The World of Pay and Compensation

1
The World of Pay and Compensation

• 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 Program

• Base Wages and Salaries
• After-tax amount on the paycheck
• Wage and Salary Add-ons
• Premiums an Differentials
• Incentive Payments
• Payment for specified outputs
• Benefits and Services
• Retirement, Savings, Medical, (39 of payroll)

3
Reasons for the Differences in Pay and
Compensation for Different Employees
Factors That Determine Rates of Pay

• 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

4
Average Hourly Earnings November 1995Specified
Production Workers
Lowest Paid

• 5.65
• 7.54
• 7.60
• 7.77
• 8.25
• 8.26
• 8.52
• 9.02
• 9.26
• 9.49

• 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
Average Hourly Earnings November 1995Specified
Production Workers
Highest Paid

• 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

6
Hourly Rates (1994) for Production 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 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