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CHAPTER 2: THE ENVIRONMENTS OF COMPENSATION AND BENEFITS ADMINISTRATION Overview: Pay decisions are reached within economic, social, legal, union, and organizational and technical environments. This chapter reviews each in turn. Corresponding courses 15: Federal Employment Laws That Impact Compensation and Benefits 71: Environments of Compensation and Benefits Administration THE ECONOMIC ENVIRONMENT Compensation decisions are made by a multitude of employers and apply to millions of employees. Employing organizations may be classified in varying ways. One classification consists of private profit-seeking enterprises, not-for-profit organizations, and government entities, a classification that seems to result in smaller differences in employment practices over time. Another classification is by size, measured in several ways, all of which result in significant wage differences. Another is by industry, which results in wage and occupational differences at least as large as differences by size. Still another is by industrial sector: manufacturing or service, with the latter representing over 60 percent of employment but different (often lower) wage levels. There are also differences in the locations of employing organizations, sections of the country and size of the communities, all of which affect wage decisions and levels. For our purposes, the thread that runs through all of these classifications is the presence of employers with employees who demand pay if they are to continue to work. Even volunteer organizations must provide some rewards to their members. Employees differ by occupation, skill level, age, gender, and minority or majority status in the compensation they are willing to accept. These differences affect their reward preferences, and their views about what they contribute to the organization. Employers use compensation as the primary magnet for attracting employees, and the amount offered is a strong consideration for employees in choosing jobs. These employment exchanges are made in a multitude of labor markets that vary greatly and are not very efficient. The approaches to solving compensation issues come from labor markets and are supplemented by rules imposed by employers, unions, and governments. Market forces and the imposed rules may or may not conflict. Labor Markets Labor markets do some things well and others poorly. They are reasonably effective in determining relative wage rates for different jobs and in raising wages and living standards with increases in productivity and national output. Labor markets also do reasonably well in determining relative wage levels for different occupations, establishments, industries, and regions. Labor markets sort millions of workers with varying skills and interests into thousands of different jobs. But labor markets do a poor job of regulating working conditions and personnel policies. They still set limits, because workers can quit if conditions become too unsatisfactory. But the limits are quite wide, because it is difficult for the worker to determine these conditions before employment. Perhaps the major reason labor markets do poorly in regulating working conditions and personnel policies is that most workers regard changing employers as a last resort rather than an opportunity and typically try to stay with their present employer or to change that employer's behavior through a union. Also, labor markets almost always contain more people seeking jobs than jobs seeking workers. These shortcomings of labor markets are major reasons for the employer, union, and government rules that supplement the operation of market forces. In the following sections we attempt to broadly describe the "world" economic environment of compensation determination and management. Markets consist of supplies and demands. This holds for labor markets, although they differ from other markets because of the relatively long duration of employment relationships. Labor supply The quantity of the labor supply is termed the labor force. A person is included in the labor force if he or she is 16 years of age or older (14 with permission in the U.S. for certain jobs) varying by country, is able to work, and is either working or looking for work. The size of the labor force is determined by the population and the number in the labor force (termed the labor-force participation rate). Population growth increases the potential labor force. The Baby Boom (roughly 1946-1956) greatly increased today's labor force. The labor-force participation rate has been changed by the increased participation of adult women and the lower rates of participation by people under 20 and over 65. Some of the changes into the 2000s are: fewer young entrants, a bulge in the 45 to 64 age bracket, more women, more older workers, more part-time employment, and more moonlighting.1 Unemployment influences labor-force participation in two opposite ways: additional family members look for work when the major breadwinner is unemployed, and discouraged workers leave the labor force believing no jobs for them exist. The latter force is greater. The quantity of the labor supply is also determined by the number of hours labor-force members want to work. Desired hours per week or per year are affected by the hourly wage rate and other income received by the family. Working hours have been declining over time, especially per year. Much variation exists among the hours people want to work. Labor-force quality is determined by the formal education, on-the-job training, and experience of the labor force. This quality (termed human capital) has been increasing relative to physical capital in the United States. Labor demand The American labor force is employed in many thousands of specific jobs, in specific locations, with specific employee requirements. The pattern of employment is constantly changing. The labor force is constantly being reshaped to fit changes in the demand for labor. This constant change is due to changes in product demand, work methods, and the location of organizations. It is also a response to cyclical fluctuations in demand, the birth and death of organizations, the entrance and exit of labor-force members, and the search for better jobs. Foreign competition and changes in consumer tastes have resulted in shifts in the relative importance of industries. One notable change has been the rise in the service sector, which now employs over 60 percent of the labor force with the proportion still rising. These shifts have changed the occupational distribution. The demand for professional and technical skills has increased greatly, for example. The demand for clerical workers has also increased. Each of the occupational categories (unskilled, semiskilled, skilled, clerical, technical, professional, managerial) imply different levels or skills, each containing a wide range of jobs in terms of the skill and training required. Further, these differences in skill requirements within and between categories are increasing. There is a current trend toward demand for both employees with high skills and low skills, while the traditional blue-collar skilled worker is in lower demand. Labor demand also varies by area. Job demand may be increasing in some areas (such as the Sunbelt) while declining in others (such as the Snowbelt). This rising demand in growing regions is met largely by migration from declining areas. When labor demand shifts, people learn the jobs in demand and move to where these jobs are. The more the demand shifts, the more workers will have to change jobs. Typically, workers regard enforced job changes as disasters rather than opportunities. Much movement raises unemployment. Also, displaced workers may not have the qualifications to fill vacancies among the jobs in demand. Market size The demand for and supply of specific skills meet in labor markets. This meeting determines wage rates for particular jobs and brings together employers who need workers and workers who named jobs. The term market usually means an area within which buyers and sellers are in sufficiently close communication that price tends to be the same throughout the area. The size of the area may vary from the neighborhood to the whole world. Labor market size varies with skill, both type and level. Managers and professionals, for example, have a national or international market. For most manual, clerical, and technical jobs, labor markets are local, often defined by commuting distance. A locality contains many specialized markets for various occupations and skills; these markets are linked by the possibility of transfer between occupations. In fact, each organization can be considered a separate labor market for two reasons. First, the organizations usually promote from within rather than filling positions from the outside labor market. Second, they create jobs that are organizationally specific, ones where the organization trains the person so that the skills obtained have little transferability to the outside labor market. These actions by the organization create what is called the internal labor market. Neither workers nor employers have sufficient information about labor markets and must seek it in order to make decisions about wages and employment. Both unemployment and job vacancies exist at the same time, usually more of the former. Moreover, workers are reluctant to quit their jobs and employers are aware of their investment in present employees. Recruitment Labor markets may be viewed as a flow of people from unemployment to job vacancies where both are being constantly renewed. But the two "pools" are related in that a change in one creates forces that change the other. The flow during the year is much larger than the net change over a year. Employers can cut their costs of seeking labor market information (recruitment) by paying above-average wages, hoping to attract a pool of applicants. They can also attempt to keep present employees and to recruit friends of present employees. But the favored method is to use internal labor markets as a source of employees so that only a few jobs are filled from external labor markets. A consequence of the use of internal labor markets is that an employee who has moved up the job hierarchy is more reluctant than usual to quit. Moving to another employer means starting at the bottom. Because employers have hiring standards that they attempt to meet through employee selection, the labor supply of the enterprise includes only those people the employer is willing to consider. Since employers tend to raise and lower hiring standards with general unemployment rates, they are in effect changing the labor supply. Workers also seek labor market information. Employees may look for a better job, either within the organization or outside. Managers and professionals usually have another job before leaving and thus suffer less unemployment. Workers at lower levels, because they have less free time to search and because employers discourage job switching, may quit to look full-time for a better job if unemployment is low and if they have transferable skills. Job seekers include those who have quit, those who have been laid off or discharged, and those who are entering or reentering the labor force. A job search involves costs of lost income and benefits of information on better job openings. Information on which organization is offering what wage rate and which organizations are hiring may result from the hunt, but the worker typically has only one offer at a time and must decide quickly. The decision usually involves a comparison of the costs of continued unemployment and the possible gain from continuing to search. As time goes on, expectation of gains falls and the cost of unemployment rises. Eventually, a job is found that meets the worker's minimum standards. The state of the labor market greatly influences the time involved in this search. This employment-seeking process is one reason for different wage rates for the same skill in the same labor market. These differences would be eliminated only if workers continued to search as long as wage differences remained.2 In summary, the economic environment in which compensation takes place is unique. Employment exchanges are made in hundreds of thousands of labor markets. Labor markets almost never set one price, do not clear (balance supplies and demands), and are constantly in flux. Both organizations and workers must search to find an acceptable employment exchange. The economic environment of compensation administration, it is generally agreed, has the strongest impact on the outcome, the pay of individual workers. But other environments also influence compensation determination and management. THE SOCIAL ENVIRONMENT The social environment in which compensation administration is practiced may be discussed in terms of work and workers. This section examines the major forces that shape work in our society and the people who do the work. Much current discussion focuses on how both work and workers have changed. Work Defining work is not as easy as it appears. Work is what most of us do to earn a livelihood, but it is also done by members of volunteer organizations. To many of us, work consists of activities performed for others, but this would exclude the self-employed. Perhaps work is best described as sustained activity whose