Retooling Labor Costs

At many companies, compensation policies have gotten woefully out of whack, with wages for workers in some jobs greatly exceeding what the market says those jobs are worth.  Consider Joe, who has been a machinist for 25 years at the same company.  Joe is a steady and reliable worker.  Although he is a significant asset to his firm, his wages have gone up steadily, while his responsibilities haven’t changed.  Today, Joe is overpaid as a machinist compared with co-workers who have been doing the same job for just two years. Struggling to ride out the recession, Joe’s company has fired dozens of workers — and considering Joe’s salary, he is a candidate for the next round of layoffs.  Or maybe...

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