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Wage Freeze Is the Beginning Of the End Of A Long Career

By: Steve Johnson

5/4/2009 - 12 Comments

Last week my wages were officially frozen for this year and perhaps many years to come.

As an employee, working in the blotted financial services industry that has yet to feel the true impact of the recession because of the governmental banking bailouts, my wages are now frozen. 

Here's a quote from our CEO;

“The decline in our markets since mid-2007 is unprecedented in our business experience.  To adjust to these difficult conditions, we have made prudent cost reductions across the Financial Services Division to protect our financial strength, to maintain our returns to shareholders, and most importantly, to preserve investments in the products, services, and support required to meet customer needs and ensure our continued market leadership.

As we approach our mid-summer performance and merit reviews for employees, I wanted to write to you to announce and explain our decision to extend a freeze on base salaries to all Financial Services employees

Obama says financial sector to shrink

Last week Obama said that the financial sector of the economy will make up a much smaller part of the economy in the future.  Obama eluded to the need to boost exports and production by saying, “We don't want every single college grad with mathematical aptitude to become a derivatives trader." And “some of the job-seekers who may normally have gone to the financial sector would shift to other areas of the economy, such as engineering.”

My fathers’ wage freeze

My father’s wages were frozen in the late 70’s and early 80’s for 8 years under President Reagan as the nation fought the last lengthy recession. It was not an easy time from what they tell me.  They also had 10-15% inflation, so they were losing income for many years.

It wasn’t until the mid 80’s before the economy turned the corner after Paul Volker increased interest rates to put an end of the massive inflation that devastated the economy.   During that eight year period, his job was on the chopping block many times but he managed to stay employed.

I’ve got maybe 2-3 years

To be completely honest with myself, I’ve maybe got 2-3 years before my current job is either eliminated or outsourced.  Now of course that doesn’t mean that I will not be working, but probably not for the financial service industry.  If I was a stock trader or portfolio manager I think I would already be out of work.

The primary reason I think I’ve got 2-3 years is because I work with financial service regulations and the Obama team is in the process of proposing sweeping regulation reforms to curb risk-taking on Wall Street and close the regulatory gaps that he thinks will prevent the kinds of excesses that led to the current deepening recession.

That means a lot of work for the businesses that provide tools and services to help manage the already massive amount of regulation in the financial services industry.  But the new regulations will only drive up the cost of banking and force more banks out of business.

The executives at my company realize that it will be impossible to increase our top line revenue as the financial services industry contracts and it will be very difficult to raise prices on existing customers.  Therefore, the only way to keep shareholders happy will be to decrease our bottom line costs and that means more outsourcing and lower wages.

I could manage to stay employed at my currency position for many years, but at some point the work load and the stress level is going to become a burden that I may not be willing to deal with.  The best part is that I know this is coming and have a few years to plan my next career move while getting my personal finances in better condition to deal with the transition. 

Let the chips fall

I still say the only way to rebuild the economy is to let the phony economy collapse and the government bailouts have done nothing but delay the inevitable.  The government should just get out of the way and let half the bank’s collapse instead of adding a massive debt burden to our children in the form of national debt. 

The government has proven time and again that they have no idea what they are doing.  

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