Question

A. Identify and explain reasons presented why immigrants are more likely to start new businesses than the US non-immigrant population. B. Define wage compression. (i) How can a worker be harmed by wage compression? (ii) How can an employer be harmed by wage compression?

Answer 1

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Question:

Answer:

Introduction:

According to a data over 27 percent of U.S. entrepreneurs are immigrants despite being only 13.5 percent of the population. Forty-three percent of the companies on the 2017 Fortune 500 list were founded or confounded by an immigrant or child of an immigrant. Immigrants are four times more likely to become a millionaire and two times more likely to start their own business. examples: Steve Jobs, Elon Musk the best example of how a immigrant built a business empire in the USA.

A). Answer-

The immigrants are more likely to start new businesses than the US non-immigrant population because of the following reasons:

1). Ease of Doing Business:

The Ease of Doing Business (EoDB) index is a ranking system established by the World Bank Group. In the EODB index, 'higher rankings' (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights and Starting a Business.The rankings are determined by sorting the aggregate scores on 10 topics, each consisting of several indicators, giving equal weight to each topic.

The rank of the USA is 6th worldwide that means doing business here is easy and government motivate the people to be entrepreneurs. So, The immigrants are more likely to start new businesses.

2) Skills and Knowledge:

The immigrants are are well educated and have number of hard and soft sets of skills. They have practical work experience in their home country so, the know how to do business. The skill sets, knowledge, friendly business culture and practical experience of corporate world motivate them for entrepreneurship.

3). Cross Culture:

They come from different culture and also spend some time with new Culture. So, culture mix help them to understand the values and belief system smartly. USA is a country of mix culture and people from all over the world come and live here. So, mix Cultural environment creat opportunities to do business. They can easley identify the Problem or business opportunities and also know how to start and how to sale and establish a good company.

4). Government Policies:

Government is also attracting the entrepreneur or business from world though new and creative immigration policy.

Government is easily providing visa to the businessman and UHNIs.

B). Answer-

Wage Compression:

Pay compression is the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience.Wage compression most often occurs in the following two scenarios first, a new employee is paid almost the same amount as an experienced employee for the same job and second, a lower-level employee is paid almost the same amount as a higher-level employee, like a manager.

Pay compression is the result of the market-rate for a given job outpacing the increases historically given by the organization to high tenure employees.

(i)  How can a worker be harmed by wage compression?

Because of  wage compression a skilled/ higher experienced worker pay the similar wages like a unskilled/semi-skilled/lower experienced, skilled/ higher experienced worker feel they are being undervalued and lose their motivation level and negatively affect their productivity.They will feel discouraged, naturally. It doesn’t make sense to continue working just as hard when their efforts are not perceived as being fairly compensated. This can lead to a more noticeable problem of poor performance in employees.

(ii) How can an employer be harmed by wage compression?

Lower productivity of employees because of wage compression also reduced the productivity and turnover of the company. its also badly affect the quality of product and services. Workers feel  discouraged, naturally that affect their productivity and services quality badly.In long run its affect the brand value, band image or brand Loyalty and the profit badly.

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