how can govrmnent raise wages?

Question

I was thinking lowering taxes and more incentive for saving and investing

Answer 1

There are all sorts of things that can be done with taxes, but usually these don't have a substantial net impact. If they reduce payroll taxes but increase sales taxes to offset, then someone might receive more $, but this will be offset by teh fact that prices are higher, so they won't be any better off in purchasing power terms.

Economic theory says that wages will be equal to marginal product of labour in the long-run. In other words, employers will pay workers based on how much value they add to a business. For example, if it costs $5/hour to employ someone and they can generate sales with profit of $5.50/hour after taking into account all of the costs of hiring them, overheads etc, then they will do so since they are 50c better off. If the person only generates $4.50 of profit after all costs are taken into account, then they won't.

Therefore, higher wages means that you need to increase productivity. Incentives for firms to invest in more capital to increase the amount of capital per worker will lift labour productivity (this is known as capital deepening). Also, education and skills training to helps improve the productivity of workers and hence tehir wages. For example, investing more in education to improve literacy and numeracy can pay big dividends in increasing the productivity of a country's workforce. If workers produce more, then employers can pay them more.

Other options include getting rid of unnecessary red tape and bureaucracy that reduce business efficiency.

Raising minimum wages can increase wages for those lucky enough to keep their jobs, but will also result in some people losing theirs or being unable to get a job in the first place. (see my answer to another question at the link below).

Answer 2

Simply raising minimum wage levels will raise wages at a cost of greater unemployment, may be inflationary, and may not lead to higher real wages in the long term. To raise real wages, that is living standards, in the long term, the government needs to improve labour productivity. Micro-economic reforms aimed at improving both technical and allocative efficiency are the way to go. Then the government has to make sure that the benefits are spread around in an equitable manner.

Answer 3

How about getting rid of all payroll taxes. Going to a national sales tax. The average person pays somewhere around 40% of everything they earn to Federal, State, and local governments that is just more government than we can afford.

Answer 4

If you are referring to the U.S. government, they have been doing so for quite some time for the people of China, Iraq, Afghanistan, Mexico, Saudi Arabia, Israel, etc., etc., etc.