Optimum Fringe Benefits

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1. Varying the form of pay from wages to fringe benefits can motivate workers. Fringe benefits for employees can generate profits for the firms if the benefits exceed the cost to the firm. In that case, it is cheaper for employers to offer fringe benefits than higher wage. Also, if workers truly value a benefit, then the firm that provide it will see an increase in the supply of labor available to them. They will be able to hire more workers at a lower wage and be able to increase the productivity of the workers that they do hire, resulting in more profits. 2. Some firms do not offer fringe benefits if the marginal costs of offering the benefits exceed the marginal value. They also do not provide these benefits, if they can’t add to their profits by offering them. Most often fringe benefits are not offered by smaller firms because they tend to provide lower-paying jobs and the people who take these jobs don’t have the means to buy most things that workers in large firms do, such as insurance. The lower paying employees don’t think insurance is a good investment and prefer to buy other things with higher monetary compensation. 2. Use the concept of “optimum fringe …show more content…

The unconventional view denies that minimum wage has helped anyone for two reasons. The first reason is that by paying employees more money is not going to make them anymore productive then they already are. If employers thought increasing wages would increase productivity, then they would have done it, however, they aren’t going to pay employees more than they are worth. Therefore, the increase in minimum wage does not help the situation of productivity. The second reason is with an increased minimum wage, the ability to vary fringe benefits and working conditions will be reduced. Even if the is an increase in minimum wage, people will not lose their jobs they will just have fewer hours and still be expected to do the same amount of work. Overall, it is not beneficial to increase minimum

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