Let's say I'm earning 25$ per hour. What can the government do to raise my wages? Or, is that even a legitimate question? Let's say I have a choice between a salary cut of 1% with a likelihood of a 1% rate of deflation over the next year, and a 1% increase in my salary with a likelihood of 2% inflation over the next year? If you do the math, taking the salary cut would be preferable. So perhaps a more appropriate question would be not how the government can increase my wages, but rather how it can increase my real wages after inflation.
Now, among the options presented have include:
1. raising the minimum wage,
2. introducing co-determination legislation, and
3. providing me with further education.
I'll look at the pros and cons of this on all fronts.
1. Raising the minimum wage:
Now I live in a city with a number of companies hiring people with my skills. As a result, employers do need to offer a fair wage to retain us. And so I doubt (though of course I could be wrong) that my employer is paying me below the equilibrium rate (the rate beyond which he'd not be willing to keep me). So now, what are the possibilities for a minimum wage increase? If the minimum wage rises to still below my salary, then it's totally pointless. If it rises to above my salary, but still below equilibrium, I get a raise and get to keep my job, but I'm still not getting a fair wage. If it rises to above equilibrium, I lose my job. So, clearly a minimum wage increase does not guarantee a fair wage and, at worse, could legislate me out of a job.
2. Introducing co-determination legislation:
Suddenly, I'm in a better position to negotiate a fair wage for myself. If indeed I'm worth more than I'm now being paid, I have the power to negotiate a fairer wage without any need for minimum wage legislation. I might even be able to negotiate a higher wage than minimum wage legislation would have given me, since i could then negotiate a fair wage, not just a legally mandated minimum wage. On the other hand, supposing that I am being paid a fair wage already, and that any increase beyond that is just unsustainable for the company, then I can negotiate a fair wage, which might be lower than the legally mandated minimum wage, but at least it's still a fair wage and won't legislate me out of work. In that sense, it is superior to a minimum wage on two fronts:
a. If I'm earning less than I'm worth, I could possibly negotiate something even higher than a minimum wage could give me, yet.
b. I'm I'm already paid what I'm worth, I can just keep that salary instead of being legislated out of work. I can even negotiate a temporary salary cut if needs be in hard times to save my job, which a minimum wage would not permit if it's placed higher than the salary cut I intend to negotiate.
3. Providing me with further education:
If I go to the government, and it gives me a school voucher to cover my education, room and board for a year, would that increase my salary by much? Maybe, but probably not by much. Let's say an extra year of education helps me raise my salary to 30$ a year. Compare that to an unemployed person not only earning 0$ a year, but even being supported by the government. If the government should give him that voucher instead, after a year he might be able to get a 10$ an hour job. That is twice the salary increase I'd get (25 to 30 for me, only 5$; yet 0 to 10 for him plus no longer being dependent on the government. So that's at least a 10$ increase).
So while such a school voucher might increase my salary, it would be far wiser for the government to give that voucher to the unemployed, underemployed, or those earning below a certain income who'd be wiling to quit that job to take the voucher for a year instead.
So in conclusion, a minimum wage might increase my salary, or it could legislate me out of work. A co-determination law would give me the power to negotiate my own salary, and so possibly benefit me even more than a minimum wage law, but certainly not risk putting me out of work since I can always negotiate downward if necessary, which would still be preferable to being unemployed. Education goes along a sliding scale:the less educated the worker is, or the less income he earns, the more the greater the dividends of the school voucher; and the more education he has, or the higher is salary already, the less the dividends will be.
This, by the way, would apply equally to lower income groups too. A minimum wage could be useless if too low, legislate him out of work if too high, and still not guarantee a fair wage if higher than the current wage but still below what he really deserves, thus benefiting him only minimally. Co-determination laws could allow him to negotiate a fair wage possibly even higher than the proposed minimum wage, or allow him to at least negotiate a fair wage even if lower than the proposed minimum wage so as to save his job. After all, a low wage is still better than nothing.
