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Board Beginners & Help
Re: Deflation: Wage rates and the employee VS the Employer
by
Brutus
on 21/06/2011, 19:32:45 UTC
"I am asking if job stability would suffer in a deflationary economy."?

Since it is a very general question I'll venture a general answer.

No.

All things being equal "I" would have to assume that this economy was based on a stable and mature monetary system with no centrally controlled inflationary mechanism (btc of 2017).  Given that I believe that said economy would lead to a much higher level of predictability for participants over the long term.

So companies would figure out ways to keep valuable employees given your example of deflation at a steady and given percentage.  Some methods; Contracting on a yearly basis (with the ability to adjust terms with the new year's contract) is one method, contracting + profit sharing, exchanging ownership for lower wages (options). etc, etc, etc.

And as mentioned in another post if wages are going down across a given industry and job skill set, the employee is likely to take the lower/current market salary (at the present job) as the market overall will not offer his/her present salary (all other things being equal as well as the receptionist having specific unique skill sets).