In a two-tier wage system, how does the pay of new hires compare to that of senior workers performing the same job?

In a two-tier wage system, new hires generally earn less than senior workers who are performing the same job. This type of wage structure is typically implemented by organizations as a way to manage labor costs and maintain competitiveness while still honoring the compensation agreements made with existing employees.

In this system, the company can offer lower starting wages to new employees without affecting the pay and benefits of long-standing employees. Senior workers have often negotiated higher wages and benefits based on their experience and tenure, reflecting their loyalty and the value they bring to the organization.

This approach allows companies to recruit new talent while controlling costs, but it can also lead to dissatisfaction among employees, particularly if there is a perceived disparity in fairness. Understanding this context is crucial when assessing the implications of a two-tier wage system, both for employee morale and overall organizational structure.