THE GUARANTEE OF WORK AND WAGES

DISSERTATION

Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University

. ^ By DILLARD E .^IR D , B.A. , M .B.A. The Ohio State University 1953

Approved by :

Adviser PREFACE

The intense general interest in security in all its phases has made the problem of providing employment and income security a problem of major importance to management. Demands for guar­ antees of work and wages represent just one form of expression by unions of the desire for security for those whom they represent.

Employees themselves are interested in guarantees or any other devices which will remove more of the risks of life, both social and economic, and give each of them more of an assured life in all respects.

Guarantees have provided the stimulation for much discussion among people from all walks of life - managers, union leaders, employees, politicians, political planners, economists, sociologists - to name only a few. The popularity of the general concept is based on its emotional appeal, not on an appeal to logic, whatever the soundness of the proposal may be judged to be.

The guarantee of work and wages is a major problem in the field of industrial relations. It is a problem which is little under­ stood and about which there are many misconceptions and a general mystical appeal. The importance of the problem and the confused thinking which characterizes the subject led the writer to undertake the present study.

- i -

A Q9SQ3 The economic theories and plans have been reviewed, the results of the field investigation have been reported, principles have been de­ veloped and each phase of the guarantee concept critically examined.

The values claimed for guarantees have been compared with those derived from effective stabilization and conclusions drawn.

The author wishes to acknowledge and express his deep apprecia­ tion for the untiring and constructive assistance of Professor Ralph C.

Davis, Professor of Business Organization in the field of Industrial

Management, College of Commerce and Administration, the Ohio

State University. Professor Davis’ aid has proved invaluable in the preparation of this study and his philosophy, works and teachings have influenced the development of many of the managerial concepts which are presented throughout the pages of this study.

The author also wishes to express his appreciation for the assist­ ance so freely given him by Dr. Edison L. Bowers, Professor and

Chairman, Department of Economics, Dr. Michael J. Jucius, Professor of Business Organization in the field of Personnel Management and

Dr. James H. Davis, Associate Professor of Business Organization in the field of Marketing, all of The Ohio State University. All of these men were most generous with their time. The counsel and the con­

structive criticisms and suggestions which they offered were most helpful.

The writer wishes to express his appreciation to many

- ii - individuals and organizations, business leaders, labor leaders,

students of the subject and others too numerous to mention for

their assistance.

Additional acknowledgement is due the many companies and

unions which supplied the writer with information pertinent to this study and to the research organizations both public and

private which placed their resources at the writer's disposal.

Without the assistance so graciously given this study would not have been possible.

Dillard E. Bird

- iii - Table of Contents

Chapter Page

I. INTRODUCTION ...... 1

II. GUARANTEE THEORIES AND PLANS .... 9

Semantics ...... 9

Maintenance of Purchasing Power Theory . . 11

General Stabilization Theory . . . . .1 6

Worker Security Theory ...... 18

Types of Plans ...... 25

Absolute Guarantees ...... 26

Limited or Conditional Guarantees . . .2 6

in. SIGNIFICANCE OF GUARANTEES . . . . 32

Significance of the Plans ...... 41

Management Opinions ...... 55

IV. PRINCIPLES ...... 66

Principles Bearing on the Decision to Offer or not to Offer a Guarantee .... 66

Economic Principles ...... 66

Sociological principles ...... 79

Psychological Principles...... 82

Principles to be Considered in Drawing and Inaugurating a Guarantee Plan in a Particular Company ...... 85 Contents (continued)

Chapter Page

V. A CRITICAL EVALUATION OF GUARANTEES . . 90

Stabilization of Production and Employment . 90

Guarantees of Work or Wages. . . . .9 2

Advantages and Disadvantages of Guarantees Claimed for Employers . . . 93

Advantages and Disadvantages of Guarantees Claimed for Employees . . . 104

VI. SUMMARY...... 114

APPENDIX...... 120

Presentation of Case Studies ...... 121

Case Study 1 ...... 146 Case Study 2 ...... 154 Case Study 3 ...... 158 Case Study 4 ...... 162 Case Study 5 ...... 166 Case Study 6 ...... 170 Case Study 7 ...... 176 Case Study 8- ...... 181 Case Study 9 • • • ■ - • 185 Case Study 10 ...... 191 Case Study 11 ...... 196 Case Study 12 ...... 201 Case Study 13 ...... 205 Case Study 14 ...... 208 Case Study 1 5 ...... 212 Case Study 16 ...... 218 Case Study 17 ...... 224 Case Study 18 ...... 227 Case Study 19 . • • ■ • • • • 232 Case Study 20 ...... 235 Case Study 21 ...... 238 Case Study 22 ...... 242 Case Study 23 ...... 246

- v - Contents (continued)

Chapter Page

Case Study 24 ...... 250 Case Study 25 ...... 254 Case Study 26 ...... 259 Case Study 27 ...... 264 Case Study 28 268 Case Study 29 ...... 273

Guarantee Contract Clauses . . . . . 277

BIBLIOGRAPHY ...... 301

- v i - LIST OF TABLES

Table Page

1 Classification of Case Studies, Currently- Operating Guarantees and Discarded Guarantee Plans by Industry Groups . . . 34

2 Distribution of Case Studies, Current Guarantees and Discontinued Guarantees by Product Class ...... 36

3 Coverage of Guarantees - Employment Fluctuations - Labor Turnover by Case Studies . . 38

4 Financial Data by Case Studies ..... 40

5 Business and Economic Factors by Case Studies . 42 Legend ...... 43

6 Employee Relations Activities by Case Studies . . 45

vii - Chapter I

INTRODUCTION

The guarantee of work and wages has become a major prob­ lem in the field of industrial relations. This issue gives every indication of continuing as a problem of prime importance to management for some time to come. While the interest of organ­ ized labor in the "guaranteed annual wage" as a demand varies with the level of employment and the immediacy of other objec­ tives which may seem to have more practical value or appeal, the problem of insuring economic security for the worker remains. 1

