Advertisement

Share Profits, Add Jobs

Share via

Lester Thurow argues in “Unemployment Rate Stays High Because Public Is Willing to Tolerate It” (Viewpoints, July 21) that the currently high unemployment rate of over 7% is the product of a new public toleration of a social ill.

He suggests that a more expansionary monetary policy could be followed without inflationary consequences. But since there are no assurances that he is correct, the Federal Reserve is unlikely to make unemployment reduction a major goal.

It is important to explore micro-level solutions, as well as the macro-oriented monetary approach, to the unemployment dilemma. The most promising of these is the encouragement of gain-sharing compensation plans, such as profit sharing. Sharing arrangements encourage firms to expand hiring, since employers obtain a proportion of whatever extra returns their new workers generate. It is for this reason, for example, that door-to-door sales companies--which offer shares of sales revenue generated as worker compensation--are always on the lookout for additional personnel.

Advertisement

In addition, an economy with a significant share element would offer more assurance to the Fed that inflation could be halted if the need arose. Monetary restrictions would quickly translate into reduced share bonuses--and, hence, labor costs--in a share economy, thus reducing inflationary pressure.

Japan, with its end-of-year share bonuses for employees, has consistently exhibited a lower unemployment rate than the United States and a greater ability to subdue inflation.

It’s time we learned a lesson from abroad and began exploring tax incentives and other devices to promote a gain-sharing compensation system for our own work force.

Advertisement

DANIEL J. B. MITCHELL

Santa Monica

Advertisement