Imagine that you are an HR Manager employed with a private, for-profit company. As a part of the most recent contract negotiations, senior management is considering a 3% across the board wage increase. This is expected to be accepted and ratified by the union membership. Management has instructed you to calculate the impact of this wage increase and report back. Your current union workforce data is as follows:
96 employees at $16.25/hour Average number of work hours per year: 2000
63 employees at $13.50/hour Average number of paid vacation hours per year: 80
29 employees at $11.75/hour Average cost of benefits per person = $4.84/hour or 35%
Using the data above calculate the following:
1a. What is the current annual cost of employee base wages?
1b. What will the annual cost of employee base wages be, if proposed increase is accepted?
1c. How much additional wage cost will be added by this proposed increase?
2a. What is the current total annual cost of employee benefits?
2b. What will the total annual cost of benefits be, if proposed increase is accepted?
2c. How much additional benefit cost will be added by this wage increase?
3. What is the total cost of this proposed wage increase?