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Let's say you have a job opening for making widgets. You need to hire someone else to help make the widgets. You already have someone who has been a very loyal, hard working employee for five years. After one year on the job, both of these two employees are making the same number of widgets for you and showing up for work every day. Most employers are going to be paying the five year employee more money at this point. It's human nature and it is a reward for 5 years of service. Nothing wrong with it and it happens all the time. You may not do it that way but most people do.
How a non-tenure pay-increase system works (well, how my old system worked anyway) varied slightly:
Every year an employee was reviewed - if review was high - then a pay increase would be given.
Pay increases would also be factored in if an employee took on more than their basic responsibilities.
If the starting pay (say, $8.00 an hour for new employees) increased by any amount then everyone else's pay would increase likewise.
An employee that was a GOOD employee would always get an increase based on performance at set-intervals (once a year for me but other companies would do it maybe twice a year or what not).
The only time in which a 5-year employee would earn the same as a one-year employee is if the 5-year employee had issues and they didn't receive performance-based increases. .. so they worked there longer but their performance was lacking a little.
But that's retail - where there aren't many *job skills* necessary (stock, cashier, clear) and turnaround is high. . . tenure doesn't actually matter quite so much in that type of work environment because years on the job doesn't = a more fine-tuned ability to do the job. After a time of being on the job then an employee might be given more job responsibilities since they've proven they're capable of handling their job - and then some . . . Which would result in a pay-increase. (Such as: being given a supervisor or advisor position).
Being on the job for years would mean that the individual respected the work-basics, more, and was a good employee overall - thus would be given slack in future issues (more paid time off, more sick-leave, etc) as well as dibs on holidays and other such things.
In this way their loyalty is honored - but job-performance is what would result in a solid pay increase.
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