Final answer:
Time wages provide no incentive to increase productivity as they are typically not adjusted frequently and don't reflect individual performance levels, which can lead to a misalignment between compensation and productivity.
Step-by-step explanation:
One disadvantage of time wages is that they provide no incentive to increase productivity. Time wages can make it challenging to align wage adjustments swiftly with productivity levels. Employers may review salaries only once or twice a year, and in positions where productivity is difficult to assess, such as an accountant in a large corporation, performance-based pay is complex to implement. Consequently, wage increases typically align with industry standards or past productivity growth, irrespective of individual performance. This approach doesn't encourage employees to enhance productivity beyond expectations, because their compensation doesn't directly reflect their output.
Furthermore, the efficiency wage theory suggests that there is a relationship between what workers are paid and their productivity. Higher wages may motivate workers to perform better, understanding that job loss could result in a pay cut. Employers might also pay more to avoid the costs of hiring and training new staff. In these ways, time wages, which don't tightly couple pay with performance, may not capitalize on the motivational effects that a more performance-oriented pay structure would.