When those signals become sufficiently polluted, employers will invariably turn to some other signal.
Lowering the standards is a move politicians often make because it "solves" the problem you outline in the short term, even though it's ultimately self-defeating because it directly undermines the virtue signaling function of academic credentials. It's a "solution" which requires no funding, no changes to teaching practices, and no changes to the ways schools are organized. So it's attractive and politically feasible even though it's harmful and profoundly stupid.
The solutions you've proposed are the right kind of solution because they preserve the signaling function of credentials. But so far they're approaches that public schools and the governments that run them seem politically incapable of taking.
There's also something else to confront here in that even when the competency signaling functions are intact, academic and professional credentials are also to some extent scarcity goods, valuable precisely because not everyone has them. So if you solve all of these problems and you still allow grades to at least attempt to fulfill their purpose, a functional and coherent grades system will, to some extent, always perform differentiation of the labor market or be obviated by its failure to differentiate. The inequality that you see manifest as students who fail to graduate falling behind in life is actually downstream of the schools, and it has to do with how many seats are available for what kinds of jobs in the economy. If you address the former without addressing the latter, the real social justice impact is going to be limited.
And you ultimately can't educate your way out of having a working class; at some point you have to look elsewhere for assuring the dignity, security, and comfort of people who academically underperform relative to others. The working class as a whole must be made livable, instead of pretending we can shove everyone into its most comfortable sections (the "middle class") through education.
The school is supposed to be a safe learning environment, not a simple daycare.
learning means giving a feedback to improve. If you destroy the feedback mechanism that gives negative news, then people stop learning altogether.
Imagine trying to train a neural network, but you dont have backpropagation, because negative feedback is bad. So you stick to throwing noodles at the wall and hope something will stick
Unfortunately that is just manifestly untrue in America, which is part of the problem. You have parents who make a nice living on their “street smarts” telling their kids “you’ll never use algebra in real life” and “those who can, do; those who can’t, teach.” Thus the contempt for education is passed down generationally.
Thinking back, different era and country, but fear of failing was much much bigger than not getting an A.
Currently there are no short term consequences to failing. Won’t this provide a motivation to a set of students to do better. The ones who’re going to fail are the ones suited to trade or other jobs, and other avenues later in like to get high school diploma. Maybe this is not the right time in their life and they need different help than being mindlessly promoted in school.
I think that applies to people more broadly. Many of us have, at one point or another, had to face down severe consequences to give us the motivation to break out of a downward spiral. Almost by definition that means a few will fail to do so but if the consequences don't have any teeth they don't serve as motivation.
I am from Germany where repeating a grade is quite common and uhm what? How does it destroy their social life?
It isn't even as bad as changing school as you can still see your friends. I don't remember anyone being traumatized or ostracized by having to repeat a grade. Also some high performing students are also allowed to skip grades and no ones says that it ruins their social life.
Sometimes students just need an extra year to mature.
I think there are two solutions. You can make students repeat only the failed class and take it with their normal classes next year like in college. Or a requirement based system where you can only graduate after passing every class on the plan but you can attempt them as many times as you want (even after you're out of school and working full time).