Economy shrinking workers’ paychecks

More than one in three U.S. workers (39%) said that they had not received a raise or that their compensation had decreased as a result of the economic downturn, according to a new survey.

As part of their Tell It Now poll, ComPsych asked workers: “Has the economic downturn impacted your work? If so, in which area have you experienced the greatest impact?”

The highest number of workers (39%) said they haven’t received a raise or their compensation had actually decreased this year as a direct result of the economic downturn.

One in five workers (20%) reported increased conflict and stress among coworkers since the economic recession began.

Another 11% of workers said they’ve had to take on more work due to company layoffs. The added work has about 10% more workers reporting that they’re working more hours and unable to take as much vacation time as they usually do.

Just 20% of respondents said the economic downturn had no impact on their work.


We’d also like to know – Has the recession impacted your work? If so, which area has been impacted the most?

Economy shrinking workers’ paychecks

More laid-off workers returning to old employers

More laid-off employees are finding new work in their old jobs, according to the latest labor statistics that show almost a fifth of displaced employees return to the company they were laid off from.

About 18% of laid-off workers who found work were rehired by the same employer that issued their pink slip, up 5% from 2005, according to Right Management’s outplacement services. (CNN Money)

"In some instances, organizations are realizing that they may have cut too deep and are bringing people back in consulting roles or for project work," Melvin Scales, senior vice president for global solutions at Right Management, said in a statement.

"Former employees have the organizational knowledge and skills to jump back into roles quickly to get the job done," Scales said.

Scales recommends that employers consider redeploying workers as an alternative to layoffs. "It's a way of leveraging the skills and talents of existing employees and reassigning them to new roles within the organization. It provides an opportunity to retain valued talent, reduce the cost of turnover and leverage knowledge transfers within the company," he said. (CNN Money)

Over the past two years, the U.S. labor market has experienced widespread job cuts. In the first half of this year nearly 3.4 million jobs have been lost, on top of the 3.1 million lost in 2008.

More laid-off workers returning to old employers

Hiring, salary freezes to melt within the next year

A majority of U.S. employers plan to reverse some of the changes they’ve made to pay benefits and other HR programs, according to the latest survey results from Watson Wyatt.

The survey discovered that 62% of companies that made hiring freezes and 69% of companies that froze salaries plan to eliminate them within the next 12 months. Almost half (48%) of companies that reduced their employer 401(k)/403(b) matches also plan on reversing their decision within the next year.

Unfortunately, not all of the affected employer benefits will experience the same changes. One in five employers plan to keep salary reductions in place and 46% of employers do not plan on reversing the increases in the percentage that employees now pay for health care premiums.

"While more employers now feel the worst of the current downturn may be behind them, most are not expecting to go back to 'business as usual'," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment." (Yahoo! News)

In the next three to five years, companies expect staffing issues including difficulties in attracting and retaining skilled employees to extend long-term. They also expect staff sizes to be significantly smaller than pre-economic levels.

Compared with pre-economic crisis levels, the companies surveyed expect the following changes within the next three to five years:

• 45% foresee difficulty retaining critical-skill employees
• 41% expect increased difficulty attracting critical-skill employees
• 50% expect no increase to current salary levels
• 52% expect to see a decrease in staff sixes
• 76% expect no change in employer contributions to defined contribution plans (e.g., 401(k))

The survey also found that nearly one quarter (24%) of the companies surveyed believed their results have “bottomed out,” double the number of survey participants that said the same in April.

"Laying off workers and cutting back on pay and benefits are never easy decisions to make. Now, companies are now looking to the new economic landscape that lies ahead," said Laurie Bienstock, U.S. strategic rewards leader at Watson Wyatt. "The challenge for employers is to reassess short-term cost cuts and ensure they have the right workforce and resources in place to meet the organization's long-term financial goals." (Yahoo! News)

Hiring, salary freezes to melt within the next year

Would you work for free to keep your job?

While getting ready for work this morning this story on Good Morning America caught my attention:

About 40,000 people work for British Airways, which means they show up, do their jobs and get paid. But now, the airline is asking workers to do their jobs for up to a month without the "getting paid" part.

British Airways asks its employees to work without pay for up to one month.

In a letter to employees this week, British Airways said, "The airline fights for survival ... people will be able to opt for one-week blocks of unpaid leave or unpaid work."

