Workers open to salary cuts; employers hesitant — study
NEW YORK, UNITED STATES — A study by the National Bureau of Economic Research indicates a significant disparity between workers’ willingness to accept salary reductions and companies offering this option before layoffs.
According to a survey of 30,500 individuals, 60% were open to a 5% pay cut to retain their job. More than half would consider a 10% reduction, while nearly a third would agree to a 25% cut.
However, just 3% reported their employers presenting such an option.
Pawel Krolikowski, co-author of the study and senior research economist at the Federal Reserve Bank of Cleveland, said past studies suggested that workers might reject pay cuts leading to employers not opening the topic to their employees.
This trend was consistent across genders, education levels, and work experiences. However, Black employees were only 12% more inclined to accept pay cuts, possibly due to higher poverty rates affecting their financial sensitivity to job losses.
The study also suggests that up to 28% of layoffs could be averted by negotiating agreeable salary reductions. Krolikowski and his research partner Steven Davis wrote that such arrangements would benefit the company by cutting costs and the employees by ensuring their job security.
