1

The World of Pay and The World of Pay and CompensationCompensation

Seventy percent (70%) of all jobs in the USA are in the service sector.

Service-sector jobs tend to be labor intense.

Service-sector companies typically spend 40 to 80 cents of each revenue dollar on employee compensation.

Wage competition in service-sector companies tends to be more intense.

2

The Compensation The Compensation ProgramProgram

Base Wages and SalariesAfter-tax amount on the paycheck

Wage and Salary Add-onsPremiums an Differentials

Incentive PaymentsPayment for specified outputs

Benefits and ServicesRetirement, Savings, Medical, (39% of payroll)

3

Reasons for the Differences in Pay and Compensation for Different

Employees

Kinds and Levels of Required Skills

Kind of Business Union and Nonunion

Status Capital Vs. Labor

Intense Industries Size of Business

Philosophy of Management

Total Compensation Package

Geographic Location

Factors That Determine Rates of Pay

4

Average Hourly Earnings Average Hourly Earnings November 1995November 1995

Specified Production WorkersSpecified Production Workers

Eating and Drinking Places Apparel and Accessory Stores General Merchandise Stores Apparel and Other Textile Products Food Stores Leather and Leather Products Misc. Retail Establishments Amusement and Recreation Building Materials and Garden Textile Mill Products

$5.65

7.54

7.60

7.77

8.25

8.26

8.52

9.02

9.26

9.49

Lowest Paid

Average Hourly Earnings Average Hourly Earnings November 1995November 1995

Specified Production WorkersSpecified Production Workers

PIPELINE except NATURAL GAS

PETROLEUM and COAL PRODUCTS

TOBACCO PRODUCTS

COAL MINING

ELECTRIC, GAS, and SANITARY SERVICES

METAL MINING

TRANSPORTATION EQUIPMENT

LEGAL SERVICES

COMMUNICATIONS

CHEMICAL and ALLIED PRODUCTS

$20.26

19.68

18.49

18.43

18.04

16.94

16.65

16.37

15.90

15.85

Highest Paid

6

Hourly Rates (1994) for Hourly Rates (1994) for Production WorkersProduction Workers

Five Highest

1) Michigan $ 16.40

2) Ohio 14.53

3) Delaware 14.08

4) Indiana 13.90

5) Connecticut 13.82

Five Lowest

50) S.Dakota $ 9.51

49) Mississippi 9.90

48) S.Carolina 10.21

47) Arkansas 10.23

46) N.Carolina 10.67

7

Reasons For The Differences In Pay And Compensation For Different

Employees

Supply and Demand of Labor

Profitability of the Firm

Employment Stability

Gender Difference

Employee Tenure and Performance

Other Factors That Determine Rates Of Pay

8

A World in TransitionA World in Transition

More Intense Global Competition

Slower Growth

More Rapid Change

Reordering of Traditional Businesses

Organizational Restructuring

Deregulation, Takeovers, and Mergers

Wage Depression and Revenue Escalation

9

Global Variations In Compensation Practices

Direct Compensation

Tax System

Social Security

Benefit Entitlements

Regulatory Environment

Employment Law