Deck 9: Wage and Benefit Issues in Bargaining

Question 1

Pay system refers to the methods used to determine how much each individual will earn within a job.

Answer 1

True

Question 2

In a lane-and-step system,pay rates are based on work experience and reference provided by previous employer.

Answer 2

False

Question 3

The disadvantage of the two-tier pay plan is that the employees doing equal work receive unequal pay.

Answer 3

True

Question 4

High unemployment dampens union spillovers,while increasing inflation raises them.

Question 5

Collective bargaining alters the status quo in pay administration by substituting a negotiated contract for management's unilaterally determined practices.

Question 6

Cost of the health insurance is tied to the employees' pay level.

Question 7

The Scanlon plan's major purposes are to reward both parties for productivity gains,encourage participation,and tie pay to company performance.

Question 8

Private sector employers are ultimately interested in increasing workers' power.

Question 9

Cost-of-living adjustment is intended to maintain parity between wages and profits over time.

Question 10

In the short run,union wages are insensitive to changes in the unemployment rate compared to wages in the nonunion sector.

Question 11

Where COLAs exist,pay levels within the contract period are tied to changes in the consumer price index.

Question 12

ERISA compels employers to offer a pension plan to all the employees.

Question 13

One disadvantage of Impro-Share is that the competitors can easily determine wage costs.

Question 14

All else equal,companies in more mature,stable,or declining industries are likely to have higher health care costs because of the older average age of their workforces.

Question 15

When the economy is strong,a profit-making capital-intensive firm can avoid wage increase.

Question 16

Benefit status seniority refers to entitlements that individuals accrue from continued employment.

Question 17

Only in the construction industry are union workers paid better than the nonunion workers.

Question 18

In a national sample of employees,those who moved from nonunion to union employment had more equal wages.

Question 19

Reduced union coverage is a major contributor to income inequality.

Question 20

Incentive and performance-based pay programs are used more often in unionized settings than in nonunionized firms.

Question 21

Takeovers of unionized firms result in higher shareholder return compared with takeovers of nonunion employers.

Question 22

Which component is associated with pay level?

A) Job evaluation
B) Gainsharing plan
C) Health care costs
D) Standard of living

Question 23

If an employee is receiving pay based on his/her length of service in the organization and highest education received,then which pay structure is his/her employer following?

A) Grade structure
B) Lane-and-step plan
C) Two-tier plan
D) Job evaluation

Question 24

What is the primary disadvantage of the job evaluation system?

A) It makes it difficult to slot a new job in the existing pay structure.
B) There is reduction of compression in wage differentials if increases are given as a percentage of the total points.
C) Union and management must initially agree on the identification,definition,and point assignments associated with compensable factors.
D) It supports team-based production,which blurs job boundaries.

Question 25

Unionization has been found to have consistent effects on firm insolvency.

Question 26

A car manufacturing company wants to lower wage costs through decreased starting rates for new hires.Which pay structure should it implement?

A) Lane-and-step plan
B) Grade structure
C) Skill-based plan
D) Two-tier pay plan

Question 27

Unionized firms invest more in research and development because of the more skilled and productive labor.

Question 28

When do companies introduce cost-of-living adjustment?

A) When they want to increase employees' standard-of-living
B) When there is pay difference within different work groups
C) When the purchasing power of employees' pay has eroded
D) When the parity between wages and prices is high

Question 29

Which of the following is more likely to adopt a lane-and-step plan?

A) A manufacturing company
B) An airline company
C) An information technology company
D) A nonresearch university

Question 30

When the economy is strong,capital-intensive employers do not have the incentive to avoid large wage raise.Why?

A) The profit-sharing ability is high
B) They are compelled to add COLA
C) Nonbargaining unit employees have better benefits
D) Wage increase leads to job security

Question 31

In two-tier pay plans,when does the employer benefit most?

A) When the company is stagnating
B) When the lower-tier employment levels begin to increase
C) When the employee turnover is high
D) When the pay increase is related to the skills learned

Question 32

Because a unionized workforce increases wage costs,compared to unorganized firms in the same industries,a unionized firm is at a competitive disadvantage.

Question 33

When is an employer more likely to implement a grade structure?

A) When the union is supporting team-based production
B) When most of the jobs are filled from within the company
C) When education and experience are assumed to be related to productivity
D) When the pay increases with the learning of prescribed skills

Question 34

Identify a condition that is likely to decrease wage imitation.

A) Decreased competition in industries where employers operate
B) Differences between industries where employers operate
C) Equal ability to pay within the industries
D) Decreased emphasis on company productivity trend

Question 35

In unionized firms,workers are more willing to share job information due to seniority-based pay systems.

