Two-Tier Wage Structure

Two-Tier Wage Structure
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Two-Tier Wage Structure
A two-tier system is a form of payroll system whereby a group of workers tends to receive relatively lower wages and employee benefits than others (Ashenfelter & Card, 2015). This type of wage system occurs when a company decides to increase the compensation of senior workers and when an employer hires new employees at a lesser wage compared to that of incumbent workers. There is major pressure from various sources who try to eliminate the two-tier wage structure. For example, various trade unions have tried to reduce the level of wage dispersion cause by a large difference in wages between employees who perform the same job. Additionally, the United Automobile Workers (UAW) despises this system since it violates the Union’s theory of equal pay for equal work (Ashenfelter & Card, 2015). The UAW is striding towards eliminating this system of payment. A large group of workers does not also support this system since it creates tension amongst employees who earn differently at the same workplace.
On the other hand, there is also pressure from various sources to retain this wage system for example, some employers encourage this system since it has enabled them to save on costs and wage expenses (Bewley, 2014). Most organizations are also working towards maintaining this system due to the notion that it motivates employees to work harder and accomplish organizational goals. Precisely, companies such as Amalgamated Putz Corporation have worked towards maintaining this wage system (Bewley, 2014).

The workers who are favored by the Two-Tier Wage Structure also advocate for the system since it enables them to receive better pay for their hard work and dedication. The different perceptions have resulted in a huge debate on whether the system is effective or not. Overall, organizations have a responsibility to ensure that employees agree to the established payment policies.

References
Ashenfelter, O., & Card, D. (2015). Handbook Of Labor Economics. Burlington: Elsevier Science.
Bewley, T. F. (2014). Why wages don’t fall during a recession. Cambridge, Mass: Harvard University Press.