Chapter 7

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Labor Relations

Chapter 7 Notes

Pg 293 Industrial Wage Differentials
Industrial wage differentials may be explained in terms of three interrelated factors: (1) the degree of completion or monopoly in the product market (2) the value added by workers in a particular industry (3) the percentage of total costs that labor costs represent
- Competition in the product market
- Value added by employees
- Labor costs as a percentage of total costs. A firm’s degree of labor intensiveness a measure of the proportion of total operating costs compromised of labor costs must also be considered in determining employee wage rates.
Pg 294 Occupational Wage Differentials and the Role of Job Evaluation and Wage Surveys
Job evaluation – The process of determining the relative importance of each job to the organization helps in understanding occupational wage differential; therefore the following steps in a job evaluation program are presented.
Evaluating Jobs Within the Organization
- Three common job evaluations methods used are ranking, classification or point system.
- A job evaluation may use 10 to 15 different job factors
- The foundation of job evaluation is Job analysis – is the process of systematically securing information and facts about the jobs evaluated.
- Exhibit 7.1 Typical Wage Structure for Manufacturing Firm
Pg 295 Surveys to Compare Firms’ Wage Structure Exhibit 7.2 Typical Results from a Wage Survey
Pg 297 Production Standards and Wage Incentives
Although wage incentive plans such as gain sharing, piece-rate pay, and profit sharing vary in structure and specific content, their goals are essentially the same: (1) to increase employee productivity (2) to attract prospective employees to the company (3) to reward employees monetarily for their increased productivity.
Pg 298 Profit sharing plans – cover between 6 and 27 percent employees in most industrialized countries where government tax policies often encourage the adoption of

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