During Recessions, You’re More Likely to See Layoffs than Pay Cuts
January 12th, 2009 by lewisTweet
Liz W over at The Inside Job has a great post on why you’re more likely to see companies reduce labor costs with layoffs rather than pay cuts. Here are the three cited reasons:
- By laying off the worst performers, the company can increase workforce productivity. (Here I assume it is on a per unit basis, but perhaps the laid off workers actually hurt company productivity.)
- Employees may retaliate to a pay cut by working less.
- Employees’ morale may go down if they get a pay cut.
If you liked this article, let us know by clicking Like.