purpose is the accomplishment of goals. If we add "for rewards" (usually pay), this definition would be sufficient for our purposes. Most of us work both because we have to and because we want to. Our collective survival is no longer dependent on whether we choose to work. Although many projections have appeared about the future of work, few have projected a workless society. The future of work is determined by numerous forces: the goods and services we demand (want and can afford), the number and qualifications of workers, and the technologies available, for example. Rising expectations of workers make relative incomes a driving force. Rising levels of education lead us to expect greater challenges and skill requirements in our jobs. Technologies however, may constrain the realization of our expectations. Although rising per capita income might suggest that fewer workers and less work time are available, this has not been the case. The length of the workweek has remained stable for almost 70 years. The proportion of the population in the labor force has increased, largely because of the increased participation of women. However, we are working shorter work years, because of longer vacations, more holidays, and more part-time employment. Changes in work Today's jobs differ from yesterday's jobs. The most visible change is the shift toward white-collar and service employment. The proportion of unskilled jobs has declined steadily, and the most boring and punishing tasks have disappeared or are done by machines. True, there haven't been uniform gains in skill requirements, and threats of displacement of low-skilled workers through automation persist. The growth of the service sector has been the most pervasive change in work. Agriculture, manufacturing, and mining no longer represent the typical workplace in the United States or any other industrial country. The shift toward service employment is in many ways a result of rising incomes and technological advance. The surge of women in the labor force has strengthened the demand for personal services. The growth of the service sector has destroyed traditional links between work and physical effort. Increasingly we work with symbols instead of tools and produce reports instead of goods. Paralleling the growth of the service sector is the change from blue-collar to white-collar employment. Managers and professionals today outnumber unskilled laborers five to one. This growth in professional and managerial jobs reflects in part the size and complexity of organizations. It also reflects the growing importance of research and managerial functions in the use of advanced technologies. It seems important to recognize that white-collar and blue-collar designations are not necessarily made on the basis of job skills. A wide range of skill levels, work environments, and job attributes occur in both groups. Many blue-collar jobs actually require more skill and provide more challenge than white-collar jobs. Although clerical workers may enjoy a more pleasant environment, the tasks of a skilled factory worker may demand more talent. Many service workers enjoy less status and lower pay than workers on assembly lines. But structural changes in jobs point in many directions. Professionals and managers historically have required high skills and were awarded high status. The jobs of clerical workers and many service workers have required less skill and hold ambiguous status. The evidence of occupational shifts or fluctuations in skill levels fails to prove that there have been either uniform improvements or deterioration in the quality of work. Some jobs are now cleaner, safer, or more interesting, but others offer less freedom and demand fewer skills. Although many more professional and technical jobs exist, so do stifling and menial work. A driving force behind occupational change is the continuing process of technological innovation. Its impact on work quality fosters continual debate. Many present-day workplaces are safer and more comfortable. Many automated technologies have reduced requirements for physical labor. But skill requirements have not uniformly improved, and automation may even decrease variety and the opportunity for creativity. Whether robots will significantly change the nature of most jobs is not known at this time. The pace of innovation will depend on the relative costs of labor and robots, as well as the supply of and demand for goods and services.3 It is doubtful that automation will have a uniform impact on the quality of work. The worst jobs may disappear as robots march into factories and assume the most dangerous and unpleasant tasks. Computerized technology can offer significant job upgrading, more freedom, more job challenge, but it can also easily do the opposite. Button pushing and machine watching are not very challenging. The most serious threat, however, is the possible disparity between skills needed by jobs and worker skills. It seems unlikely that the skills of workers in declining industries will fit the skill requirements in new growth areas. It is equally unlikely that unskilled workers will find jobs in an automated society if preferential treatment is given displaced workers. The service sector presents a different picture. Here there is an increasing demand for relatively unskilled jobs that provide little discretion. This increasing demand for low-level service skills on one hand and an increasing skill demand in professional areas on the other leads to different predictions about future labor force requirements. These adjustment problems represent only a part of the occupational shifts and technological changes faced by our labor force due to the growing size and interdependence of today's markets. The movement toward a world economy will continue to reshape domestic industries and the occupations within them. As in the past, our work force must adjust to changes in requirements. As we will see in the following discussion of workers and worker values, demographic and value changes have given our labor force more choices. Also, to a considerable extent, the economic system provides a basis for determining if a job is worth doing: employers decide what they are willing to pay, and workers what they are willing to accept. Increasing choice among our labor force means that the work society chooses to accomplish will be determined increasingly by what workers want to do, as well as by what tasks society wants done. Workers In recent years, projected changes in our labor force have received even more attention than forthcoming changes in work. Much of this attention has focused on demographic changes and their impact. But a spirited debate about whether worker values have changed, whether we have a new breed of workers, appears to be continuing. Demographic changes Both greater numbers and larger proportions of the population have entered the labor force in recent years. The ratio of workers to the working-age population has been growing, driven by rising expectations and an interest in relative income gains. Much more important, however, have been demographic forces. The Baby Boom. The so-called baby boom (1946-1956) greatly changed the age structure of the labor force in North America. In the mid 1960s, the number of younger workers began increasing rapidly, almost doubling the normal yearly growth in the labor force. Much of the growth in the labor force of younger workers occurred among the college trained until the 1970s, when the supply of college graduates outstripped demand. The ensuing drop in college enrollments undoubtedly increased the labor-force participation rates of young people. The 1980s found early strains on the economy, now all but masked by ten years of growth and prosperity never before seen in world history (1990-2000). Women. An even more important demographic change in the labor force was the extraordinary increase in female participation. More than 3/5 of the growth in the total work force from 1947 to 1996 was the result of increased female participation. Much of this growth was accounted for by married women. In more than 75 percent of all marriages today, the husband is not the sole breadwinner. In 1981, slightly more than 50 percent of all wives held paying jobs outside the home. The explanation for the tremendous increase in the labor force participation of women is not as simple as the explanation for the increase in younger workers. Part of the explanation may be technological: housekeeping consumes less time today. Also, the number of children in the home has declined. Economic need is another explanation. Women provide substantial proportions of family income and are the sole wage earners in a rising percentage of families. Thus, many families could not maintain their economic status without the woman's income. But economics is only a partial explanation of the increased participation rate of women. It does not explain, for instance, why the participation rate increases with overall family income. Perhaps the strongest explanation of the increased labor force participation of women is sociological. Roles for women have been redefined. Of course, women would not have been able to increase their numbers in the work force without favorable labor market conditions. The expanding labor requirements in the growing service sector made women's increased participation possible. Now our economy is dependent on female labor to meet our needs for a labor force. Older men. Another change in our labor force has been the reduced participation of older men. In the past 50 years, the labor force participation of men has dropped about ten percentage points due to earlier retirement. Much of the explanation is economic, a results of improvements in retirement benefits. (Interestingly, older women's participation has increased rather than decreased.) Part of the explanation is attitudinal. Retirement has acquired a more positive social image. The permanence of the reduced labor force participation of older men is in question, however. Inflation, the extension of protected labor market status to age 70 and above by the amendments to the Age Discrimination in Employment Act, and the fiscal solvency of Social Security have begun to reverse the trend to early retirement. African-American men. In the past 40 years, the participation of African-American men of all ages has dropped almost 15%. The unemployment rate of African-American males hovers around 14%, while the unemployment rate of Caucasian males is commonly about 6%.4 Unfortunately, this decrease appears to be explained in part by these men's discouragement with their labor market prospects. Poor educational opportunities and employer prejudice have reduced the attractiveness of labor force participation. Hispanics. These are the uncounted among the U.S. labor force; many illegal migrant workers, doing nothing more than what their ancestors have done for over a hundred years, working in the North for money to support their families in the South. Hispanic-Americans now outnumber African-Americans. By the year 2050, the Hispanic population is projected to be twice that of African-American. Together with other minorities, they will dominate the workforce. It is no secret why Hispanics now hold so many jobs in America. American employers need them. Workers of tomorrow Although these quantitative changes in the American work force apparently have more than one explanation, it is possible to make some predictions about our future labor force. Predictions based on demographic factors are obviously the most solid. Youth shortage. Because of the low birth rates of the 1960s, the absolute numbers of young workers has continued to fall since the 1980s. Between 1975 and 1990, the people aged 16 through 24 in the labor force declined by over one million. One consequence of this was improved relative earnings for this shortage group. Another was reduced youth unemployment, which had been especially severe for African-Americans. Surplus of prime-age workers. Also predictable on demographic grounds is a surplus of workers in the 35-54 age group. From 1975 to 1990 the "baby boom" increased this age group by over 20 million persons, or 55 percent. The consequences of this bunching imply a more rapid rate of economic growth but a fierce competition for promotions. Members of this group will suffer career disappointment and low relative income for their entire working lives. The potential personnel and labor-relations problems resulting from this surplus of prime-age workers has created heartbreak for many, only partly offset by the growth in small businesses associated with high technology. A more educated labor force. Today's workers bring more schooling to the workplace than their predecessors. Tomorrow's young people are more likely to go on to college to improve their career opportunities. Because these workers will be in short supply, their potential return from more education will increase. But educated workers in the surplus Baby Boom age group are likely to have problems getting jobs that require their levels of education. As Americans in all occupations enter the labor market with more education, these educational gains may outpace skill requirements. Most of the increase in educational levels has occurred independently of the technical requirements of the labor market. There are rational explanations for the continuing