Market-driven Minimum Wage
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1. What is an example of a market-driven minimum wage? Do you support or disagree with having a market driven minimum wage? Defend your answer
2. Do any relationships exist between the geographic location of a business and employee rates of pay? Is so explain. How are differences in rates of pay throughout the world influencing American employers? What recommendations would you offer to employers on this issue?
3. Kevin Murphy, an associate professor at Harvard Business School, stated that a previously held view that corporate executives are overpaid is wrong. Dr. Peter F. Drucker specializing in strategy and policy for businesses and social sector organizations takes contrary view on this issue. What is your view on this issue? Defend your opinion with sufficient examples.
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Solution Summary
This is a discussion of compensation and benefits as they relate to a market-driven minimum wage.
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1. Minimum wage is a statuatory concept, mandates lowest amount that can be paid for specified types of work.
Market driven means that the employer must pay enough to get an acceptable employee - for example,if they want a skilled carpenter then an employer may have to pay $15, $25, maybe more depending on the location, type of job, etc. Market driven is not constrained by law.
I fully agree with the market driven wage. I believe the market should determine the level of employee compensation. An employer is interested in hiring an employee at the lowest possible cost. Conversely, the employee is interested in obtaining employment at the highest possible wage. This conflict results in an equilibrium wage being paid to employees by employers. Basically, the scales would balance.
Consider the manager of a fast food restaurant. In the absence of a minimum wage policy established by the government, the manager could offer workers any amount he or she sees fit. Let's assume the manager offers $4.00 per hour to workers in a market where the average hourly wage was $5.00 ...
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