The topics discussed in this chapter are labour demand, nonwage benefits, and quasi-fixed costs. In this chapter, students will be able to understand: Nonwage benefits, hours of labour, payroll taxes, labour decisions in economic downturns, creating more jobs. | Chapter Six Labour Demand,NonWage Benefits, and Quasi-Fixed Costs Created by: Erica Morrill, Fanshawe College Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Chapter Focus Nonwage benefits Hours of labour Payroll taxes Labour decisions in economic downturns Creating more jobs Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Figure Components of Total Compensation Total Compensation Nonwage Benefits (supplementary labour income) Wages and Salaries Pay for Time Worked Pay for Time Not Worked Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Labour Costs Independent of the number of hours worked Arise from: hiring costs training costs dismissal costs nonwage benefits Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Costs Impact the employer's decisions on: work schedules part-time work overtime work hiring and Layoff decisions unemployment Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Nonwage Benefits and Total Compensation Fastest growing components pension . | Chapter Six Labour Demand,NonWage Benefits, and Quasi-Fixed Costs Created by: Erica Morrill, Fanshawe College Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Chapter Focus Nonwage benefits Hours of labour Payroll taxes Labour decisions in economic downturns Creating more jobs Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Figure Components of Total Compensation Total Compensation Nonwage Benefits (supplementary labour income) Wages and Salaries Pay for Time Worked Pay for Time Not Worked Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Labour Costs Independent of the number of hours worked Arise from: hiring costs training costs dismissal costs nonwage benefits Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Costs Impact the employer's decisions on: work schedules part-time work overtime work hiring and Layoff decisions unemployment Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Nonwage Benefits and Total Compensation Fastest growing components pension legally required payments Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Nonwage Benefits vs. Wages Why wouldn’t employees prefer wages over nonwage benefits? generally not taxed economies of scale for group purchases Perception that they are free ease of purchase Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Nonwage Benefits vs. Wages Employer’s benefits planning of production process reduce need for contingency plans for layoffs and accidents alter employee behaviour in favor of production reduce turnover Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Nonwage Benefits vs. Wages Government’s benefit reduce pressure for government expenditures public pension plans unemployment insurance increase social security Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Labour Costs Variable Labour costs vary with hours Quasi-fixed incurred per employee independent of hours Chapter 6- © 2002 McGraw-Hill Ryerson Ltd. Quasi-Fixed Labour Costs Recurring payroll taxes Nonrecurring hiring
