Broad retreats from generous salaries and benefits, once largely confined to the high-tech industry, are now appearing in other hard-hit sectors, including auto makers, airlines, media, hotels and certain financial services, the Wall Street Journal Online reports.
In the auto industry, Delphi Automotive Systems Corp., the largest parts maker, has already suspended its matching contributions to employees' 401(k) savings plans, the WSJ notes.
On Dec. 3, management told staff members the company was temporarily halting a program under which salaried employees got as much as $1,250 for each dependent attending a four-year college.
Meanwhile, rival parts maker Visteon Corp. says it will reduce 401(k) contributions for salaried workers, effective Jan. 1.
Ford Motor Co. announced that it will eliminate its 60-cents-per-dollar matching contributions to salaried staffers' 401(k) savings plans, suspend merit raises for about 2,200 senior executives and increase out-of-pocket costs for certain salaried employee and retiree health plans. It also is evaluating how deeply it should cut its 45,000-person salaried work force.
Executives at the Tribune Co., owner of the Chicago Tribune and a host of other newspapers and television stations, cited the worst advertising environment since the Depression when they told employees in November that the company will freeze nonunion wages and cut 140 senior managers' salaries 5 percent next year.
Starting pay for newly hired college graduates is sinking as well, especially in depressed portions of the financial-services and travel industries, says Robin Pinkley, a pay specialist and associate business professor at Southern Methodist University.
The trend seems bound to gain momentum. For instance, the new leader of UAL Corp., parent of United Airlines, is bent on cutting labor costs to stabilize the company's precarious finances. "Everything is on the table," says a spokesman for UAL.
All of these moves carry risks, the WSJ observes. In many workplaces with curbed pay, "management's view is that everybody ought to feel good to have a job," says Rick Beal, a Wyatt compensation-practice leader in San Francisco. "But people sitting there making less money aren't as productive because they're worried about losing their jobs."
Indeed, several high-tech companies that made pay cuts to prevent widespread layoffs eventually ending up cutting numerous jobs anyway. For instance, Last spring, Agilent Technologies Inc. announced an across-the-board pay cut of 10 percent starting May 1 and lasting until at least July 31. "We were hoping to avoid layoffs altogether," recalls Amy Flores, a spokeswoman for the Palo Alto, Calif., maker of test and measurement equipment spun off by Hewlett-Packard Co.
But in August, Agilent reported a big fiscal third-quarter loss and plans to eliminate 4,000 jobs, or 9 percent of its work force.
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