Final answer:
The statement is true: a Two-Tier Wage plan involves paying newly hired employees less than other employees doing similar jobs. This approach helps businesses manage labor costs, but can impact workforce dynamics.
Step-by-step explanation:
True, contract language that specifies a newly hired employee will be paid less than other employees performing a similar job is referred to as a Two-Tier Wage plan. This system can be seen as a way for businesses to control labor costs and potentially increase profits by paying newer employees at a lower rate than more tenured staff. Although this strategy may provide cost savings for employers, it can also create a distinction between different tiers of employees, which might affect workforce morale and productivity.
In the broad context of wage setting, factors such as skill shortages, union negotiations, economic conditions, and competition in the labor market can all influence the wages that are offered and accepted. Employers may also implement strategies like investing in machinery in response to higher wage demands, which can increase productivity but might result in fewer employed workers.