Final answer:
The process of reducing pay disparities among employees is known as pay equity, often supported by policies that work with antidiscrimination laws to narrow earnings gaps. The concept of equal pay for equal work upholds this practice. Adverse selection of wage cuts argument cautions against uniform wage reductions, as they can lead to the departure of the most skilled employees.
Step-by-step explanation:
Reducing Pay Disparities
The term that refers to the process of reducing the size of the pay differences among employees is commonly known as pay equity. This initiative can be supported by various policies that complement antidiscrimination laws to reduce the earnings gap between different groups of workers, such as those based on gender or race. Ensuring pay equity means that jobs which require the same level of skill, training, or education should entitle employees to equal pay. This concept is closely related to the doctrine of equal pay for equal work.
One argument against across-the-board wage cuts is known as the adverse selection of wage cuts, which indicates that reducing everyone's wages equally may cause an organization to lose its best employees, as they have better employment alternatives elsewhere. This could leave behind those with fewer employment options, potentially reducing a company's overall talent and productivity. Therefore, companies often opt for targeted layoffs or firings instead of universal wage reductions.