Companies cutting pay as a last resort to keep workers employed

As the coronavirus outbreak spreads, many workers’ paychecks are shrinking.

A growing number of companies are trying to spread the financial pain as they contend with government-ordered lockdowns, dwindling production orders and closed stores, restaurants and plants, The Wall Street Journal reports.

They reason that keeping on some workers at reduced pay can ease fixed costs and stave off greater job losses—while keeping talent at the ready if the economy and hiring market recover sooner than later. For some, it is a last resort to keep a skeleton crew employed while others are furloughed or laid off. 

Some companies have specified they would pay workers back for the lost pay: General Motors Co. said it would temporarily trim 69,000 workers’ salaries by 20%, then repay the money with interest by March 15, 2021. A GM spokesman said the pay cuts for salaried workers, as opposed to layoffs, “will ensure that we can regain our momentum as quickly as possible after this crisis is over.”

Like many companies cutting workers’ pay, GM, Occidental, Cheesecake Factory and Steelcase are all cutting top executives’ compensation as well. So have many major airlines and hotel chains and retailers such as Macy’s. Read the full story.