Tuesday, July 27, 2010

In periods of economic distress, can workers get back to their old salary levels?

A New York times columnist talked about the loss of wages today, and the length of time it takes people to get back to their former earnings levels, and the enormous loss of wealth in the meantime.

I took pay cuts twice in my career. In 1981, I was making about $36000 as a systems analyst in Dallas for a Blue Cross / Blue Shield consortium, which was falling apart. I resigned before the end came, and took a salary of $28000 at Chilton as a programmer/analyst with COBOL and learning ALC (in a DATACOM/DB/DC environment). By 1988, when the company was being sold to TRW and I was leaving again to go back East, my salary had risen to $43000. I took a job at $40000 in Washington DC, got no raise when I moved with a lateral sale of a small consulting business to Lewin/ICF, and then took a $40000 at USLICO, which would eventually morph to ReliaStar and then ING. When I got laid off and forced to “retire” at the end of 2001 at age 58, my salary was about $72000 (including the effect of a transfer to Minneapolis). With bonuses, somehow, unemployment based my benefits on it’s being $83000 in Minnesota.

Salary compounding with annual raises can recover an income level pretty quickly. The problem is getting the stability it needs to get the raises.

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