Workers are compensated by firms with \"benefits\" in addition to wages and sala

Question

Workers are compensated by firms with "benefits" in addition to wages and salaries. The most prominent benefit offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid S25 per hour and in addition received health benefits at the rate of S5 per hour. Also suppose that by 2010 workers at that plant were paid S26.25 per hour but received S11.25 in health insurance benefits. By what percentage did total compensation (wages plus benefits) change at this plant from 2000 to 2010? Instructions: Round your answer to 2 decimal places. Total compensation (Click to select) by | percent. What was the approximate average annual percentage change in total compensation? Instructions: Round your answer to 2 decimal places, percent. By what percentage did wages change at this plant from 2000 to 2010? Instructions: Enter your answer as a whole number. Wages | (Click to select) by | percent. What was the approximate average annual percentage change in wages? Instructions: Round your answer to 1 decimal place, percent. If workers value a dollar of health benefits as much as they value a dollar of wages, by what total percentage will they feel that their incomes have risen over this time period? Instructions: Round your answer to 2 decimal places, percent. What if they only consider wages when calculating their incomes? Incomes go | (Click to select) by | percent. Is it possible for workers to feel as though their wages are stagnating even if total compensation is rising? (Click to select) T

Explanation / Answer

a) From the data, we see that the total compensation is increased from $30 per hour ($25 wages + $5 health benefits) to $37.5 per hour. So there is a rise of 25 percent.

b) From the information, we see that the wages are increased from $25 per hour to $26.25 per hour. So there is a rise of 5 percent.

c) If workers value a dollar worth of health benefits equal to dollar worth of wages, and if they see their wage rate rising by 5%, they must be expecting the same percentage change in health benefits, that is, 5%. So if health benefits would have risen only by 5%, total compensation would have been $31.5 ($26.25 wage and 5% increase in benefits that would have been worth $5 + 5% of $5 = $5.25).

So total compensation would have risen by 5%.

If they incorporate only wage increase, then also there would be an increase of income by 5%.

d) It can be possible when the rise in benefits is very large compared to the rise in wage rate.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.