
Salaries Get Chopped for Many Americans Who Manage to Keep Jobs - etaioinshrdlu
https://www.bloomberg.com/news/articles/2020-05-27/salaries-get-chopped-for-many-americans-who-manage-to-keep-jobs
======
stu2b50
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.

~~~
bachmeier
Every university in the US is planning pay cuts in addition to the layoffs
AFAICT.

~~~
tesin
This is anecdata of one but not including service staff (student union etc.)
we're looking at hiring. Enrollment is still high, and there's still the
endowment as backstop. And in my particular niche, I still see job openings -
they're just remote now

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BurningFrog
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/)

~~~
spankalee
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.

~~~
colinmhayes
You don't get paid based off your expenses. You get paid the minimum your
employer thinks they can pay to get someone who does the job well. I'm not
disagreeing with you, but this argument will get you nowhere.

~~~
pbhjpbhj
Yes, but you wouldn't take the job for that wage (all else being equal) as
wfh, because you need to fund an office space. Meanwhile the employer not
funding accommodation (with all its concomitant costs: parking, cleaning,
services, etc.) would have enough to pay you to have a home-office and still -
by my estimations - save money.

I'm working from my bedroom, we're already short on bedroom space; I'll gladly
work from home for a fraction of what my employer pays to accommodate me in an
office. But I probably wouldn't have taken this job knowing I'd be stuck in my
bedroom 18 hours a day.

~~~
PaulDavisThe1st
With 20%+ unemployment, you'll probably take any job you can get.

~~~
pyuser583
Yeah that 20% unemployment is a bit misleading - experienced tech people are
still very much in demand.

~~~
Mikeb85
There will always be certain people who are more in demand than others. That
doesn't mean aggregate demand isn't way down.

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javajosh
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.

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vkou
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
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
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.

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PHGamer
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
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
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
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)

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findyoucef
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.

~~~
pbhjpbhj
They could presumably cut costs even further by a 4-day week.

Does the employee have to bear the brunt without any benefit?

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jonstewart
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.

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bfrog
I've heard of several automotive related companies cutting salaries by 10% to
20%. These are highly paid engineers, managers, and such.

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ilaksh
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.

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Melting_Harps
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.

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MattGaiser
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
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.

~~~
tgb
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.

~~~
Simulacra
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?

~~~
licebmi__at__
>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

I often argue that the markets do not optimize for the right outcomes, thus
not so great, but even I do not think they are that stupid nor inefficient.

If your standard of living has not improved (by your previous argument), why
would the markets raise the price for the Toyota Camry? So they get less
sales? Why would the workers agree to do the same work for less even if they
are gettin extra money?

An UBI will definitely shift the markets and maybe not in a good way, but that
analysis seems so absurd that I consider even calling it an oversimplification
to be too generous.

~~~
Simulacra
Because your standard of living doesn't matter. Who would get a UBI? Someone
making less than 30k? 50k? If you're already making $80k a year you don't
worry about price fluctuations as much. but if you're only making $22k a year,
and the government decides you get an extra $600 a year, business will factor
that into their pricing models. A Macbook might not go up by $600, but your
rent, food, entertainment, gasoline, etc. can and probably will.

This is why you can never tell a car dealer how much money you have to spend,
because they are going to do everything they can to squeeze every last dime
out of you. a UBI makes that WAY easier. Quick credit check, how much do you
make, oh only $28k. You must be getting a UBI. Let's make sure we factor that
into the price they will pay.

The only way a UBI works is everyone agrees not to screw people over, and that
has never, ever, happened in the history of mankind. So why will it suddenly
work for a UBI?

------
PaulDavisThe1st
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
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?

~~~
ravenstine
Fragile, because corporations that have millions or billions in cash flow
don't have the kind of savings to keep people staffed and make debt payments.
No, we little people are supposed to "save for a rainy day" and flood the
stock market with our 401ks while big business gets to grow grow grow, make
little to nothing in profit, and bolster stock prices with corporate debt.

This isn't just about big business. Small businesses notoriously operate on
very thin margins. Though that's not necessarily because of debt, but because
what it takes to run a business today takes a considerable amount of overhead.

I know that the idea of saving money seems cliche, like some obsolete thing
your grandpa might say, but we're going to have to wake up to the fact that if
we want to finance everything with debt then we're going to be penalized every
10 years when there's an adjustment or a catastrophe that forces one.

The catch 22 there is that using less debt also means less growth, and we've
all gotten used to unprecedented amounts of growth.

~~~
dantheman
I'd blame the tax code; it makes no sense for corporations to save money. They
should aim for zero every year either by investing in growth or paying it out.

With the amount we pay in taxes, the ability to save is sharply limited.

~~~
PaulDavisThe1st
This attitude is another component in why the economy is so fragile. "It makes
no sense for corporations to save money" ... as long as you think that "paying
the least amount of taxes possible" is a sensible goal for a corporation.

Compared with, say, contributing to the construction of a resilient, humane
society in a variety of ways (including paying taxes) and being ready to deal
with semi-random catastrophes quite well.

Oh, also: the amount we pay in taxes, as a percentage of personal and
corporate income, as well as GDP, is at a (near) historical and cross-country-
comparative low.

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brmgb
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
> 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.

------
mancerayder
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
(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.

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nmstoker
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)

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Mikeb85
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
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.

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PenguinCoder
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...

------
Ididntdothis
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.

------
kingkawn
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

------
psim1
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.

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ed25519FUUU
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.

~~~
MattGaiser
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
The gig economy will be the first to go.

~~~
MattGaiser
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
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.

~~~
pmiller2
> 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.

This is an interesting, and certainly plausible assertion, but do you have
data backing it up?

~~~
troughway
[https://www.brookings.edu/blog/up-front/2018/12/04/how-
the-g...](https://www.brookings.edu/blog/up-front/2018/12/04/how-the-great-
recession-hurt-the-middle-class-twice/)

[https://www.telegraph.co.uk/news/politics/7892788/Middle-
cla...](https://www.telegraph.co.uk/news/politics/7892788/Middle-class-had-
biggest-losses-from-financial-crisis.html)

Most recessions/economic downturns have the same story - Great Recession,
1980s, 2008, recent ones.

~~~
pmiller2
I didn't see anything about middle class people slipping into poverty in those
links.

