More employers instituting pay cuts
More U.S. employers are cutting wages to deal with the recession, a tactic little seen since the Great Depression, economists say.
Microchip maker Advanced Micro Devices Inc. in Sunnyvale, Calif., for instance, said Friday it would temporarily cut pay between 5 percent and 20 percent for workers and executives, as well as eliminate 1,100 positions. Heavy equipment maker Caterpillar Inc. is cutting executive pay by half while many salaried employees are seeing cuts of as much as 15 percent, The Wall Street Journal reported.
With the job market at its weakest in a generation, employees appear more willing to accept pay cuts rather than leaving behind pensions and healthcare coverage, the newspaper said. Unionized labor forces reportedly have found that the very real prospect of bankruptcy has eroded much of the remaining power of collective bargaining.
The Journal said the Federal Reserve revealed this week that its survey of economic activity found companies across the United States considering freezing or cutting pay. The newspaper also cited a recent poll by human resources consulting firm Watson Wyatt indicating that 5 percent of 117 companies surveyed said they had reduced salaries to cope with the recession.