Opportunity vs. Security

The frustration and distress which the depression years brought to millions of workers over the country have gone far to change employees from a risk-taking, opportunity-minded group stimulated to best efforts and maximum achievement through rela­ tive insecurity to a security minded group much more interested

l"The urgency of the annual wage as a labor issue may wax or wane, according to whether employment opportunity is high or low, or whether other labor objectives may at the moment appear more practical of achievement. But the problem of economic security for the worker remains." A.D.H. Kaplan, The Guar- antee of Annual Wages (Washington, D. C. : The Brookings Institution, 1947) p. 2. JL - 2 -

in assured income from steady work than in opportunity for ad­ vancement. The importance of this problem is emphasized by

the fact that our industrial methods, to which we owe so much, have made us a "nation of employees, whose survival, well being

and contentment rests on a steady flow of pay checks.

Two problems posed by the American system of private en­

terprise are particularly pertinent to this study -- (l) unemploy­

ment, or the threat of it, and (2) irregular earnings. It is the

responsibility of business generally to play a major role in the

development of answers to these problems. If the American sys­

tem of private enterprise is to be preserved, with its basic values,

a reasonable degree of employment security must be provided.

The Guaranteed Annual Wage

The popularized idea of "the guaranteed annual wage" has

been proposed as one answer to the problem of employee insecu­

rity. This term merits critical analysis because few terms so

extensively used have so many connotations. It has no standard

definition. "Guaranteed annual wage" is in itself a misnomer.

No employer under our economic system can give an absolute

^Committee on Economic Policy, U.S. Chamber of Com­ merce, The Economics of the Guaranteed Wage (Washington, D .C .: Chamber of Commerce of the United States, 1948) p. 3. guarantee to his workers, and yet this is the interpretation placed up­ on it by many who believe it implies a promise of complete job secu­ rity to all employees. Not all existing guarantee plans are annual.

Assurances are given for periods ranging from three months to an unlimited length of time. (Daily, weekly, semi-monthly and monthly guarantees are excluded from our consideration here. ) Not all guar­ antees are for wages. Some are for hours or weeks of work and some are for wages. Few plans now in existence guarantee a work­ man a sum equal to fifty-two 40 hour weeks at his established hourly rate. Thus "the guaranteed annual wage" is not in the strict sense a guarantee, it is not necessarily annual and not always for wages.

This, then presents a problem in semantics important to the solution of the basic problem of providing job security for the wage earners of the nation.

The Importance of Stabilization

Aside from the problem of semantics, consideration by manage­ ment of the feasibility and soundness of a guarantee of work or wages brings to light many problems. The difficulties of attaining and main­

taining a constant level of operations (important to the success of any

guarantee) vary with the effects of economic conditions on the com­

pany, the rapidity of technological progress in the industry and the

types and characteristics of the company's products. - 4 -

The ramifications of guarantee provisions make this study a many sided problem. It is the purpose of this study to contrib­ ute to a clarification of the thinking on this phase of worker security; to call attention to the benefits of stabilization of oper­ ations and employment to all concerned ; to cite the pitfalls of

"guarantees" ; to suggest a set of principles which govern in de­ cisions to offer, or not to offer guarantees ; and finally to present conclusions concerning the general methods of approach to wage or work guarantee .problems.

The Methodology of This Study

The basic writings and the current literature on the subject of guarantees of work and wages have been examined, and an anal- j ysis made of the various theories underlying guarantees. Visits were paid to the sources of most of the information. The readings were supplemented by interviews with the authors at the Brookings

Institution, National Industrial Conference Board, Bureau of Labor

Statistics, American Management Association and with a number of employers including several of the best known guarantors. A brief review and digest of the theories advanced and of the general types of plans is presented in Chapter II.

Through the aforementioned visits and through examination of the literature in the field a listing was made of companies which -* 5 —

(i) formerly offered a guarantee, or (2) were reported to be cur­ rently offering a guarantee, or (3) have or have had an employment stabilization plan of some kind.

A list of 229 companies was compiled. Information was developed on 189 of these companies. Twenty-nine case studies have been in­ cluded covering the best known guarantees and other plans pertinent to this study. Sixty-six (88.2%) of the current guarantee plans pre­ sented in this study have been negotiated with labor unions and are covered by contract clauses in the agreements between the employers and the unions. Significant contract clauses and other information gleaned from the study of the balance of the plans are also presented.

Letters and questionnaires were sent to the aforementioned com­ panies. The questionnaires surveyed management practices and thinking on guarantees.^ These reports have been used in the prepara­ tion of case studies. Wherever possible the interview method has been used to supplement the information furnished by companies through the questionnaire and correspondence. These case studies and pertinent contract clauses are presented in the Appendix.

It is not intended to leave the impression that all of these plans were initiated by union demands or proposals. Four of these plans are known to be employer initiated. There may be others but definite confirmation was not available for this study.

^A sample of the Questionnaire employed is presented in the Appendix. Scope and Limitations of the Study

The effort has been made to develop information concerning

guarantees of work and/or wages which extend for a substantial period of time, at least three months or more. Daily, weekly,

semi-monthly and monthly guarantees have been excluded from

consideration here for reasons which will be discussed later.

Information on some employment stabilization plans has been included because there is only a hair-line difference between some of the guarantees and some of the stabilization plans. In fact some of the plans commonly referred to as guarantees are not in reality guarantees nor are they so regarded by the managements of the

companies in which the plans are operative.

Form of Presentation

Chapter II offers a brief review and digest of the theories ad­ vanced and of the several types of plans.