rise in educational attainment, though. For the individual worker, education continues to pay off. Although the income advantage of a college degree is not as great as it used to be, it still broadens employment options and enhances individual earning potential. Because employers rely on formal education as a screening device, the growing number of college graduates forces workers to seek higher education in order to compete. Increased female participation. Female labor force participation is expected to increase by all forecasts. The sectors of the economy that tend to hire a relatively large amount of women are likely to grow. As the movement of women into previously male occupations continues, there may be an increased diffusion of women across occupations and industries. It seems safe to predict that self-employment and management responsibilities for women will continue to grow. Women may even become a majority of those gainfully employed.5 Worker values Much recent discussion of workers has been concerned with their attitudes and values. It has been suggested, for example, that today's workers are less work-committed, that the usual work incentives have lost their effectiveness, that a "new breed" of worker has emerged who rejects traditional values. It is useful to identify three kinds of attitudes, which are not completely separable: (1) the importance of work to people (job involvement), (2) what a person wants, needs, or expects from a job (work values), and (3) how much a person likes or dislikes a job (job satisfaction). Job involvement. This attitude, which is often called work commitment, is particularly hard to isolate. That more and more people want jobs is obvious, but only 13 percent of all working Americans find their work more important to them than their leisure pursuits.6 Wanting a job and being willing to work hard are clearly separable and undoubtedly differ more for some segments of our work force than others. Work values. Work values have been found to vary by occupation, education, gender, and age. Blue-collar workers focus on economic factors. White-collar workers emphasize such intrinsic factors as interesting work and opportunities to develop abilities somewhat ahead of economic factors. However, the differences between occupational groups are not very great and are associated largely with education level. Gender has been found to be associated with work values: women have generally ascribed greater importance to social and emotional considerations than men. There is evidence that young workers place more importance than older people on intrinsic factors such as degree of challenge, diversity, and freedom. D. Yankelovitch wrote that a new breed of American worker exists whose work values are different from the traditional definition of a good job: steady work, good pay, comfortable and safe working conditions, and possibly an opportunity to get ahead.7 This new breed takes these things for granted and demands, in addition, freedom, interesting and challenging work, and a voice in what goes on. These people believe they are entitled to a good job. But millions of them who have jobs find the incentive systems so unappealing that they are not motivated to work hard. According to Yankelovitch, in the 1970s self-fulfillment was severed from success for a majority of Americans -- the younger, better educated and most affluent.8 A small minority reject success and opt out of the system. Most value success but find it wanting. They assume that self-fulfillment is to be found within. Thus they demand the freedom to express impulses, to enjoy life now. Leisure has become more important than family or work. For the new women, a paid job has become a symbol of membership in the larger society and a badge of self-worth. In the new value system, the individual is more than the role. Being recognized as an individual is more important than having interesting work. Some consequences of these new values need emphasis. First, there is a strong consensus that a job paid at a fair rate should be guaranteed to everyone who wants to work. Given the demographics of the labor force discussed previously, the competition for jobs, at least in the 2000s, will be fierce. Second, work incentives must be revised to meet the new work values. Employers must recognize that the motivation to take a job and the motivation to work hard are independent and require different approaches. The new values of individualism will require different incentives for different employee groups and perhaps for different individuals. Non-financial rewards have become more important to employees and can be used as work incentives. The proponents of the new-breed hypothesis and the traditional view of American workers are probably both partly right and partly wrong, depending on which worker they are talking about. Job satisfaction. How well a person likes his or her job depends on the discrepancy between an individual's work values and what the job provides. Some of the conclusions from recent Gallup polls follow. Nearly 90% of workers were generally satisfied with their job in 1999. That included 39% of workers who were "completely satisfied" (up 4% from 1997.) Only 14% of workers were completely unsatisfied. The most satisfied workers are the self-employed, 58% of whom said they were "completely satisfied" with their jobs.9 It makes sense, then, that 43% of workers said they dream of starting their own business.10 Owning your own business, however, seems to be a goal acquired with age; 8% of workers aged 18-29 said they are self-employed, compared to 29% of workers over 50 years. Job satisfaction also rises with age; 29% of workers aged 18-29 reported that they were "completely satisfied," compared to 39% of those 30-49, and 49% among those 50-years and older. Also expectedly, job satisfaction rises with income level, from 24% of those earning less than $30,000 are "completely satisfied," compared to 48% of those earning $75,000 or more a year. Many factors led to job satisfaction. Workers report that their highest degree of satisfaction is with their co-workers; 67% are completely satisfied with their peers. Other drivers of worker satisfaction are low stress at work, job recognition, and satisfactory pay.11 Strikingly, 74% of workers think they are fairly paid; and 64% of workers believe their company CEO's salary is fair. Workers reporting the lowest satisfaction most often site frustration with co-workers, their boss, their ability to learn and grow on the job, and job security. The latter is unsurprising in an economy where mergers, offshore plant relocations, and downsizing are more rampant than ever.12 THE LEGAL ENVIRONMENT The legal environment in which U.S. compensation administration is practiced consists of federal and state legislation and the regulations imposed by executive branches of these governments. In the case of some developing legal concepts, case law (court decisions) represents the public position. In these forms, government is stating public intentions or guides to decision makers. Although private organizations tend to characterize these laws, regulations, and court decisions as constraints, they may also represent opportunities. It is difficult to portray this environment briefly, but in essence the "rules" state that compensation must not be too low or (at times) too high, but that within these limits compensation decisions should be left to the parties involved. Also, in the interests of fairness, certain groups have been protected and all must be paid when due. Unfortunately, governments have not labeled the laws, regulations, and cases according to categories of compensation. Nor indeed have they limited them to compensation matters. Because our concern is with benefits and compensation, we will focus on the guides of concern to benefit and compensation decision makers. The Fair Labor Standards Act The oldest U.S. labor law is the Fair Labor Standards Act (FLSA), often called the wage and hour law. It has four provisions that affect compensation programs. They concern minimum wages, overtime pay, record keeping requirements, and equal pay. Minimum wage Minimum-wage provisions set a floor on the amount of pay an employee must receive. The federal minimum wage per hour is $5.15 (as of October 2004). The current level has been in force since September 1, 1997, and there is pressure to raise the federal minimum wage once more. But there is considerable opposition to raising the minimum wage at this time. In the past, Congress has raised the minimum wage by amending the FLSA whenever the floor falls below about 50 percent of average hourly earnings. This is not true today (although Congress may change course at any time given the correct political winds). The failure of the U.S. Congress to manage the minimum-wage level is now causing various states to enact their own minimum wage laws. See www.dol.gov/esa/minwage/america.htm for information regarding state minimum wages. Remember, state minimum wage rates prevail if they are higher. For Canadian minimum wages by province, visit: canadaonline.about.com/library/bl/blminwage.htm?once=true&. The minimum wage is a contentious concept. Advocates claim that some minimum wage is required in society because of the imbalance of power between the employer and employee. This is particularly true in the lower levels of the economy. By having a minimum wage, the country is reducing the dependence of some people on the "safety net" of society and thus lowering the cost of government. Opponents of the minimum wage claim that it creates unemployment in the lowest level of workers and puts a hard burden on small businesses. Living wage Noting that minimum wage increases have lagged behind changes in the cost-of-living, advocates are moving beyond the concept of a minimum wage to that of a living wage. A living wage is one at which employees can support their families above the federal poverty line. Over 50 local government entities have passed living wage ordinances. These ordinances require any organization doing business with the entity to pay their employees a minimum living wage. These ordinances range from $6.05 in Milwaukee, WI to $11.00 in Santa Cruz, CA. Government entities are not alone in instituting a living wage, some companies are joining in. These companies claim that subscribing to a living wage results in the following benefits:
For information on the living wage, go to: www.epinet.org/Issueguides/livingwage/livingwage.html FLSA coverage Coverage of the FLSA has been extended. Today, the minimum wage provisions cover almost all employers. Formally, covered employers are those with at least two employees engaged in interstate commerce, producing goods for interstate commerce, or having employees who handle, sell, or otherwise work on goods or materials produced for or moved in interstate commerce. Not surprisingly, this has been interpreted to cover almost all employers. Retail or service establishments with any significant annual gross sales are covered, as well as employers of domestic workers who are paid at least $100 per year. Construction companies, laundries, dry cleaners, and private hospitals and schools are covered regardless of volume of business. Practically speaking, just about every business is covered unless it qualifies for one of the special exemptions (very small retailers, fishing and fish processing, seasonal amusement and recreational establishments). Exempt employees Not all employees are covered, however, and many employers distinguish between exempt and nonexempt employees in their personnel programs. Exempt employees are not covered; nonexempt employees are. The major groups of exempt employees are executives, administrative employees, professional (learned and creative) employees, and outside sales personnel whose jobs match the definitions provided by the Wage and Hour Division (WHD) of the Department of Labor. Placing people on salary does not make them exempt, but where the match between an organization's job and the WHD definitions leaves some room for question, amount of weekly pay decides. Employers may seek permission to pay less than the minimum to apprentices, handicapped workers, or full-time students. For more on exemptions go to www.dol.gov/elaws/esa/flsa/screen75.asp. Placing employees on salary does not make them automatically exempt. When determining exempt status, job duties is the crucial thing. Employers may seek permission to pay the following people less than minimum wage: apprentices, handicapped workers, full-time students. New FLSA regulations As of August 2004, new Department of Labor FLSA regulations went into effect. This is the first overhaul of the Fair Labor Standards Act in over 50 years. These new regulations were designed to simplify the rules for the application of FLSA white-collar exemptions. The new rules state that for an employee to be exempt, the position must be:
The
tests regarding the nature of duties are problematic, as they require job
analysis be done to differentiate between jobs with exempt duties and nonexempt
duties. For example, the position of executive assistant may be exempt or
nonexempt, depending on whether or not the position entails authority and duties
