Final answer:
When a company pays a landscaper $20 for each lawn mowed, the compensation is known as piece-rate pay, where payment is made per unit of work rather than per hour worked.
Step-by-step explanation:
When a company pays a landscaper $20 for every lawn he mows, the type of compensation is called piece-rate pay. This is a wage system where employees are paid a fixed rate for each unit of work they complete, rather than an hourly wage. In this scenario, each mowed lawn is considered a 'piece' of work, and the landscaper earns a set amount of money per piece rather than being paid based on the amount of time it takes to mow the lawn.
This type of compensation incentivizes productivity since the more lawns the landscaper mows, the more they earn. The employer benefits as well since they are only paying for the actual output (the number of lawns mowed) rather than the number of hours worked. It is a practical compensation structure for jobs where work output is easily quantifiable, such as landscaping, manufacturing, and certain types of sales roles.
In contrast, an hourly wage system would pay the landscaper a set rate for every hour worked, regardless of how many lawns are mowed. In the example provided for percentage growth in pay, an hourly employee receives a $2 per hour raise, which results in a 20% increase from their original $10 hourly rate. However, this scenario is different from the piece-rate pay that the original question refers to.