Question 36

Which of the following refers to a method by which compensation is received?

A) Pay level
B) Pay form
C) Pay structure
D) Pay system

Question 37

Which of the following helps determine pay structure?

A) Standard of living
B) Time worked
C) Wage-and person-tied benefits
D) Job evaluation

Question 38

What causes dissatisfaction in the two-tier pay plan?

A) Employees doing equal work receive unequal pay.
B) Employees with higher education get higher pay.
C) Employees with lower skill level get lower pay.
D) Senior employees get higher pay.

Question 39

Union's upward bargaining pattern has declined because of:

A) increased global competition.
B) unavailability of skilled labor.
C) strict laws protecting employers.
D) lack of employment opportunities.

Question 40

When does external equity demand in wages arise?

A) When the wages are different for different functions
B) When the wages are lower for unskilled labor than skilled labor
C) When the wages are lower than other similar firms with similar jobs
D) When the wages are different for similar functions within the organization

Question 41

Which of the following do unions have greater effects for?

A) Women employees
B) Residents of Northern states
C) Whites
D) Transport operatives

Question 42

What effect did the voluntary employee benefits association (VEBA)have on automobile manufacturers?

A) Rapidly escalated the cost of health care benefits for retirees
B) Compelled the companies to deposit $1,500 per vehicle manufactured to fund VEBA
C) Allowed them to transfer their liability to provide medical care for retirees
D) Reduced their global competitiveness and profitability

Question 43

In the Scanlon plan,which party is responsible for determining bonuses to be paid?

A) Employee committee
B) Screening committee
C) Production committee
D) Executive committee

Question 44

Which pay system refers to entitlements that individuals accrue from continuous employment?

A) Scanlon plan
B) Productive efficiency
C) Benefit status seniority
D) Gainsharing plan

Question 45

Profit-share bonuses are influenced by:

A) individual employee performance.
B) executive bonus committee.
C) product design decisions.
D) union's ability to negotiate.

Question 46

Which of the following is a method used to determine how much an individual will earn within a job?

A) Shift differentials
B) Land-and-step plans
C) Piece rate systems
D) Two-tier structures

Question 47

Which factor directly affects the health care cost of the employer?

A) Standard-of-living of workforce
B) Age and gender composition
C) Ethnic background of workforce
D) Manual labors and nonmanual labor composition

Question 48

When would employers prefer overtime workers than new hires?

A) When more work is needed and the employee wants to reduce costs
B) When person-tied benefits and paid time off exceed 50 percent of base pay
C) When the overtime contract requires higher premium
D) When costs are incidental to hiring and benefits are lower than overtime premium

Question 49

Health insurance benefits are:

A) wage-tied.
B) age-tied.
C) gender-tied.
D) person-tied.

Question 50

Why do employers currently choose the 401(k),401(a),or 403(b)plan rather than a traditional defined benefit pension plan?

A) Employers receive increased incentives to offer these plans and they carry substantially reduced risk.
B) There are guaranteed benefits for employees and the employer bears no risk of investment under these plans.
C) These plans ensure that if the company fails,the accrued pension benefits will nevertheless be paid.
D) Under these plans,employers have 40 years to fully fund an underfunded plan.

Question 51

One of the Scanlon plan's major purposes is to:

A) minimize employee participation.
B) increase labor input for a given output.
C) reward only employees for productivity gains.
D) tie pay to company performance.

Question 52

Which of the following statements is true regarding pension plans?

A) Under salary reduction plan,the employer's fiduciary decides where to invest funds.
B) Under defined benefit plan,the employee elects to contribute some amount of pretax income to his/her retirement account.
C) Under defined contribution plan,the risk of investment is borne by the employer.
D) Under ERISA,employer is not required to offer a pension plan.

Question 53

Across workers' subgroups,becoming unionized or not is associated with:

A) company profitability.
B) increased wages.
C) job satisfaction.
D) gainsharing programs.

Question 54

Which of the following is a difference between the Scanlon plan and Impro-Share?

A) Impro-Share employees can easily calculate their bonus amount.
B) In the Scanlon plan,the bonuses are shared across work groups.
C) Impro-Share is aimed at increasing employee participation.
D) In the Scanlon plan,the bonus committee determines the bonus formula.

Question 55

Aaron,an employee at a manufacturing company,earns $18 an hour.If the company agrees to a new wage contract,Aaron will be paid $18.72 an hour.What is the percentage of wage increase the company must agree to?

A) 5 percent
B) 3.5 percent
C) 4 percent
D) 2.5 percent

Question 56

What is an industrial effect of unions on pay level?

