Wage Structure and Dynamics in the Electronics Industry

Abstract

This study analyzes wage patterns over time among California electronics employers. While the range of wages paid is substantial, employers on average make only small departures from market wage that are not pervasive across occupations or persistent across time. Employers appear able to change employment levels without affecting wages. Internal wage relativities also appear flexible. Differences between administered wage scales and actual wages paid are used to distinguish wage policy from market outcomes.

The Structure of White-Collar Compensation and Organizational Performance

“…Gerhart and Milkovich (1990) find that firms that pay their managers relatively higher wages do not exhibit relatively higher financial performance. Leonard's (1990) results are similar.…”

“…4 Managerial effort is influenced by the size of the salary gradient between levels (the prize for winning a tournament) and the probability of being promoted (Rosen 1986;Lazear 1992). While Leonard (1990) finds evidence supporting the suggestion that pay hierarchies resemble tournament structures, he suggests that the relationship between steepness and performance is positive but finds no empirical support for this suggestion.…”

“…Gerhart and Milkovich (1990) find a positive, significant relationship between bonus to base ratio and firm performance across a sample of firms that includes roughly 75 top white collar managers per firm. Leonard (1990) finds bonuses related to return of equity (ROE) but not related to change in ROE. He does, however, find long-term incentives related to change in firm performance.…”

“…Extensive research investigates the relationship between top executive pay and firm performance (Coughlin and Schmidt 1985;Jensen and Murphy 1990;Kerr and Bettis 1987;Lewellen et al 1992;Murphy 1985;Tosi andGomez-Mejia 1989, 1994). Similarly, the differences in the nature of blue-collar wages across firms and industries has been a frequent research topic (Groshen 1988;Leonard 1990). In contrast, relatively little attention has been paid to the compensation of middle managers.…”

“…The measurement of pay levels, BASE/MARKET, is calculated similarly to the techniques used in Gerhart and Milkovich (1990), Leonard (1990) and Levine (1993). The relative pay level is a measure of how the wages of the managers in a firm relate to similar managers in other firms.…”