More employers favoring pay cuts over pink slips

The long-held wisdom of wage stickiness is faltering in the midst of the recession as unemployment rises.

Wage stickiness holds that it's better to layoff some workers and preserve the wages of those who remain -- instead of cutting everyone's wages to ensure there are no layoffs.

Challenger, Gray & Christmas -- a leading outplacement consulting firm -- conducted a survey in January that found 1 in 4 employers favored wage freezes over cutting heads.

Now, Challenger's May update of the same survey finds that number has more than doubled in 5 months, according to The Wall Street Journal. This time around, more than half of the employers asked are now doing wage freezes or pay cuts instead of firing workers.

Clark has long believed that workplace morale is devastated when there's a pay cut or a salary freeze. But it just doesn't seem to be so any longer.

Perhaps it's because so many of us know someone who got laid off. Now we're happy to keep our jobs at 80 or 90 cents on the dollar. The alternative -- facing a lay off where our income dwindles to zero -- is just too bleak.

Of course, the penny-pincher's challenge to you at a time like this is make sure you can get by on less. That means reducing debt and building a cushion of savings.