that require discretion. Overtime The FLSA requires that nonexempt employees be paid 150 percent of regular pay for all hours in excess of 40 per week. The workweek is defined as a period of 168 hours during seven consecutive 24-hour periods. An employer may arbitrarily decide the day and the hour the workweek begins. Hours cannot be shifted from one week to another. An exception to this rule is that a hospital may use 14-day work periods and an 80-hour breakpoint. Another exception is that some employers are permitted week-to-week balancing under a collectively bargained guaranteed-wage plan. Calculating overtime pay is straightforward for employees paid by the hour. For employees on a wage incentive plan, the base rate is average hourly earnings. Salaried employees' base rate is determined by (1) converting monthly to weekly salary (divide by 4 1/3) and (2) computing the hourly rate (divide by 40).As implied in our discussion of minimum wages, employees who are exempt from minimum-wage provisions are exempt from overtime provisions. Employers may, of course, pay overtime to these exempt employees but are not required to do so. Additional exemptions from overtime provisions of the FLSA are agricultural employees, truck drivers, railroad and air-carrier employees, some local delivery people, and taxi drivers. Record keeping Under the FLSA, employers must collect and keep certain wage and hour information on nonexempt employees. In general, the purpose of these record-keeping requirements is to permit the Wage and Hour Division to enforce the minimum-wage and overtime provisions of the FLSA. Such information as the following is required: employe''s name, address, occupation, gender; definition of workweek; total hours worked each workday and workweek; basic pay; regular hourly rate; overtime pay; deductions and additions to pay; total wages for period; pay date and period; and special information - estimated tips, payments in kind. Prevailing Wage Laws Both federal and state governments have laws requiring contractors supplying goods or services to the government to pay "prevailing" rates. The Davis-Bacon Act of 1931 requires the secretary of labor to determine prevailing rates applicable to government construction contracts in excess of $2,000. The law is controversial primarily because the secretary has used union rates in the geographical area as the prevailing rate. Employers argue that the law does not require the Secretary to use union rates and that doing so raises wages and government expenditures. Labor leaders argue that changes in administration of the law would weaken unions and union contractors. The Walsh-Healy Public Contracts Act of 1936 applies to employers that are a party to federal contracts for materials, supplies, and equipment in excess of $10,000. It requires these employers to pay prevailing wages in the industry as determined by the secretary of labor. Walsh-Healy also requires covered employers to pay overtime at one and a half times the base rate for all hours in excess of 8 in a day or 40 in one workweek, whichever is greater. The McNamara-O'Hara Service Contract Act of 1965 extends Davis Bacon concepts to government contracts for services. Contractors holding service contracts of $2,500 or less must not pay service employees less than the minimum wage. Contractors holding service contracts in excess of $2,500 must pay employees no less than the wage rates and benefits found by the Department of Labor to be prevailing in the area, or no less than the compensation (pay and benefits) found in the previous contractor's collective-bargaining agreement. Immigrant wages In the United States, a set of regulations has evolved to cover the pay of immigrant employees (excluding agriculture workers). The U.S. Government has imposed a complex set of rules related to the use of salary survey data in dealing with immigrant employees. General Administrative Letter 2-98 prohibits the use of medians and requires weighted averages. The United States is divided up into 633 geographic areas, and all positions fall within 820 major and sub-job group/families. Most positions include first-line supervision. OES means are not to be used, the typical rate utilized is Level II, the 66.7 percentile. Alternative survey data may be used under very strict guidelines. Each state varies in what data and surveys are acceptable. For more information about immigrants' prevailing wages, please see DLC Course 14: Prevailing Wage Analyses. Effect of Wage Floors The effects of wage floors (both minimum-wage laws and prevailing-wage laws) have long been a matter of controversy. Economic theory shows that wage floors may reduce employment by in effect prohibiting the employment of individuals not worth the floor. Economic theory also suggests that such floors may contribute to inflation by providing targets against which noncovered employers may be compared and by restoring customary relationships when they are raised. A contrary view is that wage floors reduce poverty by keeping wages above subsistence levels. It is also argued that wage floors prevent exploitation of employees and may in fact improve employer utilization of labor training programs to make employees worth what they must be paid.13 Wage Ceilings Although wage floors have existed as part of our legal environment for over 40 years, wage ceilings have usually been avoided. During times of strong inflationary pressures, however, attempts have been made to slow wage and price advances. During World War II, a War Labor Board was charged with devising and administering controls over wage changes. During the Korean War, a Wage Stabilization Board was created to control wage and price advances. Although evaluations of their effectiveness are mixed, wartime wage controls were generally adjudged to be necessary and somewhat effective, especially during World War II. Peacetime controls have been more controversial and less effective. The effectiveness of the wage-price guidelines of the 1960s in the Kennedy and Johnson administrations remains debatable. The more stringent controls in the Nixon administration were adjudged no more effective. The weaker controls under the Carter administration were probably even less effective. Since then, no controls have been in evidence. The wage-control techniques tried in the United States have been: (1) a wage-price freeze for a limited period, (2) guidelines and jawboning by the administration, and (3) a wage-price review board. Another strategy, suggested but untried, is to tax organizations that exceed guidelines. Objections to controls are that they are either ineffective or harmful to the economy, depending on the technique used. It appears the more effective the controls, the more harmful to the economy. Problems with wage and price controls have appeared throughout the industrial world. These controls, called income policies, are designed to improve the trade-off between wage and price stability and unemployment (the Philips curve) by political means. Although these policies have not been notably effective economically, they can achieve political effectiveness for short periods. Getting agreement among various segments of society that their interests are being served is an unsolved problem. Assurance of Payment A final type of wage legislation is the requirement that workers be paid the wages due them. State legislation typically specifies that wages be paid at regular intervals (one week or two) and that they be paid in cash or its equivalent. Payment in scrip (private currency) is usually prohibited, as is paying employees in barrooms. These laws also specify immediate payment if an employee is discharged. There are also laws that limit the ability of creditors to attach the wages of employees, called garnishments, and to assign wages. These laws regulate the collection of debts from employees by restricting the amount of wages that may be deducted for such debts and by prohibiting employee discharge for a single garnishment. The Consumer Credit Protection Act of 1968, for example, restricts garnishments on worker earnings to the lesser of either (1) 25 percent of the debtor's disposable earnings for the workweek or (2) the amount by which the debtor's disposable earnings for the work exceed 30 times the minimum hourly wage ($3.35). Disposable earnings are defined as compensation less legally required withholding (for Social Security and income taxes). Under this law, garnishment restrictions do not apply to federal and state tax debts, alimony and child support, or orders under bankruptcy proceedings. Federal law preempts state law on garnishment amounts unless state law requires smaller garnishments. The 1968 federal law also forbids firing debtors for a single garnishment but not for subsequent ones. The federal anti-kickback statute, the Copeland Act of 1934, makes it illegal to require that the employees return a part of their earnings to employers or others for the privilege of working. The act applies to all federal projects and contracts. Several states have such laws to ensure that employees receive the agreed-on rates. Equal Pay Act of 1963 The Equal Pay Act of 1963 was passed as an amendment to the FLSA. It prohibits wage differentials between men and women employed by the same establishment in jobs that require equal skill, effort, and responsibility, and that are performed under similar working conditions. The act requires that all three factors (skill, effort, and responsibility) must be substantially equal for the jobs to be adjudged equal. Likewise, working conditions must differ significantly if pay differentials are to be justified. Actually, case law has accepted "substantial equality" between jobs as sufficient for equal pay. The equal-pay provisions do specifically approve some conditions as justifying lower pay for women than for men. Wage differentials resulting from legitimate seniority systems, merit systems, or any system that ties earnings to quantity or quality of production are permissible. Wage differentials also may be based on factors other than gender (education required by the job, profitability to the employer). Part-time workers need not be paid the same as full-time workers. Differentials paid to family heads are permitted if both male and female heads of families are paid the differential. Employers may not lower pay to correct violations of equal-pay provisions. Instead, the pay of the affected group must be raised to that of the favored group. There are no exempt employees under the equal-pay provisions of the FLSA. Nearly all employers are covered by the act, as are unions that negotiate for covered employees. Most states have had equal-pay laws predating the federal statute, but they vary greatly in provisions and method of enforcement. Comparable Worth Comparable worth is an undeveloped legal concept that has become an important issue. It flows from the observation that women are paid less than men. More specifically, advocates of comparable worth call for equal pay for jobs of equal value. Note that this is different than equal pay, under which the jobs must be substantially equal. Equal pay concepts generally require similar duties, responsibilities, skill, and working conditions, that is, equal jobs. Comparable worth calls for equal pay for jobs of comparable value within an organization. Three major court cases may serve to illustrate the issue. One involved nurses employed by the city of Denver.14 The nurses charged that they were being discriminated against in pay because of their gender. They showed that they were paid a lower wage than parking-meter repairers, tree trimmers, and sign painters. They argued that these wage differentials did not reflect any differences in type or value of work but were due rather to society's tendency to pay women less for their work than men. The nurses based their case on the Equal Pay Act and the Civil Rights Act. The former was inappropriate because the jobs compared were different. But the latter appeared to apply, because jobs dominated by women were paid less than jobs dominated by men, even though the jobs were of equal or comparable worth. The federal district court agreed with the nurses that occupations dominated by women could have historically been paid less than occupations dominated by men. It also agreed that such discrimination could in fact lead to a violation of a comparable worth criterion of fairness. But the court found against the nurses by citing the market rather than comparable worth as the proper standard. In fact the court commented, "This is a case which is pregnant with the possibility of disrupting the entire economic system of the U.S." In the second case, a union charged that Westinghouse Corporation had historically established classes of jobs for wage-setting purposes that discriminated against women.15 They demonstrated that Westinghouse had segregated women's jobs from men's jobs and set lower rates for the former. The federal district court decided that such a practice discriminated against women and ordered it stopped. In the third case, jail matrons doing work similar to but not equal to that of prison guards charged that they were being discriminated against because the difference in pay between the two jobs was much greater than the difference between the jobs themselves.16 In this case the Supreme Court ruled that women who file lawsuits charging gender discrimination in pay matters may have valid claims under civil rights law. All three of these cases have questioned the adequacy