Six ways bosses can cut your pay – and what to do about it
Did you survive the massive layoffs of 2008 and early 2009? Congratulations. Now, watch out for the pay cut.Skip to next paragraph
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It probably won't come as a direct salary or wage reduction. Managers know that's demoralizing. So they're finding other, more creative ways to trim. Here are six to watch out for:
1) Delay the start date. Some law firms are waiting months before bringing their new hires onboard and, in some cases, lowering starting salaries, the Federal Reserve Bank of Dallas reported in its survey of business conditions released Wednesday.
2) Raise the pay, lower the benefits. The Federal Reserve Bank of Boston said while two-thirds of the companies it surveyed had raised worker pay this year, some had also cut benefits or announced delays in future raises.
3) Cut the retirement plan. Media General, owner of the Richmond (Va.) Times-Dispatch and other newspapers, announced in January that it would stop matching employee contributions to their 401(k) retirement plans at least through the end of the year. It joins more than 260 US companies that have announced plans to change or suspend matching contributions, according to the Pension Rights Center.
4) Slash the hours. Hardinge, a machine toolmaker in Elmira, N.Y., could have laid off 20 people but instead chose to cut the work week for most of its workers to four days. It's an increasingly common technique that private employers and, especially, state and local governments, are using to save money while holding on to their workers. The mandatory furlough – say, a week off with no pay – is a variation on this.
5) Lease the workers. It's not just US companies facing recession pressures. British telecommunications giant BT is encouraging its work force to work elsewhere temporarily. (I'm not making this up.) In the past, BT let its employees work for government agencies and charities (who picked up the tab). Now, it's urging them to work for other private companies. Not direct competitors, a spokesman told the Daily Mail last month, but those in "like-minded industries."
6) Make 'em part-timers. BT, again. Full-time workers get a £1,000 bonus ($1,650) if they switch to part-time status. There's a perk for parents: They can take all of summer vacation off to spend with their children.
These strategies are emerging now because many corporations have already engineered massive layoffs and don't want to have too few workers when the economy rebounds.
"Companies have recognized they don't want to cut any more of their workers," says Steve Gross, global rewards consulting leader at Mercer consulting firm, in a telephone interview. But a recovery is too distant for managers to tough it out without cost cuts, so they're looking for ways to trim compensation, he adds.