Productivity Growth and Real Wages Essay Example | Topics and Well Written Essays - 500 words

Productivity Growth and Real Wages - Essay Example The common man is actually not getting the benefits from the productivity growth 1. An appreciable rise in both productivity and wage structure was witnessed through the 1950s and 1960s, which slowed down in the 70s and 80s 5. However, the 1990’s saw a good and steady rise in productivity and therefore the benefits of the growth were seen by the increase in the wages 1. In the US, the real wage growth was weak in the early 1990s, but it rose from 1994, in response to the accelerating productivity, up to 2004 after which it showed a downward trend mainly attributed to increasing energy costs 3. The recession witnessed in the early 2000s resulted in a downward trend with respect to wages, even though the productivity was high 1. According to a report the median real wages for all workers increased by 1.4% per year between 1995 and 2003, which was less than half the rate of productivity growth 2. Another news article published in a website quotes a 2% decline in the median hourly wages for American workers since 2003, despite the steady rise in productivity 5.This inequality in wage distribution can be attributed chiefly to the bargaining power of workers in case of high productivity. Employee unions play a vital role this bargain. However, the workers ability to bargain has considerable diminished, thus preventing them from enjoying the fruits of the ir own labor 1. Some reasons cited for this reduced bargaining power include global trade, immigration, layoffs and technology 5. Inflation shares an inverse relationship with wage distribution and so does fringe benefits such as health care 1, 5. Education status and working skills of workers also plays a vital role in determining the wages 4. Another point made is that only the top 10% enjoyed the real benefits of productivity growth leaving the rest of the 90% with very less growth in terms of wages 3, 4.According to the Baumols Law, mobility in labor will result in an increase in wages so

Management Finance Essay Example | Topics and Well Written Essays - 2500 words - 1

Management Finance - Essay Example Company should consider a system that will give accurate results and should be certain depending on the data inputted into the system. The system also should be simple to understand and be friendlier to the end users. In addition, the system should also be flexible for it to respond easily to the changes in the organization and for simple decision-making by the junior staff. Activity based costing method is more flexible hence it produces reports which can be used by the management in decision making, this is because it has got a certain methodology of costing products and services. Compared to the traditional method, activity based costing system cannot distort costs of the products that might occur if the products cost would have been done arbitrarily. There are four steps the company should follow to implement Activity based costing system. The first step is identification of activities in within the organization. The company will be required to analyse all the activities under every department. Under this step, the company should consider the processes, which are operational in the departments, this is because in some cost centres there are activities, which were operating; but they have ceased operating. Berry limited has three activities: machine setup, ordering and machine running. Berry limited cost pool comprises of material ordering cost, machine running cost and general facility cost of $280000, $316000, $42000 and $361400 respectively. Second step is the allocation of resource costs to the company activities. The cost is traced to find why it occurs; the cost can be director in direct cost. Direct cost is directly related to the output, the direct cost of product X, y and Z are $980,000, $1024000 and $1012000. Indirect cost is the cost that cannot be associated with a particular output; the cost is for the general company. Berry limited incurs a total of $1,377,400