Is there a breaking point for business? There certainly is for workers…

In the past two decades workers have constantly been pushed to do more with fewer resources and now it seems all too commonly for less pay. While many have lost their jobs, others have experienced pay cuts and demotions while companies attempt to balance their books in a bad economy. My question is whether there is a breaking point. At what point do businesses stop making corrections, realizing that the immediate cuts to change the cost of doing business are actually hurting the bottom line?

An example of some of the stresses experienced by workers is provided in the NYT article about a pilot whose wages were cut in half when he was forced into a lower position with his airline. This is far better than being out of a job, however this results in a variety of negative ramifications to the worker and his well being. Here is a link to the article: http://www.nytimes.com/2009/10/14/business/economy/14income.html?th=&adxnnl=1&emc=th&adxnnlx=1255521777-AqOMsLK3sCDCBUfOCqSfzA

The effects of such a change include: the demeaning aspects of being demoted (even if to save the job); anger (related to being demoted for no reason, having to work the same hours and probably similar tasks, loss of status); irritability and ‘flying off the handle’; constant worry about meeting financial responsibilities; working more than one job to make up for the loss; among a variety of other things. The work-family interface takes a hit as well, with all family members experiencing greater pressure and need to adapt to this external stressor.

Several other employers are cited in the article as following the same path, either cutting pay or decreasing employee work hours. The Bureau of Labor Statistics indicates that weekly pay of production workers (80% of US jobs) has decreased for the past 9 months. This decline is similar only to declines from the Great Depression.

Another form of pay cut is to increase workload for a job, which has also become increasingly common. Of course this change is not measurable in weekly pay of workers. I’m not aware of any systems to collect this information. This is an all too common experience: not filling open positions or cutting or laying off workers and redistributing work among those left behind. This experience is perhaps measured partly in scales of psychological demand, although I do not think that this is a precise measure of the practice. We do know that psychological demand, a common workplace stressor, has negative health effects, including increasing risk of depression and cardiovascular disease. I suspect in some types of work the risk of employee injury increases as well.

Another problem with the practice is that individuals often are afraid to speak up about these negative changes for fear they will be let go. Individuals tend to meet the increased needs they face, in an effort to help out, and to be perceived as someone willing to pitch in at the time of crisis. The problem is that the crisis never ends. How long do employees continue to work with increased demands or reduced pay or hours? That is the question…

I’ll have to look and see if the Bureau of Labor Statistics keeps any data on this problem, which is perhaps new, but all too common in our current economic reality.