Amid the worst Chicago employment market in 26 years, a surprising number of job seekers are unwilling to take significant pay cuts, according to a new survey.
About 24 percent of 500 unemployed Chicagoans surveyed by staffing and recruiting firm LaSalle Network said they were willing to take a 5 percent salary reduction at most in their next job.
That’s a pipe dream, said Tom Gimbel, CEO of LaSalle.
“People are going to have to realize, in order to return to the workforce, they are going to have to take a significant salary cut,” he said. “Some people are slow to acknowledge that.”
Even as job cuts have slowed, unemployment—at 10.7 percent in July—has remained close to levels not seen since 1983. On top of that, competition among applicants for the limited number of openings is mounting, and pay freezes and cuts are popping up across a range of industries.
The survey showed that some are taking heed: About 59 percent said they were willing to take a cut of up to 20 percent, and about 17 percent said they would take a salary offer that’s less than 40 percent of their original pay.
As companies are forced to lower expenses, the cutbacks are increasingly extending to compensation and raising the specter of a long, arduous recovery.
Salary increases in Chicago were in line with the national average, which dropped below 3 percent for the first time since Lincolnshire, Illinois-based Hewitt Associates began tracking pay data in 1976. For next year, raises are expected to remain below that level in Chicago and nationwide.
Hewitt’s survey also showed that companies dedicated the largest portion of their payrolls to employee bonuses. The portion of companies’ compensation budgets devoted to performance-based bonuses rose to about 12 percent of payroll on average for some salaried workers, up from about 6 percent a decade ago.
Gimbel said that in the last 10 years, salaries—like home and stock prices—have risen out of proportion with historic levels. That could mean years of incremental pay increases.
“We are moving more toward the traditional days of the 1950s, ’60s and ’70s,” he said.
LaSalle Network’s survey, conducted July 24 to August 1, also showed 40 percent of those looking for work expected to land a job in the next three months. That’s less than the 70 percent who said the same in a survey completed May 11-22.
Twenty-eight percent said they expected their job search to take up to six months, while 32 percent said it would take up to a year.
Filed by Monée Fields-White of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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