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Wouldn't another, simpler fix be to stop providing government aid to those employees? This would stop the government from subsidizing companies that pay low wag
by bko 12y ago
Wouldn't another, simpler fix be to stop providing government aid to those employees? This would stop the government from subsidizing companies that pay low wages. Suppose the market rate for someone is $30k. The employee hired wouldn't particularly care if he gets 20k from the corporation and 10k from government benefits. If you removed the government benefits of 10k, that employee would still need to be compensated 30k to do that job. Therefore, the company would need to pick up that tab.
If you claim that the employee is desperate and would work for 20k, then why would the company even bother paying him the 20k in the first place, and instead pay him 10k instead (minimum wage issues aside)?
I think the article takes too narrow of a view of what a market wage is. It's not the bare minimum a company has to pay someone. It takes into account other factors such as retention, satisfaction and the talent you attract. As the article states, “increases in wages do, in fact, pay for themselves”. Wouldn't that make it the market rate?