Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/would-unemployment-drop-if-wag Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Would Unemployment Drop If Wages Were Tied to a Firm’s Profits? Economy Oct 22, 2010 1:56 PM EDT Name: Dr. Morris Weinberger Question: Could unemployment be ameliorated by using the “short” method of reducing employee salaries instead of wholesale firings? How much of an impact would use of “shorting” have in reducing national unemployment?? Paul Solman: We’ve addressed this issue, Dr. Weinberger, in a story last year. But the idea has been around for a long time, formalized by economist Martin Weitzman in a 1984 book, “The Share Economy.” Weitzman argued that if wages were flexibly tied to a firm’s profits (or losses), there would be a lot less unemployment, much as you suggest. A free press is a cornerstone of a healthy democracy. Support trusted journalism and civil dialogue. Donate now
Name: Dr. Morris Weinberger Question: Could unemployment be ameliorated by using the “short” method of reducing employee salaries instead of wholesale firings? How much of an impact would use of “shorting” have in reducing national unemployment?? Paul Solman: We’ve addressed this issue, Dr. Weinberger, in a story last year. But the idea has been around for a long time, formalized by economist Martin Weitzman in a 1984 book, “The Share Economy.” Weitzman argued that if wages were flexibly tied to a firm’s profits (or losses), there would be a lot less unemployment, much as you suggest. A free press is a cornerstone of a healthy democracy. Support trusted journalism and civil dialogue. Donate now