by Bill McBride on 1/10/2011 11:22:00 PM
Monday, January 10, 2011
From Sudeep Reddy at the WSJ: Downturn's Ugly Trademark: Steep, Lasting Drop in Wages
Between 2007 and 2009, more than half the full-time workers who lost jobs that they had held for at least three years and then found new full-time work by early last year reported wage declines, according to the Labor Department. Thirty-six percent reported the new job paid at least 20% less than the one they lost.Even for those who can find work, the impact of the great recession lingers ...
The severity of the latest downturn makes it likely that many of the unemployed who get rehired will take wage cuts, and that it will be years, if ever, before many of their wages return to pre-recession levels, says Columbia University labor economist Till von Wachter. "The deeper the recession, the lower the wage you're going to get in the next job and the lower the quality of your next job," he says.
Note: Wages are typically sticky downward for those workers who do not lose their jobs - but for those who lose their jobs, wages can fall sharply when they eventually find new work (this happened in the early '80s too).
Posted by Bill McBride on 1/10/2011 11:22:00 PM