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Wednesday, December 1, 2010

Dual Pay Structures

Dual Pay structures are a bad idea (Unions Yield on Two-Tier Wage Scales to Preserve Jobs, New York Times, November 20, 2010: A1, B2).

They create major inequities between employees hired at different times. In our modern economy, we are told that collaboration between workers and between management and workers is essential for the development and manufacture of new products. The management of these companies will regret their coercive actions as these two-tiers pay scales will inhibit the development of a cooperative climate.

These lower pay scales for new hires will also contribute to the large income inequities in the country. It is the Tragedy of the Commons all over again. It may make sense for one company to improve its profitability (and the managers' bonuses) by cutting wages, but the enlarging of a large pool of people lacking purchasing power will do little to improve demand in the long run.

Sent to New York Times

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