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A comment on Can Anyone Really Create Jobs?. Parent comment

Re:Can Anyone Really Create Jobs? by gahahaha on Saturday November 05, 2011 @09:50AM (#3199730)
It would probably be an even worse idea to cut government wages than to cut government jobs (also a very bad idea). It is true that people are unhappy if their wage increases don't keep up with the rate of inflation--if inflation is 4% and you get an only 1% wage increase, you're unhappy. But people are furious if your boss cuts your wages--if inflation is 1% and they cut your wages by 2%, you're not just unhappy, you're enraged. There's something about cutting the number of dollars that you're going to be paid for doing the same work in the American psyche that gets people really angry, and makes them really unwilling to put in the effort to be good workers.

And so, because each company know that cutting people's wages is a way to guarantee that they'll do a lousy job, businesses are overwhelmingly unwilling to cut people's wages at all. They would rather fire more people.

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Re:Can Anyone Really Create Jobs? by yummyfajitas on Saturday November 05, 2011 @10:22AM (#3199785)
Businesses tend to fire people because cutting wages is likely to cause adverse selection - the good people (with options) quit, the bad people (no options) stay. This is why during the recession, jobs were cut, but comp (per worker) actually increased.

http://research.stlouisfed.org/fred2/series/ECICOM

Regardless, the government could cut overall comp without cutting any individual's comp and therefore never making anyone mad. They could simply freeze wages (rather than raising them, which they did during the recession) and apply the lower pay scales only for new hires/promotions.

I.e., a current G6 makes $30577 (ignoring COLA). When he upgrades to G7 under the current pay scale, he gets $33979. If all pay scales were lowered by $2500, the individual would continue making $30577 for as long as he is a G6. When he transitions to G7, his pay would only go up to $31479. No individual's pay is ever cut, but compensation for government workers as a whole is reduced.

http://www.fedjobs.com/pay/pay.html

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Re:Can Anyone Really Create Jobs? by skylan_q on Saturday November 05, 2011 @10:30AM (#3199802)
Yes, but are we really worried that government employees will no longer be super-productive? ;) I think there's a bit of a presumption in your post!
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