As More Despair Sets In, Workers Would Take Benefit Reductions

The job market remains tight enough, and people remain concerned enough about their current employment, that many would accept cuts in vacation time and benefits. The news stands as another indication that the jobs market has not rebounded as much as recent government and ADP data show.

Randstad U.S., in a new survey, reports that among those who currently have work:

24 percent would lose their annual bonus or work longer hours without a pay increase to hold on to their current jobs.

And:

In keeping with so many employees expecting a reduction in benefits, 23 percent would take a reduction in benefits to keep their job.

The data indicate that many American workers do not expect they easily could find a new job with better benefits.

The potential for another recession continues to concern businesses. Because of this, large companies have delayed the addition of new employees. In fact, some huge corporations have used accumulated cash to improve balance sheets and, in the case of public companies, to buy back shares instead.

A lack of access to capital continues to challenge small companies. Many banks still refuse to take on risk for fear that write-offs may hurt their balance sheets.

Also, employers have adopted two strategies to keep worker costs low. The first is to squeeze existing employees to  labor harder because they believe worried employees will increase output to maintain their employment. Other firms have added part-time or contract workers to whom the do not have to pay expensive benefits. Both efforts will be effective as long as new jobs remain scarce, particularly for people who would like promotions or pay packages from new employers.

It is extraordinary the people would give up benefits that have been part of the pact between workers and employers for so long. But employers have the upper hand when the jobless rate remains near 9%.

Douglas A. McIntyre