Senators in the US have blocked a bailout deal for the car industry – they say workers need to cut their wages.
If your job was on the line, what would you do?
It’s not just the US car industry, it’s airline staff in India, machinery makers in the UK, politicians in Singapore, actors in South Korea.
You may be reading this at work – if your company were in trouble, would you rather some people lose their jobs, or everybody took a pay cut? Have you already taken a cut? Do you think that workers are being unfairly asked to shoulder the burden for mistakes made by bosses and bankers?
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BBC World Have Your Say 
I haven’t taken a paycut (yet) but we were just notified that we will not be receiving the minimum standard of living (3%) pay increase this year, or any raises.
I immediately brought up previous discussions about setting up a comission pay based on profits I bring in. My salary will remain unchanged but I will share a very small percent in the profits I bring in for the company… Better than nothing.
On the flip side, I would take a paycut if it meant everyone was able to keep their jobs. I would expect others to do the same. Besides, if you go along with it, have those people fired so you can keep your pay, next time, it may be you losing your job….If I didn’t like the paycut I would go find another job.
If I absolutely had to take a pay cut,I would. The Copmany I work for is struggling right now. They have released about 30 people since last August. Now they are going to hold back our next pay raise.
So, I would think that there are other options to a pay reduction. If my company had to take the route, than I would be all for it. I don’t make much at all (Under $18.00) per hour), But I would rather take a pay cut than loose such a good job working for an outstanding company.
Back in 2002, in the aftermath of the dotcom bust, everyone who earned SGD 3,000 a month or more in the company where I worked at the time took a pay cut equivalent to half the previous year’s pay rise. The company was still profitable at the time. We had no choice but we did see results. The company continued to be profitable, paid a dividend that year and has continued paying dividends. There are no executive jets there and all but very few still travel economy class when on company business.
Irene
Singapore
I would like to say yes I would… but I am struggling already as it is and would fight like hell not to have to. My neighbor actually did take a pay cut, as did all of his company including, amazingly, the top brass. My neighbor isn’t happy about it, but at least, so far, no one has been layed off and they are all still receiving their benefits. No holiday bonus this year though, which I know he is truly peeved about.
I’ve done so in the past. However, the big thing I consider is “does it seem fair?”. All too often, employee salaries are seen as an easy target and a way to cover up much bigger failings in a company.
In the case of the US auto makers, I firmly believe the root cause is that the management have been making the wrong cars–ones that no sane person would buy–for far too many years.
I believe that Japanese manufacturers such as Toyota who now put together cars in the US actually offer better terms and conditions (admittedly with greater flexibility)…but make cars people want so can sustain such deals.
I would take a pay cut, very much so. But, I would also expect a higher paycut to those higher up. It should be in line with your position in the company. Yesterday, where I work cut at least two people, or are planning to cut them and have told them. I am quitting my job so they can keep theirs, I hope. I am not rich but I can survive.
Hello everyone,
A debatable topic indeed.Well,the answer is debatable too.I think its better to cut the pay than cutting down jobs.I hope the example below can make my point clear:
Suppose a company has 100 workers,each receiving $500 per month.
The total income for the workers in a month would be : $5000
Now,after the financial crisis if there is a cut in the workers,say to 50 workers,the total income would be: $2500
But if they decide to reduce the payment to $300 per month,the total income would be: $3000
Hence,in comparison the income rises and also more people get employed.Also,in this way the government expenditure in the form of unemployment benefits decreases.The consumer surplus rises,the country gains International Competitiveness and hence the standard of living in a country improves.This is simple economics.
Thank you,
Abhinav Khanal
Thanks you,
Abhinav
If it were the choice between being unemployed and taking a paycut, I would take a paycut, sure. I don’t see why EVERYONE should have to take a paycut though. If your industry is having a problem, then people in that industry should take a pay cut. The people in the autounions are going to have to realize that, though the pay/benefits of the workers isn’t the only problem of the big three, it’s still a pretty big factor, so those companies simply cannot compete with foreign companies. so it’s better to have a pay cut than to be unemployed.
People in airlines take pay cuts all the time. It was always a dream of mine to be a commercial pilot, but given the industry, pilots don’t make much money, and it’s highly unstable work. Airlines go into bankruptcy all the time, so your contracts could get changed by the bankruptcy judge.
Taking the pay cut is not for the greater good.It is a decision still based on your own wants and self interest. If you don’t take the pay cut, then you are out of a job, no income.
Hi my dearest James… I do believe that the richest members of the society and those employees with the highest salaries must undertake the greatest shares of the pay-cut… With my love… Yours forever, Lubna in Baghdad…
Around the world workers are already complaining about poor salaries, which is making it difficult for them to have both ends meet on daily basis. Asking them to accept salary cut is just asking them to accept an increase in their financial hardship.
Many people have been hit by the increase in the prices of basic commodities, making their budgets overstretched. Those affected have to make do without -among other things- leisure activities to satisfy their demands for basic needs.
A cut in salary can be accepted. It is far better than redundancy and receiving unemployment benefits (which is not the case in the majority of countries around the world). At the individual level, this can be a good compromise. But for the national economy, this can have devastating effects as other industries will suffer, especially leisure activities like tourism. Less money for tourism means a slowdown in the sectors related to it like aviation, hotels and so forth.
