The Case for Lower Wages
“With nearly one fifth of workers unemployed or under-employed, the best way to save jobs and boost productivity in the short term is for workers to accept lower wages.”
“In economics, prices fall with demand. Demand is down. The price for work—wages—should be down, too. But wages have a tendency to flat-line, not fall, in recessions. Workers refuse to work at lower pay and employers are afraid to lose good workers by demanding pay cuts. So instead of falling wages, you get falling employment.” Some have suggested trying new wage structures such as: “Hiring more part-time workers, off-shoring more jobs, and adding cheap positions. We haven’t tried ‘job-sharing,’ the German plan where government and employers split the check for workers to keep more people in their old jobs even when demand for their product falls.”
