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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) One source of continuing data on unionized and nonunionized firms is the Bureau of
Labor Statistics.
⊚ true
⊚ false
2) Unions respond relatively rapidly to wage increases during inflationary periods.
⊚ true
⊚ false
3) During strong economies the union-nonunion gap is relatively small.
⊚ true
⊚ false
4) In a two-tier wage system, employees hired after a specific date are placed in a higher
wage scale than those hired before that date.
⊚ true
⊚ false
5) Tiers can be used as a cost control strategy to allow expansion or investment or as a cost-
cutting device to allow economic survival.
⊚ true
⊚ false
6) The vast majority of contracts specify that one or more jobs are to be compensated on an
hourly basis.
⊚ true
⊚ false
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7) Many contracts specify a premium be paid above the worker’s base wage for working
nonstandard shifts.
⊚ true
⊚ false
8) Most contracts recognize that jobs in the same occupations should receive different wage
rates.
⊚ true
⊚ false
9) Single rates are not usually specified for workers within a particular job classification.
⊚ true
⊚ false
10) Moving employees through pay ranges using merit increases is more popular than
automatic progression.
⊚ true
⊚ false
11) In automatic progression, seniority is used as the basis for movement through job
classifications.
⊚ true
⊚ false
12) Few contracts specify special rates for part-time and temporary employees.
⊚ true
⊚ false
13) A deferred wage increase is negotiated at the time of initial contract negotiations.
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⊚ true
⊚ false
14) A reopener clause specifies that wages will be renegotiated at a specified time or under
certain conditions.
⊚ true
⊚ false
15) Even in a nonunion firm, compensation managers will adjust rewards when there is a hint
of nearby union activity.
⊚ true
⊚ false
16) Lump-sum awards are added to base wages.
⊚ true
⊚ false
17) Openness in sharing financial and production data, key elements of putting a gain-sharing
plan in place, are important in building trust between the two parties.
⊚ true
⊚ false
18) An alternative strategy for organizations hurt by intense competition is to control base
wages in exchange for giving employees part ownership in the company.
⊚ true
⊚ false
19) There are numerous possible costs and benefits to union members for agreeing to a gain-
sharing plan.
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⊚ true
⊚ false
20) Introduction of a gain-sharing plan is particularly effective when union members
participate in plan development.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) In the context of the impacts of unions on compensation, which of the following
statements is true?
A) Unions do not make a difference in wages, across all studies and all time periods.
B) Since 2000, the union wage premium has been unstable overall and has risen slightly
in the private sector.
C) Employees in service or production occupations have the least from union wage
advantage.
D) Management and professional employees do not enjoy union wage advantage.
22) Which of the following is true of lump-sum awards?
A) They are noncash payments such as certificates and trophies.
B) They are given to employees who are added to an employee’s base wages.
C) They are given to employees every year.
D) They are typically given in lieu of merit increases.
23) Company A and Company B are in the same industry, but Company A is unionized and
Company B is not. Therefore,
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A) it can be argued with assurance that any wage differences between the two firms are
due to the presence of a union in Company A and the absence of a union in Company B.
B) it is difficult to argue with assurance that wage differences between the two firms are
attributable to the presence of a union, although the possibility exists.
C) Company B has to form a union to compete with Company A.
D) any wage differences between the two firms can never be attributed to the presence
of a union in Company A.
24) A study of unions in 114 companies concluded that
A) the impact of unions on wages is less during recession.
B) the union-nonunion gap is the greatest during strong economies.
C) unions make a difference in wages across all studies and time periods.
D) unions are not responsible for any differences in wages.
25) When compared to the impact of unions during strong economies, the impact of unions
during periods of higher unemployment is
A) unknown.
B) the same.
C) smaller.
D) larger.
26) Which of the following issues most commonly reach arbitration?
A) Layoffs
B) Discharge and disciplinary issues
C) Transfers
D) Complexity of work assignments
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27) Union employees in the public sector earn, on average, about ________ more than their
nonunion counterparts.
A) 40 percent
B) 5 percent
C) 14 percent
D) 22 percent
28) In the context of contracts, which of the following is most appropriate when the
necessary job skills are within the grasp of most employees?
A) Merit progression
B) A gain-sharing plan
C) Automatic progression
D) A profit-sharing plan
29) In a(n) ________ pay plan, a contract is negotiated that specifies that employees hired
after a given target date will receive lower wages than their higher-seniority peers working on
the same or similar jobs.
A) skill-based
B) efficiency-based
C) one-tier
D) two-tier
30) Basically a phenomenon of the union sector, two-tier wage structures differentiate pay
based upon the
A) type of work.
B) hiring date.
C) place of work.
D) length of contract, if applicable.
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31) The phenomenon where nonunion management continues to enjoy the freedom from
union “interference” in decision making and the workers receive the rewards already obtained by
their unionized counterparts is known as
A) automatic progression.
B) the spillover effect.
C) an experience differential.
D) the equal mirror effect.