If a cut in salary is a necessary price for a promising economic recovery for all, let it be. It can be an opportunity for people to consider the era of ME is over and it must be the WE era. Ordinary workers can accept a salary cut if the bosses also accept to have drastic cuts in their income and to experience the financial limits until full economic recovery.
NO, NO,, a thousand times NO!
Salaries of directors should be adjusted and they should be made to downscale their bonuses, if indeed they deserve anything at all this year – or next, for that is when the fan will become truly soiled. I’m surprised so few have been removed from their positions because of the way they have abused other people’s money – these global bailouts are not addressing the cause of our pending economic woes – yes, they’re still pending, believe me – which is gross corporate mismanagement by the upper echelons of the business world.
All salary (and bonus) reductions should start from the top down, and at the upper levels they should be quite savage. Why should salaried workers accept pay cuts anyway – the price of everything keeps going up (thanks in part to the WTO) – again through mismanagement of resources, or rather management of resources to benefit the top 5%.
Top executives should take a bigger pay cut than line employees, because:
1. Executives are far from the poverty level and can take a bigger cut without going hungry or losing their apartments. They might have to move to a smaller house, sell the vacation cottage, or send their kids to public schools, but they’ll still have nourishing food, heat, and gas in their cars.
2. Executives are more responsible for the mess the company is in. Of course the economy is bigger than any one company, but the executives are supposed to be taking precautions against downturns. Regular workers are responsible only for the quality of the work they do; they don’t make choices about the direction the company is headed. So the executives should bear more of the pain.
3. In a global market, companies can compete by making stuff cheaply or by making it well. Making stuff cheaply by cutting workers’ wages and reducing quality results in a world full of impoverished people and shoddy stuff. Making stuff well by protecting workers’ wages and enhancing quality results in a world with fewer items that are better made and more durable. The well-made world has less pollution, less trash, and more enjoyment than the cheaply-made world.
Having someone give it to you doesn’t mean it was earned. That is, accepting monies in excess of the value of one’s services is theft. By this simple criterion most everyone should take a pay cut. The larceny is usually greatest at the top, though…
g
Re: Would you take a pay cut for the greater good?
No.
Re: Do you think that workers are being unfairly asked to shoulder the burden for mistakes made by bosses and bankers?
No, I don’t think they are. While some people are not in positions where they earn a large amount of money the problem comes from all around. It’s not just the people in positions of authority making mistakes.
Pay cuts are a thoughtful gesture but they are not the solution to the problems we are having. They are not for the greater good of anything; only delay the inevitable.
Its a no brainer for me. I absolutely would for the greater good. But at the same time the geniuses that
caused the problem should also have to sacrifice a portion of their earnings and so should the shareholders.
It’s funny, I have been discussing this with friends. Before I answer I would really want to know if Bush and his friends Dick and so forth have all lost the same 38% or so that most Americans big and small have on their investments. If so I am in. If not it’s dog eat dog.
GB/ OB
Waning Superpower
Keep in mind, people, especially those advocating that the richest should be forced to take pay cuts, less income means less taxes. Who do you think pays most of the income taxes already? Less income means less tax revenue. Think about what you wish for, because you might get it.
If salary cuts are general, how can the economy keep going? Less income means less spending. Tightening one’s belt can be acceptable if only it is temporary. Salary cuts and massive sacking of workers are an introduction to economic collapse. What is needed is a policy for economic stimulus to keep the production and consumption chain going.
A salary cut means a halt to personal plans like getting a house or having a relaxing holiday. Should people spend their time looking for cheap goods , watching TV and chatting over empty beer glasses to reduce the effect of salary cuts? For people in the West, it will be difficult to ask them to help aid organisations like Oxfam to help the poor when they themselves need help. An impoverished person in the West means more impoverished people in the already poor countries.
I would rather lose face in the wind than give up my salary. If it means taking up a different job at a lower pay rate then as long as I do not lose face to my own novel. On the plus side, if i no longer have the job I have now….someone else will have it
Yes I would take a pay cut however I would like to structure it such that I had a fixed component and a variable component that is linked directly to my performance and the companies performance.
That way I am sure of getting back to the original level or better once the economy starts pumping again.
This would also be a good option for employers because by establishing fixed+variable, they know that salary costs will scale automatically with economic perfromance of the company.
The only other fair way to achieve the pay cut would be to reduce working hours at the same time, however this has the negative effect of also reducing production. Fixed+variable maintains production.
For a great national & International Market we need some things to be done:-
(a) Competative price.
(b) Quality Controll.
(c) Least Expensive Maintenance & Operation.
Infact we are paying top dollors & getting lousy cars compairing to Japan & Korea, this is why US Automobile Industry is facing crises.
Been there, done that.
You survive.
Learn to cut out everything you do not need.
You learn to count your blessings.
You downsize your bad habits.
You become an expert in what you can do for free.
And you remember to give to charitable organizations when you get back on your feet.
(A pay cut for the common good is often the first step toward being fired.)
@ Steve…
Yeah make sure those fatcats continue to make a ton of cash so they can continue paying taxes into things like welfare for the rest of us they’ve greedily screwed out of jobs. Good idea friend. Remember- there are more of us than there are of them. So actually, WE pay more taxes as a whole.
