Wage deflation is setting in. Let’s look at some anecdotal evidence.

The Times Plans Temporary Pay Cuts

March 26, 2009

Facing a steep drop in revenue, The New York Times Company plans to cut the pay of most employees by 5 percent for nine months, in return for 10 days’ leave, and will lay off 100 people and make other budget cuts, executives said on Thursday.

The company will make the pay cuts unilaterally for most nonunion employees, including top executives, in its corporate division, at the flagship Times newspaper and at The Boston Globe. The reductions will be in effect from April through December.

At The Times newspaper, the company will ask the Guild, which represents most newsroom employees, to accept the 5 percent cut and 10 days off voluntarily, and avoid possible layoffs. It is not clear how the moves will affect unionized employees at The Globe.

McClatchy to cut 1,600 jobs, lower salaries

March 9, 2009

Struggling newspaper publisher McClatchy, parent company of Charlotte’s Observer, said Monday that it would cut 1,600 jobs and lower salaries across the company.

McClatchy (MNI), based in Sacramento, Calif., said the job cuts amount to about 15 percent of its work force. The company plans to begin laying off workers and restructuring operations by the end of the first quarter. The reductions will result from a combination of layoffs, attrition and outsourcing, the company said.

McClatchy said that its salary reductions would include a 15 percent cut in Pruitt’s base salary. In addition, other executive salaries will be hit with a 10 percent reduction, while board members will see a 13 percent decline in cash compensation, including retainers and meeting fees. Also, McClatchy will pay no bonuses to executive officers this year.

Gannett puts 15% pay cut on the table

March 12, 2009

The Indianapolis News Guild is sad to inform you that Gannett is now seeking to cut the pay of newsroom and building services employees by 15 percent. The lawyer for the company provided us with a one-page “supplemental” proposal this afternoon that he said would implement this uniform salary reduction either 1) at the time we reach a new contract with the company, or 2) at the time both sides reach an impasse and cease talks.

This was a disappointing move, given that we thought the company’s bargaining team was starting to embrace the concept of negotiating instead of dictating. In fact, we believe the company’s actions at the table today raise the specter of regressive and bad-faith bargaining.

Microsoft temps face 10 percent pay cut

February 26, 2009

The thousands of contractors who work at Microsoft through third-party agencies are facing pay cuts beginning Monday, as Microsoft continues to look for ways to cut costs.

Microsoft and its contracting agencies agreed to a 10 percent cut in the bill rate, impacting all temporary worker assignments. Several contract employees have said the reduction is being passed on to them in the form of a pay cut. One person said some agencies are seeking to pass deeper pay cuts onto their workers. Several contractors contacted The Seattle Times, asking for anonymity for fear that speaking out would jeopardize their jobs.

The 10 percent cut is for existing contracts. New contracts will have a 15 percent reduction in the rate.

The Oregonian Newspaper Takes Cost Cutting Measures

March 23, 2009

The Rocky Mountain Paper closed recently after 150 years in print. The Seattle Post Intelligencer can only be found on-line now. And Portland’s Willamette Week has instituted an 8 percent pay cut.

So the staff at The Oregonian knew cuts were coming.

Nobody from the Oregonian’s management responded to a request for an interview. But in a letter to employees Publisher Fred Stickel said that the Oregonian lost “several million dollars” last year — and doesn’t have enough income to cover expenses this year. Stickel says quote:

“The economic crisis has dramatically worsened the precarious financial situation facing the media industry, our Company, and many of our advertising customers.”

To fix the problem he announced a 15 percent pay cut for himself and other top staff, and a five or 10 percent cut for other employees. Some part-time workers are also being laid-off, while other staff will be required to take four furlough days over the next few months.

‘Spokesman-Review’ to Freeze Wages, Seek Salary Cut

February 18, 2009

SPOKANE, Wash. The Spokesman-Review newspaper will freeze wages in 2009, and seek a 5 percent salary cut for all managers, non-union employees who earn more than $11 an hour, and, with their voluntary consent, all union employees.

Morris Communications to reduce worker wages

Wednesday, March 18, 2009

Morris Communications Co. announced today it will reduce employee wages by 5 to 10 percent effective April 1. The reductions will affect hourly and salaried employees.

Mr. Morris said the pay cuts are designed to preserve jobs in a difficult economic environment.

“The newspaper business is facing unprecedented challenges,” Mr. Morris said in a news release. “Just yesterday, after 126 continuous years of publishing, the Seattle Post-Intelligencer printed its last edition. Other newspapers have sought protection from creditors in bankruptcy court, severely cut back on their publishing schedules or abandoned the business entirely.

ADN announces staff, pay cuts

March 19th, 2009

The Daily News will cut its work force and reduce wages as part of a major nationwide effort by its owner, the McClatchy Co., to cut $110 million in expenses to offset declining advertising revenue, Patrick Doyle, the newspaper’s publisher, told employees in a letter Thursday.

This will be the third round of staff reductions at the newspaper in 10 months and is symptomatic of an industry-wide crisis threatening to sink newspapers across the country.

Staffing at the Daily News will drop by 45 people, or about 17 percent, through a combination of buyouts, layoffs and the elimination of vacant positions, Doyle said. Seven of the jobs eliminated were the result of new, more efficient production equipment.

The cuts will affect every department, from circulation to advertising, production and news.

The paper will also impose pay cuts ranging from 2.5 percent for lower-paid employees to 10 percent for the highest paid, Doyle said. Those making less than $25,000 a year will not see a reduction.