Chapter III presents an analysis of the case studies related to the theories advanced. In this chapter are included tabulations showing, for companies covered in the study, the number of employees ; the type of industry ; the number of plants ; the stock ownership (whether closely held or widely dispersed) ; the feasibility of manufacture to stock,; product classification (producers' durable goods, producers' non­ durable goods, consumers' durable goods, and consumers' - 7 -

non-durable goods); ability to forecast demand; percent of the

sales dollar represented by payroll; employee benefits offered by the Company; capitalization; methods of distribution; effects of economic conditions; yearly average employment; yearly flue- tuations in employment; labor turnover; and labor unions repre­ senting employees (if any). In the tabulations each of the forego­ ing factors is related to management thinking and practices in the field of guarantees.

Chapter IV presents a body of principles which govern in guarantee considerations. These principles were developed from the analysis of the case studies and the theory advanced.

Chapter V presents a critical evaluation of guarantees against a background of stabilization.

The final chapter presents the findings of the study, draws the conclusions which the findings indicate and develops the thesis.

It is generally believed that guarantees of work and wages will be an urgent demand of labor unions within the foreseeable

future. This makes the subject of prime importance at this time.

While a number of studies have been made of the subject of guar­

antees, comparatively little has been published on this subject

since 1947. - - 7A -

Management has many factors to consider as it makes a deter­ mination in each instance to offer, or not to offer, a guarantee. The

significance of some of the more important of these factors and their

relationships to guarantee considerations are described below.

The type of industry is of significance because layoffs are much less

likely in process industries where continuous operation is indicated by the nature of the industry. Employment is therefore almost a surety

to a certain minimum number of employees (the number varying with

the nature of the industry and of that business in particular). This minimum would not be laid off short of the extreme necessity of com­ plete cessation of activities due to an act of God or some other criti­

cal situation judged to be beyond the control of the company.

The number of plants has an important bearing in such considerations.

It is usually considerably easier to offer a guarantee in a one plant

operation,where the control over operations can be close, than in a

multiple plant operation. Seldom are the same identical factors pres­

ent in the same degree in the several production plants of a company.

This is true whether the products are the same or different. If the

products are not the same it is possible that the industry too is dif­

ferent. These factors as they vary present different problems to

management for solution in connection with the development, inaugu­

ration and operation of any guarantee plan. - 7B -

Stock ownership concentrated in the hands of a few may make it much easier to reach a decision to offer a guarantee and still easier to take such action from time to time as may be necessary to insure the suc­ cess of any guarantee plan so inaugurated. This is particularly appli­ cable if the few represent the active management of the company. When the ownership of the stock is widely dispersed among many stockholders it may be more difficult to reach a decision to offer a guarantee to em­ ployees when the representatives of the stockholders feel that the first guarantee should be made to the investors represented.

The feasibility of manufacture to stock is recognized as having an im­ portant bearing on the ability of a company to enter into any formal commitment to guarantee year-round employment or wages to its em­ ployees . It is generally believed that a business which is in a position to manufacture to future demand without assuming undue risks is in a much more favorable position to offer a guarantee than a company which finds manufacture to stock neither feasible nor economical.

Product classification indicates the distance from the manufacturer to the ultimate consumer and the probable life of the product, both of which factors have been judged by many to be important in guarantee

considerations.

The methods of distribution give an indication of the extent to which the company can control the distribution of its products in accordance - 1C - with the production schedules which it finds necessary of adoption.

Conversely, it reveals the extent to which the company is dependent on methods of distribution which are beyond its direct control. It is important that the company have sufficiently close control over the distribution of its products to insure maximum effectiveness in the sale of its products in the quantities which it finds necessary to manu­ facture in the interest of economy and/or for the sake of guarantee maintenance.

Capitalization gives some indication of the financial size of the com­ pany and when properly appraised can serve as one criterion for determining the wisdom of a guarantee in a particular company.

The percent of sales dollar represented by payroll gives a clue to the

size of the potential financial burden which may be assumed by a com­ pany through the institution of a guarantee.

The ability to forecast demand is important. It is difficult in all situ­ ations where stability is not assured and easier, within reasonable limits, where stability of operations is an accomplished fact. Good forecasting forms the basis for sound advance planning, both neces­

sary to the attainment of stability of operations and employment.

The effects of economic conditions are important to the consideration

of any guarantee commitment. Seasonal fluctuations, of an excessive

nature, cause employment fluctuations, inventory problems and. many - 7D -

others. Yet seasonal fluctuations can be controlled and minimized in many industries. If a company can forecast with reasonable ac­ curacy, it then is possible to plan effectively and through these de­ vices leyel seasonal peaks and generally stabilize production, opera­ tions and employment. Cyclical fluctuations are o.f even greater im­ port. In periods of depression job security takes on increased im­ portance. Yet, there is not much that can be done by the individual business to control the cycle and its effects on the individual business.

New product development, research, improved methods and processes and generally forward looking policies, advance planning and the estab­ lishment of reserves to finance specific projects or commitments through years of business depression all will help counteract, but not correct entirely, the effects of a deep cyclical swing. The secular trend is important,too, because a business in a growth industry is in a better position to offer a guarantee to its employees than another firm in an industry the long term trend of which is downward.

The number of employees and the average yearly employment are in­ dices of the total wage bill which under a guarantee which covers all employees becomes a fixed wage cost. If the company elects to cover only a part of the employees then it must be prepared to satisfy those employees excluded from coverage under the plan. This latter obliga­ tion is of no less significance in many situations than the obligation - 7E -

assumed for those employees to whom a given amount of wages or

employment is guaranteed.

The yearly fluctuations in employment give indication of the current degree of stabilization of operations and employment and the extent

to which seasonal fluctuations may impose a burden on the company

attempting to guarantee work or wages to its employees. The stable work force is usually the starting point from which a determination

is made of the number of employees to.be covered by a plan. This

in turn influences the limitations and escape provisions incorporated

in the plan. Generally speaking, the higher the percentage of em­

ployees covered by a guarantee, the greater the number and the more

important the limitations and escape provisions which the plan will

include. Conversely, the smaller the percentage of employees cov­

ered by the plan the less the necessity of limiting provisions and

escape clauses.

