Recession finds even those with jobs losing pay



These workers aren't counted in the unemployment rate, which hit 8.1 percent in February. They're not eligible for federal benefits that provide a safety net for the jobless. Yet their pain is real, and their reduced spending is a drag on the economy.


"I won't be able to buy the groceries I need to buy to make sure my family can eat until the end of the month," said Rhonda Wagner, a 52-year-old California state employee who has been dealing with less pay due to state-imposed leave.

Before her pay cut, Wagner said her paycheck from the Department of Motor Vehicles was barely enough for her to pay her bills. Now, she says she's facing foreclosure and struggling to pay for utilities.

"I will have to rob Peter to pay Paul," she said. "We're expected to work, even though we're not getting paid."





As the recession cuts demand for goods and services, companies that don't shed workers outright must squeeze savings from the work force that remains. They typically do so by cutting hours. And as a recession persists, rising competition for jobs tends to shave wages and benefits. Companies lose any incentive to boost pay.

"Other guys are now competing with you for that job, and they're willing to take that same job for less money," Lazear said. "While it might not happen in any given month, over the next three years, wage growth will be lower than it would have been had we not had a recession."


