Salaries stilted in troubled economy

02.09.09
By Nicholas Storie

As rounds of layoffs sweep across many U.S. firms, even employees who manage to retain their jobs may find themselves affected by the difficult economic climate.

An article on CNN Money describes how many companies are offering smaller raises to workers, freezing their salaries or imposing unpaid vacation days to save money.

"Companies are looking for every nickel and dime they can find just to survive and hang on," Ken Abosch of consultants Hewitt Associates told the news provider. "Compensation represents one of the top expense categories."

A number of major employers have publicly announced salary freezes in the past few months, as a strategy of keeping costs in line with revenues.

But how significant will the cutbacks be? According to the article, American employees can expect to see their salaries increase by approximately 3 percent, which is the lowest rise seen in the past 30 years.

Perhaps in anticipation of these measures, many consumers have been cutting back on spending and trying to put more money into savings.

December figures from the Federal Reserve reveal that consumer credit fell by 3.1 percent, due in part to concerns about the employment picture.

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Many companies are enacting salary freezes