Revisiting multi-tier wage structures: Equity, employment mobility, and tier effects

Abstract

This study considers the competing conclusions reached by Martin and Peterson (1987) and Cappelli and Sherer (1990) regarding two-tier wage systems and examines how worker perceptions of their own employment mobility affect attitudes about two-tier systems. Findings from a hybrid multi-tier wage system in the retail food industry containing both permanent and merging or temporary tiers indicates that workers on the permanently lower B tier possessed more negative attitudes than their A-tier counterparts, with some evidence that the effects of permanent and temporary plans differ. Employment mobility moderates these attitudes, for low mobility workers report more positive attitudes than do high mobility workers.

When Collective Bargaining Leads to Inequality: Determinants of Two-Tier Provisions in Canadian Collective Agreements

“…They suggest some kind of an exchange between the union and employer. As pointed out by Townsend and Partridge (1999), two-tier provisions protect the working conditions of the employees in place while facilitating trade union concessions that introduce less advantageous working conditions for newly hired employees. In exchange for concessions related to job security and employer contributions to employee benefits for employees with more seniority, the employer asks the union to make concessions on two-tier provisions aimed at new employees.…”

“…According to Kochan, Katz, and McKersie (1994), one of the important changes transforming industrial relations at that time was that employers took the initiative, demanding significant union concessions in response to these competitive pressures. Some employers saw two-tier provisions as the best way to bring down labor costs and to survive the competition from non-unionized firms with lower labor costs (Jacoby and Mitchell 1986), without angering senior workers (Townsend and Partridge 1999), given that across-the-board wage decreases have generally been associated with a negative impact on employee morale and productivity (Bewley 1999). Although concession bargaining subsequently receded until the early 2000s, the prevalence of these provisions nevertheless remained stable in collective agreements (Chaison 2008).…”

Employees' preferences for the bases of pay differentials

“…This is a predictable finding as most pay systems do recognise levels of contribution. There is evidence that systems that do not, such as two‐tier wage structures, are associated with more negative pay and job attitudes (Heetderks and Martin, 1991; Martin and Peterson, 1987; McFarlin and Frone, 1990; Townsend and Partridge, 1999). There is much less information about the types of contribution that people think should be recognised in pay as most studies have only investigated responses to a limited number of measures of effort such as educational attainment or occupational prestige.…”