Political Reform

Minimum Wage Page 2

How do we Raise Wages?

Remember what the two main causes of low wages are?

1) Low skills or low educational levels

2) Not enough jobs, or too many workers looking for jobs.  In other words, high unemployment

Lets address number two first to get it out of the way, so I can focus on the first reason for the rest of this article.

In order to have lots of jobs compared to the number of workers looking for jobs, we need to either restrict the number of job seekers through tighter immigration (this is not a great solution) or we need to create more jobs.  Creating more jobs is the best solutions.  How do we do it?  To create more jobs, first you need to understand who CAN create jobs.  the answer to that question is only small businesses truly create jobs.  Big business PRETEND that they are the job creators, but in reality big businesses are net job destroyers.  See these stories for some staggering job destruction numbers: Dell axes 10,000+  Microsoft axes 18,000 jobs  HP axes 10,000+ and Cisco lays off 6000

The reality is that big companies have pretty much stopped growing in sales, but their workforce continues to get about 2% more efficient every year due to improvements in technology and processes.  That means on average you will want to lay off 10% of your workforce every 5 years to stay competitive.  Any growth you have may reduce this number.

Job creation comes from small businesses, because they are growing faster than their workforce is improving its efficiency.  Policies that are friendly to small business will help job creation.  Policies that are unfriendly to small business will kill job creation.  Democrat party policies are in general bad for job creation, while republicans are good at it.  Observe that the best states in terms of unemployment numbers are states like Utah and Texas that are dominated by Republicans.  Copy the policies of a state like Texas, and unemployment will go down.  I've written more about this subject here:

I'll  leave job creation for now and move on to fixing the skills problem.

One of the first problems here, is not that people have NO skills, but that they have the WRONG skills.

This is what's called a skills gap.  Where millions of people can't find a job at the same time as thousands of employers have millions of high paying job openings that they can't fill. Mike Rowe has set up a foundation to try to address this problem.  I recommend you check it out.

However we do have a problem of people with no marketable skills.  These people often end up stuck in fast food jobs going nowhere fast.  A high percentage of African American high school students end their school experience functionally illiterate.  If you can't even read, its going to be nearly impossible to get a job.  

How can students end up with such an abysmal education when we are spending up to $20,000 dollars a year per student?  New York, which in 2013 spent almost 20,000 per student would have spent $600,000 per class of 30 students.

That's enough to do a really good job, so why do the schools suck?  See my article on education here:

To fix the problem we need to introduce efficiency and give choice to the students. I recommend a voucher system.