This paper is a brief for the introduction of a subsidy to any qualified firm for its use of low-wage employees as a means to reduce the unemployment and raise the pay of disadvantaged workers. There would be a case for such a wage subsidy in all the advanced market economies, and certainly the American one, regardless of recent trends. The case has grown stronger, however, with the worsening of the relative wages and especially the unemployment rates of low-age workers. The globalization of investment and the bias of technical progress are the causes most often suggested. I would add the growth of the system-the public entitlements to hospitalization, to retirement and disability insurance, and to the benefits labeled welfare in the narrow sense. Since this factor tends to be overlooked, I devote Section I to it. Section II proceeds to the case for a low-wage employment subsidy. It will be clear that the beneficial effects of the subsidy on disadvantaged workers are the mirror opposite of the harmful side effects of the system, side effects that the subsidy would counteract. I. Side Effects of the Welfare System

The Council's Report provides a look at the 1969-71 game plan to disinflate by means of retarding aggregate demand.... The President-Elect's Task Force on Inflation recommended, as a first interim step, that aggregate demand be slowed so as to bring the unemployment rate back to some equilibrium region around 4.5 percent.... What happened was that, under the cover of the expectation and acceptance of such a limited step towards re-equilibration, the Administration gradually tightened monetary and fiscal policy so severely as 'gradually' to send the unemployment rate whizzing past the equilibrium zone to around 6 percent. To my knowledge the theory of how, and how well, this medicine would act to cure the patient of his inflation was never spelled out by the Council of Economic Advisers. [pp. 533--34]