Labor turnover throws some light on the present attitude of employees

toward the company and its policies, each an important criterion in

the determination to offer or not to offer a guarantee. If the plan is

currently operative, labor turnover figures give some information on

the effect of the guarantee in one area of operations where economies

might reasonably be expected.

Employee representation is an important factor because it indicates - 7F - whether the plan has resulted from, or will of necessity be a matter

of, collective bargaining. The number of unions, their identity and

affiliations are important because of their differing objectives and

concepts in general and in relation to guarantees in particular.

The employee benefits offered are of significance in that the guaran­

tee plan itself is considered as an employee benefit and the review of

all benefits permits the viewing of the guarantee in the perspective of

its organization and employee significance. The expansiveness or

the meager limits of the employee benefit program are of importance

in viewing and evaluating the contribution of the guarantee plan, the

reception it receives from employees and its contribution to the over­

all objectives of the company, and more especially to those of its

employee relations program. - 8 -

So far as this writer has been able to determine in addition to recency the following new contributions have been made through the study:

1. A contribution to the clarification of the thinking on the subject of guarantees has been made;

2. A new basis for classifying plans as to types has been offered;

3. The current status of present and former guarantee plans has been determined;

4. Some new and pertinent material has been developed;

5. Two sets of principles governing the application of the "guarantee" idea have been deduced and are offered here. The first set are pertinent to the considerations of the individual company on its decision to offer or not to offer a guarantee. The second set are principles to be considered in the design and inauguration of a guar­ antee plan in a particular company. - 9 -

Chapter II

GUARANTEE THEORIES AND PLANS

If this study were made and recorded by the author of one of the better mystery series, it would probably bear the title, "Behind the Mask of the Guaranteed Annual Wage, " so obscure are the facts and so strong the emotional and mystical appeal of the magic words —

Guaranteed Annual Wage.

Semantics

In spite of all the study and discussion devoted to the subject by leaders of management and labor to say nothing of the prolific writ­ ings by students of the subject, there is probably no term more bandied about and more loosely used than "The Guaranteed Annual

Wage. " It means all things to all people. It has no standard mean­ ing in its every-day usage. ^

The loose thinking on the subject begins with the "label" it­ self. The Guaranteed Annual Wage, as it has been branded, is a misnomer. It is not a guarantee in the strict sense of the word; neither is it necessarily annual; nor must it be primarily of or for wages.

1,,The term . . . means different things to different people. " Joseph la. Snider, The Guarantee of Work and Wages (Boston: Harvard Graduate School of Business Administration, 1947) p. 1. - 10 -

An examination of the term, word for word, is very reveal­

ing. The word "guarantee" is not suitable because, most "guaran­ tees" now in existence contain "escape" clauses which permit the guaranteeing company to withdraw or amend the plan at its discre­ tion. The necessity for these limitations is obvious. Few compa­

nies could survive an extended period during which they received little or no income if they were compelled to continue full wage

payments to all employees.^ Nevertheless, the inclusion of the

necessary limitations makes the use of the word "guarantee" inap­

propriate and inaccurate in this connection.

The use of the word "Annual" is not appropriate because the

plans now operative provide their assurances for periods ranging

from one pay period, to a few months, to the duration of a labor

agreement, to an indeterminate span.

The use of the term "Wages" is not accurately descriptive,

for some plans "guarantee" work and some wages.

Taken as a whole this term "Guaranteed Annual Wage" is

misleading. It is used loosely to describe varied approaches by

^"Under the economic system in which we live, a private firm cannot give an absolute assurance of an annual wage income, just as profits cannot be assured. " Ernest Dale, Annual Wages and Em­ ployment Stabilization Techniques (New York: American Manage­ ment Association, 1945) p. 13. - 11 - management to the problem of regularizing the employee's income.

Few of the plans to which this term is applied guarantee the em­ ployee 52 full weeks pay at his regular rate and yet this is the popular interpretation of the idea and strictly speaking this is what the term implies.

Theories Supporting the Annual Wage Concept

Maintenance of Purchasing Power Theory

Early consideration of the values offered and problems pre­ sented by "guarantee" plans were from the viewpoint of the indivi­ dual company. In the early and middle thirties there developed a strong advocacy from some quarters for a nationwide system of guarantees which implied Government sponsorship, support, and supervision as Well as the element of compulsion. Fortunately

Latimer, 4 the Advisory Board 5 / (of the Office of War Mobiliza­ tion and Reconversion, Office of Temporary Controls) and the

O A. D.H. Kaplan, The Guarantee of Annual Wages (Washing­ ton, D. C. : The Brookings Institution, 1947) p. 6.

^Murray W. Latimer, Guaranteed Wages, Report to the President by the Advisory Board, Office of War Mobilization and Reconversion, Office of Temporary Controls (Washington, D. C. : U. S. Government Printing Office, 1947) p. 3. 5 Ibid, p. xviii. - 12 -

Hansen-Sainuelson memorandum, ^ all supporters of the "annual wage" concept in general, agreed that guarantees should be on a voluntary basis with the individual company.

The Advisory Board and the Hans en-Samuels on memoran­ dum advanced the idea that this was a matter for collective bar­ gaining between the company and the union representing its em­ ployees. The agreement of these men on this particular point blocked the attempt to pass legislation calling for a nationwide

system of Government administered guarantees, and it may have killed the idea for all time. This turn of events caused a shift of

interest on the part of the CIO unions to industry wide guarantees.

The Steel Case heard by the War Labor Board in 1944 included the

demand by the Steelworkers for a guaranteed wage. The request

for a guarantee was denied by the W.L. B. because that Board

decided that demand was outside the scope of its authority. The

interest of the Steelworkers in this demand has not waned as evi­

denced by the fact that the late Phil Murray, President of the

Steelworkers and the CIO, reiterated his stand on the guaranteed

annual wage before each of the CIO conventions since that time.

