With no revenue coming in and government relief frequently tied up in red tape, businesses across America are weighing bleak options to stay afloat, and shedding costs wherever possible — from slashing pay to cutting staff or paring down benefits.
Fiat Chrysler, Ford and GM all told their employees that they would temporarily cut 20 percent of their salaries. The auction house Sotheby’s announced pay cuts in early April. Even the hospital industry is cutting salaries. Pullman Regional Hospital in Washington told its staff that their salaries will be cut by 25 percent over the next 60 days to make $1 million in cash available immediately for operations.
Prior to the coronavirus shutdowns, unemployment had been at a 50-year low, forcing many companies to offer better perks to attract and retain talent in a job seeker's market. Now, those benefits — such as higher contributions to employee 401 accounts — are first on the chopping block as companies try to cut costs and minimize layoffs.
During the 2008 financial crisis, mainly smaller companies reduced or suspended 401 contributions, Thompson said. By July 2009, Fidelity found only 8 percent of its companies had suspended their matches. For furloughed workers, who are temporarily unemployed with reduced pay, life seems even more precarious. Retail associate Wendy, who asked that her last name not be used, is one of roughly 7,000 workers furloughed by Michael Kors in response to the pandemic. Wendy will only get a fraction of what her co-workers will receive because her pay is complicated by her military service. She’s now deciding between waiting for unemployment, finding a new job, or waiting to return to work.
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