Which one of the following choices from the reading is NOT a myth about pay?

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Question restatement: Which one of the following choices from the reading is NOT a myth about pay?

Option 1: 'Labor costs constitute a significant proportion of total costs.' This statement is often presented as a fact in cost accounting and operations management, and many analyses show labor costs can be a large portion of total costs. If it is treated as a myth in some contexts, that would be because people oversimplify, but in many real-world scenarios it may indeed be a substantial share. The claim is not inherently a myth across all contexts, but it is often used in discussions to mislead about where costs come from, which is why it can be contested depending on the setting. If the reading treats it as a myth, this would be a mischaracterization; otherwise, it could be factual in many cases.

Option 2: 'Lower labor costs are a potent and sustainable competitive weapon.' This is a classic myth. The idea that simply reducing labor costs is a lasting competitive advantage ignores quality, productivity, innovation, turnover, training costs, and the potential for reputational harm. Over time, this approach tends to erode value rather than sustain it, making the statement an oft-cited misconception.

Option 3: 'Labor rates and labor costs aren't the same thing.' This is a factual distinction and, in most readings, is presented as a correct understanding of pay economics. Labor rate refers to the hourly pay rate, while labor cost includes not only wages but also benefits, payroll taxes, overtime, and related expenses. Recognizing the difference is key to accurate budgeting and financial analysis. Therefore, this option is not a myth.

Option 4: 'People only work for money.' This is a myth in organizational behavior. Motivation is influenced by a mix of factors—intrinsic motivation, job satisfaction, meaningful work, recognition, and workplace environment—not strictly monetary incentives. The statement oversimplifies human motivation and is widely regarded as false in the literature.

Option 5: 'You can lower your labor costs by cutting labor rates.' This is another common myth. Simply reducing pay rates may lower immediate wage costs but can backfire through higher turnover, lower morale, reduced productivity, and difficulty attracting skilled workers, which can increase total costs and reduce long-term value.

Summary interpretation: The passage distinguishes between true distinctions in pay economics and several prevalent myths about labor costs and motivation. The statement that labor rates and labor costs aren’t the same thing is the core factual distinction, while the remaining options are commonly treated as myths or oversimplifications in pay discussions.

MGMT 102 LEC ONL: MANA... 05 | Submit | Midterm

Which one of the following choices from the reading is NOT a myth about pay?

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