I heard many years ago, when U.S.A. CEOs were just starting to get their more astronomical pay, that at that point the multiple of bottom income compared to top level within a company in Japan was x10, while here it was already at x90. I believe it was in the 1990s, when Japan was flourishing and people were looking for reasons. I hate to think what it is now.
I believe that there should be a cap on that multiple, maybe of x50, for the country. Of course, “that can’t happen, isn’t capitalism”; but I don’t think it’s right-thinking capitalism to keep the people who actually do something at work from making a living wage. It’s taking time during their life-span to go to work just as much as with anyone else, and they don’t get the perquisites (perks) of the C-suite. A multiple of fifty covers that you had to put time into education, et cetera, just fine.
Of course.
What a bunch of entitled malcontents.
Good riddance to them and to the car industry. We don’t need the lousy products they’ve been peddling on the consumer for decades. Welcome to the real world where no one owes you a thing: not a job nor any particular wage or benefit.
Being retired it does not apply directly to me, though I would happilly see both my pensions frozen if it helped keep others in work. I’m used to scrimping.
What I would love to see is poliicians practice what they preach. Let them take a pay cut. let them feel “the pinch” Then perhaps the publiic would be more prepared to foollow?
One good example is Mark Thompson head of The BBC. He gets twice as much as our Prime Minister. Does that suggest that running The BBC is twice as important as running the country?
It would be foolhardy for the auto workers in US unions to stick to the high salaries their workers earn. If they strike a deal with the employers that will see salaries cut down and more workers retained, they will have served their members well. But unions are not always for the benefit of their members. There is a proverb of my Agikuyu people that goes: “There is a time for laughing at jokes, and quite another when a sharp bone is stuck in your throat”.
Yeah, I took a pay cut for the greater good one time, saw the writing on the wall and immediately began looking for another job. Two weeks after I left the company folded.
Folks in the auto industry should have been shopping around for something else decades ago.
I would lose my job for the greater good:
I am a Medical Staff Credentialing Coordinator at a Medical Center, and if we go socialized medicine, then I might be outta a job, but I feel that socialized medicine is important to America, so I’d have to go back to retail management, but I’d be OK with that if it benefitted the U.S. like that.
-Anthony, LA, CA
@ Monica
That’s totally wrong. The top 10% of income earners pay over 70% of the income taxes. The top 1% of income earners pay 40% of all income taxes.
http://www.ntu.org/main/page.php?PageID=6
Would you take a pay cut for the greater good?
ye
There are two ways to do these things:
Laid off.
Take a pay cut.
Either or make sure, that you make a collective agreement.
(Now, they have to make adjustment to produce for the modified public ‘psych’.
There could be good things in smaller thinks-cars. etc.etc.)
Behavorial modification for the world is a little bat of drastic measure to my liking..
YE, JUST ME-bjay.
Hello James,
In short not here in Africa because you will never see, know the end. Maybe in America it’s gonna work and I wanna believe so, they know what they wanna, maybe not for them but for their children.
I recall as child my father was put in the same position. The business that he was working for needed to restructure under Chapter 11. Together management and the union worked out an agreement, which included a pay cut for the employees, with the clause that a date in the future after the restructing was finished and the company became profitable the employees would be given back pay for the period of pay reductions. And that is exactly what happened, everyone won.
@ Steve,
ok on that point I stand corrected… HOWEVER… It doesn’t make sense to me for these CEOs with their big paychecks and all their stocks to continue sitting pretty while those of us already struggling take pay cuts, and end up on welfare or get layed off and end up on unemployment. Seems to me it would make more sense to share the pain of those who have worked so hard to help grow the business. I’m not asking for total financial equality, because obviously I don’t share the late night conference calls and the constant stress that my boss endures, but I know for sure I bust my you know what day in and day out to help keep my company going, and that should count for something.
I agree with a lot of people.
The higher up the deeper the cut!
I can’t see how people in a small business that are drawing large salaries are refusing to bring their standards down some for the good of their employees. The have shown that they will give up people rather than their pay.
Employee’s can be your most valuable asset. When the smoke clears and this crisis is over, who will the companies look to for new employees? By then word would have spread that they were not loyal to their employees.
For the love of country? Hmmm…
How many people love their countries these days? Otherwise, I find it hard explaining why one person will embezzle millions of dollars meant for the majority and stash it in his personal account. Maybe I am not just patriotic at all
People really need to do their research before opening their mouths and proving themselves the fool. UAW members earn, at most, $30 per hour. This is already on par with what employees of foreign auto companies make here in the States.
Labour costs account for 10% of GM’s corporate costs. Should obese Americans cut off their noses in order to begin losing weight? That is equivalent of what Republican Senators asked American workers to do last night: to cut off their noses to spite their faces.
I have been watching these Republicans over the past few days during the auto bailout hearings, their press conferences, and Congressional debates. Every time they open their mouths, they are either asking useless rhetorical questions that reflect a complete ignorance of the current state of our economy, asking questions that were already answered, or spouting lies that have already been disproven. Either they are stupid and do not know it, or they are wilfully misinfornming the American public to achieve their own political ends.
My advice to my fellow Americans would be to vote these Republican Congressperson out of office as soon as you can before they completely hijack our government with their political agenda at the expense of us, the people.
