3.1- Compensation and the Law

3.1- Compensation and the Law - Unit 3, Lecture 1:...

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COMPENSATION CONCEPTS Prof. John Kammeyer-Mueller MGT 4301 Unit 3, Lecture 1: Compensation Concepts
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Plan Where we are Understand the basics of recruiting and hiring Understand systems for training and development Where we want to be Understand some of the basic ideas underlying compensation plans How we know how we’re doing What is the Fair Labor Standards Act and how does it apply to compensation? What type of behavior does it encourage? What is Social Security? What type of behavior does it encourage? What is worker’s compensation insurance? What type of behavior does it encourage? What is the Family and Medical Leave Act? What type of behavior does it encourage? Unit 3, Lecture 1: Compensation Concepts
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Moving on to compensation Why do you have to pay people to work? Basic sustenance To offset the opportunity cost of doing something else So that you can have a certain amount of control over what they do How do you pay people to work? Straight compensation Benefits Incentives (which we’ll deal with later) Unit 3, Lecture 1: Compensation Concepts
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Thinking About the Legal Environment for Compensation New proposal for subsidized healthcare in the American workforce based on the Hawaii system Employers must provide health care coverage to employees who work at least twenty (20) hours per week. Coverage commences after four (4) consecutive weeks of employment. All health care plans must be approved by the government. Employers must pay at least 50% of the premium cost. Unit 3, Lecture 1: Compensation Concepts
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Thinking About the Legal Environment for Compensation What are your thoughts about this proposal? How are employers likely to respond in terms of Pay rates Employment levels Employment arrangements (e.g., employees, temps, outsourcing) Selecting and training employees How are those in the labor force or potentially in the labor force likely to respond in terms of Desire to obtain a job vs. “non-market” Consideration of health in making employment choices Cost of living Unit 3, Lecture 1: Compensation Concepts
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Basic Economic Model of Compensation Employment Wage rate E* W* D S We’re all familiar with this basic idea, but it’s one we’ll be visiting repeatedly through this unit Because I’m not an economist, we’ll also talk about how labor is different from normal exchange goods Unit 3, Lecture 1: Compensation Concepts
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To Put This in Classical Economics Terms If, in the same neighborhood there was any employment evidently either any more or less advantageous than the rest, so many people would crowd into it in the one case, and so many people would desert it in the other, that its advantages would soon return to the level of the other employments Adam Smith, The Wealth of Nations Smith said these conditions hold only if workers have perfect liberty to change jobs Unit 3, Lecture 1: Compensation Concepts
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Employer Choice in the Neoclassical World L Wage rate E*
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This note was uploaded on 07/18/2011 for the course MAN 4301 taught by Professor Kammeyer during the Fall '10 term at University of Florida.

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3.1- Compensation and the Law - Unit 3, Lecture 1:...

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