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Chapter 7. Economic Issues . Industrial Wage Differentials. Reasons for Wage Differentials The degree of competition or monopoly in the product market The value added by workers in a particular industry The percentage of total product or service cost represented by labor costs.
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Chapter 7 Economic Issues
Industrial Wage Differentials • Reasons for Wage Differentials • The degree of competition or monopoly in the product market • The value added by workers in a particular industry • The percentage of total product or service cost represented by labor costs MGMT 523 – Chapter 7
Evaluating Jobs • Job Analysis • Job description • Tasks, duties, and responsibilities required to perform the job • Job specification • Knowledge, skills, abilities, and other factors required to be possessed by job holders • Methods of Job Evaluation • Ranking • Classification • Point system MGMT 523 – Chapter 7
Typical Wage Structure Labor Starting Hourly Job Titles Grade Points Wage Rate Janitor I 200—249 $6 55 Material handler II 250—299 8.30 Shipper III 300—399 9.45 Tool room keeper IV 350—399 10.20 Machinist B V 400—449 10.50 Maintenance worker VI 450—499 11.80 Mechanic VII 500—549 12.00 Painter VIII 550—599 3.30 Carpenter IX 600—649 14.10 Truck driver X 650—499 14.68 Electrician XI 700—749 17.19 Tool and die maker XII 750—799 17.42 Machinist A XIII 800—849 18.49 MGMT 523 – Chapter 7
Union Preferences Include if favorable Grievances ExternalFactors InternalFactors Wage Structures Wage Surveys Job Evaluation Company Preferences Wage Structure Preferences MGMT 523 – Chapter 7
Production and Incentives • Production Standards • Goals for wage-incentive plans • Employee Incentive Plans • Bonuses • Profit sharing plans • Skill-base pay (SBP) • Group Incentive Plans • Scanlon Plan • Rucker Plan MGMT 523 – Chapter 7
Wage Determination Arguments • Wage Comparability • Degree of Labor Intensity • Ability to Pay • Productivity • Cost of Living • Consumer Price Index (CPI) • Comparable Worth MGMT 523 – Chapter 7
Example of Two-Tier Pay Scales MGMT 523 – Chapter 7
Interim Wage Adjustments • COLA • Deferring wage increases in multi-year labor contracts • Back-loaded: Larger wage increases later • Front-loaded: Larger wage increases earlier • Even-loaded: Wage increases are equal • Lump-sum pay adjustments MGMT 523 – Chapter 7
Employer Costs per Hour MGMT 523 – Chapter 7
Health-Care Cost Containment • PPO • Health-care providers who agree to a fixed/lower rate schedule of fees for their services • HMO • A health-care organization that contracts with the employer to deliver services for a fixed contract amount MGMT 523 – Chapter 7
Other Pay • Income Maintenance • Severance Pay • Supplemental-Unemployment Insurance • Work Sharing • Premium Pay • Overtime • Shift differential • Reporting pay • Call-In pay MGMT 523 – Chapter 7
Payment for No Work • Incidental Nonwork Benefits • Bereavement leave • Sick leave • Military leave • Personal leave • Major Paid-Leave Benefits • Holidays • Vacations MGMT 523 – Chapter 7
Retirement Plans • Pension Plans • Defined benefit plan • Defined contribution plan • 401(k) Savings Plans • Employee Stock Ownership Plan • Cash Balance Pension Plans • Vesting MGMT 523 – Chapter 7
Family and Other Benefits • Family and Medical Leave Act of 1993 • Requires private employers to provide eligible employees with up to 12 weeks of unpaid leave. • Prepaid Legal Services • Employee Assistance Plans MGMT 523 – Chapter 7