In support of the Steelworkers' demand for an annual wage, he

^Ibid, p. 453. - 13 -

stated

"It is axiomatic that where workers are assured full employment and economic security, they furnish the backbone for the mass purchasing power so essen­ tial for the continued turning of the wheels of indus­ try ... If the Steelworkers as a group are guaranteed an annual wage, . . . they have the security which permits them to go out and purchase their automo­ biles, refrigerators and thousands of other articles which require steel.

This line of argument contends that if employees have an assured income, there will be no need for them to save and they will therefore purchase durable consumers' goods with what they might otherwise have saved. This, it is contended, means that savings will fall and consumption will rise. Advocates of this idea believe that an increase of current consumption is highly desirable. This, they say, is the approach to the solution of the problem of mass unemployment. Since wages and salaries con­ stitute 60 to 65% of the national income, certain labor and politi­ cal groups hold that if a steady flow of wage and salary income is guaranteed, the economy will become stabilized and mass unem­ ployment will disappear. Some of those who have written on the

^Philip Murray, "The Guaranteed Annual Wage, " Steel Labor, (April, 1945) p. li.

^Bert Hoselitz, "Annual Wage Plan of the CIO", (Univer­ sity of Chicago Round Table, August 26, 1945). - 14 -

annual wage have generally endorsed this line of reasoning. 9

However, according to Dr. Emerson P. Schmidt, the pur­ chasing power theorists find little support among most econo­ mists. He believes that the theory "derives from the despair of the Keynes-Hansen- TNEC indoctrination efforts through which we were urged to believe that the tendency toward secular stag­ nation and excessive savings call for artificial devices to main­ tain consumer spending. " He questioned whether deficiency of outlay, consumer spending or new investment is a cause of underemployment or merely a symptom. A long time student of the problem, Dr. Schmidt believes that the facts do not sup­ port the philosophy that guaranteed annual wages would insulate

us against depression and unemployment in a voluntary society.

He points out that:

"Even if universal annual wages should sustain high prosperity for a time, this gives no assurance that investment and spending would not eventually reach a saturation point in several directions. Speculative building, over —expansion or bidding up of asset values in land, securities, or other property would inevitably get out of line in various segments of the

9 Jack Chernick and George C. Hellickson, Guar an teed Annual Wages (Minneapolis, Minnesota: The University of Minn­ esota P ress, 1945): Edwin E. Witte, "Steadying the W orker's Income, " Harvard Business Review (Spring Number, 1946). - 15 -

economy and tlie universal commitment to pay annual wages would finally break down. M

He further states that depressions come when wage income is at a peak and that when . . . "consumer or wage income is at an all- time low, at the bottom of a depression, then we begin recov-

The Hans en-Samuels on memorandum comments on the theory in part as follows:

"Unfortunately, economic analysis of guaranteed wages does not seem to substantiate the claim that this device would, as a first approximation, neces­ sarily tend to maintain consumption for any appre­ ciable period of time at the appropriate full employ­ ment levels. "

Dr. Kaplan in his study indicates that:

"Maintenance of the payroll level, while important for consumption as a whole will not guarantee the maintenance of demand in strategic areas of the economy. "AIP

^Em erson P. Schmidt, The Economics of Guaranteed Wages (In American Management Association, Personnel Series, No. 91, New York, 1945) p. 21-22.

^ ^ A. H. Hansen, and P. A. Samuelson, Economic Anal­ ysis of Guaranteed Wages (This is Appendix F of Guaranteed Wages, Report to the President by the Advisory Board, Office of War Mobilization and Reconversion, Office of Temporary Con­ trols) (Washington, D. C. : U. S. Government Printing Office, 1947) pp. 436-37.

1 ^A. D. H. Kaplan, The Guarantee of Annual Wages, (Wash­ ington, D. C.: The Brookings Institution, 1947), p. 187. - 16 -

General Stabilization Theory

The purchasing power theory is believed by its advocates to be the starting point for a series of chain reactions all pro­ ducing effects beneficial to the individual company, its employ­ ees and the economy generally. Its proponents conceive that the adoption of a guarantee plan will cause the employer to de­ vise ways and means of regularizing and stabilizing his oper­ ations. The stability achieved would insure regularity of pur­ chases of suppliers which would contribute to their stability.

The higher the level of stability attained and the greater the coverage of guarantees, the more widespread the favorable interaction among companies and the fewer layoffs, which when they occur contribute to further unemployment outside the af­ fected companies.

This idea to the uninitiated sounds very reasonable." How­ ever, some of those who have studied this subject believe that in order for a plan to be successful the company must have sta­ bilized its operations before committing itself to a guarantee.

Industrial Relations Counselors in Memo Number 95 stated:

"The weight of evidence tends to the conclusion that, while each employer should exert every effort toward regularizing employment in his own enterprise we cannot expect such efforts to make more than a minor - 17 -

contribution to the solution of the general problem of preventing unemployment. Since only the most excep­ tional employer could afford to guarantee employment or wages for any significant period without first having substantially regularized employment, it follows that the possible scope of sound plans for guaranteed em­ ployment or wages is definitely limited.

William Green, the late president of the American Federa­ tion of Labor, was asked the question, "Would it be feasible, sound, for most companies, industries, to establish a'guaranteed annual wage'?" His answer was:

"In considering this, the line must be drawn be­ tween seasonal employment and stabilized employ­ ment.

"It would be very difficult for many employers who are associated with seasonal employment to pay an annual wage.