It's a twist on sacrifices being made by employees around the world. In Connecticut, for instance, Courtney Bosch was given a one-week furlough from Kodak.

"In these times, I was comfortable with it, you know I can honestly say I was happy to still be employed," Bosch said.”

Watch the story here.

Furloughs are one thing, but asking employees to work for free for up to one month is quite another.

With nearly one in 10 U.S. workers without a job, some people are so afraid of joining the ranks of the unemployed that working for free sounds like the only choice they have.

Employers should still use caution when considering such a plan. ABC News workplace commentator Tory Johnson went on to say that expecting people to work for free is “absolutely a slippery slope” for employers.

More than a thousand employees have signed up for British Airway’s “no-pay plan.” The airlines also said there is no sense of intimidation or peer pressure among employees regarding the plan.

Is asking workers to go without pay simply a sign of the times or is there a better way for companies to save money? Would you work for free to keep your job?

Would you work for free to keep your job?

IRS answers more pressing COBRA questions

If you’re an employer struggling with COBRA questions, the Internal Revenue Service (IRS) has published added guidance on the federal premium subsidy to help answer some of the most common issues.

The new COBRA regulations, which were part of President Obama’s American Recovery and Reinvestment Act of 2009, contain specific changes to COBRA health benefit requirements that affect former employees, their employers and COBRA coverage providers.

Under the subsidy, involuntarily terminated employees must pay 35 percent of the COBRA premium and employers must front the money for the remaining 65 percent. After paying insurers directly, employers can then claim the payment as an offset against payroll tax liabilities using the updated Form 941.

The IRS published information earlier this year to answer major questions from the public regarding eligibility for the COBRA subsidy. Information has been added to the question-and-answer style document as new questions develop.

Last week, the IRS updated the online document with additional information including guidance on whether an employee who is a reservist would be eligible for the subsidy if called to active duty.

Q. Does an involuntary termination of employment occur if a member of a military Reserve unit or the National Guard who is employed by a civilian employer is called to active duty?

A. Yes. This is the case regardless of whether the civilian employer otherwise treats the employee’s absence as a termination of employment or a leave of absence.

The IRS also added information in response to questions regarding elected officials and employees hired for a limited period of time.

Q. In the case of an employee who is hired only for a limited period, such as a seasonal worker, or a teacher hired only for one school year, can the end of employment at the end of the period be considered an involuntary termination?

A. Yes. Under Notice 2009-27, Q&A-1, an involuntary termination may include the employer’s failure to renew a contract at the time the contract expires, if the employee was willing and able to execute a new contract providing terms and conditions similar to those in the expiring contract and to continue providing the services. Thus, if an employee hired for a limited period works to the end of the period, is willing and able to continue employment, and terminates employment because of the failure of the employer to offer additional work, an involuntary termination occurs for purposes of the premium subsidy.

For more answers to questions on COBRA continuation health coverage read the IRS FAQs for employers.

IRS answers more pressing COBRA questions

How employees aim to impress during tough times

As eight out of ten companies continue to cut labor costs by such means as reducing salaries, worker hours and job perks, many employees are taking extra steps to ensure their jobs aren’t part of those cuts.

A recent Randstad survey revealed exactly how employees aim to impress their bosses and improve their job security during times of economic unrest. While some employees are willing to put in the extra work to make a good impression, most won’t take it much farther than working some overtime.



Some key findings of the survey include:

• Only 47 percent are willing to work overtime to impress their boss in order to create more job security for themselves


• Only 37 percent reported a willingness to come in early or stay late to impress their bosses


• Less than half of employees (43 percent) think their boss is open to new ideas


• A mere 19 percent view their boss as their biggest advocate


• Despite all that these employees are willing to do to impress their boss, taking a pay cut is not one of them (4 percent)


• More women are willing to take on more work and responsibilities than men (11 percentage points more), 63 and 52 percent respectively

Mass layoffs and downsizing can have a severe impact on the morale of employees in surviving positions. The stress of watching their coworkers leave and working in an office with a growing number of empty cubicles may have some workers wondering if they’ll be the next to go.

Even companies that are economizing by eliminating low-cost perks like coffee cups and plastic utensils can be seriously damaging employee morale. While finding ways to save money, companies may be unintentionally pushing employees out the door.

