openpolitics.com

The Mystery of the Vanishing Pay Raise

Peter Cappelli, a professor at the Wharton School of Business, noted, for instance, that many retailers give managers bonuses based on whether they keep their labor budgets below a designated ceiling. “They’re punished to the extent they go over those budgets,” Professor Cappelli said. “If you’re a local manager and you’re thinking, ‘Should we bump up wages,’ it could really hit your bonus. Companies have done this in order to increase the incentive to hang tough on budgets, and it works.”