Profit sharing and job anxiety: moving public policy toward a win-win solution

Interest in profit sharing as a form of flexible pay is part of a larger interest in more flexible personnel practices. The interest in flexibility, in turn, reflects a perceived increase in product-market uncertainty. Where in the past employers have offered job security - due to legal mandate or practice - increased product market uncertainty makes such job “insurance” more costly. Job security protections can be viewed as an employee option to sell labor at the going wage, even when its value to the firm has dropped. As is true of financial options, the cost increases with the variability of the value of the underlying asset. Recent political trends in the U.S. suggest that there are social costs to the flexibility in American labor markets about which mainstream politicians have little to offer.