Final answer:
Efficiency Wage Theory suggests that employers pay above the market rate to increase productivity and reduce turnover, while workers may choose jobs based on several factors, not solely on the highest salary. This strategy is beneficial for both employers and employees.
Step-by-step explanation:
The idea that workers always strive to choose the highest paying job available to them can be understood through the lens of the Efficiency Wage Theory. This concept suggests that employers often opt to pay their employees more than the equilibrium market wage to boost productivity and retain staff, thereby avoiding the costs associated with turnover and training new hires. A worker's choice may also be influenced by factors such as job security, work environment, benefits, and location, rather than solely by the highest salary on offer.
Employers recognize the value in offering competitive wages to avoid losing employees who would otherwise experience a salary decline if they were to leave. This understanding incentivizes workers to perform better and stay loyal to their current employer. The competitive pay acts not just as a motivator for individuals but as a strategic business decision for companies looking to maximize efficiency and profitability. However, it is also important to note the context within the labor market, as periods of high unemployment may force workers to accept lower wages, indicating that the decision isn't always straightforward.