Wednesday, September 18, 2013

Wages - Piece Rate Payment - Going

Piece-rate payment is an old idea. We find it far back
in the history of the guilds, and no doubt it existed centuries
before that. Within comparatively recent times, however,
it has been brought into new prominence through the earnest
efforts of men who saw in it a great light to lighten the
way out of the darkness of day wages. It offered an in-
centive to the worker, a reward proportioned to his skill
and industry, an enlarged output induced by this financially-
stimulated activity, and the very essential result of increased
volume of manufacture with decreased cost of product from
the same plant investment. Results important results
have been secured; but yet they have frequently been
disappointingly below expectations, chiefly for the reasons
suggested in my little parable of the hat-maker.

The great inherent trouble is the difficulty (under ordi-
nary or non-scientific management) of fixing piece prices
which are fair and which continue to be fair. The reserve
capacity which a workman may be holding back, consciously
or unconsciously, in an operation that has not been scien-
tifically studied and standardized, is almost unforetellable.
When it is realized under the incentive of piece payment,
and his earnings rise enormously, the disposition of the
wage payer to rebel against the outlay and to cut down
the piece price is almost irresistible. If the employer sees
that a workman can do several times as much as he was
doing under day wages, you can hardly blame him for feel-
ing that he has been defrauded all along under the old
system, and for trying to make things more even from his
point of view. But the price-cutting that has so very, very
often followed soon after unscientific price-setting has
worked immense mischief, by raising in the minds of the
men suspicion and distrust of systems introduced to replace
the old day-wage plan. Union opposition has been strong
against piece rates, and while it has been modified in many
places so as to admit piece work, this acceptance has often
been accompanied by counter-restrictions which nullify most
of the possible advantage as, for example, the fixation of
a very moderate number of pieces as the maximum that
any man may make in a day, thereby coming back substan-
tially to day wages.

The trouble here, however, is not so much one of principle
as one of administration; but there is a fault of principle
inherent in piece rates, and that is that they put all the
uncertainties of production on the workmen. Suppose a
man is machining steel castings at so much per piece. He
may have delivered to him a lot of hard metal parts that
take four or five times the expected time to finish. For
that period, at least, he can not make living wages. Sup-
pose a gang is unloading coal cars at so much per ton, and
the switching crew is tardy in moving away empties and
setting in loaded cars, and so keeps them idle for consider-

able periods, or suppose that in setting in the new cars
it places them badly so that the men have an extra long
throw and work at a disadvantage. Again, the workmen
may be unable to make fair wages, through no fault of their
own. Suppose, once more, a working gang is made up by
the foreman so that green men are mixed with skilled, and
these green men by their awkwardness cut down the out-
put of the whole gang. Here, again, if they are working
at piece rates, their earnings are reduced without their fault.

In all such cases, unless there is special intervention by
someone in authority to make up the loss, it falls upon the
piece-rate worker. Under day pay, of course, it would be
the employer who would suffer in such cases; but the em-
ployer is in the first place better able to stand the loss. The
unprofitable item of work is probably only one of many
he has in hand, while to the workman it is the worker's
entire interest; and last, and most important, the whole
power to remove the conditions that caused the loss rested
with the employer and not with the workman.

Notwithstanding these certain defects of principle and
administration, however, piece rates are a good deal used.
Where the rates are carefully and fairly set, by fair and
frank effort on the part of both employer and employee
to make them right, and where they are fairly maintained
after they have been set, they are often (almost usually)
preferred by the men; for they make the man more the
master of his own time, and they enable the capable work-
man to increase his earnings in correspondence with his
ability and capacity. Where the men will work fairly under
the piece rates they are liked by employers also because
the system stimulates larger production from the same plant
without materially increasing the indirect operating ex-
penses. These are the advantages of the piece-rate sys-
tem increased output and increased earnings. Its dis-
advantages are that when difficulties interfere with output

the men's loss is not made up to them without special action
by the employer ; 1 and, worst of all, that when the em-
ployees* earnings are very much increased the employer can
seldom resist the temptation to cut the rate. Knowing this,
the men are frequently suspicious and seldom let themselves
out to anything like their real capacity.

The " contract plan " of employing and paying labor is
used to some extent, especially in heavy machine-shops, that
is, locomotive and shipbuilding plants, in the United States
and Great Britain. It is not, however, a separate and dis-
tinct system, but is substantially a gang piece rate. An
over-all price for a job is agreed upon with the contractor,
who uses the equipment and facilities of the employing shop,
but hires his own workers and assistants on terms arranged
between him and them. As discipline and responsibility
thus fall chiefly on the contractor, while the tools, facilities
and general environment are largely supplied by the shop,
the plan leads to a somewhat demoralizing divorce of au-
thority and liability. It is likely to lead, and in practice
it does lead, to very bad industrial conditions. Neverthe-
less, it has been in use for a long time, and remains in use,
and hence must be considered a practical and to an extent
commercially successful method, although the success is not
determined by very high standards.

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