"In practice this almost never happens"

I was using that as an example. It could be "work fewer hours", "reduce health care", "have no chance for promotion", "laid off" or other things where the employer has control over an employee's future.

However, as to "almost never happens", here are some recent examples:

- In the recent Hostess/Twinkie news, "Though he imposed an 8 percent pay cut for all Hostess workers, Gregory Rayburn’s monthly $125,000 pay — or $1.5 million a year — will remain unchanged" http://thinkprogress.org/economy/2012/12/04/1278131/hostess-...

- An undated article but likely from 2008 (not recent, but I wanted the last quote): "The company will slash executive compensation up to 50%, cut many employees' pay as much as 15% and offer voluntary buyouts to its 25,000 workers.", "Ohio-based AK Steel, aks for instance, said on Dec. 3 it would implement an indefinite 5% pay cut for salaried workers, including the CEO and executive officers. ", ... ""It's not common, but in each recession it seems to be picking up speed … as proactive employers figure out that it's very expensive to lay people off and then go back and hire them," Lingle says." ( http://abcnews.go.com/Business/story?id=6514494&page=1#.... )

- more about the steel industry: "the world's largest steelmaker and among the largest in the U.S., has told the union it wants to cut wages and benefits for all workers by more than $28 an hour, or 36%, from an average $77.40 in 2011 and eliminate retiree health care for anyone hired after Sept. 1. The steelmaker also wants the "unilateral right" to cut wages during periods of reduced operations and to schedule 32-hour work weeks." http://online.wsj.com/article/SB1000087239639044409790457753...

- (Ireland, 2012): "The Labour Court has recommended that construction workers should accept a pay cut of 2.5%.
It comes on top of a 7.5% pay cut introduced some years ago.". I believe the pay cuts would have occurred earlier had the unions not been involved, but that's conjecture.

- 2012: "Scranton, Pa., slashes workers' pay to minimum wage" and in defiance of a judge's order: http://www.nbcnews.com/business/scranton-pa-slashes-workers-... .

- 2012: "Muskegon school employees take pay cut to save their jobs", http://www.mlive.com/news/muskegon/index.ssf/2012/10/muskego...

- 2012: "Madawaska School Committee backs off teacher pay cut decision". The school board decided to make the cuts, then "general counsel warning that the proposal could “constitute an unlawful refusal to bargain in good faith” and open the school department up to litigation" caused the board to reverse their decision.

- 2012: a first account of how the person adjusted to a spending cut: http://finance.yahoo.com/news/first-person-pay-cut-taught-pe...

- 2012: "Detroit police see pay cut in checks despite judge's order" http://www.freep.com/article/20120826/NEWS01/120826033/Detro...

I think this is enough to establish that, while uncommon, it is no hen's tooth.

My thesis is that some employers can be viewed as a monopoly provider of jobs. But monopolies in and of themselves are not a problem - it's the abuse of monopoly powers which is the problem.

"Abuse" is almost by definition a question of morality, not of economics. It may be better for the economy (more prosperous, shorter recessions, or some other measure) should we once again allow child labor. Indeed, I've heard more than one person argue that a reason for banning child labor was to raise wages for adults by introducing a shortage of workers. But the bans stay because of moral reasons, and we export our morality to other countries when we demand that our clothes and other items not be made with child labor. Even if the economics of that country would be better with more local child labor.

The morality comes into play here because part of the reason people work for a company is to reduce personal economic risk. As a consultant, my income is highly variable, and it's stressful when that income is low. Even when my income is high, I can't make the same economic decisions as someone who is salaried and with the same monthly salary as my average, because of the Gambler's Ruin issue I mentioned. There can be and have been times when my savings became quite low, and I was seriously considering getting a salaried job. While now, my income is quite above my average.

A salaried job is an exchange of services for money. The general expectations are given in the contract, the law, and the general culture. One of the employee expectations is that the salary will generally be stable, and it will be more stable for government jobs than at a company. People will go into civil service for that increased (perceived) stability, even though it doesn't pay as well.

But unlike, say, overtime pay, this stability is not usually part of the contract nor (in the US) the law. A company can unilaterally decide to cut wages and/or benefits on employees. I've shown examples where that has happened this year. The abuse comes in when companies start breaking both the explicit and implicit promises which are part of the employer/employee relationship. If pay cuts becomes more frequent, then there will be increasing outrage, and the implied stability will be made explicit in either the law, or the contract, ... or people will accept that they have no control over their month-to-month wages. I think the latter is bad for us as a culture.

You and the economists may be perfectly correct in saying that "stickiness of wages causes greater unemployment." What action should be taken from that observation? Should there be laws which prevent stability clauses in a contract, in order to reduce unemployment levels? Or should there be a basic stipend so people can be unemployed for longer while they search for a job with higher stability levels?

This thread started in part because of an observation that in many places in the US there is a broadband duopoly with AT&T and Comcast. In and of itself, this is okay, so long as they don't abuse those power. The recent "Data Caps Help Carriers Rake In Huge Profits" (e.g., http://techcrunch.com/2012/12/19/report-data-caps-help-carri... ) gives an example of what I would call an abuse of that duopoly power.

I've carefully said "broadband duopoly." There are other ways to get access to the internet, including some 3 million people who use dial-up for AOL. Monopoly law is careful about defining a market before looking to see if there is an abuse of monopoly powers.

I assert also that employment should also be subject to a similar market segmentation analysis. If there's only one factory in town, paying $45/hour, and the other jobs are retail and fast-food paying $10/hour, then those are different employment markets. Yes, someone could quit the factory and start working at the DQ, but someone could also quit with AT&T and switch to AOL dial-up. The local factory has a monopoly on high-paying jobs for the area, and can (and does!) use that market advantage.

My thesis is that the same analysis used to identify monopoly abuse in the market should also be used to identify monopoly abuse in employment relationships. No, employers aren't necessarily monopolies, nor do they necessarily abuse their monopoly if they have one. But I think the parallels between monopoly abuse and unilateral change of employment conditions are close enough that the former has bearing on the latter.