Adam Posen: Morning Must-Read: US Companies Pay Well and Do Better

…to voluntarily announce a raise for all of its lowest-paid employees…. Aetna raised all of its employees’ wages to at least $16 an hour…. It is possible to profit from paying your employees well…. For decades, labour economists have gathered evidence on… [how] higher wages can motivate employees to work harder, to treat customers better, make them more reluctant to leave their jobs and help them to bring fewer worries and distractions to work. That can increase productivity and reduce an employer’s costs…. All jobs can be done better or worse, and that lower-paid workers respond to incentives other than just fear of losing their job. This is not just a relative wage story…. This is also not just a minimum wage story…. Efficiency wage increases will not solve all current economic problems. Fordist fantasies that paying a higher wage would meaningfully stimulate increased purchases, for example, have to be left aside…. Nor will such initiatives take the place of needed training to make sure workers have the proficiencies…. The shortfall of long-term investment in the US, public and private, cannot be made up for with low-skilled labour…