WASHINGTON -- — In December, Timothy Owner, a trombone player with the Virginia Symphony Orchestra, called his landlord to tell her he might have trouble paying rent around May. He and the orchestra's 53 other full-time members, many of whom are paid less than $30,000 a year, had agreed to a monthlong furlough.
The furlough, which ended Saturday, was rough, Owner said. But he and other musicians acknowledged that the alternative could have been worse. "We're less unhappy if this means the orchestra will survive," he said.
Across the country, workers' earnings are stagnating or, in some cases, declining. For many Americans, the setbacks are all the more troubling because they have lost so much wealth in recent months, with the value of their homes and retirement packages falling.
Employers big and small have resorted to slashing hours, and once-unthinkable wage cuts. In March, staffing agencies that work for Microsoft Corp. agreed to a 10% reduction in their billing rate. In April, hotel operators in New York City asked unionized waiters, housekeepers and bellhops to reopen their contract and accept wage cuts. State governments such as Indiana's have frozen pay, while others, including those in Maryland and California, have furloughed employees.
According to a recent Washington Post-ABC News poll, more than a third of Americans say they or someone in their household have had their hours or pay cut in the last few months. That's an increase from a similar poll conducted in February.
Wages in absolute terms -- not adjusted for inflation -- tend not to fall, even during economic downturns. In a study of the recession of the early 1990s, Yale economist Truman Bewley found that employers are loath to reduce wages because of the potential effect on morale and productivity. That's why wages are considered "sticky" -- they rarely slip.
So far, there's no evidence that cuts to compensation have reversed overall wage growth. But, as in past recessions, the growth is slowing rapidly. The Labor Department's employment cost index, which tracks wages, salaries and benefits, rose in the first quarter by the smallest amount since the index began in 1982.
That bodes ill for those workers trying to rebuild nest eggs depleted by the housing and stock market downturns. To boost their savings, they typically need faster income growth or lower spending, and, as Harvard University economist Lawrence Katz put it, "It is going to be a long time before we see sustained pay raises."
