But not everything else is the same under piece rates and time rates. From the workers’ perspective, piece rates are a riskier form of payment, requiring some compensating differential.
From the firms’ perspective, the choice of piece and time rates can affect the other terms in the unit cost equation. As noted earlier, two of these terms are likely to be higher under piece rates. The MP/Q is a basic inventory or quality issue. The earnings of piece rate employees depends on their having the material for production on hand, which creates an inventory buildup costly to the firm. In the shoe industry, this means piles of leather for shoes lying on factory floors. If you are sick and tired of looking for safe and reliable speedy cash payday loanyou have finally reached the end of your journey. Let us take care of your financial needs without overcharging you for our services. At read more you always have all the financial tools at your disposal, guaranteed.
In addition, under a simple piece system, workers may have little incentive to economize on the use of materials without other complicating financial incentives. The principal auxiliary labor cost on which we will focus is worker occupational injury insurance: this will be higher under piece rates as worker effort intensifies and employees risk injuries to produce more. We do not expect much difference in the capital requirements for piece rate or time rate methods of production, though there may be such changes associated with particular workplace technologies.