‘Misery Out’
“I asked: Why do you lay so many people off rather than reducing pay? And his answer was -- I should’ve made it the title of my book -- ‘to get the misery out the door’,” Bewley said.
“It’s sort of obvious, and I kept hearing that same thing all over the place,” he said. “Your core -- which you want to hang onto and cultivate -- have them work full-time and keep their pay and be loyal to the company. And everybody else, you sacrifice.”
The logic held up even through the unusually deep downturn of 2007-09 -- spawning a new wave of research on the topic. “Sticky wages” were invoked to explain why pay was slow to increase after the crisis, too.
The virus slump looks as if it may be different.
Many businesses -- such as Helen of Troy, which sells household and beauty products and is based in El Paso, Texas -- are adopting the language of shared sacrifice.
“Our people supported this approach and continue to do exemplary work, driving the business and keeping the company fully operational,” Chief Executive Officer Julien Mininberg said on an April 28 earnings call.
The circumstances of a public-health crisis probably make pay cuts more palatable to workers than they’d normally be, according to Bruce Fallick, an economist at the Federal Reserve Bank of Cleveland -– at least initially.
‘It’s Pretty Obvious’
“If the state of Ohio tells you you have to shut down, or you can only have customers if they’re spaced by this amount, and they can only come in at this rate, and all that sort of thing, it’s pretty obvious to everybody what’s going on,” he said.
But the share of national income that goes to U.S. workers in the form of compensation already is near the lowest level in more than half a century. And there’s no guarantee salaries will return quickly to pre-crisis levels. The pace may depend on government support for the economy, to ensure people have money to spend on goods and services once the pandemic is over.
While Congress has authorized some $3 trillion of fiscal spending, Fed Chair Jerome Powell has warned that measures taken to date may not be enough to prevent widespread bankruptcies and prolonged joblessness.