@ Monica
And my point is that if the big earners take paycuts, that means there will be less tax revenues. So either spending will have to be cut, or the taxes will have to be raised on lower income earners. There are consequences for all actions. Less income equals less income that gets taxed, and since the rich pay most of the taxes, the consequences will be less revenues.
This is a silly concept. I would love to hear an economist explain how a business like Ford, GM, or Chevy making their workers take a pay cut was going to help the local economy. An economy grows up around these production industries. When they make less money, the whole community suffers. The Ford plant worker tightens their belt, and no longer goes out to eat, puts off home improvement, and stops going the bars. At that point the Waitress, plumber, and bartender are making less money. That means they won’t be able to buy a new car! and the spiral continues.
The problem is that the employee at a place of that size wears a few different hats. They are a producer, they are also a consumer, a tax payer, and a voter. This is a problem that doesn’t exist if you live outside the economy. Cutting will only lead to further economic degradation.
The auto makers have proven, over the course of the last 15+ years, that they cannot run a successful business. Time to let the “invisible hand of the free market” remove them from play, and make room for some innovative businesses who can actually balance their own books.
The prudent savers of the US are already getting an involuntary paycut.Retirees dependent on income from savings and bonds are seeing their income dwindle as interest rates are held abnormally low..This comes on top of losses of capital in the stock market and real estate.The political leaders fail to level with the people about how serious this meltdown really is and how grim the outlook.The nation could be mobilized to cooperate if someone in Washington could muster the courage to do so and engage the people in the survival effort .Washington is destroying the future for next generations to avoid the bitter medicine today necessary after decades of gluttony.Enormous government debt could become unsustainable and the excess liquidity could set off a future inflation and destruction of the dollar.Better toget our house in order now than later.
BBC you question wrong infers workers can save their jobs.
Workers do not hold the power to save their jobs. Taking a pay cut now will NOT save anyone’s job long term and when a company’s bottom line is based on making a profit high enough to line the pockets of executives, board members and shareholders. Companies in the US do not operate on what is best for the people, its workers or the economy. The U.S. is a capitalist society whose sole purpose is to make an all mighty dollar. Basic Economics 101.
Better a pay cut on limit percentage otherswise when people loss jobs, the demand for labour supply will still be high and figures will have to get inflated to pay for the extra work done by those that remained in the system!
Meanwhile, how does a landlord who is not affected by recession, charge his tenants facing low pay because of pay cut? Does he fire them off his compound and again fire the new tenants because they can’t meet his rent demands?
@ Dwight From Cleveland
RE: December 12, 2008 at 6:18 pm
It’s astounding people’s inability to understand basic economics and how it all trickles down. I wish all politicians were required to do basic math and forced to take a economics course.
For the record, I do not think we should have bailed out wall street or the car manufactures and ANY tax payer dollars “lent” to banks whose leaders have proven not only to be bad businessmen, but incapable of regulating themselves was and is a recipe for disaster. To add insult to injury, we cannot hold these wall street jokers accountable for their colossal mistakes in gambling with our money.
How can the US elected officials elect to save white collar jobs, but send the blue collar workers to the unemployment line and expect the economy to improve?
@ dwight
If you work at Ford and make 70 bucks for the same job at toyota making 48 bucks, I’m sure they won’t be tightening their belts if they take a fair pay cut. They should be happy those greedy unions have been getting away with this for so long!
-Anthony, LA, CA
I would not take a pay cut. I have done that in the past and lost my job a few months later. So you cannot win in an economy like we have now. We just have to enjoy what we have for however long we have it. When you live pay check to pay check that is all you can do. If you worry about it you would just cry all day.
And more welfare/unemployment will end up being paid out (where do you think that money comes from?)… so again I ask you, why should the brass not have to be part of a pay cut? And not only that, but if a company is struggling, the ultimate responsibility lies with the top eschelon (spelling?), so how does cutting the salaries of the worker bees, or laying them off, make things better? I can tell you based on personal experience, it doesn’t. In fact, I’ve seen layoffs make things way worse.
Would I take a pay cut for the public good? I’m a teacher; I take one every year. I work more than 60 hours a week (not “billed” hours; but 60 time periods of sixty minutes each). Brief summer vacations are spent in individual study or in research. My salary is not much different from that of an average law clerk and healthcare insurance costs now consume one fifth of it. Perhaps I should just leave education to the rich. Some would have me believe the wealthy are astonishingly altruistic.
g
@ Jess in NYC
These people know how to ride the Austrian Business Cycle. They take advantage for as long as they can, then they tighten their belts when times are tough. American Cars will come back, then once they are thriving, THEN they with become super greedy again. 🙂
-Anthony, LA, CA
Absolutely, it is already happening. I welcome the collapse of our house of cards. Anyone who says, no, to this question must like living in fantasy land. The only way to make it stronger is to rebuild from the ground up. For all those, “let them eat cake types………..pshaw!”
The proposition is preposterous.
The Republicans have demonstrated once again that they have no shame calling for pay cuts for workers but wait…. did they ask for a pay cut for the CEO’s and other top executives? Of course not.
By calling for these pay cuts the Republicans are intentionally exacerbating class divisions. They are heightening the state of America’s aristocracy at the expense of the working class. This is their nature. They believe in a system where a small number of very number of very rich people own everything, and the masses of poor people have to work for, buy from, borrow from and rent from the rich.
