Management attitudes toward two-tier pay plans

Two-tier pay plans, under which new hires are paid on a lower pay scale than existing employees, have been used with increasing frequency in union-management contracts. The two-tier phenomenon appears to be associated with the wider concession bargaining movement that began in the early 1980s. In this study, management attitudes toward and forecasts about two-tier pay plans are explored by means of a questionnaire survey. In general, the management community is found to be optimistic about the spread and utility of two-tier pay plans in the near term. Managers in firms that actually have two-tier plans are more enthusiastic about their impacts than other managers. Over a longer term, however, the managers surveyed tend to believe that separate wage scales under two-tier plans will eventually be merged into a unified scale. The authors would like to thank Maury Pearl and Gwang-Gi Baek for research assistance on this study.