of the market as a criterion of job worth. Proponents of comparable worth argue that because women have been "crowded" into certain occupations, the labor market discriminates against them.17 Job evaluation as a formal method of comparing jobs is logically a potential solution. To the extent, however, that different job-evaluation plans are used for men's and women's jobs, the crucial job comparisons are not made. Also, to the extent that job-evaluation plans are developed on the basis of market wage rates for key jobs, job evaluation and market rates are not separate criteria.18 It is just as easily argued that job evaluation plans cause and perpetuate discrimination when they impose a measurement system developed by predicting a discriminatory environment. (One of the oldest point-factor plans continues in use today although its measures were developed to predict the pay of bank workers in the Philadelphia in the late 1940s).The issue of comparable worth will arise at several points in this book. At present it seems best to label it an undeveloped legal concept that may be settled by further court cases or by legislation. As an issue for compensation administrators, it seems important to recognize that wage decisions under our system are made for decentralized units. Thus, the issue is whether jobs and/or people in the organization are being paid on a nondiscriminatory basis. The larger issue of differences between men's and women's pay is beyond the control of the organization's decision makers. Rules Concerning Equal Employment Opportunity and Affirmative Action Equal employment opportunity (EEO) rules and affirmative action (AA) guidelines are to be found in several laws, a number of executive orders, and some case law. The principal federal laws are the Civil Rights Act of 1964 and 1999, the Americans with Disabilities Act of 1990, Section VII; the Equal Employment Opportunity Act of 1972; the Age Discrimination in Employment Act of 1967 and its 1978 amendments; the Vocational Rehabilitation Act of 1973; and the Vietnam Era Veterans Readjustment Assistance Act of 1974. The Equal Pay Act discussed previously may also be considered EEO legislation. State laws on civil rights matters have been in effect longer but have been superseded by federal laws. Executive orders 11246 of 1965 and 11375 of 1967 are the foundations of affirmative action programs. The most important legal cases will be cited shortly. These rules and guides apply to two separate types of programs. EEO programs prohibit discrimination based on race, color, gender, religion, age, or national origin in any of the terms of employment stipulated by employers, employment agencies, or labor unions. The Equal Employment Opportunity Commission issues guides for employer actions, record keeping, and reports that represent compliance with EEO. AA programs call for positive steps to correct the results of past discrimination. Government contractors are the major group required to have AA programs, and the executive orders just mentioned spell out most of the requirements. AA programs also require employer activities, record keeping, and periodic reports. The handicapped and Vietnam veterans are covered by both EEO and AA requirements. Employer coverage varies somewhat under the different legislation and regulation. The Americans with Disabilities Act of 1990 (ADA) The ADA is worth reading carefully. General or old job descriptions now appear to be a liability. Up-to-date job descriptions may be an employers' best defense for demonstrating the rationale behind their hiring decisions. The Civil Rights Act of 1991 With this Act, Congress empowered plaintiffs and their attorneys to claim punitive, as well as compensatory damages. At its passage, Congress deflected some of the concern of business by enacting maximum limits to these damages. This potential punitive damage exposure is coupled with a powerful new legal concept, demonstration that an employment practice is required by business necessity may not be used as a defense. www.eeoc.gov/policy/cra91.html One useful way to view EEO and AA rules in their entirety is to use the concept of protected groups. Since compensation decisions constitute important terms and conditions of employment, they are covered by law. If compensation differentials exist between the majority employees and members of protected groups, the employer must be prepared to justify them. All compensation policies, programs, and practices of an organization should be examined as steps intended to guarantee that no discrimination against protected groups has occurred or can occur. Laws Affecting Collective Bargaining The legal environment of compensation administration includes the rules of the game in collective bargaining. Collective bargaining is a method of determining compensation (as well as other terms and conditions of employment) if employees prefer it. But with very minor exceptions (union security clauses and discrimination matters) collective bargaining leaves the decisions to the parties. If employers and employees prefer to strike individual bargains, the rules are those we have been discussing. Tax Laws Tax laws are an obvious part of the legal environment of compensation administration. Anyone who has ever received a paycheck is aware of income tax withholding. Less obvious, however, is the influence of tax laws on benefits and, especially, on executive compensation. Not all benefits are taxed; many are bargains in part because they are not. Some benefits provide deferred income that is not taxed until the employee receives the benefit. These provisions constitute many of the real benefits of pensions, profit sharing plans, and employee stock ownership plans. Equally important is the influence of tax laws on employer benefit costs. These laws often encourage certain kinds of benefit programs and discourage others. Under the present U.S. Internal Revenue Code, certain benefits are not taxed; health and life insurance are examples. Other services or perquisites may or may not be taxed. For example, services or perquisites provided only to executives are considered taxable. Many forms of executive compensation appear, expand, and even disappear in response to changes in tax laws. Stock options, for example, seem to expire or acquire new life in this way. Various forms of deferred income and restricted stock also seem to vary in this way. For all of these reasons, tax laws are an important part of the legal environment of compensation administration. Understanding tax laws is a prerequisite to designing compensation programs. Benefit Legislation Just as minimum and prevailing-wage laws place a floor under wage rates, so Social Security, unemployment insurance, and Workers' Compensation can be interpreted as placing a floor under benefits. Likewise, the Employee Retirement Income Security Act of 1974 and the 1980 amendments of it applying to multi-employer pensions can be considered assurance-of-benefit-payment laws. OASDHI The Old Age, Survivors, Disability and Health Insurance Program (OASDHI) is at least as significant to employee benefits as the FLSA is to wages. More than nine out of ten workers are covered by its provisions, which form the base of most benefit programs. The only workers not covered are federal civilian employees in the federal retirement system (as of now), state and local government employees who have chosen not to participate, some agricultural and domestic workers, and employees of some nonprofit organizations who have not arranged coverage. The programs under this label provide retirement, survivors, and disability insurance; hospital and medical insurance for the aged and disabled; black-lung benefits for coal miners; supplementary security income; unemployment insurance; and public assistance and welfare services. Social Security Retirement, survivors, and disability insurance, as well as hospital and medical insurance for the aged and disabled are paid for by a tax on employers and employees. These taxes, authorized by the Federal Insurance Contributions Act of 1936, constitute the FICA deductions noted on paychecks. Employer and employee taxes and the earnings subject to tax have been rising along with benefits. In order to pay for this expansion, the tax has gone up over the years. In 2000, only the first $76,200 in earnings were taxed. In 2002, this rose over 10% to $84,900.Social Security also imposes some record keeping and reporting requirements on employers: amounts and dates of wage payments; amount of tips received; name, address, occupation, periods of employment; and Social Security number of each employee receiving wages. The W-2 form that each employer must provide each employee by January 31 for the previous calendar year is a requirement of Social Security. Unemployment insurance This is a state-administered program operating under general requirements set out by OASDHI. Its function is to provide partial income replacement when a worker loses a job through no fault of his or her own. Unemployment insurance (UI) is funded by a tax levied by states on employers. In a few states, employees also contribute to unemployment insurance. The employer's tax depends on benefit levels in the state and the employer's record. The employer's tax is adjusted up or down from the standard tax depending on the employer's record or experience rating. States vary somewhat in the way they compute the experience rating, but in all of them, the greater the number of successful UI filers, the higher the tax. Successful filers must register at a public employment office and file for UI. The worker's previous job must have been covered, and an earnings or employment test met. To draw UI, workers must be able to work, be available for work, actively seek work, and be willing to take a suitable job. Workers must have lost jobs through circumstances beyond their control; they cannot quit without good cause, and cannot have been discharged for cause. In almost all states, workers may receive UI if they are unemployed because of a labor dispute in which they are participating. Both workers and employers have the right to appeal UI-eligibility decisions. Employers concerned with their experience ratings challenge claims they deem inappropriate and carefully document discharges. Worker's Compensation Worker's Compensation varies from state to state depending upon state laws. Because worker coverage, benefits to workers, and costs to employers vary tremendously from state to state, several national commissions have suggested federal standards. The goal of Workers' Compensation laws is to provide medical care and income to workers who are injured on the job or who acquire an industrial illness, and to provide support to dependents if a worker is killed; it is essentially an insurance program covering work-related injuries and illnesses. States vary in whether employer self-insurance is permitted, and whether a state insurance fund must be used or whether private insurance carriers are acceptable. Benefits are usually based on a worker's wages at the time of injury and the number of his or her dependents. Maximum and minimum payments for specified injuries and total claims are typically specified by law, as are time limits for benefit payments. Costs to employers are influenced by the provisions of the state law as well as by the employer's accident record. ERISA The Employee Retirement Income Security Act of 1974 (ERISA) was passed to ensure that pensions offered by private industry employers met certain standards and were received by employees. ERISA does not require employers to offer pension programs, but it does require that those who do follow certain rules if they want favorable tax treatment for both their contributions and for their employees' deferral of income. ERISA requires that plans regularly provide participants with important information about features and funding. It sets minimum standards for funding, vesting, participation and benefit accrual. ERISA also requires that plan fiduciaries (those who manage a plan's assets) be accountable. Otherwise, these fiduciaries may be responsible for restoring losses to the plan. As additional insurance, ERISA allows participants to sue for benefits and breaches of fiduciary duty. PBGC To insure that vested benefits are paid to employees in spite of employer default, the Pension Benefit Guarantee Corporation (PBGC) was created. A covered employer pays a charge per plan participant per year into the PBGC as an insurance premium. Vested benefits of up to a certain amount per month are guaranteed to participants. The PBGC is a federal agency that assumes control of the defined benefit plan and pays basic benefits to retired workers in the event that an employer is unable to fund the defined benefit plan due to financial problems. Defined benefit plans are the only type of plan covered by the PBGC; and the PBGC does not guarantee the following benefits: vacation pay, health care, severance pay, and other non-basic benefits. Vesting Under ERISA, an employee gains ownership of accrued pension rights through a period of employment. These ownership rights are obtained even if the employee leaves the organization before retirement. The process of acquiring ownership through employment time is called vesting. For defined benefit plans, an organization can use any of three vesting methods under ERISA.
