Getting laid off from work really isn't a good feeling at all. Getting a raise is almost always a good feeling. Getting your benefits cut really stinks but getting benefits added to the offering always seems like a good idea. Watching your friends get fired is always bad, watching your friends brag about "getting one over on the man" is almost always fun. The thing is, as I've studied more in my Managerial Economics course I am starting to see how increasing pay and benefits while tolerating marginal performing employees can be costly to everyone at a company or organization.
In an effort to not get technical, let's just say that your best buddy Jennifer likes to take 20 minutes or more on restroom breaks 4 or 5 times a day in addition to her normal authorized breaks. During this time Jennifer likes to catch up on the gossip, walk around and comment on everyone's choice of attire or plan the next social outing for the weekend. This lowers whatever measurable output of work that Jennifer is supposed to perform, which as you may have guessed, will skew the ratio of output to compensation that employees will realize. Make sense?
Okay let's try a different approach. Say that Jennifer makes $10.00 an hour at 40 hours a week. She works as a customer service representative and answers 30 calls a day for help. This means that her employer is paying her $2.67 per call answered.
Megan is less of a social butterfly; she loves her job and always shows up on time, puts a full 8 hours in and answers 50 calls a day for help. Her employer pays her the same $10.00 an hour for a 40 hour week yet realizes $1.60 per call answered.
Rick, the boss, really likes Jennifer and couldn't give a rat's behind about Megan but he keeps Megan around in order to get the numbers up and lets Jennifer run amok. When the employer (Rick's boss) decides upon spending a large sum of money on an automated machine which will do Jennifer and Megan's job, they will look at the COMBINED output of both employees assuming all things are equal because Rick is on the job.
This puts the average at 400 calls divided by $800 in salary a week paid out for a realized output of $2.00 per call answered. This new doodad of a machine will do it for a realized cost of $1.75 per call. Now Jennifer and Megan both lose their jobs. Crappy right?
Suppose for a second that the machine answers calls for a realized output of $2.05 per call answered and the company decides to keep Megan and Jennifer on board, but it comes time for an annual raise in salary, do you foresee any Christmas bonus or raise in pay for either woman? Probably not.
What about if the company decides to review the benefits package but figures that the new, better benefits would place realized output on investment for keeping Jennifer and Megan on board too high? Do you think they will get additional benefits? Not likely.
Of course all management decisions are not economic or economically motivated, but remember that the reason we all have a job is because there is some type of economic benefit to us working there. Just something to consider next time you're gossiping at the water cooler.