A method for preparing a water soluble lubricating additive having the generic structural formula:
wherein R₁ is an alkyl, cycloalkyl, aryl, alkaryl or aralkyl group having from 1 to 34 carbon atoms; R₂, R₃ and R₄ are independent alkylene groups having from 2 to 30 carbon atoms; x is either 1 or 2; y is either 0 or 1 when x = 1 and is 0 when x = 2; m is either 0 or 1 and n = 2 to 30 is disclosed, wherein a sulfur-containing alcohol is initially reacted with an organic carboxylic acid to produce an alkylmercapto ester which is then further reacted with an alkylene oxide to produce the lubricating additive. The water-soluble lubricating additives produced in this manner are useful as lubricating additives for water-based fluids used in metalworking operations.