As an employer wants to reduce the production cost during the economic recession, he/she could
choose to (1) lay off some workers without changing wages or (2) keep all workers but cut wages for
all. Which method would you choose? Why?
Additional information:
•
"Masters, provide your slaves with what is right and fair, because you know that you also have a
Master in heaven" (Colossians 4:1, NIV).
•
"Look at the birds of the [a]air, that they do not sow, nor reap nor gather into barns, and yet your
heavenly Father feeds them. Are you not worth much more than they?" (Matthew 6:26, NIV).
•
"He who oppresses the poor taunts his Maker, But he who is gracious to the needy honors Him"
(Proverbs 14:31, NIV).
•
"…Encouraged by Wall Street investors, many companies over the past decade have slashed their
full-time workforces, reduced benefits and demanded more output from the remaining
workers…Many workers sense that they’re merely expendable components of an impersonal
production process involving the manipulation of employees for the sole objectives of the
maximization of profit and shareholder value.” — John Stapleford, Bulls, Bears, and Golden
Calves. IVP Academic (p. 104)
I’ll must be honest; this week’s question is a difficult one to answer, and at first, I thought I knew the
answer. The more I thought about it the harder it became to establish a definitive reply. Also, the verses
given seem to be pushing our decision in one direction over the other. On one hand, most would
probably say that it is best to just lay off workers and keep all the other worker’s pay the same. This is
what seems to be common in the corporate world and we often hear of this happening. The pay cut
option tends to be less common, although during the pandemic it has become more common. The pay
cut route tends to be seen as the more humane route here. In this case everyone in the company takes a
hit and loses a small part of their salaries instead of a few losing 100% of it. “Corporations can save the
same sum of money via pay-cuts that they would have done by laying off people. Only the human cost is
less. There are no devastated families, no suicides, and no foreclosures and so on” (Pay Cuts vs. Lay-Offs,
n.d.). We also see that “Finding alternatives to a layoff can foster greater loyalty, which pays off for
companies in the long run” (Alternatives to Employee Layoffs: Salary Reductions | The Hartford, n.d.). In
an economy where cuts to jobs are happening all around the country this, in fact, may be the best
option, and it tends to alleviate the situation I will talk about in the next paragraph.
The issue that arises with pay-cuts is that it tends to retain the worst employees. The good employees
tend to look elsewhere for jobs that are willing to pay them more, while the worst employees cannot
find other jobs willing to hire them, so you are stuck with them. In a down turning economy across the
board this is less likely to happen. But if this were not the case, the question becomes, wouldn’t it be
more beneficial for a company to retain the best employees by keeping their salaries the same and
laying off those individuals who are not pulling their weight? Also, pay cuts tend to demotivate
employees while layoffs tend to get those who are left behind to work harder due to fear. Now, I am not
saying we are to scare employees into working harder, but it is a normal psychological reaction that is
had.
In either situation, one does not want to have to make this type of decision, but if the time does come,
one should do their due diligence and weight all the options of the situation at hand before a decision
should be made.
References
Alternatives to Employee Layoffs: Salary Reductions | The Hartford. (n.d.). Www.thehartford.com.
Retrieved February 11, 2021, from https://www.thehartford.com/business-
insurance/strategy/alternatives-layoffs/reducing-employee-pay
Pay Cuts vs. Lay-Offs. (n.d.). Www.managementstudyguide.com. Retrieved February 11, 2021, from
https://www.managementstudyguide.com/pay-cuts-vs-lay-offs.htm
