Role of compensation in labor supply

Compensation plays an important role in ensuring that all workers at the local government institution remained motivated and facilitated to perform their duties better. In this regard, the paper has taken the context of Cedar Park City in Texas to analyze its budgets statements that forecast the future compensations and performances as well as the implications of all these actions to the present nad the future performance of the organization.



Analyzing the agency’s compensation for employees; A rationale on what the costs and the benefits would be for a 2 percent, 4 percent, or 5 percent pay increase for the fiscal year 2014.

OVERVIEW

 Compensation for employees would increase in the benefits of the workers such as the increase in salaries and improvement in their pension schemes would mean that the government incurs more. This would require the government to increase taxation thus impacting negatively on the common citizen. However, it can be noted that a measure to stimulate the economic stimulus would make low-income households to increase their incomes. Families are likely to gain more financial stability through an increase in the workers benefits thus making them financially stable. This would lead to an increased purchasing power which is essential for the growth of any economy.  A growing economy leads to the growth of new job opportunities fuelled by the increased consumption. This is essential for the creation of employment thus addressing the issue of unemployment in a sound way. An increase in the compensation for the workers would mean that there is a decrease in turnover; this is likely to lead to overall training cost in government institutions thus reducing the cost of training. This would be evident if there is an increase in the minimum wage policies.
  In this regard, the following paper provides an analysis of what the costs and benefits would be for a 2 percent, 4 percent, or 5 percent pay increase for the fiscal year 2014.
Two percent
A two percent increase in the compensation amounts to the employees for Cedar Park would ultimately increase the overall employee remuneration opts for the entire organization in a significant measure. Going by the large size of Cedar Park and also the size of its activities in the City of Cedar Park, there will be more allocation towards compensation. The compensation for the year 2014 is $380,233 which is the actual value.  Therefore, the actual allocation towards the services of the employees would increase by $7,604. However, despite the increase in costs still the degree of efficiency in delivering services would be improved. This could make the organization reap enormous benefits regarding raising the overall welfare of Cedar Park residents through friendlier, happy and hardworking local government staff.

Four percent
Increasing the compensation by 4 percent would increase the allocation by $15,209.32. This is still a significant amount, and if there were a matched improvement in the employee’s tools of delivering services, there would be an overall benefit regarding improved efficiency in work delivery. The organization could tap on the potential of a better-satisfied public

Five percent
A five percent increase in compensation would amount to $19,012. This is quite a significant amount going by the books of Cedar Park and its sources of revenue. On the contrary, it may, however, be noted that increasing such compensation would be too costly for Cedar Park as this would call for the use of new methods of raising revenue for the organization. This would also call for the improvement in the capital equipment and tools used in services delivery to the people.
PAYROLL FORECAST

The increase of the benefits for the agency would have the following effects;
Personnel adjustments
Increasing the benefits for the employees would lead to both positive and adverse effects on the agency. One of the effects is the need for the staff adjustments that would need to be made to reflect the different needs of the agency as well as the various remunerations of the organizations.

Increase in training allocation
The readjustments would necessitate the increase in training allocation. There would need to increase the allocations to ensure that the employees services delivery are at par with the new level of remuneration. Training would, therefore, be a cost to the organization meaning the agency would have to incur additional costs of training its staff to match the new standards.

Welfare
There would be an increase in the need for welfare services of the staff. Staff would be able to better afford the joining of welfare organizations to generate savings, provide welfare benefits to needy employees and also the need to better their living standards.




EXPENDITURE FORECAST

Five (5) year forecast of the four highest expenditures

Expenditure Forecast


Year

Detail
2015
2015
2016
2017
2018

Personnel services
381,999
401,000




materials and services
4,000
4160
4360
4560
4760

Occupancy
1900
1950
2000
2050
2100

Contractual services
160,164
166,164
172,164
178,164
184,164

Other charges
42,785
44785
46785
48785
50,785

Total
590,848
618,059
225,309
233,559
241,809


All the charges in the forecast are expected to increase in line with the increase in compensation.
The increase in compensation would necessitate the increase in expenditures on materials and services for better service delivery, occupancy costs due to the need for better welfare and housing, contractual services and other miscellaneous charges.

 To be approved or not
These budgets should be approved based on several reasons. First, there is a need to analyses the projected cash flows and incomes to identify the limitations that are bound to be faced. By doing so, the agency will be able to make prior plans to meet any circumstances and needs that many arise in the course of meeting its obligations. Therefore, in this regard, there is a great need to approve the budgets for the miscellaneous charges as the agency foresees a future where it will need to undertake initiatives that will be geared to match the standards of the human resource to the new compensation scheme.

Additionally, the budget should be approved to cut costs in areas where it is applicable. The surge in controllable costs can be hard to control if proper budgets are not generated and passed. It is under this background that the budget or forecast has identified particular expenditures whose growth will be monitored to reduce the overall cost expenditure of the agency. In particular, contractual services will grow at a slower pace as compared to other expenses since they are a significant proportion of the overall cost outlay incurred by the agency. Therefore by controlling them, the agency will have better control of its finances by keeping the value lower.

In conclusion, therefore, by approving these budgets, the agency will have control of, monthly, quarterly, semi-annual and annual spending as well. This will boost the financial control nad growth of the organization in a planned path as well.





CAPITAL BUDGET
Capital costs will increase due to the need to make more investments in utilities to ensure there is a better working environment which should go hand in hand with the increase in welfare

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Trend Analysis




From the analysis, it can be seen that the overall budget increased from the year 2013 to grow to $194,083,992 in the year 2016. This can be attributed to the growth in the truth in tax rates calculations. The result is in a growth of population and a review of the taxation that led to an increase in the overall income from taxation.
The year 2014 there was the noted increase in per capita income. This was attributed to the income elasticity of expenditure being at 4.7. The rise in per capita income translated to direct national income.
The government aimed at improving its citizen’s welfare through the provision of better services for the city council. These included attributes l like garbage collection, the increase in the deficiency in the water supply and provision of basic amenities such as health and education. There was also eminent pressure to increase the overall national budget hence bringing a need for a more taxation and collection of more taxes.
The need for security was the most touching need for the growth of the budget over the years since the issue of terrorism needed more resources. There was also the eminent need for reduction in greenhouse gasses thereby the need for resources to research and explore renewable energy sources. The national defense systems needed substantial expenditures during the engagement in the war
The national government issue of inflation was given the response from a local government level. This led to an ever increasing public expenditure and therefore the government had to pay additional salaries to employees.