Can’t wait for Obama.
Hi, James & The Rest of the WHYS….
I would take a pay cut if I want to say at the job!
Years ago I worked at a firm that fell on hard times. Layoffs, plant closings and other measures loomed. Then, someone proposed that all employees take one day per pay period (10 days) off work AND take a 10% pay reduction rather than some of the other measures. That idea was accepted and all employees retained their jobs and all employees (executives included) had a pay reduction. In a few months the crisis passed and all employees returned to full time work and full pay. It was an excellent solution to a difficult problem!
Over the last 6 years, my salary has gone up and average of 2% a year, which is under the inflation rate. So effectively, I have been taking a pay cut already. That being said, I make more than I need to live on. And if my company cuts workers that would mean I would just have to put in more hours which again reduces my overall pay, so either way I lose. So yes I probably would take pay cut if it was across the board. However when the senate turned down the bail out of the auto workers over pay, that was just pathetic, since the US government has been in the hole and needing bail out for years. But does the senate or government works ever talk about a pay cut for themselves? I think not. Thats messed up!
How about the sacred cow question that never gets asked:
“Are the common stockholders and preferred stockholders willing to take a cut in their dividends in order to save the company?”
And:
“Are the bondholders willing to take a cut in either their interest rates or their principle owed in order to save the company?”
There are many classes of people with a stake in the survival of a company, why are the workers to only ones asked to suffer?
Labor did not make the decisions that took the company down, it was the stockholders through their appointed Board of Directors and the Management hired by the Board that made the decisions and therefore put the company at risk.
About 8 years ago, I did take a cut from fulltime 40hrs to parttime (24hrs week) so that no one on my small team (5 of us) would loose their job completely. It was a huge compromise for my family, but I was able to keep the full medical benefits that my employer was providing for the full family.
None of the upper mgmt in the company took cuts and it was really painful to see a lot of good people loose their jobs.
Carolyn
DEAR BBC. Economics crisis came by the time when the Republicans were in power. Why are they objecting to the Bailout policies? and politicize aid packages while these came as a results of their fails policies.
Jess, come see us After Hours! We miss you!
Anthony, have you done any reading on union members’ wages as compared to wages of employees at plants like Toyota favtories? Your post indicates that you have not. Start with my previous post; then do some Googling.
What everybody is not thinking about is here – The marginal cost or marginal wage of labour should be equal to its marginal revenue! So the pay cut should descend as fact, if their is to be any motivation!
These people are funny. They got a good job at a car company cus their dad or uncle got them a job their, with no training, plus way over paid because of the union, and now they’re crying about taking a pay cut? Boo hoo! These people saying it’s unfair should get their jobs taken away, disgusting!
-Anthony, LA, CA
Hi
I am sorry that I have become distracted from the subject by the athlete who just said that he and his team mates risk their LIVES on the field.
Yes they risk injury when they play and yes fans come to see them… but they are not risking their lives
I had to note this because many people in many countries DO risk their lives every day, mostly but not only in military jobs…
geez
Hello,
I am a scientist with dual bachelors degree in science. I currently research treatments for inflammation. I was baffled when one of your callers said he made $28/hour and would ‘consider’ taking 26$/hour in an effort to help his coworkers. I think this is a noble idea, but that is still twice the amount that I make! How can someone in the USA struggle on $28/hour? I have made an average of 13$/hour for the entirety of my professional career, now about 5 years. I have been laid off 7 times during these 5 yrs. I just don’t understand how one can make this much and only give up 2$. If I could, I would give up a lot of my salary, but in my pay grade, I would starve.
I want the auto industry to survive as much as the next person, but I simply don’t understand how they can justify making that much in this economy.
Best regards,
Paige
I find it disturbing that the BBC is turning Republican ideology into a conversation about worker pay cuts.The topic should be Why are Conservatives Anti-Union and Anti-worker. Or perhaps: When Should the Greater Good Surpass Ideology.
Only the CEO’s, and top managers. This includes the UAW local and overal leadership. The contract rules need to be adjusted, people cannot continue to get paid for doing absoloutely nothing, the is sooooo much BS agreed to in sporadic local negotiation, and upper management are fiscal bullies in every sense of the word!!!!!!!!! I know I worked for DCX and Ford for 15 years as a supervisor, and manager.!!!!!!!!!!!!!!!!!!!!!
I would take a pay-cut if, I like or love the job….
I currently work in Systems Integration’s in the HealthCare Industry. I haven’t taken a pay cut, but have declined two pay raises this year to create a budget to hire more people and help the budget.
In hind-sight I’m not sure if I would do this again, since although I gave up two pay raises we have yet to hire any new staff. I am aware (though shouldn’t be) that some of the higher level people are taking bonuses while everyone below them has frozen their salaries and are not paid market rate. It seems the workers have gotten the short end of the stick while the higher-ups have reaped the benefits of our sacrifices. I think its time the sacrificing comes from the top down.
The problem with paycuts during a recession is that when the economy turns up again, it’s hard to convince employers to bring the wages up as well.
When the economy had a downturn in 2001 the company I work for was close to failing. We all had to accept salary cuts, and the CEO stopped taking a salary. The cuts were a smaller percentage for those making less, and more for those making the most. I had a 28% cut which was from 50k to 36k. It hurt, but I kept my job. It took a couple years to get back up to my previous salary, but the company did not fail and we kept our jobs.
