OC Register cutting wages

FishbowlLA just reported that the Orange County Register, owned by Freedom Communications, plans to institute a 5-percent wage cut companywide.

*Updated 6/30: A few more details on the wage cuts from the OC Register:

Workers at the Orange County Register will get a 5% cut in pay effective July 13 as part of an across-the-board reduction being implemented by its parent company, Irvine-based Freedom Communications Inc. ...

Freedom is laboring under $700 million in debt, which it took on in 2004 to pay members of the family-owned company who wanted to cash in their shares.

Over the last couple of years, Freedom has implemented a range of cuts including voluntary severance, layoffs and ending the company’s matching contribution to the 401-K plan. During the second quarter, all employees had to take a five-day unpaid furlough.

Burl Osborne, Freedom’s incoming interim chief executive, said the executive team considered and rejected other actions, including additional furloughs in the last two quarters of the year and further layoffs.

“There is no best way,” he said. “This, I believe, is the least worst way. No one is enjoying this.”

Mercury News workers to consider austerity contract

The union representing employees at the San Jose Mercury News has negotiated a contract that offers major concessions to save money.

The contract, which will be voted on by secret ballot on Monday, includes a 7-percent pay cut (plus another two percent next year), five days of unpaid furlough, higher health care costs and a reduction in vacation accrual. The contract also allows owner MediaNews Group to consolidate copy desk functions with the company's Bay Area News Group (BANG), which includes the Oakland Tribune and Contra Costa Times.

From the Media Workers Guild:

As you know, it is a difficult period in the newspaper industry and the country. This contract settlement represents our best efforts at protecting workers, jobs and quality at the Mercury News. It is not something that we recommend lightly...

The folks at the SF Weekly aren't too impressed.

Krugman: Wage cuts could lead to unemployment

The temptation to cut wages in a downturn might save jobs at an individual company, but when everyone starts doing it unemployment is likely to rise, economist Paul Krugman argues in the New York Times. Further, he says shrinking incomes act as an anchor on an already slow moving economy, since our bills won't drop to keep up with our lower wages.

Krugman writes:

Here’s how the paradox works. Suppose that workers at the XYZ Corporation accept a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cuts raise employment — which they do at the level of the individual employer.

But if everyone takes a pay cut, nobody gains a competitive advantage. So there’s no benefit to the economy from lower wages. Meanwhile, the fall in wages can worsen the economy’s problems on other fronts.

My question, does this argument hold true for individual sectors in the economy... say, newspapers? If every major newspaper publisher cuts wages, does that negate the benefit to individual companies?

Buyouts and wage cuts in Syracuse

The Syracuse Post-Standard, which is part of the Newhouse chain, is offering a generous buyout plan to eligible employees and cutting the wages for everyone who stays at the paper. From the paper's own story:

Editor and Publisher Stephen A. Rogers, who announced the measures in staff meetings, offered a buyout of a year's pay to employees with at least seven years of full-time experience. For all remaining employees, pay will be reduced July 1 through the end of the year by a range of 5 to 12 percent, depending on pay levels. Highest-salaried people will get the steepest cuts. In addition, all employees will begin to contribute 25 percent of their health care coverage costs.

The cuts come on the heels of 10 days of involuntary furlough announced last month.

As the NYT goes...

The New York Times Co. has reached a tentative agreement with the union at the New York Times to cut worker pay by 5 percent. This follows the wage cut/furlough instituted for non-union employees last month.

(via Romenesko)