32) MaxTrain Corp. recognizes that its competitor GlasWell Corp., which is unionized, offers
higher wages and benefits. To avoid unionization demands from its workers, MaxTrain decides
to offer the same wages and benefits to its employees as GlasWell. Which of the following
phenomena is exemplified in this case?
A) The sorting effect
B) The halo effect
C) The leniency effect
D) The spillover effect
33) Which of the following statements about single rates is true?
A) Single rates are usually specified for workers within a particular job classification.
B) Single-rate agreements differentiate wages on the basis of seniority.
C) Single rates are only specified for workers employed by a firm in different
geographic areas.
D) Single-rate agreements differentiate wages on the basis of merit.
34) ________ is movement through the wage ranges where seniority is specified as the basis
of the movement.
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A) Length-of-stay progression
B) Automatic progression
C) A merit differential
D) A performance differential
35) In ________, employees who are evaluated more highly receive larger or more rapid
increments than average or poor performers.
A) a two-tier pay plan
B) automatic progression
C) a union spillover
D) merit progression
36) A deferred wage increase
A) specifies that wages will be renegotiated at a specified time.
B) specifies that such nonwage items as pension and benefits will be renegotiated under
certain conditions.
C) is negotiated at the time of initial contract negotiations with the timing and amount
specified in the contract.
D) involves periodic adjustments based typically on changes in the consumer price
index.
37) Which of the following involves periodic adjustments based typically on changes in the
consumer price index?
A) A COLA clause
B) A deferred wage increase
C) A reopener clause
D) An annual improvement adjustment
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38) In the negotiation stage of a multiyear wage contract, Mark, the manager of SifCo Corp.,
specifies that changes will be made to the wage based on the changes in the consumer price
index and mentions the effective dates of adjustment. Which of the following types of clauses
has Mark introduced in the contract?
A) A halo clause
B) A spillover clause
C) An escalator clause
D) A reopener clause
39) Which of the following is the most likely reason for most unions to insist on group-based
performance measures with equal payouts to members?
A) It enables employees to learn new skills.
B) It cuts down on strife and internal quarrels.
C) It encourages individual differences.
D) It causes a leniency effect.
40) The CEO of BoardCom, Inc., James, negotiates a new union contract with the union
leader. If James wants to reduce expenses and keep the union happy, which of the following
suggestions is most likely to be helpful?
A) Introduce merit increases based on individual-based performance.
B) Provide lump-sum awards in exchange for merit pay increases.
C) Introduce a gain-sharing plan that substitutes wages.
D) Provide a 20 percent increase to base wages.
41) Increased global competition has caused unions to:
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A) demand higher base wages than their international counterparts.
B) become more receptive to alternate reward systems that link pay to performance.
C) accept less variable pay in exchange for higher base pay.
D) demand increases in product prices to cover for increased wage costs.
42) ________ are one-time cash payments to employees that are not added to an employee’s
base wages.
A) Relational returns
B) Merit increases
C) Lump-sum awards
D) Cost-of-living increases
43) In recent years, a stable ________ of all major collective bargaining agreements in the
private sector have contained a provision for lump-sum payouts.
A) three-fourths
B) one-half
C) one-quarter
D) one-third
44) Which of the following plans give employees part ownership in a company?
A) Employee stock ownership plans
B) Pay-for-knowledge plans
C) Gain-sharing plans
D) Profit-sharing plans
45) Which of the following actions is most likely to be favored by unions?
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A) Increasing the pricing of products to cover for increases in wages
B) Substituting wages with gain-sharing plans
C) Making each individual worker more expendable to the firm
D) Introducing lump-sum awards
46) Pay-for-knowledge plans do all of the following EXCEPT
A) make employees less expendable to their firms.
B) increase the probability of work being subcontracted out to nonunion organizations.
C) make each individual employee more valuable.
D) pay employees more for learning a variety of different jobs or skills.
47) Which of the following is a reason for unions favoring gain-sharing plans?
A) Increased peer pressure to perform
B) Increased involvement with job activities
C) Increased flexibility in moving employees quickly into high-demand areas
D) Increased clarity in bonus calculations
48) Which of the following is a reason for unions opposing gain-sharing plans?
A) Reduced job security
B) Decreased peer pressure to perform
C) Decreased feeling of achievement or contributing to the organization
D) Reduced need for jobs due to increased productivity
49) Which of the following is true regarding a gain-sharing plan?
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A) It involves paying employees for learning new skills.
B) It creates difficulty in maintaining employment levels in marginal organizations.
C) It becomes ineffective when union members participate in plan development.
D) Not all unions would be in favor of this type of plan.
50) With gain-sharing plans, the most common union strategy is to
A) delay taking a stand until real benefits are more apparent.
B) be very enthusiastic.
C) have direct opposition to the plans as soon as they are suggested by the management.
D) have no concern for the plans.
SHORT ANSWER. Write the word or phrase that best completes each statement or
answers the question.
51) What are two-tier pay plans?
52) What is the spillover effect?
53) What is meant by automatic progression?
54) Briefly summarize lump-sum awards and ESOPs.
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55) Briefly describe gain-sharing plans.
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Answer Key
Test name: chapter 15
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