The organization may also use a more generous vesting schedule. ERISA also has requirements for defined contribution. For 2002 and beyond, ERISA requires companies to adopt a schedule at least as generous as one of two vesting schedules for 401(k) and 403(b) plans:
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) HIPAA establishes a federal role for regulating the employer group and individual insurance markets). The goal of the legislation was to provide coverage security for those currently insured. It guarantees the availability of insurance to all small employers (with 2 or more employees) and assures that individuals who leave employment are able to maintain health insurance coverage. Thus HIPAA ensures access to insurance for some employer groups and individuals who previously were unable to purchase health insurance or unable to purchase adequate coverage. HIPAA contains many provisions, including administrative rules intended to reduce the costs and administrative burdens of health care by making possible the standardized, electronic transmission of many administrative and financial transactions that are currently carried out manually on paper. (See Chapter 24.) Most importantly, it allows states to pass legislation affecting employer medical plans as long as those laws are more beneficial than federal law. What effect this will have on the number of uninsured or the price people pay for insurance is debated, although the previous five years have seen costs again reach 12% annual increases, and the number of national carriers drop dramatically (to two). The variability among states in existing insurance legislation, and the flexibility that states are given to implement the individual market reforms, suggest that the answer to these questions will vary. Overall HIPAA is not good news for administrators. HIPAA has made modern benefit administration evermore complex and requires administrators to constantly keep up with laws of the states in which they have employees. As states continue to pass diverse laws related to health care, it may make it all but impossible to safely manage self-insured medical plans. It may drive all the insured carriers from the market (or at least prevent carriers from insuring across state boundaries). For more information on HIPAA, see http://aspe.os.dhhs.gov/health/reports/hipabase/pt2.htm. THE UNION ENVIRONMENT Unions and collective bargaining represent an important part of the environment in which compensation administration is practiced. Compensation decisions by both union and nonunion organizations are affected by unions -- the former directly and the latter through the "threat" effect. Unions attempt to regulate every kind of managerial action that directly affects the welfare of their membership or their own strength and security. The substantive provisions of union contracts may be said to encompass three main groups: job tenure and job security; work schedules, work speed, and production methods; and amount and method of compensation. All three influence wage costs and decisions. Methods of hiring, promotion, and layoff influence labor costs indirectly. Work speeds and production methods strongly influence labor costs. The decisions on compensation, wages and benefits, bear directly on costs. Unions try to influence employers hiring, placement, and retention decisions in part to ensure jobs for their members and in part to influence the wages paid by reducing the labor supply. Their interest in union security, training programs, use of seniority in promotion and transfer, and discipline and discharge decisions is tied to getting and keeping jobs and employment opportunities for their members. Although unions have always showed concern with demand for labor, there is evidence that their concern for job security may be increasing. A not unusual quid pro quo for wage concessions in the recession of the 1980s and 1990s was an increase in job-security guarantees. The unions' interest in work schedules, work speeds, and production methods represents their concern with the effort bargain. The cost to employers of employment is labor cost per unit of output. Thus employers want as much output as possible for their wage costs. The unions' concern with work speeds, timework versus incentive plans, production techniques, and work rules represents their desire to prevent exploitation of members, conserve employment opportunities, and make life on the job more pleasant for members. Unions try to influence all of the compensation decisions affecting their members. For example, they try, often successfully, to reduce wage differences among unionized companies in the same industry. This principle of the standard rate for workers doing comparable work stems partly from considerations of equity and partly from political pressures within the union. But a better explanation is that a uniform wage level for companies operating in the same product market takes wages out of competition. Application of this principle varies with the geographic scope of the product market. In local-market industries there is a tendency toward wage equalization within the city but often much variation in wage levels between cities. In manufacturing industries where firms compete on a regional or national basis, there is a tendency toward uniformity in wage levels throughout the country. Although attempted equalization of hourly rates is most common, equalization of other measures has been sought by various unions at various times. For example, equalization of the rate for common labor, all job rates in a plant, piece rates, or labor cost per unit may be attempted. Equalizing one of these measures, though, will not produce equality in the others. More important, these objectives have different consequences. Imposing uniform hourly rates may result in serious hardship to an inefficient plant or company, whereas uniform piece rates would not. Equalizing labor cost per unit of output would be most difficult. The wage-paying ability of companies or plants may differ because of variations in technical efficiency, management ability, or geographic location. Unions attempt to determine if low-paying organizations are paying as much as they are able to pay. Organizations may assert their inability to pay, and unions may require convincing evidence. One of the effects of concession bargaining in the early 1980s has been that organizations now provide more information on their condition and prospects. Union pressure frequently forces management to increase efficiency and thus the organization's ability to pay. Where this "shock effect" cannot occur because of unchangeable economic conditions or company conditions, some of the less efficient plants may be forced from the industry. If union members in a particular plant become convinced that forcing wage equalization will cost them their jobs, they will usually vote to accept a lower wage and keep the plant in operation. This is more likely to occur when the plant is geographically isolated and members would have to travel some distance to find new employment. In such cases even national union officers may be willing to accept some departure from wage equality. In general, however, unions emphasize the principle of the standard rate rather than the principle of ability to pay. Some disagree and insist that pattern bargaining is dead, that the ability to pay of each employer will drive the bargaining.19 Others believe that concessions and other unusual union behavior will disappear with continued improved economic conditions.20 The latter may argue that whether a given organization followed the "pattern" has always depended on the economic survival of the organization. Unions in different industries face different conditions that may enhance or reduce their influence. Such factors as skill mix of the labor force, geographic location, proportion of female or minority employees, percentage of the industry organized, profitability, rising product demand, productivity increases, industrial concentration, oligopolistic product market, and large size have been shown by research to influence the degree of success of union bargaining efforts. Much of this research has been designed to determine whether unionism makes a difference in wages. In the process it has been necessary to try to measure and adjust for the factors just mentioned in order to isolate the independent effect of unionism. Most of these studies have found that unionism has a moderate effect, on the order of 15 percent. The effect is greater in times of recession and much less in periods of inflation. Apparently the serious recession of the early 1980s was no exception, and the union-nonunion differential has been growing in spite of the lower proportion of the work force represented by unions. An interesting question left by such research is why, given the tremendous differences among industries in favorability of economic conditions for union gains, the union-nonunion differential has been so modest. One possible answer is the politics of unionism, which forces union leaders to keep up with wage changes but holds out little incentive for them to lead. Another is that equity and reasonable wage relationships act as conservative forces. Still another is that market forces limit the relative wage differences among industries, which would permit all of them to attract and keep a work force. It is true that unions in some industries have raised relative wages of their members more than unions in other industries. This may be partially explained by favorable economic conditions, but not always. A better explanation may be that large-scale, highly concentrated industries are easier to organize and to win gains from, for several reasons. Large plants may mean less costly organizing. Workers in large organizations have lower job satisfaction and are more union-prone. Large organizations are visible to the public, and antiunion activities would be also. Large plants represent high fixed investments; their parent firms cannot run away. But this explanation is also incomplete. Some industries are made up of small organizations whose business is such that they are confined to a location that the union controls when organization is complete. Another possible explanation is the nature of the union and its leaders. The skill mix of an industry has an effect on whether craft or industrial unionism is the norm. But type of union has an independent effect. A strong case can be made that the industrial unions in autos and steel changed the wages and benefits of tens of millions of American workers through innovative bargaining. If, as seems likely, their influence has been eliminated by structural changes in the economy, and if no other union(s) assumes their former leadership role, the union environment of the United States will be greatly changed.21 Unions may change occupational differentials in the industries that they organize, and they may do so through their influence on how general increases are made in a company. By organizing blue-collar workers in certain industries they may have raised their wages relative to clerical, professional, and managerial workers. Also because the least-skilled and lowest-paid workers are nonunion and often in the service sector, the wages of these people may be relatively lower because of unionism. Within organizations, unions that obtain general wage increases have an effect on occupational differentials. But those that obtain flat cents-per-hour increases (primarily industrial unions, for political reasons) reduce occupational differentials. Craft unions, however, are more likely to maintain customary differentials, and thus occupational differentials would not change. However, union policy may dictate raising the lower rates to protect the total structure. Even in industrial unions, customary differentials are usually protected by membership sentiment and threats by skilled people to form their own union. On balance, a decline in the earnings of skilled and semiskilled relative to unskilled workers has been a general tendency in the United States. Unionism may have aided this tendency, but not very much. The decline in the occupational differential has varied by industry. The principle of the “standard rate” suggests that unions attempt to eliminate the differential among regions and communities of varying size. But this depends on the market structure of the industry and the scope of bargaining. Where competition is limited to a locality and bargaining is conducted locally, there is no reason to expect wage equalization among localities. Thus, where unions have organized high-wage regions and communities, they may have widened geographic differentials in such industries. In manufacturing industries selling in a national market, unionism may reduce or eliminate geographic differentials. Economic pressures work in this direction. So do political pressures from union members. Although employers tend to favor paying wages that are in line with the community level, national bargaining may be able to achieve equalization. Geographic equalization is more likely in industries that