Question

bob has been an employee at spex technologies for 15 years and is considered to be an essential part of the company running smoothly. spex technologies has been experiencing a decrease in profits over the past two years and needs to find ways to cut costs. as of right now, the company is reluctant to reduce bobs salary. which of the following best describes why this scenario can lead to wage stickiness? select the correct answer below: 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 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 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 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

Explanation:

The insider - outsider model of the labor force posits that firms won't cut wages for insiders (those already working for the company) as they rely on them for smooth organizational operation. Bob is an insider (an essential employee with 15 - year tenure). Wage cuts for insiders could disrupt the organizational routine (he's familiar with procedures and crucial for smooth running), so the company is reluctant to cut his salary, which shows wage stickiness.

Answer:

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