Koreans Take Pay Cuts to Stop Layoffs

March 3, 2009

Shinchang Electrics Co. offered union leaders a proposal that would reduce wages at the auto-parts company by 20% in exchange for no layoffs among its 810 workers this year. Eight days later, the union agreed.

The deal is one sign of the unusual way South Korea is grappling with the global economic crisis. Across the country, executives, salaried employees and hourly workers at companies from banks to shipbuilders are joining to slash wages and other costs with the goal of avoiding layoffs.

Singapore Press Reduces Pay, Halts Hiring Amid Slump

March 12 (Bloomberg) — Singapore Press Holdings Ltd., the city-state’s largest newspaper publisher, will cut wages and bonuses of 3,000 employees and freeze hiring to reduce costs amid the island’s deepest recession.

The lower salaries will result in a 20 percent drop in the overall wage bill, the company said today in a statement to the Singapore exchange, without giving a figure for savings. Hiring has been halted and profit-related bonuses will drop, it said.

Singapore’s government has said the economy may contract as much as 10 percent this year, prompting companies to fire staff, cut pay and conserve cash. Singapore Airlines Ltd. has offered more than 14,000 workers the option of as much as two years of unpaid leave, the Straits Times reported on March 11.

“We need to bring our costs down in the face of a weaker advertising market and uncertain business environment,” SPH Chief Executive Officer Alan Chan said in the statement, which was released after the close of trade. “It is imperative that we prepare for a longer-than-expected downturn.”

HP to cut staff wages by 5% as print revenue drops

23 February 2009
HP has said it is to slash most of its employees’ wages by 5% in a bid to combat declining revenues and reportedly save around 20,000 positions worldwide.

The cuts come as revenue within HP’s Imaging and Printing Group dropped 19% to $6.0bn (£4.19bn) in the first quarter to 31 January 2009.

Supplies revenue in the group was down 7%, and commercial hardware revenue and consumer hardware revenue dropped 34% and 37%, respectively.

The manufacturer recorded a 33% dip in printer unit shipments and commercial printer hardware units were down 39%. Operating profit for the group was $1.1bn – equivalent to 18.5% of revenue.

Con-Way to cut employees’ base wages by 5%

March 9, 2009

Con-way Inc. (CNW) said late Monday that it will cut base wages and salaries of executives and employees of Con-way Freight and Con-way Inc. by 5% and suspend certain 401(k) contributions in an effort to further reduce costs. The trucking company will also reduce the salaries of Chief Executive Douglas Stotlar and certain members of the senior leadership team by 10%. The measures, which are scheduled to be completed early in the second quarter, are expected to save the company between $100 million to $130 million in 2009. Con-Way had already cut 2,500 positions, suspended bonuses and reduced capital expenditure during the fourth quarter.

Sacramento Bee Staffers Approve Pay Cuts

March 6, 2009

Newspaper Guild members at The Sacramento Bee agreed Friday to take pay cuts of up to 6 percent to save jobs at the 152-year-old paper.

Members voted 65 percent to 35 percent to accept the deal, said Ed Fletcher, a reporter who heads the Guild’s local at the Bee.

Even with the pay cuts, Bee managers plan to cut 34 of the 268 Guild-covered positions in the editorial and advertising departments. Another 19 jobs would have been in jeopardy if the union had rejected the pay cuts.

IBM Cuts Jobs as It Seeks Stimulus Money

March 25, 2009

Reports of deep job cuts at International Business Machines (IBM) come at a potentially delicate time for the company—just as it is hoping to secure money from the federal stimulus package. The company will lay off as many as 5,000 U.S. workers in its Global Business Services unit, transferring some of the work they performed to India, according to media reports.

Any job transfers IBM may make to India would occur at a sensitive time, as the recession deepens and as the U.S. unemployment rate climbs. Moreover, the company would be cutting high-skill positions domestically as it and others jockey for new business from the $787 billion stimulus package Congress enacted in February—primarily to help create U.S. jobs.

Currently, 29% of IBM’s workforce is in the U.S., down from 35% in 2006. The fact that IBM has built up large workforces in such low-cost countries as India allows it to shift work abroad more easily, says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology. He says the current economic climate allows IBM to position itself as one of many firms squeezed by the recession and forced into layoffs. IBM “can now blame the layoffs on the economy, masking the reality that it is offshoring high-wage, high-tech jobs to low-cost countries,” says Hira.

But while offshoring has been on the rise for decades, the economics of the recession are creating a new political climate that makes such moves more controversial. That’s because, as IBM and others continue global restructuring, they’re working to secure pieces of the $787 billion stimulus measure enacted in February.

IBM is seeking a share of the $8 billion the U.S. plans to spend on high-speed rail and part of the $20 billion in the stimulus plan to digitize the U.S. health-care system. Palmisano was one of 13 executives who met with President Barack Obama in January in an appearance aimed at pressuring the House of Representatives to pass the economic stimulus bill. He joined the CEOs of Xerox (XRX), Motorola (MOT), and Google (GOOG).

Wage Deflation Tally

  • 9 Publishers
  • IBM
  • Hewlett-Packard
  • Microsoft
  • Con-way Freight
  • Shinchang Electrics

Wage deflation is setting in like wildfire in the publishing industry. Technology and trucking are affected as well. Budget cuts in California and other states are affecting teachers. Rest assured this is not inflationary news.

Mike “Mish” Shedlock
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