Over 300 business people, labor leaders, business consultants, and counselors of unemployed people were interviewed during the recession of the early 1990’s in order to learn why wages and salaries were declining in only a few ﬁrms. Employers believed that cutting pay would hurt employee morale, leading to lower productivity and current or future diﬀiculties with hiring and retention. There were few indications that unemployed people had excessive wage expectations. On the contrary, many unemployed were too flexible and found themselves rejected by ﬁrms as overqualiﬁed.
Bewley, Truman F., "Why Not Cut Pay?" (1997). Cowles Foundation Discussion Papers. 1415.