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In industries such as steel and auto manufacturing, benefits account for what share of the total cost of compensation?
A25 percent
B40 percent
C10 percent
D65 percent
Answer & Solution
Correct answer: B. 40 percent
1. Compensation cost is made up of direct pay plus the cost of benefits.
2. In steel and auto manufacturing, benefits make up 40 percent of that total cost.
3. A share that large explains why unions bargain as hard over benefits as over wage rates.
4. It also means that a change in benefit costs moves the employer's total labor bill sharply.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 8 "Managing Human Resources and Labor Relations", section Wage and Benefits_
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