Word: weitzman
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...suppose, says Weitzman, that workers agreed to accept a share of the company's revenues or profits--two-thirds, for example--as compensation in lieu of set wages. That money would be divided among all employees. When revenues dipped during a slump, workers' income would drop accordingly, and the firm could then reduce prices to revive sales. Because all the workers take a temporary cut, no one would have to be laid off. The burden of the recession would be shared by the entire work force...
...Weitzman contends that even in good times, fixed wages are a barrier to increased employment. Companies today are afraid to hire too many new employees because they do not want to be stuck with them when the economy turns down. But in a share system, says Weitzman, the company would have more incentive to hire new employees. The workers would be there to help when business is good, but they would not be a drag on earnings when it is bad because the employees' average pay would fall along with revenues. Workers might be willing to take...
...admits that his plan would not succeed if only a few companies adopted it. These firms would hire large numbers of new workers, and because the revenue pie would be split into many more pieces, the average pay might be reduced to levels that employees would not accept. But Weitzman argues that if many corporations embraced the share system, the pool of qualified people looking for work would be depleted fairly quickly. Each company would then be able hire only a relatively few workers, but the overall impact would be a large boost in employment throughout the economy...
...major practical problem with Weitzman's plan is that it is not attractive to workers with seniority who are in little danger of being laid off during a recession. Many of them would undoubtedly make less money in a share economy than they do now. For that reason, labor unions are decidedly cool toward the proposal. Says Murray Seeger, director of information for the AFL-CIO: "This scheme would continue the suppression of workers' earnings." Weitzman says the Government would have to lead the way in overcoming worker opposition. He suggests that employees who accept a share plan be given...
Some businessmen also dispute Weitzman's reasoning. They argue that companies cannot add employees unless demand for their products increases. "Weitzman has a utopian idea," says Kevin O'Donnell, president of SIFCO Industries, a metalworking firm based in Cleveland. Many economists praise the theoretical elegance of Weitzman's plan, but doubt that it could be put into practice any time soon, if at all. Says David Glasner, a senior fellow at the Manhattan Institute for Policy Research: "Workers simply prefer having a known wage rate and do not want to take the risk of a variable income." Contends Melvin Reder...