Wave of forced furloughs adds to wage deflation threat
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Layoffs are one source of wage deflation in the economy -- a decline in overall consumer income, which then can lead to a drop in retail sales and the threat of a downward spiral in prices.
Forced furloughs are another way to cut wages.
From Bloomberg News:
Gannett Co., the largest U.S. newspaper publisher, said it will make most of its U.S. employees, including Chief Executive Craig Dubow, take one week of unpaid leave this quarter to help save money. The McLean, Va.-based company is asking its union workers to participate in the unpaid-leave program, Dubow, 54, said today in a memo to employees. ‘A furlough program would be the fairest and least intrusive way to meet these fiscal challenges in the first quarter,’ Dubow, who had a salary of $1.2 million in 2007, said in the memo. ‘We sincerely hope this minimizes the need for any layoffs going forward.’
Announcements of forced furloughs -- the vacation you didn’t ask for -- have become widespread in recent months. The closing of California state offices two days a month is one of Gov. Arnold Schwarzenegger’s proposals to trim the state’s mammoth budget deficit.
A forced furlough is better than losing your job altogether. But with so many families living paycheck-to-paycheck, any reduction in income is likely to send more people over the financial edge.
-- Tom Petruno