Which of the following would cause an organization to increase their starting rate for a position and thereby create wage compression for current employees?
A) Increase in interest rates
B) Labor shortage
C) Decrease in inflation rates
D) Labor surplus
E) COLAs

Question

Quizplus · Accepted Answer

A labor shortage would cause an organization to increase their starting rate for a position in order to attract more candidates to apply. This increase in starting rate could potentially create wage compression for current employees who were hired at a lower rate. The other choices are not directly related to a labor market issue that would impact wages.

Which of the Following Would Cause an Organization to Increase