Suppose George is making $18 an hour installing electronic chips in hand held computers. Would your offer to work for $8 an hour get you the job? Why might a profit-maximizing employer turn down your offer?
Whether I offered might depend upon how desperate I am for a job.
The employer might turn me down because she's following the adage, "You pay for what you get." She might fear that she wouldn't get as strong a work ethic and as good a quality for such a low wage.
To determine whether your offer to work for $8 an hour would get you the job, we need to compare it with George's wage of $18 an hour. Assuming both candidates have similar qualifications and experience, a profit-maximizing employer might turn down your offer for a few reasons:
1. Wage Efficiency: If the employer believes that George's skills and productivity are worth the wage of $18 an hour, they may be hesitant to hire you at a lower wage of $8 an hour. This is because a higher wage generally signifies higher productivity and efficiency, leading to better value for the employer's investment.
2. Quality Concerns: The employer might associate higher wages with better quality work. If they prioritize accuracy and precision in the installation of electronic chips, they may believe that George's higher wage reflects his ability to meet those standards consistently. In this case, they might be unwilling to hire you at a lower wage due to concerns about maintaining the desired level of quality.
3. Retention and Morale: If the employer is concerned about their relationship with George, they might fear that accepting your offer for a lower wage could create internal issues. By hiring you at a significantly lower wage, they could risk demoralizing George or damaging overall morale within the team. This could potentially lead to higher turnover rates or reduced job satisfaction among employees.
Understanding these factors, a profit-maximizing employer is likely to consider not only the cost savings but also the potential risks involved in hiring a candidate at a significantly lower wage. They will balance these considerations to make the most rational decision in terms of efficiency and productivity.