doubt they'll exist next year.
    • dudul 6y ago
      Same story for me. 15% cut across the board for base salaries, merit increases cancelled, 401k match removed. Similarly bonuses were paid, but because they were reflective of 2019.
      • bradlys 6y ago
        I'm just curious about this - but what kind of industry, job, and what kind of total compensation range are you starting at? I'm wondering if all these mentions of pay cuts are going to be something I should worry about. It seems farfetched for my current company (we're still hiring and growing) but I worry they would try to follow industry trends... So, I wonder if we're in the same industry. It feels like if the employer is even considering working remotely then they're more interested in cutting salaries too. Seems like if your employer has no interest in remote work and sees it as a purely temporary situation then there will likely be no salary cuts. Or am I wrong? (Presuming revenue is still okay)
  • sethammons 6y ago
    ouch on the 401k. That is one of my very important perks. Our place is not as good as many others, but still an important perk. If my current employer got rid of that, I'd strongly consider starting to look elsewhere.
• javajosh 6y ago
  It's so hard to distinguish between a valid attempt to keep costs down, and a cynical attempt to increase profit. Rather than attempt it, you could rely on the market. Sadly the market is highly imperfect, jobs are too sticky, the cost to enter/leave too high, and it would really help if the market was more fluid so workers could actually maximize their profit just like companies do.
• bfrog 6y ago
  I've heard of several automotive related companies cutting salaries by 10% to 20%. These are highly paid engineers, managers, and such.
• findyoucef 6y ago
  I work at a large public University where they're furloughing staff and cutting pay. The ones not furloughed will see a cut in pay between 5-10% depending on salary.
  • Antecedent 6y ago
    They should cut all the ‘coordinators’ and ‘advisors’.
  • pbhjpbhj 6y ago
    They could presumably cut costs even further by a 4-day week. Does the employee have to bear the brunt without any benefit?
  • asdf333 6y ago
    I have heard no bonus. no merit increases at a large university medical center.
• nmstoker 6y ago
  Have heard of a case where US companies are exporting the cuts to their international staff, even to locales where it isn't necessary (eg UK where staff could be furloughed largely at government expense)
• Antecedent 6y ago
  I would rather they cut jobs and just eliminate all the people who can’t work well from home. Too many slackers who can’t get things done.
  • hjhjhjhj 6y ago
    > Too many slackers who can’t get things done. Do you have statistics on this, or are you just making a broad unsupported claim?
  • ed25519FUUU 6y ago
    -- Sincerely, someone wasting time on HN who is probably working from home.
• ed25519FUUU 6y ago
  Remember, this has only lasted a few months. I want us all to be prepared for it to last much longer. Even if we were to reopen fully today, things have changed in ways that they won't change back. Take care of yourself and your family. Have a backup plan in case of financial hardship. Entertain scenarios, such as social unrest and food supply chain issues, and come up with a plan for you and your family (with hopes that it never comes to that). If you don't feel safe in your city, prepare yourself to leave. I'm not trying to doom-say or anything like that. You don't have to become a prepper, just think critically for yourself and be flexible in an environment that's unprecedented and fluid.
  • 650REDHAIR 6y ago
    I feel like a crazy prepper because I am thinking the same way. I just want to have a plan!
  • MattGaiser 6y ago
    Sign up for all those gig economy platforms before the rush of people starts to them. You never know when you might really want to have that option.
    • troughway 6y ago
      The gig economy will be the first to go.
      • MattGaiser 6y ago
        Depends on who gets laid off. If the upper middle class people remain fine, then food delivery will remain strong as will Amazon delivery.
        • troughway 6y ago
          You know that the upper middle class is the one that loses the most in these recessions, their risks of slipping into poverty rise drastically. Recessions cause the movement of money to slow down, that's why getting out of a recession is so hard. Nobody wants to spend money, especially those on the brink. The entire thing is one big spiral, whether or not it's caused by an actual economic downturn or an external actor (in our case, this whole COVID-19 tragedy), the result is the same.
• kingkawn 6y ago
  Delaying each subsequent pay period by one day is a way to save a lot of money and spread the pain out for employees over a longer period of time
• ilaksh 6y ago
  Economists are not scientists. They are priests in a cult.
  • ClumsyPilot 6y ago
    Most of what common people hear of economics is just partisan political talking points. May i reccomend "23 Things They Don't Tell You About Capitalism" - its written by a real economist.
• ilaksh 6y ago
  The reason they are doing that is because they are desperate to turn a profit or just stay in business and also because people tolerate it since they have no choice. They can get away with it more easily because everyone is aware of the pandemic. It also makes more sense because they can anticipate a significant increase in business once things start to normalize.
• PenguinCoder 6y ago
  I understand the reasoning behind this, businesses are in it for mostly profit and not people. Of those people that have had their salary cut, have you also reduced your work performance/output as well? I think that is fair, albeit risky. But when you were hired for the job, you agreed to the offered salary for the work level. Now that the salary is reduced, how many people are going to reduce their efforts in exchange? If none, or little... then the employer has once again won, in taking advantage of employees in a desperate situation. Less pay, same/more work...
• mancerayder 6y ago
  Why are stocks continuing to go crazy in an upward direction on "optimism hopes" (when headlines of vaccines and openings hit) when we're likely to see a belated fallout due to people's dropped incomes and lost jobs? Is it just that the upper middle class are insulated from all of this? I'm reading that mortgage activity is spiking as well. There's clearly a multiple tier system at work here.
