Question

question
the 400 employees of busy bee computing firm are aware of their companys reduction in profits. the employees are
concerned about their wages being cut. the majority of the employees are worried that they will be one of the few that will
experience wage cuts while their peers will not see a change in wages. which of the following best describes why this
scenario could lead to wage stickiness?
select the correct answer below:
the efficiency wage theory which argues that workers productivity depends on their pay, and so employers will
often find it worthwhile to pay their employees somewhat more than market conditions might dictate
the insider-outsider model of the labor force, which argues that a firm will not cut wages for its insiders (those who
already work for the company) because it depends on them to keep the organization running smoothly, to be
familiar with routine procedures, and to train new employees
the adverse selection of wage cuts argument which points out that if an employer reduces wages for all its workers,
then the best workers, those with the best employment alternatives at other firms, are the most likely to leave
the relative wage coordination argument which argues that workers will be alienated by wage cuts whenever they
cannot observe that the wage cuts are across the whole organization

Explanation:

The relative wage coordination argument suggests that workers feel alienated by wage cuts. This means when wages are cut, workers who compare their pay to others (peers) within the organization may not see a change in their relative position. If the wage cut is across - the - board (not just for some workers), and workers' productivity is somewhat dependent on their pay perception, a situation where peers' wages are also cut (so relative wages remain the same in a sense) can lead to wage stickiness. Workers might not feel the need to change their behavior (like leaving the firm) as much as they would if only their wages were cut.

Answer:

the relative wage coordination argument which argues that workers will be alienated by wage cuts whenever they cannot observe that the wage cuts are across the organization