Final answer:
The statement regarding piece-rate compensation plans being used because production work is machine-paced is false. Piece-rate plans are effective when workers can control their productivity, and allow them to earn more by producing more. Wages are tied to productivity, often influenced by investment in better capital equipment.
Step-by-step explanation:
The statement that a major reason for a piece-rate compensation plan is that many production jobs are machine-paced, so employees have limited control over the pace of work and thus the number of items produced during scheduled work hours is false. A piece-rate plan actually rewards employees for their productivity by paying them a set rate for each item they produce. Consequently, employees have a direct incentive to produce more, as their earnings are directly tied to their output. This type of compensation plan is particularly effective when employees have control over the pace of their work and can increase their productivity.
As indicated by the provided information, productivity growth influences the average level of wages. Employers generally set wages based on the value of the output produced by the workers. In cases where firms decide to invest in better machinery in response to union demands for higher wages, the productivity of workers may increase due to better physical capital equipment, leading to potentially fewer workers being needed but at higher pay in some cases. This relationship between productivity and wages underlines the importance of capital investments in the efficiency of labor.