Chapter 41 Question ○35

Why do employees' wages generally increase with their working years instead of with the improvement of work efficiency? (Edward Lazer) For companies that provide long-term employment positions, employees' salaries generally increase with the number of years, rather than with the increase in production efficiency.Assuming that the average salary does not exceed the average production efficiency during the entire period that the employees work for the company, it can be concluded that the employees of this kind of company earn less than their personal income at the beginning of their careers, while in the second half of their careers, they earn The income exceeds the personal price.But once the salary of an employee exceeds the value of his labor force, why does the company keep him?

One explanation for this salary model is that it actually functions as a mechanism to prevent employees from cheating and slowing down. In the United States alone, employee malfeasance costs companies hundreds of millions of dollars every year.If companies can find ways to reduce this behavior, they can pay their employees higher wages while making higher profits.With the annual salary system (that is, the growth rate of wages over the years is higher than the growth rate of production efficiency), dishonest or lazy employees are definitely unwilling to sign such employment contracts.Even though the total salary of this kind of contract is higher, the salary in the previous few years is lower than that of other places. Dishonest employees will definitely worry that they will be fired before they get the reward salary in the later period.On the contrary, honest employees are more willing to accept this kind of contract, they will stay in their posts for a long time, and finally get a late bonus.From the company's point of view, if they don't honor their contracts with honest employees, they will have trouble recruiting new employees later.