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On Unemployment and Minimum Wage

The new Biden administration wasted no time working on a $15 minimum wage proposal. I agree that something needs to be done to improve the level of starting wages, but it is time to change our mindset that increasing the minimum wage is the only tool we have to do that.

The government instead could easily guarantee anyone who wants it a $15 per hour job. To accomplish this, they can start a portfolio of non-profit enterprises that focus on essential services like infrastructure, health and well being, defense, and community-based organizations. USPS and U.S. military are examples of two such enterprises that exist today. Anyone could get employed by one of these enterprises. Perhaps even anyone can apply to start their own local non-profit public enterprise that would then be approved to higher more people at $15/hr.

These non-profit public enterprises would become market makers for starting wages that for-profit companies would need to compete against to retain talent. This would accomplish four things. First, it would likely push up the hiring wages at companies to $15 per hour without mandating that they do that. Why would anyone want to work for a company for less than $15 per hour unless there were other benefits or opportunities (like stock options) to make more? 

Second, this would give bargaining power to every employee instead of needing unions to do it. Think about it. If an employee ever gets frustrated, they always have the option to quit and go back to a government job. This allows them to do the negotiating for themselves. Unions are only needed when employees have no leverage, but this setup would give every employee that leverage.

Third, this would take the unemployment rate to 0% overnight. Isn't that the goal of all this monetary and fiscal stimulus? It shocks me that politicians and central bankers think printing money is the only solution to lowering unemployment when all the government needs to do is actually create jobs themselves. Makes you wonder if there is some ulterior motive to all this stimulus and money printing, right?

Lastly, this would eliminate the need for unemployment insurance. If someone loses their job, they can just jump right into a government job even on a part time basis while they search for a new job. This would free up funds for employers who today pay a good portion of unemployment insurance to offset the wage increases they will need to make to stay competitive. And it would allow people to stay productive instead of going months or years without work.

We need our leaders and politicians to start thinking more strategically about the problems at hand. The old solutions will continue to not work. It will be our collective ability to discuss, test, and advance new ideas that will lead us to a better society that will create opportunities for everyone, not just a few privileged. Perhaps this idea of mine has merit, perhaps it doesn't. But let's at least start thinking about minimum wages and unemployment differently and having those conversations as a society.