Firms Choose Pay Cuts Over Layoffs

Some deem sharing the pain preferable to axing workers
By Jim O'Neill,  Newser User
Posted Jan 15, 2009 10:03 AM CST
FedEx workers sort packages passing along a conveyor belt before loading them onto delivery trucks at the FedEx Express Station Monday, Dec. 15, 2008 in New York.   (AP Photo/Mark Lennihan)
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(Newser) – Employers increasingly are opting to cut salaries rather than staff as they tighten budgets, a plan that helps keep them ready to respond to an economic rebound but could hurt morale, reports the Los Angeles Times. Companies also are looking to trim operating costs by eliminating bonuses, requiring employees to take unpaid leave, and slashing other benefits.

FedEx last week trimmed salaries 5% for 36,000 workers, truckers at YRC Worldwide accepted a 10% cut, and non-union workers at media giant Gannett are being told to take an unpaid week of vacation in the first quarter. "Companies would rather cut jobs than cut pay," said a consultant. "If a company is cutting wages, that's a sure sign of recession."