I have no sympathy for the workers who are so shortsighted that they would rather earn zero when their companies fail than take less now.
If you compare the wages/benefits of US workers in the big three vs the wages/benefits of US workers for foreign car makers that build in the US such as BMW and Hydundai, the workers for the foreign companies get less wages/benefits, and those car companies make bigger profits, whereas GM for example, loses money on every car it sells. While it’s not just labor that’s the problem, American cars in the US have a reputation for poor reliability, have bad resale values, etc, they simply will not be able to compete anymore with the amounts their employees cost them. Hyundai is builing the world’s largest autoplant in some southern US state that doesn’t require employees to be union members, he it’s cheaper to hire labor there, and all of these UAW members are going to be UNEMPLOYED unless they realize that their companies cannot compete given the costs they put on their employers. Sorry, but you can’t have it all. If you want to keep your job, you’re going to get paid less, and probably a lot less. Do you think that unemployment check is going to be any larger than paycheck? I bet it’s going to be smaller. So you need to decide whether you want a job or not.
On the issue of pay cuts, it seems that someone should mention the federal minimum wage that is increasing the beginning of Jan. This is a issue that is hitting the states that have a higher min. wage than the Federal standard the hardest. (I live in Oregon.) Our min. wage is a lot higher than the federal, if I’m not mistaken our min. wage in Oregon is going up over $8 hour. What this does for people in the service industry (I’m a chef) is it gives our servers an incredible wage increase, but makes it impossible as a small business to increase our cooks wage to a livable one. It’s a catch 22. Increasing the min. wage is important but in these times highly unfair.
Paycut., shmaycut. If workers pay is reduced,then the capacity to consume is also reduced. “Catch 22″…. Trickle down economics has proven to be a failure. It”s only a matter of time before the small businesses hit the wall; and that means “main street” job cuts, higher unemployment and lower wages with less consumption. Transforming into a modern sustainable economy is expensive now,but more expensive later. The time for action is NOW.
Personally, I would rather take a pay cut than lose my job, but in a union shop, I wouldn’t have the choice. Union contracts consistently require layoffs rather than pay cuts. I once read a study about the reasoning, but I don’t remember it.
Since the car industry is prompting this topic, I’ll say that wages aren’t the problem; LABOR COSTS are. Work rules require workers to be paid even after their plants are closed. GM pays more in health and pension costs for every car than for steel.
Cutting executive pay won’t solve anything; executive pay is a tiny sliver of labor costs. You could cut the executives out entirely and barely make a blip.
Jonathan
San Francisco
That is the auto industry, we do not need to bail out mismanagement and idiocy! They are bailing out the UAW.
The Greek youth and other Europeans are just dump liberals. Global warming is the biggest scam of the year and it is only a myth, your program makes things worse.
No one seems to consider that this whole issue is based upon market demand – or the lack thereof. Salaries and benefits are nice to talk about, but if demand is not there, or if productivity makes a company uncompetitive, the rest of the discussion is not that meaningful.
Make your product more quickly – better – cheaper than your competitor or salaries and benefits become moot. There won’t be any.
Get brown and his inept rabble to take their noses out of the trough.
They are responsible for this mess.
£4000 a week for nothing..
OK for some
RE “” they say workers need to cut their wages. “”
——————————————————————————————————————————–
————— It’s primarily Rep senators blocking the bill. Paulson has been directed to do an end run around congress and use the the current bailout package for an assist.
The whole thing is a dog and pony show. The American workers have been losing the value of their labor to inflation and the fraud leading to the meltdown. CEO/corporate manager pay and bonuses have never been higher and growing obscenely out of proportion the past decade.
The question should be will the government garnish the money fatcats have earned for driving their businesses into the dirt through incompetence and fraud to bail them out? How about use of the RICO law here.
Compensation is still going to be huge on Wall Street this year compared to the average worker already worked down to the bone with both husband and wife having to work to support children. Wall Streeters’ biggest dilemma to be delaying the purchase of that yacht or new mansion and reducing the Carribean/European vacations. They’ll still be smoking $100 cigars and $200 bottles of wine and keeping that other women safely tucked away in the hotel room for spur of the moment trysts. In between sifting insider information of course, after all, they do work hard at it when not at play.
American Conservative Republicans defeated the bill to save the automakers because they want to break the unions by making them go through bankruptcy and break the contracts.
When we all need to work together to save our companies, Conservative Republicans take the opportunity to attack the workers! This is just absolutely shameful!
I am a young student who has been unable to afford his tuition payments and afford to support his family. I have been forced to enlist in the military in order to support myself & family.
The lack of support from my government to help struggling students through college is infuriating to me. We are trying to increase our profitability to the national economy.
I’d take a pay cut if the cuts were across the board and reflective of productivity and service rendered. No executive in an ailing industry should be getting bonuses or pulling down the reputed $20 million that some American auto industry execs were getting. I’d take a pay cut for a piece of the good times, too, as I’d be invested in making the good times happen. By the way, as a real estate broker, working on commissions only, I’m taking major paycuts every day that the lending climate is tight, and every time a prospect loses a job to layoffs or downsizing or outsourcing. It’s way beyond theoretical for me.