"At the same time, the employers who are engaged in producing goods or service in stabilized industries could pay an annual wage. I am of the opinion that no rigid rule could be applied in the consideration and solution of the annual wage problem. There are many complications, as well as implications, connected with it. Its consideration and application would call for sound thinking and the exercise of good judgment. "

One economist in a paper on the subject of guarantees points out that employers can do much to regularize employment even in

^Industrial Relations Counselors, Guaranteed Employment or Wages as Part of a Security Program, Industrial Relations Memo, Number 95 (New York: Industrial Relations Counselors, Inc. , 1 948) p. 8. - 18 - some of the seasonal industries such as men's and women's cloth­ ing and for what they can do they should be held responsible. He goes on to say however that employers cannot be held responsible for the kind of insecurity which grows out of business fluctua- tions.. ■ 14

.Dr, Kaplan does not believe that the existence of wage or employment guarantee plans in non-durable consumer goods industries would be of material assistance to the producers' goods industries. In his summary he states:

"The chief hope of the annual-wage guarantee as an aid to employment security lies in a faith that the guarantee of current payrolls will stabilize consumer purchasing power and thereby sustain employment across all branches of industry . . . Guaranteed pay­ rolls and mass consumer power do not ensure cru­ cial areas of capital goods production.

Worker Security Theory

A number of theories have been advanced concerning bene­ fits which it is claimed accrue to the employer through the insti­ tution of a guarantee plan. One of the most important of the

14 Waldo E. Fisher, The Guaranteed Annual Wage, (Pa sadena, California: Industrial Relations Section, California Institute of Technology, 1945). 1 5 A. D. H. Kaplan, The Guarantee of Annual Wages, (Wash­ ington, D. C. : The Brookings Institution, 1947) pp. 238-239. - 19 - theories advanced stresses the far reaching values of worker se­ curity.

It is generally recognized that security has always been important to American employees generally. The interest in security has been greatly accentuated during the last twenty years. Up to the time of the depression in 1929 the primary interest was in, and the emphasis on, opportunity. Along with the search for the employment which afforded the greatest oppor­ tunity for future advancement and reward there was a willingness to take a risk. It was generally believed at that time that this was the land of opportunity where any man, regardless of his initial station in life, could by hard work and intelligent risk- taking attain the pinnacle of success.

The depression of the thirties with the loss of income, sav­ ings and homes brought frustration and distress to millions of workers over the country. This coupled with changing social and economic concepts has gone far to alter the objective of American employees. An opportunity minded group stimulated to best ef­ forts and maximum achievement through relative insecurity has been changed to a security minded group much more interested in assured income from steady work than in opportunity for - 20 - advancement. The old spirit still exists in some quarters but among many fewer people.

There is considerable difference of opinion concerning the effect which the security of employment offered by a guarantee has upon employee efficiency.

It is believed by some that an employee of a company can be relieved of one of his greatest worries, the fear of losing his job, through a guarantee of employment or wages. The relief from the pressure of this worry, it is claimed, will have a good psychological effect on the worker which will be reflected in increased efficiency. Specifically, it is claimed that the em­ ployer will benefit materially once the employee feels secure in his job: (1) he will not be so likely to leave and thus turn­ over will be reduced, with consequent savings in training time and costs, and a more highly skilled and productive working force; (2) he will not be inclined to stretch work to try to make sure that he does not work himself out of a job; (3) he will be more willing to accept methods changes which can be useful in cost reduction and cooperate in their installation; and (4) he will increase his overall efficiency and productivity.

One economist has suggested the possibility that such se­ curity might cause the worker to become lethargic rather than - 21 - increase his efficiency. ^ One executive interviewed for this study found that in his company efficiency increased with pre­ dictable regularity during the period before the employee became eligible for coverage under the plan. Also with predictable ac­

curacy generally on admission to coverage under the plan his

efficiency curve dropped off sharply, roughly 50% of the gain

in efficiency since his initial employment. A period one and

one half times as long as the period of employment before his

inclusion under the plan was required to approximate the level

of efficiency attained before the employee became eligible for

and was included under the plan.

Professor Snider recognizes the possibility but feels that

the job security offered through a guarantee need not result in

decreased efficiency because he says that a guarantee does not

give an individual immunity from disciplinary measures includ­

ing discharge if he is inefficient. I?

One student of the subject raises a very moot question :

"Concerning the promise of increased efficiency, what one cannot foresee is whether the stimulating

^Herman Feldman, "Annual Wage Plans - Some Practical Problems", Advanced Management, (September, 1945) p. 11.

1*7Joseph Li. Snider, "Management's Approach to the Annual Wage", Harvard Business Review (Spring, 1946) p. 336. - 22 -

and cooperative atmosphere pervading certain firms that have independently set up annual-wage schemes would carry over into the wider arena, where the workers of an industry get an annual wage through union bargaining, whether the management is for it or not. "

He might have added that it is a little difficult to see how a management could be imbued with the enthusiasm requisite to the

success of the plan, if the plan were forced upon it. This would

be particularly true in those cases where conditions within the

company were not favorable to the installation of the plan at that

time.

The same unions which are demanding the annual wage

oppose wage incentives, merit rating and similar devices for

stimulating the individual to increased effort and reward. While

opposing such incentives to the individual they stress seniority

which recognizes no differences in ability or performance and

which in the final analysis places a premium on mediocrity. It

is not quite consistent to this writer to believe that the inaugu­

ration of a guarantee plan will cause the union leadership to

throw aside its traditional approach and encourage individual

initiative and performance to the end of increased efficiency.

D. H. Kaplan, The Guarantee of Annual Wages, (Wa shington,. D. C.: The Brookings Institution, 1947) p. 165. - 23 -

It is quite as inconceivable to imagine the workers striving for increased efficiency and production against the will of union leaders.

Kaplan questions the belief that under an annual guarantee unions will have a significantly more favorable attitude toward jurisdictional questions or permit substantially greater flexi-

1 9 bility in the utilization of labor. A case in point is that of the

Namm Store of Brooklyn, New York which discarded its guaran­ tee plan because the opportunity to make interdepartmental trans­ fers was restricted when a union contract was signed which em-

2 0 phasized departmental seniority.

