Pay Cuts Preferred Over Unemployment Line

WASHINGTON Dc (WUSA) No one likes to hear the word, "pay cut." But many say it's a lot better option than the unemployment line.

"These are awfully tough times," said one man adding, "I think employers and employees are going to have to tighten their belts and everybody's going to have to give a little bit." Another woman said, "it's almost like you have no choice. It's like your back is against the wall."

But a pay cut may end up costing his employer. "You end up not working as hard. You feel like they're taking a loss so you don't want to put the amount of work in because you feel like they're taking advantage," an employee of a Georgetown business said.

Even worse, "people start to hunker down, they spend less, they become more fearful," says economist and University of Maryland professor Peter Morici. He says, "they're more likely to hoarde their cash. They go to the mall less, they buy fewer clothes, they don't renovate their kitchen. They might not put a deck on this summer."

And when there's less people spending money, factories lay people off, stores close, and home foreclosures go up which means already cash-strapped municipalities will lose sales and property taxes.

While some say they're committed to spending more, others are moving in the opposite direction. "We've overdone that. We've overdone the consumption. We've overdone the materialism. Let's sort of buckle down to American values and be patient," said one DC resident.