Final answer:
Allen employs the piece-rate payment method, which pays employees per completed piece, influencing business decisions regarding labor and machinery investment.
Step-by-step explanation:
Allen is using the piece-rate payment method. This method compensates employees based on the number of pieces they produce or complete. This approach is often debated within incentive payment plans and can influence how firms respond to labor costs and productivity demands. For example, in response to union demands for higher wages, a firm might invest more in machinery, which could increase worker productivity due to better physical capital equipment but would also mean hiring fewer workers due to increased automation and efficiency.