There is general agreement that the stabilization of opera­ tions and employment offers many advantages to a business.

However, even in this instance, one economist points out:

"Moreover there are dangers as well as advantages in such a scramble for stabilization because of unwise business practices in which companies might engage

D. H. Kaplan, The Guarantee of Annual Wages,

Joseph L. Snider, The Guarantee of Work and Wages, (Boston: Harvard Graduate School of Business Administration, 1947) p. 84. - 24 -

21 in order to reduce paying for mere idle time. "

On the negative side, one important factor to be considered is that under a guarantee labor costs become a fixed charge against the business. This could tend to limit expansion or new ventures requiring capital expenditures, even those necessary to insure the competitive position of the company. One executive interviewed for this study indicated that because of a guarantee provision in his company's contract with the union, and the liability for labor costs which it implied, it was difficult to obtain necessary loans or to attract new capital. If labor costs become too highbecause of the guarantee, the company may find new ways of maintaining its competitive position through increased mechanization, revised sales and pricing policies or other devices. However, failing in such efforts the price of the product may be increased and the company may price itself out of a market. The significance of these disadvantages in the individual company depends largely on the percentage of the total costs represented by labor costs. How­ ever, regardless of the percentage, these are pertinent consider­ ations for any company contemplating a guarantee.

^Herman Feldman, "The Annual Wage -Where Are We?" American Economic Review, Volume XXXVII, No. 5, (D ecember, 1947), p. 838. - 25 -

Types of Plans

There is no standard plan nor is there a standard pattern which the individual company may follow in the development of a plan for guaranteeing work or wages, if that is its desire. Plans which have been developed and have operated in the past have va­ ried widely in objectives and in methods. Each plan has included provisions which seemed to best satisfy the needs of the particu­ lar situation at that time. The fact that industries face diverse and varied conditions and that the companies within an industry differ m aterially accounts in large measure for the diversity found in the plans.

As there is no standard plan, so there is no standard classi- fication. z z While there are areas of general agreement among the several classifications, there are also significant differences, par­ ticularly as to bases of classification. The problem of classifica­ tion derives from the problem of semantics involved in the whole

"guarantee" concept and from a co-related problem, i. e. , that many of the so-called guarantee plans are not guarantees at all.

^^Among those who have classified plans according to type are : Emerson P. Schmidt, "Annual Wage and Income-SecurityPlans',' The Journal of Business of the University of Chicago, Vol. XIV, No.2 (April, 1941); Ernest Dale, "Annual Wages and Employment Stabili­ zation Techniques", (New York: American Management Association, 1945) pp. 13-24. - 26 -

Having recognized the problem that exists and the inherent weak­ nesses of any classification, one more basis for classification is added here, which it is believed gives increased recognition to the problems cited.

A. Absolute Guarantees.

There are those plans which guarantee to all employees covered, as a minimum, "x" weeks of work of "x" hours (or simply "x" hours) at the applicable straight time hourly rates, or the money equivalent.

Such guarantees must extend for at least one year or for the life of the union agreement (if any) and the guarantee must not be hedged by any limitations or conditions.

Strictly speaking this is the only type of plan which merits being labeled a "guarantee". There are very few plans which may be so

classified, for it has usually been considered neither possible nor feasible for a company to guarantee earnings to its employees when it can have no guarantee of sales or profits. This suggests that a term more accurately descriptive than "guarantee" might be found.

B. Limited or Conditional Guarantees.

There are a number of plans which give assurances of a spec­

ified amount of employment and/or income, over a designated

period of time. Such assurances vary widely as do the limitations - 27 - and/or conditions which they impose.

1. Guarantees of Work.

Some plans offer assurance of a definite amount of em­

ployment but leave room for variation in employee earnings.

Such guarantees may be in terms of weeks work per year,

hours work per year or both.

The Flexible Wage Plan is one of the best known types

of work guarantees mainly because this is the type plan em­

ployed by one of the best known guarantors. The plan de­

rives its name from the fact that it guarantees a selected

group of workers (those with greatest seniority) continuous

employment with the company but leaves wages flexible.

This makes it possible to maintain a consistent relationship

between prices or profits and wages, sales and production

or any other two factors which may be selected as the bases

for wage determination. This type of plan is not widely used.

2. Guarantees of Wages.

There are a number of plans which guarantee a given

amount of income over a specified period of time, regard­

less of the availability of work.

Included in this category are Wage Advance Plans. These

plans provide for limited wage advances to an employee in - 28 -

weeks in which his earnings do not reach a specified amount

of pay. The company advances an amount equal to the differ­

ence between specified minimum earnings and actual earn­

ings. The advance must be repaid, in work, in weeks in

which more than the minimum amount of work is provided.

3. Layoff Pay Plans.

There are several companies which offer employees who

are laid off a specified amount of pay per month. The amount

of such layoff pay is set by a schedule based on length of

service and the employee's regular rate of pay. The struc­

ture and provisions of the plans differ but the basic idea is

the same.

The limitations and conditions imposed by the various plans are listed below. Some of these find application to each of the plans included in the several categories of limited or conditional guarantees described above.

Escape, relief or protective provisions relieve the em­ ployer of all or part of his obligations and permit him to abrogate or modify the commitment at any time or may define within nar­ row limits in what way the plan may be modified or abandoned and under what conditions. Protective provisions, modifications

or restrictions found in plans include provision for the following : - 29 -

1. Transfer of an employee at any time to another job at

the prevailing rate for the new job ;

2. Reduction in weeks, hours or hours per week, wages

or income guaranteed ;

3. Reduction in force when necessary because of lack

of work;

4. Reduction of job rates during the life of the agreement

or plan;

5. Limitations on extent of employer's obligation for total

payments under the guarantee during a given period ;

6. Complete abrogation of the plan at the employer's dis­

cretion and/or in case of emergencies and catastrophies,

strikes and the other usual conditions accepted as being

beyond the control of the employer.

