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Survey Says: Incentive-Based Pay Systems Provide Higher Compensation Than Time-Based Models

Anyone who has engaged in collective bargaining knows that, generally, unions throw their arms up at any proposal dealing with incentive-based pay versus time-based pay systems. Their rationale can range from distrust to unfounded beliefs that incentive-based pay somehow detracts from seniority. However, new data published by the Bureau of Labor Statistics (BLS) – a government entity that tracks labor data in the U.S. – gives some nice bargaining ammunition to employers looking to migrate to these systems.

According to the BLS report, “Incentive-based pay depends at least partially on productivity and may include commissions, production bonuses, or piece-rate work. The pay for time-based workers depends solely on a schedule, such as hourly or weekly rates or annual salaries.” When surveying people across varying occupations, the report found in every instance employees in incentive-pay systems earned considerably more per hour than those in time-based models, with some earning nearly $20 per hour more. This BLS report may be a valuable tool for employers headed to the bargaining table where incentive-based pay proposals may be an issue.

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About this Author

David J. Pryzbylski, Barnes Thornburg Law Firm, Labor Law Attorney
Partner

David J. Pryzbylski became interested in labor relations early on in high school, having grown up next to several of the largest steel mills in the world. Fittingly, Mr. Pryzbylski now is a member of Barnes & Thornburg LLP’s Labor & Employment Department. Building on his life-long fascination with labor law, Mr. Pryzbylski concentrates his practice on traditional labor matters. Specifically, he routinely assists clients with developing union-avoidance training, drafting collective bargaining agreement provisions, developing collective bargaining negotiation strategies, decertifying...

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