At least 4 million private-sector workers in the United States have had their pay cut during the coronavirus pandemic, Washington Post reported.
Workers are twice as likely to get a pay cut now than they were during the Great Recession, according to data provided to the Washington Post by economists who worked on a labour market analysis for the University of Chicago's Becker Friedman Institute. Salary cuts are spreading most rapidly in white-collar industries, which suggests a deep recession and slow recovery since white-collar workers are usually the last to feel financial pain.
More than six million workers in the US have been forced to work part-time during the pandemic even they want to full time, Labour Department data showed.
"I have Fridays off but I would rather have the money," said Denise Iezzi, who has seen her weekly paycheck at a New Jersey air conditioning business fall from USD 720 to USD 576.
The widespread pay cut is highly unusual. Firms typically lay off workers rather than dealing with the administrative challenges and morale effect to slashing pay across the board.
But, according to the Post, as some business has tried to save jobs by cutting pay between 5 and 50 per cent.
Economists are concerned that the country, which had seen some sizable wage gains last year might be facing a major backslide.
"It took us so long to see even the slightest acceleration in wage growth. Watching that get undermined is devastating," said Martha Gimbel, a labor market expert and manager of economic research at Schmidt Futures.
Business leaders are characterising the pay cuts as "shared sacrifice," as Tesla's head of human resources put it, during a global crisis.
Both small and large companies have been cutting pay. In data shared with The Post, Gusto found almost a third of small businesses had cut some workers' pay or hours by at least 10 per cent in May.
That includes 9.5 per cent that reduced pay for at least one employee and 22 per cent that cut hours.
The ever-growing list of large companies that have slashed pay includes General Motors, BuzzFeed News, Occidental Petroleum, HCA Healthcare, Mass General Brigham, Tesla, Sotheby's, state of Ohio employees and Major League Baseball.
"The pay cuts seem to be geared toward higher-paid workers in positions that are hard to rehire," said Nick Bunker, research director at Indeed Hiring Lab. "But it's also a sign that if there is slippage in the overall economy, we might see layoffs extend to higher-wage positions as well."
"Businesses typically fire you before they cut your pay, so this is really atypical," said Mark Zandi, chief economist at Moody's Analytics. Zandi works with ADP on its analysis of jobs data. "There is a real risk we would see actual nominal wage declines, which would be unprecedented." (ANI):
