Pay Cuts: America's New Norm

Nine straight months of declining pay sets new record
By Jason Farago,  Newser Staff
Posted Oct 14, 2009 7:49 AM CDT
A customer pays for clothes at a Gap store in Palo Alto, Calif.   (AP Photo/Paul Sakuma)
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(Newser) – In previous recessions, layoffs were the principal way for employers to cut costs—pay cuts were seen as demoralizing and a sure-fire way to lose workers to other jobs. But now pay cuts, sometimes in the form of demotions or shortened workweeks, are more common than at any time since the 1930s. Production workers, who represent 80% of the work force, have seen their weekly pay decline for nine straight months, setting a new record; the previous record was a two-month fall in 1981-82.

The New York Times profiles one Virginia pilot who was downgraded from captain to first officer, cutting his wages by about 50% and bringing his pay below that of his wife, an elementary school teacher. His pay cut came just as the couple closed on their house, and now their savings are dwindling and they are relying on family members for help. A father of four, he underwent a vasectomy after his demotion: "We could not take the risk of having another child."