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Suggestion: [reform] Progressive Minimum Wage

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Lizard25
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Post: #1
Suggestion: [reform] Progressive Minimum Wage

Progressive Minimum Wage:
Implements a series of minimum wages based on workers' qualification levels.
Workers are divided into three brackets based on their job qualification, with each bracket being provided with it's own minimum wage. Thus, underqualified workers are not provided with a minimum wage, qualified workers are provided with a basic minimum wage and overqualified workers are provided with an significant minimum wage.

Effects:
Provides employers with a strong incentive to employ the underqualified, lowering unemployment and crime rates. Deflates the value of "overqualification", speeding up job creation and consequently promoting economic growth through increased productivity. Increases bureaucracy and administrative spending. Lowers the quality of goods and services produced, leading to reduced competitively on the international market.

This post was last modified: 26.04.2015 22:26 by Lizard25.

26.04.2015 22:18
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Helsworth
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Post: #2
RE: Suggestion: [reform] Progressive Minimum Wage

Lizard25 Wrote:
Progressive Minimum Wage:
Implements a series of minimum wages based on workers' qualification levels.
Workers are divided into three brackets based on their job qualification, with each bracket being provided with it's own minimum wage. Thus, underqualified workers are not provided with a minimum wage, qualified workers are provided with a basic minimum wage and overqualified workers are provided with an significant minimum wage.

Effects:
Provides employers with a strong incentive to employ the underqualified, lowering unemployment and crime rates. Deflates the value of "overqualification", speeding up job creation and consequently promoting economic growth through increased productivity. Increases bureaucracy and administrative spending. Lowers the quality of goods and services produced, leading to reduced competitively on the international market.


The market already does that. If an enterprise requires skilled workers to produce output, it will hire skilled workers, it won't hire unskilled laborers. The unskilled will simply be forced to compete for the smallest wages. Poverty is higher in states who practice the so-called 'right to work' (aka union bashing and no minimum wage).
More than that, a differentiated minimum wage does not decrease unemployment. Permanent and involuntary unemployment is a macroeconomic phenomenon, and it affects people irrespective of their skills/education; and is always the evidence fiscal deficit spending is not enough to cover the private sector's tax bill and its desire to net save. The long-term unemployed become unhireable by the private sector, because they are perceived as liability. Firms like to employ those who are already working or who have taken only a brief absence from employment. Read in the news about people with higher education degrees searching the dumpsters for food.
After full employment fiscal policy was scrapped in favor of the NAIRU with the coming of power of neoliberalism/monetarism - permanent and involuntary unemployment became the norm. Macroeconomic problems can only be solved by macroeconomic solutions. You cannot solve a macroeconomic problem with a micro-solution and vice-versa. A good economy is that in which firms compete for people, not that in which people compete for firms.

PS: I like the reform suggestion though, but you forgot other effects it will have. GINI and Discrimination will increase, and equality of opportunity will decrease. Happy


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This post was last modified: 27.04.2015 09:01 by Helsworth.

26.04.2015 22:34
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Lizard25
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Post: #3
RE: Suggestion: [reform] Progressive Minimum Wage

Helsworth Wrote:
The market already does that. If an enterprise requires skilled workers to produce output, it will hire skilled workers, it won't hire unskilled laborers.


The point of my progressive minimum wage is to prevent this from happening. By forcing employers to pay very high wages to skilled and/or educated workers, it will become cheaper for them to employ and train unskilled and/or uneducated workers.

17.05.2015 13:31
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Helsworth
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Post: #4
RE: Suggestion: [reform] Progressive Minimum Wage

Lizard25 Wrote:

Helsworth Wrote:
The market already does that. If an enterprise requires skilled workers to produce output, it will hire skilled workers, it won't hire unskilled laborers.


The point of my progressive minimum wage is to prevent this from happening. By forcing employers to pay very high wages to skilled and/or educated workers, it will become cheaper for them to employ and train unskilled and/or uneducated workers.

People who are skilled & have experience are already getting higher wages. In the present is cheap to train unskilled and inexperienced workers. I don't know if you noticed or not, but firms are not having trouble fulfilling wages - what they want, however, is people who are already working and who have experience! They're not looking to 'waste time' by training inexperienced folk. Minimum wage presence or absence is not conducive to full employment levels anyway; for it pertains to the realm of microeconomics, not macro. Indeed, states who don't have minimum wage & who practice union bashing have slightly better employment levels, but they also have higher poverty levels compared to states which have the minimum wage and who don't practice union bashing. In real life, your proposal wouldn't change anything. For when people gain experience, the law will require them to be paid the high minimum wage. And so the time investment spent on training them at a wage below minimum DOES NOT pay off. Look at China. Profiting from such a vast labor pool, when workers demand higher wages, the company simply keeps a few 'master' blokes around (to train the next lot) and fire the rest who don't like it.


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17.05.2015 14:02
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