A) Union workers are paid lesser than nonunion workers on an average.
B) Industries having highest union wage premium had the lowest employment decrease in the 1970s.
C) Unions are able to bargain larger-than-normal increase in firms that created specific assets.
D) Wage premiums come with cost to labor making the firms less profitable.

Question 57

ERISA obligates that:

A) all employers must offer a pension plan.
B) employers with pension plans must create a set of rules and comply with them.
C) employers with pension plans must allow all employees aged 21 and over to participate.
D) employers with defined benefit plans must make contributions that will cover immediate retirement costs.

Question 58

What did Joseph Scanlon propose to avoid a firm's closure?

A) Parties work together to increase productivity to which a bonus is linked.
B) All employees should participate and rewards should be given to highly skilled labor.
C) Management should decide the best solution and workers should follow it.
D) Bonus should be given to the work group that came up with the best solution.

Question 59

If an employee selects a pension plan in which a fixed percentage of profit is allocated to each employee in proportion to his/her proportion of total employee pay in that employee group,which pension plan did he/she select?

A) Defined benefit
B) Salary reduction
C) 403(b)
D) Defined contribution

Question 60

In which pension plan is the amount paid on a monthly basis?

A) Defined benefit plan
B) Salary reduction plan
C) Defined contribution plan
D) Tax-free fund transfer

Question 61

According to various studies on union's effects on a firm's performance:

A) unionized firms are 20 percent more productive than nonunionized firms in auto parts industries.
B) productivity was higher in public sector establishments in the hospital industry.
C) student achievement was negatively affected by unionization in education.
D) nonunionized workers were more productive than unionized workers in the construction industry.

Question 62

According to a study across income distribution in Canada:

A) employees whose earnings are in the top quintile lose from unionization.
B) employees whose earnings are in the lowest quintile lose from unionization.
C) average earning of the nonunion worker in the first four quintiles is higher than the nonunion worker.
D) employees who are most advantaged in the labor market benefit the most.

Question 63

What are the evidences related to success of the Scanlon plan?

Question 64

According to an extensive study of union wage differentials:

A) the private sector wage premium is higher today than it was in the 1970s.
B) public sector wage effects are smaller than those in the private sector.
C) nonunion workers are able to resist employers' efforts to reduce wages better than unionized workers.
D) there remains big variation in the premium across workers.

Question 65

Explain an important cost-of-living adjustment (COLA)consideration while increasing wages.

Question 66

Why do unionized firms have lower research and development budgets?

A) Higher labor costs compared to nonunion firms
B) Lack of skilled workers compared to nonunion firms
C) Less productive workforce compared to nonunion firms
D) Higher share prices compared to nonorganized firms

Question 67

What are the factors that influence a firm's ability to pay?

Question 68

How does unionization affect income inequality?

Question 69

Studies provide evidence that higher levels of unionization are associated with _____.

A) lower flexibility in employment
B) higher average variable costs
C) higher flexibility in employment
D) lower average fixed costs

Question 70

What is union's effect on the pay system?

Question 71

List the rules of the Employee Retirement Income Security Act (ERISA)that employers with pension plans must comply with.

Question 72

How does skill-based pay plan work?

Question 73

How does unionization affect insolvency?

A) The rates of unionized plant closure are higher in the manufacturing industry.
B) Unionization has no consistent effect on a firm's insolvency.
C) Unionized firms are 20 percent less profitable.
D) Management cannot convince unions about saving concession.

Question 74

Explain the bonus formula in Impro-Share with an example.

Question 75

Why was the voluntary employee benefits association (VEBA)created?

Question 76

Why are performance-based pay programs used less in unionized organizations?

A) Lack of measurable performance criteria
B) Demand for equal pay across functions
C) Performance monitoring is difficult
D) Union jobs are more repetitive

Question 77

Which characteristics of grade structures must be negotiated?

Question 78

Which condition raises union spillovers?

A) High unemployment
B) Increasing inflation
C) High standard-of-living
D) Economic expansion

Question 79

Why do unionized firms have higher skill levels than nonunionized firms?

A) There is increased competition in unionized firms.
B) Employees are more willing to share job information.
C) Most unionized firms adopt skill-based pay system.
D) Unionized firms hire only highly-skilled labor.

Question 80

Which of the following statements is true about union and nonunion members?

A) Nonunion members receive more in nonstatutory benefits.
B) Union members are more likely to have benefits such as vacations.
C) Unions have the greatest impact on high-wage employers.
D) Nonunion members prefer a larger portion of their pay as benefits.