“Employees’ professional development and morale should always be a priority for employers, and especially in an economic slowdown when employees may feel additional burdens,” said Eric Buntin, managing director, marketing and operations for Randstad USA.

“A healthy employee-employer relationship greatly contributes to an overall positive workplace attitude. Employers who connect with their employees create an environment where workers are more engaged in their jobs. Ultimately, this increases retention and productivity, both of which tie directly to a company’s financial success.”

As an employee, have you been doing anything differently to impress your boss since the recession began? As an employer, do you notice your employees putting in any extra effort to create better job security for themselves?

Please leave a comment and tell us all about it.

How employees aim to impress during tough times

HR survey shows more slashing salaries, less layoffs

Eight out of ten companies continue to cut labor costs, most by reducing salaries, worker hours, perks, and using furlough or forced vacations, according to a survey released yesterday by Challenger, Gray and Christmas.

According to the report, more than half (52%) of human resources executives surveyed in May said their companies had decided to slash or freeze pay, more than double the 27% of companies using the same cost-cutting techniques in January.

Executives listed as many as 13 different measures they’re currently using to cut expenses, but they’re not necessarily using these techniques in place of layoffs. Survey results revealed that the companies which had gone through layoffs were more likely to use cost-cutting methods than companies that had not.

Slashing benefits, pay, and perks allows companies to lower their labor costs without cutting workers. Layoffs can create a major challenge when the economy begins to recover and employers are short on trained workers. "It is a lot easier to restore compensation and benefits that it is to rehire and retrain workers when the economy improves," says John Challenger, chief executive of Challenger, Gray and Christmas. (U.S. News & World Report)

The percentage of employers making permanent cuts fell since the beginning of the year, from 56% in January to 43% in May, according to the survey. Altogether, 86% of executives said their companies were implementing cost-cutting measures, which is slightly better than in January when 92% of organizations were slashing costs.

Has your company been able to avoid layoffs by implementing other cost-cutting measures, such as salary reductions or freezes? Leave a comment and let us know what worked for your organization.

HR survey shows more slashing salaries, less layoffs

Lonely cubicle graveyards killing employee morale

Since the recession began, companies have been forced to make difficult decisions, including mass layoffs and downsizing. Among a list of other negative repercussions, those difficult business decisions are transforming once bustling gray mazes full of busy employees into barren “cubicle graveyards.”

Workers may now have more room to stretch out, but the ever-growing emptiness is having a harmful effect on remaining employees’ morale.

During the past year, the average square foot per office occupant has risen to 435 square feet, up from 415 square feet in 2008, according to International Facility Management Association (IFMA) in a recent MSNBC article.

Compared to last year, there are fewer people working in a greater amount of space. A spokesperson for the IFMA attributes the growing amount of empty space to the economic downturn and mass layoffs our country is experiencing.

While the sight of empty cubicles can be depressing to remaining employees, many organizations aren’t doing much to improve the situation.

"To some extent, companies are waiting until things stabilize so they can look at their options," says Ilene Gochman, an organization effectiveness expert with consulting firm Watson Wyatt. "People are not sure they have the right size organization yet. They don’t want to move people and then have to move them again."

Unfortunately, it’s not that easy on those left behind.

"Emotionally, workers look around the empty office, and it brings the depth of the economic crisis home for them in a personal way," says Leslie Seppinni, a clinical psychologist. "They wonder: 'Am I next?' and a tremendous amount of anxiety and depression builds as they try to figure out what steps to take next." (MSNBC)

Other workplace experts featured in the article offered some tips for offices dealing with cubicle graveyards:

• If you’re an employee upset over the empty office landscape, speak up. Some managers may be unaware of how the empty cubes are affecting morale and usually all it takes is a simple conversation to bring it to their attention.


• Rearrange the office and test different layouts. Take a look at how employees are using the space they already have and ask, “Do they need more conference rooms or more collaboration space, such as informal meeting areas?”


• Let in natural light. A simple way to immediately improve the mood around the office is to allow more natural light flow through windows. Disassemble cubicles and give more employees a window view. Set up Wi-Fi in the office so workers can become more mobile and collaborate easier.

Lonely cubicle graveyards killing employee morale