Job losses are a common focus in evaluating economic pain, and for good reason. But there are other approaches employers use to adjust to a shrinking economy – cuts in pay or in work hours – that also have powerful effects on public attitudes and behavior.
I returned to our data on this today after this morning's announcement by FedEx that it’s cutting pay by 5 percent for non-union salaried employees and by 7.5 to 10 percent for senior execs (20 percent for the CEO). FedEx already had cut work hours to reflect its lower volume.
Turns out this phenomenon is a widespread one: As we reported yesterday, our poll on economic woe found that 27 percent of Americans say they or someone in their household has had pay or work hours cut in the last few months. And, like full-blown layoffs, such cuts are a major factor in economic anxiety.
One example: Among people who’ve so far escaped pay or work-hour cuts in their household, 51 percent plan to spend less for holiday gifts this year. But among those who have had a work-hour or pay cut in the family, this soars to 73 percent – almost as high as it is among those who’ve experienced an outright job loss in the household.
It shows up in other measures as well. People who’ve experienced pay or work-hour cuts – let’s call them this recession’s walking wounded – are 20 points more apt than others to have fallen behind on rent or mortgage payments in the last year. And they’re 30 points more likely to be “very concerned” about paying for needed health care – a dramatic difference, 55 percent vs. 25 percent.
The walking wounded also are 26 points more apt to be very worried about being able to maintain their standard of living and 24 points less apt to be confident they’ll have adequate retirement savings. And they’re more than twice as likely to be worried about losing their own job entirely. Here’s a table:
Pay/hours cut? Yes No DiffSpending less on Xmas 73% 51 22 pointsStandard of living: very worried 43 17 26Late on rent/mortgage 29 9 20Very concerned: Paying for health care 55 25 30 Making rent/mortgage 38 15 23Confident re retirement 28 52 24Layoff: Likely 35 15 20
A lot of these are nearly as grim as they are among people who’ve had an outright layoff in the family. The main differences are that in those households people are even more likely to say they’ve been late paying their rent or mortgage (41 percent), as well as more apt to be worried about keeping up with such payments in the future.
While all these are eye-openers, one that stands out to me is the level of concern about paying for health care – as we asked it, “being unable to afford necessary health care when a family member gets sick.” Among people who’ve had neither a layoff nor a pay cut in the family, just 22 percent are very concerned about that – compared with 55 percent of those who’ve had pay or work hours cut, and 61 percent of those who’ve had a layoff in the household. Beyond economic impacts, to the extent that not only layoffs but pay cuts increase, there could be real ramifications in terms of public health.