  • cowgoesmoo 6y ago
    (just my personal theories, I have no professional finance experience) * There is no good alternative to stocks. Interest rates are 0, bonds aren't returning much, commodities are volatile, and cash is bad vs inflation. You mentioned an increase in mortgage activity which is likely also driven by this in combination with cheap debt. * The fed has shown that they are willing to continue pumping money into the market. This increases confidence in the market driving up prices.
  • anonymouswacker 6y ago
    Stock market prices do not reflect economic realities since the invention of central banking that arbitrarily injects its fiat currency for political reasons. Instead of expecting the market to go down, expect inflation to rise rapidly.
• PaulDavisThe1st 6y ago
  fragile ... the word is fragile. We've built an insanely fragile economy. Take a look. There's been no war. 100% of the (not so great) US infrastructure that was there before SARS-COV-2 is still there. We've lost about 100k people, which is horrific but in the scheme of things at "USA" scale, and with the skewed demographics, not much of a hit to the economy. And yet the economy is staggering and it's likely to get worse. Why? Because people have stopped doing things We've built an entire economy around people doing things they don't really need to do. In and of itself, that's not so bad, but we've also built an economy with so little resilience, so much fragility, so little spare capacity that the mere fact of people stopping doing a bunch of stuff has the potential to cause complete economic disaster for, what 15-20M Americans? This is utter insanity. It's like claiming that the only vehicle you need is an F1 race car because of course that's all you need: lean, fast, stripped down, powerful and ultimately focused on increasingly one thing. Meanwhile, it's totally obvious to anyone with a pair of eyes that it's a completely unsuitable design for anything except racing on a specially built course, and that the smallest thing is capable of destroying it. We've built this insane economic system despite the blinding obviousness of calamities like pandemics, wars, storms, unrest, climate change and so on. The "system" will continue to function (very probably), but at what cost and to how many?
  • bluedino 6y ago
    Fragile? We basically locked people in their homes. Shut down every imaginable business except those deemed "essential". Closed all retail and restaurants. What would you expect to happen?
    • keithnoizu 6y ago
      Buying starbucks, etc. People who work at one cafe spending money at another cafe, etc. is the economic version of busy work. It doesn't really impact the countries ability to produce food and goods. Yet with out it the economy grinds to malaise that may last for years. That is pretty fragile.
    • czbond 6y ago
      You both have valid points; I think OP is talking about the U.S. economy being built on consumerism, materialism, and need to spend for growth. Growth requires the citizen base to continually spend more.
• Melting_Harps 6y ago
  Agreed. I just got an offer this week for a position and its substantially lower (nearly 20% less) than what I made back when when I was in the Auto Industry in 2017. And this company supplies a consortium of Industries, which include medical, commercial aero, as well as other Industries trying to automate their factories.
• Ididntdothis 6y ago
  Due to slow business my company has introduced a 32 hour week with corresponding pay cut in order to save cash. Management higher up is taking bigger cuts and the CEO is taking zero salary until end of the year ( he is making >10 million usually so I think he will be ok). Lower paid workers can keep their 40 hour week. Overall I think this is a good way to handle it. I think a lot of companies are using the current situation as an excuse to do what they wanted to do anyway. I am pretty sure that during the boom of the last ten years ( the “Obama/Trump” boom ) a lot of excess people have been hired who are now costing a lot of money. I wonder how things will work out in Silicon Valley. The bubble looked already fragile before COVID.
• Mikeb85 6y ago
  This is disastrous for the economy. This depression will last at least 3 years possibly could last a decade. Even if you just cut everyone's income by 10%, that's 15% less discretionary spending (assuming 1/3 of one's income is spent on housing) which puts the reduction in economic activity on par with the Great Depression. Of course thinking only 10% of aggregate income was cut is wishful thinking; this is going to be the greatest worldwide depression we've seen yet. The UN is forecasting that 130 million more people could be at risk of starvation because of this, all because ~250k old people in developed countries died.
  • puranjay 6y ago
    I really don't know if the old behaviors are going to come back. They say that it takes 2 months of doing something regularly before it becomes a habit. I've been in lockdown for over 2 months now. Cooking instead of ordering in, repairing instead of buying new have now become habitual. I was used to ordering in 3-5 times a week - even though I have above average cooking skills. 2 months of cooking everyday and my brain doesn't think of picking up the phone and ordering food anymore. I just rummage around the kitchen and fix something to eat, even though delivery is now open and I have no hangups about safety. Maybe the old habits will come back. Maybe they won't. But I sure as hell wouldn't want to build a business that bets on the former.
• jonstewart 6y ago
  My company (Aon) cut salaries by 20%, with a location-specific floor for lower wage workers, to avoid layoffs. I don’t love the paycut, but it is frankly a relief not to have to worry about layoffs (both personally and team-wise). Of course, our industries have not evaporated overnight, so it’s more of a measure to ride things out. Layoffs seem unavoidable for businesses in the service and travel industry.
• psim1 6y ago
  It’s not my usual attitude, but “during these unprecedented times” if my pay gets cut, I will surely cut my work output in proportion.
• brmgb 6y ago
  This is a self-defeating cycle. You cut salaries because you see less demand. People have less money so they consume less and you see less demand. We will definitely need a some kind of a new New Deal when this is over. We can't count on the usual way to inject money into the economy. What happened after 2009 shows that this money doesn't trickle down enough.
  • blaser-waffle 6y ago
    > shows that this money doesn't trickle down enough. They figured that out in the 80s. Bad actors have been milking the system for some time.