1. 1 The World of Pay and Compensation l Seventy percent (70%) of all jobs in the USA are in the service sector. l Service-sector jobs tend to be labor intense. l Service-sector companies typically spend 40 to 80 cents of each revenue dollar on employee compensation. l Wage competition in service-sector companies tends to be more intense.

2. 2 The Compensation Program l Base Wages and Salaries After-tax amount on the paycheck l Wage and Salary Add-ons Premiums an Differentials l Incentive Payments Payment for specified outputs l Benefits and Services Retirement, Savings, Medical, (39% of payroll)

3. 3 Reasons for the Differences in Pay and Compensation for Different Employees l Kinds and Levels of Required Skills l Kind of Business l Union and Nonunion Status l Capital Vs. Labor Intense Industries l Size of Business l Philosophy of Management l Total Compensation Package l Geographic Location Factors That Determine Rates of Pay

4. 4 Average Hourly Earnings November 1995 Specified Production Workers l Eating and Drinking Places l Apparel and Accessory Stores l General Merchandise Stores l Apparel and Other Textile Products l Food Stores l Leather and Leather Products l Misc. Retail Establishments l Amusement and Recreation l Building Materials and Garden l Textile Mill Products $5.65 7.54 7.60 7.77 8.25 8.26 8.52 9.02 9.26 9.49 Lowest Paid

5. Average Hourly Earnings November 1995 Specified Production Workers l PIPELINE except NATURAL GAS l PETROLEUM and COAL PRODUCTS l TOBACCO PRODUCTS l COAL MINING l ELECTRIC, GAS, and SANITARY SERVICES l METAL MINING l TRANSPORTATION EQUIPMENT l LEGAL SERVICES l COMMUNICATIONS l CHEMICAL and ALLIED PRODUCTS $20.26 19.68 18.49 18.43 18.04 16.94 16.65 16.37 15.90 15.85 Highest Paid

6. 6 Hourly Rates (1994) for Production Workers Five Highest 1)Michigan $ 16.40 2)Ohio 14.53 3)Delaware 14.08 4)Indiana 13.90 5)Connecticut 13.82 Five Lowest 50) S.Dakota$ 9.51 49) Mississippi 9.90 48) S.Carolina 10.21 47) Arkansas 10.23 46) N.Carolina 10.67

7. 7 Reasons For The Differences In Pay And Compensation For Different Employees l Supply and Demand of Labor l Profitability of the Firm l Employment Stability l Gender Difference l Employee Tenure and Performance Other Factors That Determine Rates Of Pay

8. 8 A World in Transition l More Intense Global Competition l Slower Growth l More Rapid Change l Reordering of Traditional Businesses l Organizational Restructuring l Deregulation, Takeovers, and Mergers l Wage Depression and Revenue Escalation

9. 9 Global Variations In Compensation Practices l Direct Compensation l Tax System l Social Security l Benefit Entitlements l Regulatory Environment l Employment Law