I really don’t see the issue here. Jobs are Ghana are hard to come by and salary levels are very low. These guys in GM are already enjoying good salaries, so there shouldn’t be a problem if they are to sacrifice a little bit for their own good. I have three guys in my company who are willing to work three good months without salaries. Staff of GM please accept the paycut to for your own good.
The fact that the consumption of goods and services is linked to the health of an economy is fundamentally understood. Pay cuts do not facillitate economic health, as they diminish the capacity for consumption. A reorganisation of economics vis a vis sustainability is pragmatic, essential and fiscally responsible. I would not take a pay cut and I do not think that it is a responsible request where fiscal rectitude will lead to the dearth of enterprise and growth.
I can see employees taking a pay cut in a small business in order to try and make the company survive, but in a huge business like GM or Chrysler it makes no sense, since those business have failed long ago. People are not buying their product. They don’t WANT what they are producing. Those giant manufactures should be allowed to fail. Buyers will come in to purchase their assets, and new businesses will rise from the ashes… or not.
@ Anthony
American Cars will come back, then once they are thriving, THEN they with become super greedy again.
Do no one will learn from these mistakes? I hope you’re wrong. *sigh*
All of this financial suffering, all of these pay cuts, business failures, and layoffs we’re hearing about from all around the world can be laid at the feet of American Conservative Republicans; because in 1999 they refused to Regulate or even allow Regulation of the new financial chimeras that plague us now.
Absolutely shameful! This could all have been prevented!
Talk about pay cuts usually considers reducing the compensation of all but senior managers.
How about having the top 10% compensation tier of workers taking a cut reducing them to the level of the the tier below. They are best able to afford a cut; and if they decline a cut, there is a negative incentive for anyone lower to accept a cut.
@Tom D Ford
Good to see your sense of humor remains robust. “Why shouldn’t stockholders share the pain?” Ho, ho! US car companies stock is down about 90% over the last couple of years–that’s a little bit more pain than the hourly workers are feeling, ya think? And the bonds are of course junk now. But please don’t let me confuse the colorful fantasy with mere dreary facts.
@Pink
Did your research disclose that although, as you say, UAW workers “earn” about the same as non-union auto workers (which raises a rather obvious question that I won’t ask here), UAW workers COST their struggling employers 200% or 300% more? The diff is in splendid pensions, gold-plated health insurance, featherbedded work rules, and other relics from the days before significant competition from imports. Wages are immaterial.
Your point about obesity and cutting of noses sailed over my head, sorry. I agree completely about silly Congress people of course. But they don’t run car companies (yet)–even Republicans–so I don’t get that either.
So what’s the answer? Why are the Detroit companies dying while the Honda plants in the south are thriving? You’re kind of a tease to say you’ve done research, cite statistics, veer off onto Congressmen and noses, but never offer any theory to explain the facts.
Do you happen to have a source for your statement that “Labour costs account for 10% of GM’s corporate costs?” Not that it’s relevant, since what matters is what it costs GM to make a car compared to Honda, Toyota, et alia. That’s what determines whehter GM makes money or loses it.
@ seth
you could have taken out student loans. Just about everyone does it these days.
Hi,
I certainly would not because; the lowest paid would be expected to bare the highest percentage of cuts and in absolute terms even a relatively small cut in wage would have a high impact on the poorly paid, A small amount from a small income could seriously effect the ability of low waged people to survive,
A high cut in high salaries would leave more than enough for a quality lifestyle, and then there are the expenses and benefits enjoyed almost exclusively by the higher paid. Why should the poor or just surviving workers be leached to maintain the high lifestyles of the better paid?
This is just another wheeze to filch the resources of the lowest income groups and stash-up false praise for those that are insulated from the desperation of just getting-by in the U.K. that the vast part of the population is forced to experience.
Perhaps an element of reflection should be addressed to France in the 18th Century, and the perpetual medieval stratification in the U.K. be eradicated. The professional gamblers and fraudsters sitting rich and protected by this government should be held to account! Their assets stripped and penalties for their Feudal treatment of the masses be exacted! Not the placing in Hock of the masses and our children. Billions for the ‘fat cats’, cuts for the children’s education , the pensioners, the sick and disabled, and the unemployed: for Gods sake STOP!
Vive la Plebe!
I was thinking about this fatcat thing. I guess they don’t have to necessarily have to be individuals so…..I propose that Planned Parenthood be de-funded.
http://www.lifeissues.org/pp/index.html
Look at all of the money they have!
We could really use all of that money they are saving by being considered a “charity”! And, no more government grants so that you can provide gift certificates for abortions.
Anthony, I don’t know where you got the numbers. But I know people from all walks t the ford plant. Most make around 60 G’s a year 70 if you include benefits. While they are some of the highest paid members of the community, the communities wages are set by them. For the same reason people complain about illegal immigrants dragging down the labor cost. Highly paid employees drag them up. But so goese the wage of a real-estate agent, a lawyer and a all other major service and production employment around the area.
Here is the fact. Where I live was once a very symbiotic affluent farming and fishing community, In came the automotive industry. They paid sold their plan to the politicians who sold it to the farmers. They brought high wages and “good paying unskilled jobs” to the area. That drove up the cost of living so much that a farmer or a fisherman couldn’t afford to live on the lands their they had worked for 10 generations or more. Soon they lusted after the “good jobs” at the steel and auto manufactures. You need the wages they make just to survive around here.
