Final answer:
Skill-based pay can lead to an increase in payment for work, motivating employees to develop high-demand skills and benefiting organizations through a more competent workforce. This pay strategy is popular as it aligns with economic principles of supply and demand for skilled labor.
Step-by-step explanation:
One important advantage of skill-based pay is the potential for increasing the payment received for work. This approach is not only popular with both economists and the general public, but it also encourages individuals in investing time and effort into developing these skills. When the workforce is highly skilled, businesses benefit from a more competent and versatile team, which can lead to innovation and efficiency gains within the organization or department. In a broader sense, wages are often aligned with the rarity and demand for certain skills. Competition in the workforce influences wage levels, particularly in times of varying employment rates. Moreover, if a business invests in machinery enhancing worker productivity, fewer workers may be needed, but those employed may enjoy higher wages as a result of their specialized skills.