I believe that the efficiency wage theory is valid in that productivity goes a long way with better pay. It seems as if performance is based on what people are compensated. Higher pay can also make an employee feel more valuable to the company, which can lead to higher productivity. It can change a mindset for people to actually enjoy their jobs.
Turnover rates are typically pretty large with lowering paying jobs. A job may require a lot of long hours and crazy shifts, but if the pay isn’t great people aren’t willing to stay. The time it takes to train new people and prepare them for the job, productivity begins to slow down. My mom works in staffing and watches this happen all the time. She has fought for higher pay for the employees, but it has yet to happen. Because of that they have high turnover rates and jobs that aren’t getting done.
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