are highly unionized and concentrated and in which plants in low-wage areas are subsidiaries of companies in high-wage areas. In some industries unions fail to reduce or eliminate geographic differentials because their strength varies from region to region. On the other hand, strong unions may achieve equalization among regions even where there is no reason for it in the product market. Unions in most industries have had little effect on geographic differentials, because of either local markets or lack of strength. Where differentials have been reduced, industry location may be affected. Wage leveling reduces inducements to move on the grounds of labor costs, at least in small, labor-intensive industries. Unions also influence the employment exchange by trying to influence legislation. Union support for minimum-wage laws is well known. Unions have also been in the forefront in reducing hours of work. Less evident is their interest in restricting immigration. All of these efforts have probably had the effect of reducing the labor supply and thereby increasing the general level of real wages. Unions also attempt to influence the makeup of the reward package by pushing for benefits that improve the security of employees and the amenities at the workplace. The widespread existence of some benefits is probably due to union innovation. Unions also greatly influence personnel policy and practice in organizations. With the exception of selection and training of new employees, all personnel programs for unionized agreements are jointly determined. In fact, the erosion of the employment at will doctrine in the 1980s and 1990s stems at least in part from the protection against arbitrary discharge that unionism provides. There is evidence that concession bargaining in the early 1980s resulted in a change in union concerns and bargaining tactics. One such effect has been a demand for gainsharing, including profit sharing. More significant, perhaps, is increased union concern with employment levels. Where in the past unions have usually bargained wages and left decisions on employment levels to the employer, now unions granting wage concessions often demand detailed information on company operations. Further instances of union concern with employment levels include wage concessions in return for employment guarantees, union involvement in management decisions, advance notice to unions before plant closures or work transfers, and strengthening of supplementary unemployment benefits, severance-pay provisions, and employee rights to transfer to still-open plants.22 These trade-offs appear to involve important management prerogatives. Probably the most important is the unions' insistence on their right to be informed of company decisions that affect the organization's prospects and thus its work force. Apparently pricing policy, cash-flow decisions, and new investment decisions have all been discussed in concession bargaining. Whether these are permanent changes in collective bargaining and whether they will spread to industries in which they do not now appear cannot be foreseen. They seem quite foreign to the ideology of American workers and to management tradition. But it is hard to believe these innovations will disappear without having some effects. THE ORGANIZATIONAL ENVIRONMENT Compensation administration is practiced within organizations. For this reason, it may be said that the organization's goals and its incumbents represent the most pertinent environment of compensation administration. Organizations may be classified as private for-profit, not-for-profit, and government entities. Although there are differences among these types of organizations in cost consciousness and accounting practices, they are of degree and are becoming smaller.23 As a result, these differences appear to be among the least important to compensation administration. But the economic, social, and legal environments of the organization have substantial effects. So do the maturity, size, number of businesses engaged in, number of organization levels, centralization versus decentralization decisions, technology, information and control systems, and management style of organizations.24 Economic conditions place limits on organizations. These limits, however, vary among organizations and over time. An organization's compensation and benefit levels have maximum and minimum limits, which are set by its position in the product and labor markets. The organization could not go below the minimum and hold enough employees to meet organization goals, and it cannot exceed the maximum for budgetary reasons. But these limits are not clearly defined unless the organization believes it is close to either limit and in danger of being pushed beyond it. Furthermore, these limits depend on the period under consideration. The organization can exceed either limit for short periods, but for longer periods the range between them is narrower. The maximum and minimum levels are determined by different forces, and there is not necessarily a connection between them. The maximum is set by conditions in product markets and the organization's ability to operate within them in terms of costs and prices. The minimum is determined by conditions in labor markets, which result in part from supply and demand for labor, but at least as much from customary relationships, legal pressures, union pressures, and pressures from other organizations. Other organizations affect employer wage decisions in two directions. Some organizations in the community exert downward pressure to keep the employer from "upsetting the market." Other organizations in the industry may exert upward pressure to forestall "unfair competition" in wages. Thus an organization in a high-wage industry in a low-wage community must somehow balance these opposing forces. Social, legal, and union environments affect an organization through the kinds of employees it hires and retains. Forces bearing on these organizational members will be outlined later in this section. Although some organizations are seriously restricted in at least some compensation decisions by the environments in which they operate, the typical organization has a good deal of leeway in compensation decisions. It can adjust its compensation administration system according to its structure and incumbents. Organization Size An organization's size can serve to free or restrict its compensation decisions. Small size, if combined with limited economic resources, may restrict the range of compensation levels. But the flexibility permitted by small size may be an advantage in most other compensation decisions. Pay relationships may be less important because each member can arrange his or her contract with the owner. Unique pay arrangements with individuals may be worked out to attract needed individuals. Pay increases may be closely tied to performance visible to all members. Profit sharing and gainsharing plans may have performance-motivation effects in small organizations, but not in large ones. Communication regarding pay may be more open. Large organizations, on the other hand, may have more economic slack and thus be less restricted in determining wage levels. But in other compensation decisions they are typically more restricted. More attention must be paid to internal pay relationships. The possibility of conflict between internal equity and external competitiveness becomes more severe. More serious is the difficulty of relating pay to performance. Lower-level managers in large organizations have the information on performance, but permitting them to make pay decisions often promotes inconsistency. A common result appears to be that large organizations need to relate pay to performance more, but use this relationship less than small organizations. Communication of the pay system is probably also vulnerable to differences in organization units. As is well known, large organizations have difficulty integrating the differentiated units that come with increased size. Thus, seeing that the pay system accords with other systems is a continuing problem. Organization Age The age of an organization may be associated with its size, because almost all organizations attempt to grow. But age may also be considered an independent influence. New organizations and plants may be designed around a homogeneous work force, a particular management style and non-traditional pay systems. With increasing age and diversity of the work force, new and different pay plans may be required. Just as product life cycles dictate different management approaches, organization life cycles seem to require different pay systems. Nowhere was this more evident in American dot.com companies. (A standard practice was to ascertain competitive rates, increase that amount by 20%, pay ½ that total in direct compensation, and award stock options of that exercise value. Multiple Businesses Although product markets drive the maximum wage levels, organizations engaging in several businesses often have only one compensation system. Perhaps the major reasons are their desires for a consistent approach and more ease in transferring employees. Whereas an organization in a single business can have a single pay system regardless of location, a multiple-business enterprise would be unwise to do so. The needs of each business should determine the pay system, pay levels, pay structure, pay-system plans, and pay forms. This influence often becomes important when an organization diversifies into a new business. Attempting to use the previous pay system in the new business may cause serious equity and performance problems. Most assuredly it will cause one group or the other to be over or underpaid. Perceived inequities can probably occur if more than one business is operated out of a single installation. Moving to separate systems seems a better solution than trying to operate with one pay plan. Number of Management Levels Just as large size (more jobs and more incumbents) requires different compensation systems, so do more management levels. More attention to job and pay relationships is usually called for in multiple-level organizations. At least in management jobs, reporting level has been found to explain almost 90 percent of the variance in pay.25 Also, jobs at different management levels require that different variables be measured in performance-pay plans. Centralization vs. Decentralization The degree of centralization should influence the pay system because it determines the level at which performance information is gathered, the point where important decisions are made, and the technical competence of decision makers. If only centralized measures are available, measuring plant or other unit performance may be impossible. If decisions are made at corporate levels, unit managers cannot be rewarded for unit performance. If the competence to measure and reward performance does not exist at the local level, performance-based pay plans won't work Information Systems The information system of an organization often determines if a performance-pay plan is appropriate and, if so, the level at which it must operate. Performance-pay plans require a good performance-measurement system. Equally important, the organization level to which these measurements apply (individual, group, plant, or organization) determines the appropriate type of performance-pay plan Influence Systems Whether an organization is basically authoritarian or is open to substantial influence by its members has a strong effect on its pay system. Because authoritarian organizations limit information to members and member trust is unlikely, severe limits are placed on the pay system. Pay information will be secret or limited. Employee input in pay decisions will be unlikely. As a consequence, pay decisions must be objectively based to achieve employee acceptance. In contrast, organizations permitting more member influence on decisions are more likely to exhibit employee trust in management. In such organizations more pay information will be provided employees. Also, employee participation in committees making pay-related decisions is more likely. Because employee acceptance is the ultimate test of the equity of a compensation system, such organizations have more leeway in choosing a pay system that fits the organization. Pay systems must fit the people who work in the organization. People differ in capabilities, needs, and values. As mentioned in our discussion of technology, they also differ by occupation. They differ in age, gender, and family situation. For the illegal immigrant working in the fields and factories, they also differ by nationality. Employees also differ in reward preferences, attitudes toward work, and involvement in work groups. These differences affect the appropriateness of a compensation system. Members of different occupational groups expect to be treated differently. Age, gender, and family differences often result in different reward preferences. Attitude and value differences may encourage or discourage a performance-pay plan or the form it takes. Perhaps even more important to pay systems are forthcoming changes in work forces. As suggested in the section on the social environment, the work force is becoming more heterogeneous. Organizations can expect to employ more minorities, more women, and more older people. This means more differences in values, lifestyles, and family situations. In turn this means greater differences in preferences for and attitudes about compensation. Another suggestion that flows from the rising expectations noted in the social-environment section is that people are placing more importance on pay. If this is true, pay-system design and operation become even more crucial. Still another suggestion flows from what appears to be an increase in rights consciousness. It appears that workers are becoming increasingly conscious of their right to a fair process of pay, promotion, and dismissal decisions. This means additional attention to the equity of compensation systems. Compensation Policy Perhaps the most important aspects of the organizational environment are an organization's intentions and goals with respect to compensation. What the organization intends to do about rewards and what goals it seeks to accomplish with the pay system tell managers and employees what to expect. It should also provide stability, consistency, and the credibility the compensation system needs in order to work. Organizations should probably determine and state their policies in the following areas:
