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Pondering the universe


The jobs spin

When politicians and business leaders talk about creating jobs, activate your spin radar, because they are not likely to be talking about well paying ones.

When Henry Ford produced the Model-T and realised that it was too expensive for most to afford, he immediately doubled the salaries of his workers, to make sure at least they would be able to afford one. Since then, very few have done the same for those they see at the bottom rung, but most numerous, of their workers.

For most employers, whether private or government, the mass of their workers are seen as overhead, and deserving of the lowest they can be paid. Conversely, their leaders, and key positions under them, are seen as worthy of many times the remuneration of the lowest paid. Presumably, this judgement is based on the numbers of each.

However, if wages don't grow in line with the average properity of a nation, its economy suffers, because it is what the great majority spend that keeps the economy running. What a very rich minority spend doesn't add much to what most businesses earn. And the very rich are not forced by circumstances to spend almost all their income on living expenses. No, they are accumulating capital assets, adding to their wealth, and not dissipating it.

Many pay systems are based upon getting a pay rise after proving increased performance, but research shows that performance, especially in its quality, is improved by paying better beforehand, while pay-for-performance may weaken performance. The former proactive approach would seem to produce better performance as the norm, rather than the latter reward-a-few approach which pits workers against each other to produce a generally lower average performance level.

The paradox is that the businesses paying the least are service industries, but they are the ones most dependent upon people having disposable income. Unfortunately, they make local decisions to pay their workers low, but the situation can only really change when most pay more, but it has to start somewhere. With service industries providing 80% of jobs, being skimpy with wages only hampers their profitability, as it sabotages the spending ability of the nation. Money has to circulate to provide benefit.

The argument put forward by many is that a low wage is better than no wage. But that predisposes people to underperform and produce lower quality due to resentment, which sabotages the perception of the business, and thus sabotages their potential income. It is very short-term thinking that relies on this argument.

On the world stage, companies try to play off countries against each other for which can achieve the lowest wages, but the sooner all are payed equally, regardless of country, the sooner jobs can be retained in a country, protectionist tariffs can be dropped, and all economies have healthy money circulation.

When Henry Ford doubled employees' wages, he was not seeing the bottom line, but the top line, which is the inverse of most business thinking, but his success showed that the approach paid off. This is the challenge that most businesses face: focus on the immediate bottom line, or plan for the future and focus on profitability.

Investing in workers pays dividends for businesses and countries, so the sooner workers get healthy remuneration, the sooner businesses and countries get healthier remuneration. You have to invest to reap the rewards.

Nowhere is this couterproductive thinking more demonstrated than in the wages treatment of health and police services. We expect to be kept healthy and have a police force that is honest when governments of all persuasions keep underfunding them, well short of community expectations. This approach just chases good people out of these systems.

A society cannot expect people to exist on their own goodwill and dedication to service while the rest focusses on their selfish wants. Democratic governments have a duty of care to protect the health and security of their citizens, but skimping on the wages of those carrying out those functions undermines that duty.

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