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Administering Wages and Salaries

SECTION. 13-2. pp. 427-429. Administering Wages and Salaries. Key Words to Know. salary scale (p. 427) A table of wages or salaries used to compare various jobs in a company. cost-of-living adjustment (p. 427) A raise in salary to keep up with the rate of inflation. Key Words to Know.

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Administering Wages and Salaries

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  1. SECTION 13-2 pp. 427-429 Administering Wages and Salaries

  2. Key Words to Know salary scale (p. 427) A table of wages or salaries used to compare various jobs in a company. cost-of-living adjustment (p. 427) A raise in salary to keep up with the rate of inflation.

  3. Key Words to Know merit increase (p. 427) A raise in salary to reward an employee for the quality of his or her work.

  4. Formula New = Present + Cost-of-Living + Merit Salary Salary Adjustment Increase

  5. Example 1 Ell Eea is a systems analyst (salary level 2 position) for EPD Inc. The executive board of EPD voted to give all employees a cost-of-living adjustment of 2.8 percent. In addition, Eea was awarded a merit increase of 3.5 percent. What will Eea ’s salary be for the coming year?

  6. Example 1 Answer: Step 1 Find the present salary from Figure 13.1 below.

  7. Figure 13.1 The present salary is $40,000.

  8. Example 1 Answer: Step 2 Find the cost-of-living adjustment. Salary × Cost-of-Living Adjustment Percent $40,000 × 2.8% = $1,120

  9. Example 1 Answer: Step 3 Find the merit increase. Salary × Merit Increase Percent $40,000 × 3.5% = $1,400

  10. Example 1 Answer: Step 4 Find the new salary. Present + Cost-of-Living + Merit Salary Adjustment Increase $40,000 + $1,120 + $1,400 = $42,520

  11. Example 2 D’Marco Mullin is a computer operator, salary level 3, for EPD Inc. He received a 2.8 percent cost-of-living adjustment and a merit increase of 4 percent. What is Mullin’s new salary?

  12. Example 2 Answer: Step 1 Find the present salary from Figure 13.1 below.

  13. Figure 13.1 The present salary is $38,500.

  14. Example 2 Answer: Step 2 Find the cost of living adjustment. Salary × Cost-of-Living Adjustment Percent $38,500 × 2.8% = $1,078

  15. Example 2 Answer: Step 3 Find the merit increase. Salary × Merit Increase Percent $38,500 × 4% = $1,540

  16. Example 2 Answer: Step 4 Find the new salary. Present + Cost-of-Living + Merit Salary Adjustment Increase $38,500 + $1,078 + $1,540 = $41,118

  17. 428:1-16

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