Oct 14, 2009

Working Fewer Hours for Less Pay

Layoffs have been much in the news for more than a year, and with good reason: Unemployment has reached 9.8%, and is expected to continue growing in the months to come. But lost jobs aren't the only employment story of the economic downturn. Many struggling companies are trying to get more for less -- more work out of their employees for less money, that is. When companies combine layoffs with pay cuts and hour cuts, the inescapable result is that remaining employees have to work harder for less pay.

As statistics show: The Bureau of Labor Statistics (BLS) has released its latest figures on what it calls "labor productivity," a measure of employee output per hour as compared to the cost of that labor. Here's the good news: Employee productivity is up by 6.6% in the second quarter of this year. (Way to go, people!) The bad news is that we realized this improvement not by boosting overall productivity -- which actually declined by 1.5% -- but by working faster. Work hours declined by 7.6% in the same period. (This decline encompasses hours lost both to reduced work schedules and to layoffs.) In fact, the New York Times reported today that pay cuts -- which are often tied to reduced hours -- are more common now than at any time since the Depression.

Even those at the bottom of the economic ladder are facing declining wages: Colorado has said that it will have to cut the minimum wage from $7.28 an hour to $7.24 an hour as a result of deflation. Colorado is one of ten states in which the minimum wage is tied to inflation. This type of legislation is typically intended to protect low wage workers by making sure that the minimum wage keeps up with the cost of living. But when the cost of living drops, these laws requires the minimum wage to drop along with it.