Because there is no objectively correct answer to pay issues, each organization must design its own compensation system to fit its situation. Carefully considering these strategic issues and taking and stating a position on them, tells members what to expect and decision makers what to do. TECHNOLOGICAL ENVIRONMENT The technology of an organization has a strong influence on its pay system. Technologies differ in job design and the kind of job incumbents that predominate. Jobs in the different technologies differ in cost structures, measurability of performance, interdependence and thus need for cooperation, and number and level of skills needed. Organizations engaged in process production (as opposed to mass production and unit production) usually have lower labor-cost ratios and thus more freedom in decisions on wage levels.26 But in process technology (such as chemical plants), operations are much more interdependent and individual performance is much more difficult to measure. Thus, process industries, although in a position to pay well, are limited in designing pay to motivate performance at the level of the individual. Plans measuring performance at the level of the group, plant, or company may, however, make good sense. On the other hand, organizations in process industries often have relatively few employees and thus enjoy the advantages of small size. Unit or mass production usually requires less interdependence and a more simple form of it. Thus, these two types of production often permit paying for individual performance. Appropriate pay-for-performance plans, however, usually differ between unit and mass production. Service industries can usually be classified in the same way and would seem to be subject to the same variables. Many service organizations specify high interdependence among employees. But many do not. In some service industries, identifying performance may require more effort. But many service organizations are small and enjoy the advantages that this entails. Also, many have high proportions of highly skilled jobs. Another useful way of classifying technologies for pay-system purposes emphasizes the different types of employees as typical rank-and-file members.27 Obviously, organizations composed chiefly of semiskilled production workers, skilled workers, engineers and other professionals, or technically trained managers would call for quite different pay systems. For example, the first two would be expected to resist performance-pay plans and the latter two to demand them. Communications Policy The Internet brings an organization's information to an employee's fingertips at work (via a Local Area Network) and at his/her home (via the Internet). The rush to LANs should not be overlooked. It is estimated that over 94% of businesses with more than 100 employees have a local area network over which employees share information. The Internet Age also requires decisions regarding:
If one accepts that the Internet is affecting compensation management, it would only be logical to define what an organization wishes to achieve using this technology. Equally logical, would be to outline a set of measurement standards with some oversight as to their achievement. SUMMARY In most areas of management today there is a greater concern with the environment. Compensation is no exception. We have examined the major aspects of the environments that affect the manner and outcome of compensation decisions, including the economic, social, legal, union, internal organizational and technical environments. Economic and Social Environments The economic environment has been affected recently by major changes both in the supply of and demand for labor. On the supply side, there has been an increasing participation rate, particularly on the part of women. Men, on the other hand, have shown some decline in participation. This is especially true for older men. These changes, coupled with changes in the attitudes of younger workers, have created a significant transformation in the nature of today's labor force. The demand for labor is likewise changing. The move from a manufacturing to a service society makes many of the traditional middle-class skills obsolete. There is an increasing dichotomy in the demand for labor between the high skilled and the low skilled, such that movement from one to the other becomes more and more difficult. Matching these diverse trends is the job of the labor market. This market is clearly an imperfect one, both theoretically and practically. Legal Environment The legal environment continues to become more structured and demanding for the organization. While the basic laws in compensation were a result of the depression years, the new legislation is a function of the demands for social justice of the past 30 years. The issue of comparable worth was once believed to be the major concern in compensation. Today we wonder what the world will be like when employees are as well informed about competitive rates and legal rights as their employers. In the field of benefits, there is a continuing trend toward legislation to protect employees' investment in their benefits. The allowance in the U.S. for states to pass their own laws affecting health care beginning in the late 1990s has led to ever increasing complexity for the multi-state employer. All point toward a greater role for the Internet. Union Environment The balance of power between management and labor unions has changed dramatically in the past few years. Union power has been eroded by the poor economy in the late 1970s and early 1980s, losses in union membership, changing composition of the work force, and changing attitude by management and the government. Organizations efforts (supported by the government) to shift manufacturing jobs off-shore further eroded union power. However, the impact of unions on compensation decisions, while lessened, has not disappeared. Some of the more dramatic changes in compensation, such as two-tiered pay systems, are a result of the changing balance of power in union-management negotiations. It would appear that, for a time anyway, unions are going to be more interested in security than in increasing wages greatly. Organizational Environment One of the least considered influences on compensation decisions is the organization itself. The size, age, type of business, management structure and philosophy, technology, and power structure all influence the compensation program that the organization requires. There needs to be a fit between the type of organization and the type of compensation program. It can be seen from these environmental factors that the organization is limited in the type of compensation program that it develops. In contrast to that, different organizations, since they are in different environments, can be expected to have different compensation programs. Technological Environment The changes in technology have led to different compensation systems for different types of workers. Some respond well to variable pay systems, others resist them. The Internet has simplified employer-employee communication. Now employees can answer their own compensation and benefits questions by logging onto their organization's website from at home or at work. This increased communication requires special attention to what data is offered and who has access to it. |
| 1 | C. Kerr and J, Rosow, eds., Work in America: The Decade Ahead (New York: Van Nostrand Reinhold, 1979). |
| 2 | G. J. Stigler, "Information in the Labor Market,"Journal of Political Economy, supplement, October 1962, pp. 94-105. |
| 3 | Business Week, August 3, 1981, p. 62. |
| 4 | "Employment Status of the Civilian Noninstitutional Population, by Gender and Race: 1980 to 1994," based upon the publications of Claudette E. Bennett, U.S. Department of Commerce Economics and Statistics Administration, Bureau of the Census. |
| 5 | L. Harris, "Our Changing Structure of Values," in Working in the Twenty-First Century, ed. C. Sheppard and D. C. Carroll (New York: John Wiley, 1980), pp. 123-36. |
| 6 | D. Yankelovich, "Work Values and the New Breed," in Work in America, ed. Kerr and Rosow, p. 3-26. |
| 7 | D. Yankelovich, "Yankelovich on Today's Workers," Industry Week, August 6, 1979, pp. 60-68; and D. Yankelovich, "The New Psychological Contracts at Work," Psychology Today, May 1978, pp. 46-50. |
| 8 | See D. Yankelovich, New Rules (New York: Random House, 1981). |
| 9 | Lydia Saad, "American Workers Generally Satisfied, but Indicate their Jobs Leave Much to be Desired," Gallup News Service, Princeton, New Jersey, Sept. 3, 1999, www.galluppoll.com/content/?ci=3616&pg=1. |
| 10 | Jeffrey L. Seglin, "The 1998 Inc./Gallup Survey: The State of the American Workforce," Inc. Magazine, June 1, 1998. |
| 11 | Saad, loc. cit. |
| 12 | Seglin, loc. cit. |
| 13 | S. A. Levitan, and Richard S. Belous, "The Minimum Wage Today: How Well Does It Work?"Monthly Labor Review, June 1979, pp. 17-21. |
| 14 | Lemons v. City and County of Denver, Colorado, 1978 620 F2d 225. |
| 15 | I.U.E. v. Westinghouse Electric Corporation, New Jersey, 1979 620 F2d 228. |
| 16 | Gunther v. County of Washington, 1981 U.S. Supreme Court 451 U.S. 161. |
| 17 | See, for example, Helen Remick, "Strategies for Creating Sound, Bias-Free Job Evaluation Plans," in Job Evaluation and EEO: The Emerging Issues (New York: Industrial Relations Counselors, 1978). |
| 18 | See E. R. Livernash, ed., Comparable Worth (Washington, D.C.: Equal Employment Advisory Council, 1980). |
| 19 | For example, A. Freedman and W. E. Fulmer, "Last Rites for Pattern Bargaining," Harvard Business Review, March-April 1982, pp. 30-48. |
| 20 | For example, J. T. Dunlop "Remarks by Former Secretary of Labor Dunlop on 1982 Wage Developments before Conference of Business Economists," Daily Labor Report, February 23, 1982, pp. D1-D2; and D. J. B. Mitchell, "Is Union Wage Determination at a Turning Point?" in Proceedings of the 35th Annual Meeting, IRRA, (1983), pp. 35-61. |
| 21 | E. M. Kassalow, "Concession Bargaining: Something Old, but Also Something Quite New," in Proceedings of the 35th Annual Meeting, IRRA, (I 983), pp. 372-82. |
| 22 | Cappelli, "Concession Bargaining and the National Economy," in Proceedings of the 35th Annual Meeting, IRPA, (I 983), pp. 362-71. See also Kasslow, op. cit. |
| 23 | D. Q. Mills, Labor-Management Relations (New York: McGraw-Hill, 1978), p. 38. |
| 24 | E. E. Lawler III, Pay and Organizational Effectiveness: A Psychological View (New York: McGraw-Hill, 1971). |
| 25 | K. Foster, "Job Evaluation: It's Time to Face the Facts," Working Papers. |
| 26 | J. Woodward, Industrial Organization: Theory and Practice (London: Oxford University Press, 1965). |
| 27 | C. Perrow, Organizational Analysis: A Sociological View (Belmont, Calif.: Wadsworth, 1970). |
Internet Based Benefits & Compensation Administration
Thomas J. Atchison
David W. Belcher
David J. Thomsen
ERI Economic Research Institute
Copyright © 2000 - 2004
Library of Congress Cataloging-in-Publication Data
HF5549.5.C67B45 1987 658.3'2 86-25494 ISBN 0-13-154790-9
Previously published under the title of Wage and Salary Administration.
The framework for this text was originally copyrighted in 1987, 1974, 1962, and 1955 by Prentice-Hall, Inc. All rights were acquired by ERI in 2000 via reverted rights from the Belcher Scholarship Foundation and Thomas Atchison.
All rights reserved. No part of this text may be reproduced for sale, in any form or by any means, without permission in writing from ERI Economic Research Institute. Students may download and print chapters, graphs, and case studies from this text via an Internet browser for their personal use.
Printed in the United States of America
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