, Columnist
Too Much Debt Is Making Us Sticks-in-the-Mud
Why do employers lay off a few workers instead of cutting everyone's wages? It's not as irrational as it sounds.
Why let a store sit empty? Maybe there's a risk to renting at a cut rate.
Photographer: Richard Levine/Corbis via Getty ImagesThis article is for subscribers only.
We’ve had a long run on the current economic expansion, but eventually, another recession will come. A lot of people will lose their jobs, maybe including you. So ask yourself a question: When the time comes, would you rather take a guaranteed 10 percent wage cut, or have a 10 percent chance of becoming unemployed?
While they are both just theoretical possibilities, the risks may seem similar. But in practice, a 10 percent income reduction would be merely miserable, while a 100 percent income reduction would be catastrophic.