How Some Businesses Are Cutting Expenses Without Laying Off Employees

by Damozel | I was hoping the story would be about executives who receive ridiculous amounts of money for letting their companies drive off the cliff, but no.

It's a story about companies cutting back on hours, asking employees to volunteer for pay cuts, imposing enforced furloughs, and otherwise being very creative about keeping jobs while trying to cut back on their expenses.

The rolls of companies nipping at labor costs with measures less drastic than wholesale layoffs include Dell (extended unpaid holiday), Cisco (four-day year-end shutdown), Motorola (salary cuts), Nevada casinos (four-day workweek), Honda (voluntary unpaid vacation time) and The Seattle Times (plans to save $1 million with a week of unpaid furlough for 500 workers). There are also many midsize and small companies trying such tactics....

Watson Wyatt, a consulting firm that tracks compensation trends, published survey data last week that found that 23 percent of companies planned layoffs in the next year, down from 26 percent that said they planned to do so in October. Companies say they are considering other cost cuts, like mandatory holiday shutdowns, salary freezes or cuts, four-day workweeks and reductions of contributions to retirement and health care plans.

Companies seem particularly determined to find alternatives to layoffs in this recession, said Jennifer Chatman, a professor at the Haas School of Business at the University of California, Berkeley. “Organizations are trying to cut costs in the name of avoiding layoffs,” she said. “It’s not just that organizations are saying ‘we’re cutting costs,’ they’re saying: ‘we’re doing this to keep from losing people.’ ”

She said the tactic builds long-term loyalty among workers who are not laid off and spares the company having to compete again to hire and train anew.  (NYT)

It's sort of like what my friend said when I commiserated with her about the miseries of her chemotherapy:  "It beats hell out of the alternative."

Economist Yves Smith cynically criticizes the tone of the Times piece, which he says " candy-coats this development, presenting it as a "win-win" that saves jobs, as opposed to a further grinding down of workers who have had stagnant real wages since the mid-1970s."  (naked capitalism)

I suppose if you candy coat a jagged shard of glass it might be a bit easier to swallow.  Because I am afraid I must agree with Yves Smith, because tragically, what he says is true:

 Admittedly, so far employees have reportedly gone along with these moves. But I must cynically note that everyone quoted in the article is either a manager, an expert (a consultant or academic) or if a worker, was presumably interviewed with management's knowledge. And let's face it, labor has no bargaining power in the US. Acquiescence is the only option.  (naked capitalism)

And others darkly mutter, Scrooge-like, that such measures may be a passing measure on the part of bosses who still can't quite believe what's happening is going to go on happening.

The magnanimous feeling will probably pass, said Truman Bewley, an economics professor at Yale University who has studied what happens to wages during a recession. If the sacrifices look as though they are going to continue for many months, he said, some workers will grow frustrated, want their full compensation back and may well prefer a layoff that creates a new permanence.

“These are feel-good, temporary measures,” he said.  (NYT)

I guess it's a step or two removed from "Are there no prisons?  Are there no workhouses?"   And at this festive time of the year, I suppose it's the best we can expect, or hope for.

More at Memeorandum.

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