But that's the thing. They are still "doing their jobs". It's almost like the company is missing out on "missed growth". Perhaps nothing declines, it's just they lost growth because employees stopped giving 110%.
That's the thing though. Even if you fire the old timers, or the 40 year olds, even the new grad is going to stop giving a **** when the raise is 0%. So sure, you can keep firing employees when they hit 30 years old I guess, but everyone stops giving a **** when the raise is 0%. You lose out on missed growth.
Zero is so much worse than 0.25%.
0.25% on $120,000 is $300.
0.5% on $120,000 is $600.
You really think a person won't continue to work hard to keep their job?
And people think I'm in denial. Your boss comes up to you and says either take a $20k cut or leave the company, my advice is take the cut. You won't have a job if you don't. This is still years down the road though.
You're all talking about the concept of money illusion.
http://webs.wofford.edu/pechwj/money illusion.pdf
Money illusion, we suggest, arises in large part because it is considerably easier and more natural to think in nominal rather than in real terms. This tendency, we suspect, is likely to persist despite economists’ attempts to educate the public (e.g., Fisher [1928])
Long story short, if you can find someone where less is still a better deal and can structure their lives around less, then they win. Yes, overall there is a cut to wages, but to the individual, it'll just be a continual pressure cooker situation as there's always going to be someone else willing to work for less. There is no industry that does not have this feature with labor at some point. That's why I have a problem with
@stoichiometrist pushing Computer Science so hard with people that may or may not have the talent and motivation to do the work even in uncomfortable situations, because they have the same labor excess problem. Like everything else, starting conditions don't equal the conditions of longevity.
The game is to lead you from being hungry and working for less, to a situation where you have assets that you ironically have to work even harder to defend (so even as wages go flat, you'll be even more productive to sustain the assets you have), to the endgame of musical chairs where at the point you need a salary most of all (the twilight years), the company finds some way to gray hair get rid of you. In Walgreens, that's why the percentage of RxS's retiring with anything is so, so low (from the numbers up to the inverted acquisition. What Walgreens does with their RxS/DM's is to defer compensation until years 15-20 while paying them an RxM's salary and with a little bit more of a bonus. However, have two years where you don't make your numbers or place at the bottom 10% of the RxS performance, get fired with nothing to show for it. For that sort of rat race, Walgreens wins overall as all of their RxS staff work really hard, but know that they only have to pay out in the small minority of cases who continually are the winners. In some ways, working as a pharmacist is a better deal as you get your stuff upfront without having to work for a promise.
You're now in the second group, where you have assets that you have to defend, so you'll take a lot of indignity because you really don't have a better deal elsewhere if you restart. Wait 10 years, and you'll understand what factory workers, IT workers before the first tech crash (~2001), and basically everyone who works in a field where productivity can be directly measured and HR has replacements. In such situations, you get rid of >50 year olds who are top of their salary classes and hire 20 year olds who are willing to be more productive for less without the issues of health, vacation, and benefits.
Yes, you will eat those paycuts (although we're all hoping that deflation is the future), and yes, you will eventually be discarded by your companies. But on the other hand, unlike the last generation, you know this is coming, so start figuring out how to diversify your earnings now (or create enough assets that you can live off them indefinitely).