And education vouchers could be provided to those earning less than a government-recommended minimum wage (not to be confused with an obligatory one) and who'd be willing to quit their jobs and go to school for a year to upgrade their skills.
In the end, I'd say options two and three would be the way to go to truly help the poor without risking legislating them out of work.
Now, among the options presented have include:
1. raising the minimum wage,
2. introducing co-determination legislation, and
3. providing me with further education.
I'll look at the pros and cons of this on all fronts.
1. Raising the minimum wage:
Now I live in a city with a number of companies hiring people with my skills. As a result, employers do need to offer a fair wage to retain us. And so I doubt (though of course I could be wrong) that my employer is paying me below the equilibrium rate (the rate beyond which he'd not be willing to keep me). So now, what are the possibilities for a minimum wage increase? If the minimum wage rises to still below my salary, then it's totally pointless. If it rises to above my salary, but still below equilibrium, I get a raise and get to keep my job, but I'm still not getting a fair wage. If it rises to above equilibrium, I lose my job. So, clearly a minimum wage increase does not guarantee a fair wage and, at worse, could legislate me out of a job.
2. Introducing co-determination legislation:
Suddenly, I'm in a better position to negotiate a fair wage for myself. If indeed I'm worth more than I'm now being paid, I have the power to negotiate a fairer wage without any need for minimum wage legislation. I might even be able to negotiate a higher wage than minimum wage legislation would have given me, since i could then negotiate a fair wage, not just a legally mandated minimum wage. On the other hand, supposing that I am being paid a fair wage already, and that any increase beyond that is just unsustainable for the company, then I can negotiate a fair wage, which might be lower than the legally mandated minimum wage, but at least it's still a fair wage and won't legislate me out of work. In that sense, it is superior to a minimum wage on two fronts:
a. If I'm earning less than I'm worth, I could possibly negotiate something even higher than a minimum wage could give me, yet.
b. I'm I'm already paid what I'm worth, I can just keep that salary instead of being legislated out of work. I can even negotiate a temporary salary cut if needs be in hard times to save my job, which a minimum wage would not permit if it's placed higher than the salary cut I intend to negotiate.
3. Providing me with further education:
If I go to the government, and it gives me a school voucher to cover my education, room and board for a year, would that increase my salary by much? Maybe, but probably not by much. Let's say an extra year of education helps me raise my salary to 30$ a year. Compare that to an unemployed person not only earning 0$ a year, but even being supported by the government. If the government should give him that voucher instead, after a year he might be able to get a 10$ an hour job. That is twice the salary increase I'd get (25 to 30 for me, only 5$; yet 0 to 10 for him plus no longer being dependent on the government. So that's at least a 10$ increase).
So while such a school voucher might increase my salary, it would be far wiser for the government to give that voucher to the unemployed, underemployed, or those earning below a certain income who'd be wiling to quit that job to take the voucher for a year instead.
So in conclusion, a minimum wage might increase my salary, or it could legislate me out of work. A co-determination law would give me the power to negotiate my own salary, and so possibly benefit me even more than a minimum wage law, but certainly not risk putting me out of work since I can always negotiate downward if necessary, which would still be preferable to being unemployed. Education goes along a sliding scale:the less educated the worker is, or the less income he earns, the more the greater the dividends of the school voucher; and the more education he has, or the higher is salary already, the less the dividends will be.
This, by the way, would apply equally to lower income groups too. A minimum wage could be useless if too low, legislate him out of work if too high, and still not guarantee a fair wage if higher than the current wage but still below what he really deserves, thus benefiting him only minimally. Co-determination laws could allow him to negotiate a fair wage possibly even higher than the proposed minimum wage, or allow him to at least negotiate a fair wage even if lower than the proposed minimum wage so as to save his job. After all, a low wage is still better than nothing.
And education vouchers could be provided to those earning less than a government-recommended minimum wage (not to be confused with an obligatory one) and who'd be willing to quit their jobs and go to school for a year to upgrade their skills.
In the end, I'd say options two and three would be the way to go to truly help the poor without risking legislating them out of work.