With the economy sitting at a standstill and revenue streams drying up, companies are looking for ways to reduce costs. And some are cutting salaries and benefits to help make ends meet.
“There is no workplace in the US not affected by everything that is happening,” said Vanessa Matsis-McCready, assistant general counsel and director of human resources at Engage PEO. “Businesses are trying to figure out how to keep the doors open, and sometimes the best way to do that is to make pay reductions.”
Labor costs typically consume the biggest part of the budget, so pay reductions can help employers avoid layoffs.
“In 2008, businesses were more aggressive with layoffs,” said Russ Adler, labor and employment attorney in New York City, referring to the last recession. “We are seeing more creative attempts to address the issues. Furlough and pay reductions you didn’t see as much in prior downturns. It’s still scary for employees, but it’s better to have 80% of income than a layoff.”