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Amazon recently announced that it would pay all of its employees a minimum $15 per hour, more than double the federal $7.25 minimum wage. Many of its employees are in occupations and parts of the country that would earn at the minimum wage. So, occasionally, firms find it beneficial to pay above (or even below) the equilibrium wage rate.

a. Why do you think a firm would pay its workers (office, warehouse, etc.) above-market wages?

b. Why do you think a firm would pay its managers above-market wages?

c. Some firms used to set up employment contracts where workers were paid below-market wages early on and then above-market wages later in a worker's career. Why do you think these types of contracts were used? Also seen with these contracts was a pre-determined mandatory retirement date; why would this be an important part of such a contract?

Reference no: EM132154265

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