Let's hope that YOU pay this "Dream Employee" well....Very well.
It's odd though that all the things in my list you equate to dream employee so he/she needs to be paid more, all relate to things that should come with someone at no additional cost off the top. These are conduct/character/policy adherence things no one should have to pay extra for. Some of what I listed are common sense and articulated in employee handbooks across the board such as No Drug or Alcohol problems, no disrupting a co-worker trying to get work done, clock in on time, do your work reliably, etc.
Stick to your standards, your "green flags", consistently and you WILL see a trend in that direction over time. Ignore those standards, or don't have any at all beyond peeling steel, and you accepted the path to the poorer result. Because that's how people work. I listed those points, because those are the points I personally look for in co-workers. It's not about holding up unrealistic standards for a "dream employee".
The question asked was what are the "green flags" you look for, and I listed those I keep in mind. And I followed with an example out of a machine shop where we've hired someone with those attributes, where there has been active coaching and recognition given when that person has stepped up.
Because those are very good things, "green flags", to have in a co-worker in a practical and real sense.
If the conclusion is we have to pay people more, meaning more than what we've already costed out for the job like add-on option costs on a car, so people clock in on time, don't screw around with your co-workers when they are trying to get work done, don't come to work with drug or alcohol problems, don't be a drama queen yapping to people to cause problems, etc., then the problem isn't with a the labor pool to draw from in the marketplace, it's with "us".
People should be "paid well, very well" (meaning a bump beyond standard yearly or seniority increases) based on two things in my experience: 1) Increases in responsibilities and accountability, and 2) Technical skills increase (capability) or performance levels, such as advancing to EDM work or 5-Axis milling & CNC programming, or consistently producing 30% more than anyone else reliably.
Everything else I've listed are things that . . . should . . . but sometimes don't based on the person . . . come with the job at no additional pay. All that remains is what are our standards for the shop? Are we promoting those standards reasonably and consistently? This is hard work, it's uncertain because it's "people stuff". But it's important, and it makes a difference.
Just an opinion based on experience.