This is accomplished through the lobbying of governments and its success is Wage mix indicator of the collective power of the union movement. Though all of the above play a role in determining wages, it is impossible to conclude that managers have all this relevant information available when making wage decisions.
According to Freeman and Medoff nonunion wages are affected by gains made by unions within the same firm, therefore, compensation gains obtained by unionized workers are generally passed on to non-union coworkers.
These can take the form of formal compensation surveys or informal information gathering. The measure of cost of living is valid in determining regional pay differentials.
The influence of the spillover effect, it was shown, is dependant on the extent of unionization within the "wage community". The threat of unionization can lead organizations to substantially Wage mix wages in an attempt to thwart the efforts of the union.
This is so Wage mix the demand for labor is a derived demand that is dependant on the demand for the products and services produced by labor.
There is some disagreement between studies as to whether the spillover effect crosses the boundary between blue-collar and white-collar workers. Nonunion Wage Determination Wages in nonunion organizations are generally determined using a system, which first analyzes the content of the various and specific jobs.
Wage mix wages of employees can be affected in several ways though the threat mechanism. Therefore, wage rate implies both cash and benefit compensation.
Legislative factors are important in wage determination in that they set out minimum standards, especially minimum wages and conditions. There are many factors to consider and many sources of information. This information provides managers with data that is up to date, and relevant in terms of what the competition is doing.
Legislative Influences Legislative factors are determined outside of individual organizations and affect wages. In addition, legislative requirements such as pay equity and employment equity increase the administrative burden and cost to the employer.
The application of "content and value" need not be an either or proposition. Freeman and Medoff conclude that the magnitude of the spillover effect is a function of the percent of the organization that is unionized.
It is important to remember that organizations do not operate in isolation and that forces that are external to individual organizations may influence each of these wage structures.
The purpose of the information, and the need for accuracy, will determine the sophistication of the method. Information on outside wages is obtained though various means of sampling. Secondly, even in the event of a successful defense against a union drive, organizations may be "under the gun" to offer higher wages to their employees.
Second, union wages will affect wages in nonunion organizations if the union wages are included in general wage surveys.
This evaluation of the worth of jobs, to the organization, is based on either the job content or the job value. A combination of these tools can be used when creating a wage structure.
For example, some firms may be more able then others in dealing with fluctuations in the economy. As discussed previously, these surveys are used by organizations when determining wage rates.
Many employers rely on a low skill, low wage minimum transient workforce. This may be a prime factor used by some firms who rely on low skill, low pay minimumand transient workers. Other external market influences in determining wages are the general state of the economy and the cost of living.
The third characteristic of the spillover effect is the impact on nonunion wages, as a result of a union organizing drive within an organization. This may be due to size, management effectiveness, etc. The dynamics of the decision does not however necessitate that it be completely fluid.
External factors are those that operate outside of, and are beyond, the influence of any individual organization.
The purpose is to collect sufficient data that will be used to describe the jobs that were analyzed. It is important to note that no distinction is made between wages and overall compensation.
This analysis is conducted using both conventional and quantitative techniques. From the above analysis of the external factors, only one meets all of these criteria and it is the influence of outside wages.
The concept of elasticity can be further applied to labor itself, as a factor of production. The demand for labor will be more inelastic and therefore able to withstand price increases if; 1 it is an essential factor of production; 2 the supply of complimentary factors of production are relatively inelastic; 3 the demand for the final product is relatively inelastic and; 4 the cost of labor is relatively small, in relation, to the total costs of production.Start studying Chapter Learn vocabulary, terms, and more with flashcards, games, and other study tools.
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Determining Compensation-The Wage Mix- Figure Factors Affecting the Pay Mix Internal Factors Pay Mix External Factors Internal Factors-Employers compensation strategy -Worth of a job o Influenced by labour market or by collective bargaining in unionized employee jobs o Job evaluation to aid in rate determination o Should be based on the.
The Wage Mix The Wage Mix—Internal Factors qܟ Employer’s Compensation Strategy qܟ Worth of a Job qܟ Employee’s Relative Worth qܟ Employer’s Ability-to-Pay The Wage Mix—External Factors qܟ Labour Market Conditions qܟ Area Wage Rates qܟ Cost of Living qܟ Consumer Price Index (CPI) qܟ A measure of the average change in prices over time in a fixed “market basket” of goods.
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