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Assessing Worker Attitudes Under A Two-Tier Wage Plan

Peter Cappelli, Peter D. Sherer

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This study examines data from a 1985 survey of employee attitudes at an airline that had introduced a merging (or temporary) two-tier pay plan the year before. The authors find, contrary to popular wisdom, that lower-wage ‘B’ tier workers felt significantly more satisfied with their pay, work, and supervision, more optimistic about future pay, more confident of their job security, and more committed to the company and union than ‘A’ tier workers. The authors suggest that ‘B’ tier workers have lower expectations than ‘A’ tier workers, partly because of their self-selection into jobs with reduced starting wages and partly because of the reference groups with which they evaluate their situations, which differ from ‘A’ tier workers' reference groups.