However, wages are all realative. I saw a sign in Florida 8 years ago or so that said, “dishwasher needed, $15 p/h.” Turns out that was a low paying job in the area.
We need some more heroes. When Chrysler was swirling down the toilet, Lee Iacocca took the job and was paid $1 per year. We have many military heroes, same for medicine and technology. SOS for principled heroes of industry, People who prefer an earn-out instead of a bail-out. I vote for a pre-packaged bankruptcy to abrogate all of the health insurance premiums, retirement plans and pensions they can not afford. If the UAW people get laid off, they are paid $90 cents of every dollar earned prior to their separation. Let’s ALL buck up and make a sacrifice (management included) in the same proportion as everyone else.
Everytime I hear the “greater good” I cannot help but think “Hot Fuzz” and what the people would do to protect the image of their town.
Steve, let me point out a couple of thing.
1. The top 10% of taxpayers may pay 70% of taxes but they own 90% of every thing. So it looks to me like they are not paying their share of the infrastructure and upkeep of this company. Let’s hope Obama can straighten out that imbalance.
2. If the foreign auto companies pay their workers less they pay their executives a lot us. Union auto workers might find it easier to swallow a pay cut if they saw their bosses also take a cut. If its best for the Big Three to imitate Toyota, let’s follow their example across the board.
Greater good? Are you suggesting that money creates a great good out there worth pursuing?
Money and mammon,thruppence short of a tickey.
But nice try, pick up your wage on the way out.
Des Currie.
Pay cuts in individual companies that are ailing, to get them through the recession, make a lot more sense than layoffs. All those people who said that pay cuts also mean less spending in the community seem to ignore the alternative: lost jobs and possibly a completely failed company. That’s far more disruptive than across-the-board pay cutes in that company.
Yes, even the top brass.
Some employees will be motivated to find another job. That’s good too.
The problem I see with US automakers, specifically, is that they spent too much time concentrating on truly obscene vehicles in the past many years, not enough time developing fuel efficient vehicles. Yes, this was mostly the fault of the US car-buying public, but it’s the responsibility of the top brass at these companies to worry about long term strategy. Instead, they worried more about short-term profits. Ultimately, obese road hogs won’t be sellable anymore. Fuel prices, long term, ain’t going down.
So even when the economy recovers, assuming the US car buyer continues to be interested in more fuel-efficent vehicles, they won’t be looking at US auto companies for these vehicles. That’s the real problem. A shame, considering that US cars, not the obese SUVs and trucks, are starting to be very good now. It may be a case of “too little, too late.”
@ Teresa
Are you trying to tell me that the top 10% of earners own 90% of the cars out there? Cars require infrastructure, and a lot more than 10% of the people are out driving around, utilizing the infrastructure. Because someone earns more money and already pays more in taxes, they should pay even they drive over a particular bridge no more often than a poor person with a car does?
@ Teresa
Also, how is not paying 70% of the taxes a “fair share”? 10% paying 70% of taxes seems to be excessive, to be unfair, unless your idea of fair is 10% paying 100% of the taxes. That’s not fairness, that’s called being a parasite.
And because someone owns something they should have to pay more taxes? Some of the poorest people I know has the most stuff. HDTVs, game systems, cars, all on credit. Ownership isn’t a basis on which to tax someone. This isn’t the soviet union.
Not sure what happened to my previous post but I think it would be interesting to consider planned parenthood’s huge income, how it is attained through them not paying taxes and accepting donations as a charity. Shouldn’t we be saying that since they have this income; they pay taxes on it. The grants they receive take money away from other necessary things and that money could be utilized during this financially hard time.
@ Jonathan December 12, 2008 at 8:26 pm
“@Tom D Ford
Good to see your sense of humor remains robust. “Why shouldn’t stockholders share the pain?”…
If I recall correctly, there are classes of preferred stock that retain their dividend stream even when the common stocks take a dive, that’s who I was writing about. And I believe there are types of Bonds that do the same.
The extremely wealthy don’t actually put their wealth at risk, they just use it to attract the wannabes who are willing to risk their money. Well until Lehman Brothers was allowed to go down anyway. And even with Lehman the very wealthy picked over the carcass and took the good parts.
@ Tom
Preferred stock doesn’t mean gauranteed income stream. I just is a higher priority. It pays a dividend before common stock. iF there is no profit, there is no divident, period. If there is only a small profit, it goes first to preferred shares. If there’s anything else, then it goes to the common shares.
Of course I would take a pay cut, if the company was worth it. What these and other companies have done, is gamble with the lives of there country. Uncensored greed have driven these companies in to the ground, and now they are asking their workers to sacrifice, rubbish!
Hello.
I’m new there
Nice forum!
I found the best thing to my sister’s birthday… It’s really hard to find cool and still unique.
So today I saw this thing from ZTARLET on facebook where you can name a real star in heaven and have the certificate and a teddy bear sent to you and pay it by a single SMS. So awesome 🙂
I saw that Casey Fronczek is offering fishing trips now down in south Florida. Does anybody have any input on these trips or has anyone been on one of these trips before?