pay cuts
Rising Wages Amid the Global Recssion
It's tough finding a job in this economy. There have already been 3.6 million job losses since the start of the recession. So would you believe that hourly wages have risen almost 4 percent in the past year?
How can this be? According to an economic theory called "adverse selection," employers are better off increasing wages rather than cutting them. Cutting pay often prompts the most productive workers to look for employment elsewhere, leaving the company with the laziest, most unproductive workers. Higher wages are also good for employee morale. This same wage phenomenon occurred during the Great Depression.
Not all companies are subscribing to "adverse selection" theory — Hewlett-Packard and FedEx are planning to cut worker pay. But as the saying goes, a happy worker is a productive worker, and as the New Yorker notes, productivity is key to a healthy economy.
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