http://www.rttnews.com/Content/BreakingNews.aspx?Id=879695&Category=Breaking%20News&SimRec=1&Node=B1
Summary
On Wednesday March 11, 2009, American Reprographics Co, which is a company that deals with business to business document management services, announced a company wide wages reduction of 5%. They also announced a 50% deduction from Suriyakumar, who is the chief executive officer. This company is doing this in an attempt to dodge some of the economic repercussions; an effort in cutting costs. The Walnut creek, a California based company, said that they are expected to produce an annual savings of 6 million or 0.08 per share. In this attempt of cutting costs they also plan to close down 50 locations during this year.
Connections
Cutting wages and various other costs would indeed be a good example of what we are learning in chapter 16. This chapter deals with a variety of tax refunds, tax payments and many other situations that we would probably see ourselves in the near future. Cutting wages would also cut how much the government earns of income tax thus decreasing the amount of money Canada has to spend. This wouldn’t just affect the government it would also affect many people in Canada. When paying some of the taxes, some of it goes to the Canadian pension plan, unemployment insurance and any other plans out there. If someone is making less than what they would normally make, then they have a less luxurious retirement fund.
Reflection
In my opinion I think what this company, American Reprographics Co, is doing is something that isn’t very healthy to the economy. Losing money would lower the consumer confidence level slowing down the economy. Most people also pay some sort of pension plan for their retirement and if less is going into that fund, or reserve, then as I have already said, their lives would not be as good as if they had not have this reduction in wages. But again if these companies weren’t to do this, they might go bankrupt and that would put people on the street and those people would be worse off then if they didn’t.
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1 comment:
Hey John! That is an interesting article that you have found. In regards to the article and American Reprographics Co, I think what they are doing is the right move because it literally is "better than nothing." If American Reprographics Co did not reduce the wages employees were earning, they would eventually go bankrupt and the economy would be even worse because of less people working. I honestly see no way on how the government can "stimulate" the economy now because it just seems impossible. With us being in a recession, companies are bound to reduce their expenses, meaning workers are definitely going to get paid less, meaning the government is receiving less income. Without tonnes of income for the government, it will be even harder to jump-start the economy. I hope we find a way to end the recession soon. =D
-P.Ngo
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