Question

In: Economics

Workers are compensated by firms with benefits in addition to wages and salaries. the most prominent...

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 $20 per hour and in addition received health benefits at the rate of $4 per hour. Also suppose that by 2010 workers at that plant were paid $21 per hour but received $9 in health insurance benefits.
a. By what percentage did total compensation(wages plus benefits) change at this plant from 2000 to 2010? What was the approximate average annual percentage change in total compensation?

Solutions

Expert Solution

(a)

Total compensation = Wage + Health benefits

(i)

Total compensation, 2000 ($) = 20 + 4 = 24

Total compensation, 2010 ($) = 21 + 9 = 30

% Change in total compensation = ($30 / $24) - 1 = 1.25 - 1 = 0.25 = 25%

(ii)

If average annual growth rate be r, then

$24 x (1 + r)10 = $30

(1 + r)10 = $30 / $24 = 1.25

Taking 10th root on each side,

1 + r = 1.0226

r = 0.0226

r = 2.26%


Related Solutions

Workers are compensated by firms with “benefits” in addition to wages and salaries. The most prominent...
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 $35 per hour and in addition received health benefits at the rate of $7 per hour. Also suppose that by 2010 workers at that plant were paid $36.75 per hour but received $31.5 in health insurance benefits. a. By what percentage did total compensation (wages...
Workers are compensated by firms with “benefits” in addition to wages and salaries. The most prominent benefit offered by many firms is health insurance.
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 $30 per hour and in addition received health benefits at the rate of $6 per hour. Also suppose that by 2010 workers at that plant were paid $31.5 per hour but received $13.5 in health insurance benefits. a. By what percentage did total compensation (wages plus...
If the government imposes a minimum wage that increases wages for workers employed by the firms...
If the government imposes a minimum wage that increases wages for workers employed by the firms participating in the market, what happens to the inverse supply function? what happens to the equilibrium price of products traded in this market?
Examples of Salaries and Wages
Examples of Salaries and Wages
Workers and firms often enter into contracts that fix prices or wages, sometimes for years at...
Workers and firms often enter into contracts that fix prices or wages, sometimes for years at a time. If the price level turns out to be higher or lower than was expected when the contract was signed, one party to the contract will lose out. Briefly explain why, despite knowing this, workers and firms still sign long-term contracts. You must start a thread before you can read and reply to other threads
why is it important for social workers to be compensated their worth?
why is it important for social workers to be compensated their worth?
Fair trade exists to make sure that fair prices, the living wages and benefits for workers...
Fair trade exists to make sure that fair prices, the living wages and benefits for workers for those in under developed countries. This gives them equal rights although they live in these under developed countries. Fair trade is supposed to allow openness and respect while countries seek some type of international trade. This offers these countries better trading opportunities and secures there rights. Although it does deal alot with trading it deals with much more then just that. It also...
Average wages and salaries for most Americans have not kept pace with inflation. What impact does...
Average wages and salaries for most Americans have not kept pace with inflation. What impact does this have on aggregate demand? Average wages have been hit by technological change (think robots) and international trade (cheaper wages abroad). What policies or changes would help boost average wages?
Which of the following statements are correct? A. Employment rent benefits workers but harms the firms...
Which of the following statements are correct? A. Employment rent benefits workers but harms the firms as it implies higher production costs. B. Piece rate payment is an appropriate way to pay employees working on a team project. C. Positive employment rent implies that there must always be involuntary unemployment. D. Firms pay workers more than their reservation options so that workers do not want to leave.
1,Average wages and salaries for most Americans have not kept pace with inflation. What impact does...
1,Average wages and salaries for most Americans have not kept pace with inflation. What impact does this have on aggregate demand? Average wages have been hit by technological change (think robots) and international trade (cheaper wages abroad). What policies or changes would help boost average wages? 2.Discuss some of the devastating effects that Hurricane Katrina had on the Gulf States, and the U.S. economy in general.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT