This article from the New York Times is a perfect example why models and other things we'll learn in school, can't explain everything that happens out there in the real world. Theoretically, economic models would suggest that in order for us to solve this unemployment issue, businesses simply need to drop wages in order to clear the market. However, what isn't taken into consideration is the fact that businesses are run by people not economic robots. The men and women that run these companies have morales and emotions. It's unfortunate but there is some benefits to being the boss's "pet", that being that you'll be able to keep your job and not see pay decreases. Simulataneously, millions of others who don't carry emotional connections with their manager are being laid off in the millions so that those few who are preferred by their bosses can keep their current rate of pay.
This is a frustrating finding/conclusion made by the author of this article however, atleast in my mind, it made the seeming difficulty at eradicating this unemployment rate make a lot more sense in my mind.
I think that the emotional and personal ties that people share at work do effect the firings and hiring of companies; but I believe it happens more frequently in small businesses. while people still have business relationships at larger companies if the decision is made to fire someone it usually comes from the upper management and when that happens personal relationships don't have as much sway. In small businesses i would completely agree that the personal relationship is important to airings and firings.
ReplyDeletePersonal relationships in smaller businesses are what holds a lot of people in that job, whether it's them getting fired or even quitting on their own. If someone has a lot of friends and is respected by their bosses, they're less likely to have a higher rate of separation. However, if they maybe get no respect or are singled out time and again and aren't really friends with their bosses/managers then there's a high chance they'll leave.
ReplyDeleteI agree that personal relationships play a larger role in small companies business decisions. This is because at small companies employees are more likely to know and work with each other on a day to day basis. However, at large companies some upper management may not know the workers this takes personal relationships out of the equation for business decisions.
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