Short-sighted Frugality? Employers Who Rein in Compensation Too Much Could Pay a Price Later

As economic malaise bleeds into another New Year, employers are making hard-nosed decisions about benefits and compensation. That means for many in the nation's workforce, compensation remains flat, health care premiums are up, the 401(k) match has disappeared and bonuses are smaller or nonexistent. The result is not hard to guess. When workers feel that "the company is doing fine, but somehow I'm doing worse, at some point there has to be some dissatisfaction with that. It's not sustainable," suggests Wharton management professor Adam Cobb, who studies labor, worker benefits and income inequality. "I think there's a general feeling of: This system is rigged and not in my favor."
A recent survey of 2,500 workers by career website Glassdoor.com found that 17% of workers said employers had cut or eliminated bonuses and 15% had slashed perks such as commuter subsidies. About one quarter said their companies were in a hiring freeze, and about half reported that employers had cut pay or laid off staff in the last six months. January, once warmly anticipated for a year-end bonus, may be remembered in 2012 as the month that year-end gifts -- along with other perks, pay and benefits -- disappeared.
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