Frozen Wages and CA Unemployment

From EDD: California's Unemployment Rate Increases To 8.4 Percent

California's unemployment rate was 8.4 percent in November, and nonfarm payroll jobs declined by 41,700 during the month, according to data released today by EDD. The U.S. unemployment rate also increased by 0.2 percentage point in November, to reach 6.7 percent.

In October, the state's unemployment rate was 8.2 percent, and in November 2007, the unemployment rate was 5.7 percent. The unemployment rate is derived from a federal survey1 of 5,500 California households.

In a year-over-year comparison (November 2007 to November 2008), nonfarm payroll employment in California decreased by 136,000 jobs (down 0.9 percent).

In related data, the EDD reported that there were 593,670 people receiving regular unemployment insurance benefits during the November survey week. This compares with 527,918 last month and 302,550 last year. At the same time, new claims for unemployment insurance were 80,920 in November 2008, compared with 67,491 in October and 39,531 in November of last year.

Governor's Open Letter to All State Employees Regarding Furloughs and Layoffs

In the letter, California Governor Schwarzenegger Stated:

Our state's fiscal crisis has worsened dramatically in the past few weeks without legislative action to address our budget crisis. We face an approximately $15 billion General Fund deficit this fiscal year, and that number is estimated to grow to $42 billion over the next 18 months. Without immediate action, the state will not have enough cash to meet its obligations starting in February.

Furloughs: Beginning February 1, 2009, and lasting through June 30, 2010, rank-and-file employees will be furloughed two days per month. For employees who are not part of a bargaining unit (i.e., exempt appointees, career executive assignment employees, supervisors and managers), we will implement an equivalent furlough or salary reduction plan effective February 1, 2009. We intend to implement these measures in a way that does not affect your retirement.

Layoffs: I have instructed the Department of Personnel Administration to work with state agencies to initiate layoffs, reductions and other efficiencies to achieve General Fund savings of up to 10 percent starting February 1, 2009. This is in addition to reductions that I have already ordered for the current fiscal year. Employees in General Fund positions in the bottom 20 percent of seniority will receive "surplus" notices within the next month. Employees who receive these notices will not necessarily be laid off, and they will have hiring preference for non-General Fund positions for which they qualify.

From Calculated Risk: Frozen Wages
In addition to more part time workers, freezing wages is becoming a common theme.

According to the employment consulting firm Watson Wyatt, 11 percent of all the companies it recently surveyed either already had cut wages or planned to do so over the next 12 months, and 10 percent either have reduced their employer 401(k) match or planned to do so. Among many corporations and organizations, FedEx has one of the toughest plan:

Base salary decreases, effective January 1, 2009:

• 20% reduction for FedEx Corp. CEO Frederick W. Smith
• 7.5%-10.0% reduction for other senior FedEx executives
• 5.0% reduction for remaining U.S. salaried exempt personnel
  
• Elimination of calendar 2009 merit-based salary increases for U.S. salaried exempt personnel
  
• Suspension of 401(k) company matching contributions for a minimum of one year, effective February 1, 2009