Which of the following best explains why current employers do not seem to reduce wages for existing employees in the short term when the supply for a particular set of skills far outstrips the demand?
A) because of the wage compression phenomenon
B) because of the negative impact on morale
C) because labour budgets tend to be determined on an annual basis
D) because fewer potential employees tend to put upwards pressure on wages

Question

Quizplus · Accepted Answer

Reducing wages for existing employees would have a negative impact on morale, which could harm productivity and employee retention. Employers generally do not want to risk these negative consequences.

Which of the Following Best Explains Why Current Employers Do