3/17/2006

03-18-06 - 1

03-18-06

Seniority-based pay is bad for capitalism. Some small amount of seniority-based pay increase is good because it encourages employees to stick around and ensures a valuable knowledge base built from experience is in the company to transfer to new hires. However, most traditional old companies and pay structures (especially in unionized and public sector jobs) have severe seniority based pay scales. These strongly encourage people to lock into one job and stay there for many years without changing companies. This is bad for employee liquidity, which is terrible for capitalism (see my previous rant on why employer-based health care is so bad).

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old rants