An increase in wages leads to a decline in supply of goods and services because labor is considered as a business cost. However, a reduction of labor costs also results in a decline in demand because the supply side creates the demand equation. The reason for this is that as costs of business are reduced by reducing the cost of labor, the result is that there are jobs lost and therefore there is less money on the demand side as well. Where there is a shortage of skills, high wages must be paid to ensure that workers are attracted. However, low skill jobs have many people who can work and therefore the result of this is low wages for such tasks (Gerhard, 2009).
In addition, it can also deteriorate the core of the company by reducing the number of employees and as a result causing an insufficient workforce. “Workers originally want unions primarily for defensive purposes -- to protect against what they see as arbitrary decisions, such as sudden wage cuts, lay-offs, or firings. If they are going to compete successfully in an economy that can go boom or bust, then they need a great deal of flexibility in cutting wages, hiring and firing, and adding extra hours of work or trimming back work hours when need be.” (Domhoff, 2013) Another example is that, when being protected under a union, it makes it difficult to discipline workers. Participation in a union starts to become more about the circulation of connections rather than skills proficiency. Also, despite having a voice in a union, there may still be aggression and lack of cooperation and collaboration; which is vital in a workplace.
The first pro this article states is that employees who are getting paid at a higher rate will be more likely to stay. These employees will feel more appreciated for their hard work. This means there will be a lower turnover rate,which results in fewer expenses to hire and train new employees. The second pro is the raise in inflation. The federal minimum wage needs to be raised in order to account for inflation.
Stryker likely gets their raw materials from multiple suppliers and if they are dominate enough, the suppliers can reduce the marginal earnings of the company. Stryker can reduce this risk by experimenting with new product design, having an efficient chain of suppliers, and seeking out suppliers whose business depends more on Stryker than vice versa. Buyer Power Buyers can put pressure on Stryker because they search for the best quality materials, yet they want to pay the least amount they can for it. This causes difficulty in sustaining profitability over a long period of time. Luckily, Stryker can reduce the bargaining power of buyers by creating a large customer base.
As expected, when workers are aware they are being monitored, the average productivity of the assembly line is increased. This ultimately causes a bias in the data being collected during the study, and the results are not accurate. Intuitively, workers will work at a slower pace when they do not believe they are being monitored. In either case, workers do not take kindly to the fact they are being monitored. This was ultimately shown to be true when Devinatz discussed a worker quitting when they realized they were part of a time study.
For example, the neoclassical model, simply put, states that the high cost of labor will decrease the demand for labor. This model assumes that each worker receives the minimum wage which is not completely inaccurate but the assumption can yield imprecise results. Another model is the monopsony model in which the employer’s side is compared to a labor force in which all employees are paid the same. This model can lead to an increase in employment as well as a decline in employment depending on the wage set by the labor force. According to recent studies by the Congressional Budget Office, a higher minimum wage can have two effects on the employment of low-wage workers: most of the low-wage workers who would receive a higher wage due to the federal minimum wage would also have a high income with some earning an income that would put the above the federal poverty standard while another effect is that some low-wage jobs would disappear and the income of the unemployed would decline
The fixation of wages bind the company to pay the workers the minimum amount as the government has fixed. Such situations might contribute in increasing the costs of employers thus causing them to make adjustments otherwise. For instance, the employers can choose to adjust this cost by reducing the hiring of workers, reducing the working hours, minimising the benefits and allowances and charging higher prices in return to compensate the cost incurred. A number of policy makers are on the view that companies cope with the fixation of minimum wages and increase in the minimum wages by compromising on the profits but in most of the situations, this is not the case. In order to maintain their net earnings, the business look for a number of alternatives, that includes cutting employment and making other similar decisions.
Changes in compensation could cause many issues is the staff does not feel adequately provided with benefits. A decrease in staffing can occur if the merger of the compensation systems leaves them feeling underpaid or that they have other employment options (Sinkin & Frederiksen, 2012, para. 4). For example, if staff will no longer receive a bonus in order to increase pay to help equalize pay grades across both companies. This could leave the staff that had their bonuses terminated with a feeling of being underpaid or unappreciated.
After a strike, the employees’ performance becomes reduced significantly in their working field. Consequently, making the organization suffer from slow growth in their rate of production. If the concession of the strike involves only the return to work and does not focus on the needs of the workers, during the recession period, an organization must be prepared to focus on any form of reduction productivity, and the employees work effort. Another outcome is that strikes tend to intensify the relationship between the employees and employer creating a problem in both disseminating information and work coordination between them. Consequently, the result of poor communication between the employer and employees is a low performance, which may eventually lead to low
The decision to cut down the expenditure means reduction in number of bases and corresponding slice in funding, hence, increasing the friction between the states to have a base in their state. • It is also less likely that the funds diverted from military expenditure immediately produce equivalent economic activity and returns in other forms thereby, hampering the economy. According to an article by Business Insider, immediate slashing of expenditure is sure going to be a problem to its economy. So, it suggests continuing spending the diverted budget so that fairly equivalent economic activity continues without impacting the number of jobs. This can be done by rerouting the funds to the development and renovation of new and existing domestic infrastructure respectively.