Tuesday, August 16, 2011

Sticky wages? Not in chemistry.

I still look at my paystub, even though I know exactly what
will be printed on it... Photo credit: gcccd.edu
There's some discussion in the political/economics blogosphere about the concept of "sticky wages." This is the observation that wages do not tend to fall as fast as the employment market might indicate; for example, employers tend to balk at lowering wages in response to recessions for a variety of reasons (contracts, long-term morale, etc.) even though the labor market might bear the decrease. Tyler Cowen, a libertarian economics professor at George Mason has posited the question from the other side: "Why don’t the unemployed lower their wages to find a job?  The more tragic you think unemployment is, the greater the puzzle..."

While I think there is plenty of evidence elsewhere for the "sticky wages" observation, it's been my observation that there is no such issue in the field of industrial chemistry. The 2010 ACS salary survey registered a median salary drop of 3.2% in 2009.  It seems like even before the mass outsourcing of positions to East/South Asia, there were plenty of CROs popping up who were willing to lower their offered wages. (I suppose, though, that the fact that new firms were the ones to lower their wages is potential evidence for 'sticky wages.') In addition, I see no evidence that either entry-level chemists or mid-career professionals have not been willing to lower their wages to take on positions at companies that pay less than the industry average.

Readers, what do you think? Know any chemists who have been staying unemployed to hold out for a higher wage?


  1. Just the opposite, actually. I know many chemists (and chemical engineers) that would jump at the opportunity to work, even if they have to take a 50% pay cut. The problem is that potential employers look at their most recent salary and just assume that they will either not accept a lower salary or that they'll only take the job temporarily (until something better comes along). The latter may be true to a certain extent, but depending on the region in which you wish to work, lifestyle may be more important than a big pay check.

    Employers should let the new recruit weigh in on the decision of whether or not a lower salary is acceptable, but that's rarely the case.

  2. You could get pretty deep into the weeds with this, but I assume that your potential employers are assuming 'sticky wages.' Who knows?

  3. At this university, they froze all the salaries of postdocs since 2008 (but not for anyone else). While my paycheck goes through the payroll churn, the money is direct from an NIH fellowship. I had to fight in order to get them to give me my congressionally mandated NIH stipend each year even though it had zero impact on any university budget.

    The UCs furloughed people, but I can't imagine a furloughed researcher does any less work. They likely just get paid for 80% of the time they are supposed to be in the lab.

    I bet there are tons of other examples outside academia where people get screwed out of money one way or another, without a change in title.

  4. Don't forget the German economy, which during the economic crisis dropped EVERYONE'S wages and didn't lay anyone off. (Facts might not be 100% on this, but the gist is about right)

  5. I'd say the trick here is to keep the discussion of salary as late in the interview process as possible. Employers do think you won't take a cut in salary, or think you'll be unsettled and possibly a disruptive influence if you think yourself underpaid.

    You should think about what the lowest salary you can accept might be, as if you take a job below that, then you will end up discontent. But if you keep the salary discussion out of it until they feel ready to make you an offer, you can negotiate the salary knowing they won't withdraw an offer.

    I think people (in chemistry at least) are willing to work for a lower salary if that means keeping doing what they enjoy most - if employers will go for it as well.

  6. @ anonymous
    Yeah I too haven't received any pay raises in my post-doc position due to state mandated pay freezes. It's odd that as a "State Staff Employee" I get the negatives of no pay raise (even though my boss pays me from a NIH research grant with set dollars in place) but then I don't reap the vacation rewards of so called "State Staff Employee" (that is I work 6days/wk, no hollidays off, only 2 weeks vacay per year compared to the 5 day/wk and nearly 40 days of sick/vacation that the "normal" employees receive).

    And for the cherry on top, recently some funds have been allocated for merit based pay raises, do you think I will get that. Nope.

    Getting screwed from both ends. I guess a post-doc is better training to turn tricks than make good science ;)

  7. The problem is not knowing "how low is, too low". I mean understand that in these climate, The Chinese and Indians can set the bar even lower that, the big companies will be tempted to outsource.

  8. Sticky wages exist solely because cost of living is not fungible. Companies that chose to offer below average market value for labor will generally attract lower quality workers in the long run. The previous poster is correct money will always chase cheaper labor, but often it is not advantageous to out-source projects.