Limitations of scope are inherent in all plans. These limitations are stated as provisions in the description of each plan. They include :

1. Limitations as to the amount of work or wages guaranteed;

2. Provision for terminating the liability to individual worker s;

3. Limitations as to eligibility for inclusion or coverage under

the plain.

Eligibility may be limited in a number of ways. The most - 30 - common limitations are listed below.

a. Length of service. Eligibility may begin on the first

day of employment with the company or at the end of a

probationary period of as little as one week or as long

as six months. Other plans limit eligibility for inclu­

sion to those who have been with the company for one,

two, five years or in some cases even longer. One

plan limits eligibility for coverage under the plan to

those employees who were on the active payroll and

had completed five years service as of a given date.

Other variations too numerous to mention fall within

this general category.

b. [Particular groups of employees may be selected for

inclusion under the plan with all other groups excluded.

The group designated may be the members of a particu­

lar union, employees with certain skills, employees of

a specified department or departments, the office em­

ployees, certain specified key employees of the com­

pany, the management group, or any other group which

can be carefully defined.

c. Employees replacing those on military leave have in

some cases been exempted from coverage under the plan. - 31 -

However, the stringency of the labor market in most industrial areas has caused most guarantors to discard this provision. d. Employees forfeit their rights, under practically all plans which have come to attention, through resignation or discharge for cause and in some cases through strike participation. - 32 -

Chapter III

SIGNIFICANCE OF "GUARANTEES11

"The first plans in which employers assumed responsibility for providing work or wages were those of the decade of the 1890’s, negotiated in the wallpaper industry, by brewery workers, by tex­ tile printers in a New Jersey dyeing and finishing establishment, and established by a smallmidwestern retailer of sporting goods.

An investigation of subsequent guarantee efforts reveals thatmany plans have been introduced and many discarded since the introduc­ tion of these first plans.

The investigation made for this study included an examina­ tion of the literature of the field, direct contact with students of the subject and with representatives of management, labor and governmental organizations reportedly interested in the subject.

From these and other sources a list of 229 companies reported to be guaranteeing work or wages to their employees or to have

done so in the past was compiled. Direct contact was established with as many of these companies as possible. Through these

^Murray W. Latimer, Guaranteed Wages, Report to the President by the Advisory Board, Office of War Mobilization and Reconversion, Office of Temporary Controls (Washington, D. C. : U. S. Government Printing Office, 1947) p. 3. - 33 -

contacts and the sources described above a check on individual plans was made to determine their current status.

The investigation revealed, reports in the literature not with-standing, that 37 of the 229 companies included on the list now indicate that they never had such a plan and further that they never guaranteed work or wages to all or a part of their employ­ ees; 74 companies which at one time did offer a guarantee of some sort to all or a part of their employees have since discarded the plan or discontinued the guarantee ( 7 of these companies are now out of business). Even though a very broad interpretation of "guar­ antees11 was used, the entire list revealed only 74 companies cur- 2 rently offering "guarantees" to all or any part of their employees.

Of the number currently offering "guarantees", 5 have plans which do not fall within the scope of this study, i. e. they are "guarantees" for periods of time less than three months. There were 44 com­ panies included on the list of 229 which were reported to have of­ fered a "guarantee" of some kind at some time in the past about which it has not been possible to secure any definite information.

Current guarantees 74 Discarded guarantees 74 Never had guarantee 37 No reply 44 Total firms contacted 229

2 This figure includes the guarantee plans of two cities. - 34 -

TABLE NO. 1

Classification of Case Studies, Currently Operating Guarantees and Discarded Guarantee Plans by Industry Groups

Case Current Discarded Industry Group Studies Guarantees Guarantees Manufacturing Food & Kindred Products 5 13 8 Textile-Mill Products 13 Apparel & Other Finished Products (made from fabrics) 2 9 10 Lumber & Timber Basic Prod’s. Paper & Allied Products 2 7 Pr't'g. .Publishing & Allied Ind. Chemical & Allied Products 6 A 4 Leather & Leather Products 1 3 Stone, Clay & Glass Products 1 Iron & Steel & their Products 1 3 7 Non-ferrous Metals & Products 1 2 Machinery Except Electrical 1 Electrical Machinery 1 2 Transportation Equipment 1 1 Petroleum Products 1 1 Miscellaneous Mfg. Industries 4 Manufacturing Total 18 49 47 Non-Manufacturing Non-Metallic Mining & Quarrying 3 Construction - General Contract'rs, 1 Wholesale Trade 1 3 3 Retail Trade 4 7 9 Real Estate Railroads (inc. Street R'ys. ) 2 2 1 Water Transportation 1 Warehousing & Storage Services Incident to Transportation 2 Communication 1 3 Heat, Light & Power 3 2 4 Services Cities 2 Movie Production 8 Miscellaneous Non-Mfg. Industries 1 Non-Manufacturing Total 11 25 27 Total 29 74 74 - 35 -

Case studies covering selected companies whose experience with guarantee plans or stabilization efforts appeared of signifi­ cance to this study are presented in the Appendix. Also included in the Appendix are contract clauses and other material pertinent to guarantee plans reviewed for this study.

Table 1 shows the distribution of (1) the case studies, (2) currently operating guarantee plans, and (3) discarded or discon­ tinued guarantee plans, by industry groups. It will be noted that out of 74 currently operating guarantee plans, 35 (47%) fall in one of three categories, Food and Kindred Products, Textile-Mill

Products, or Apparel and Other Finished Products. The next largest segment, 11%, falls in the movie industry. Very few are found in heavy industries where cyclical fluctuations are more se­ vere and where there is less the company can do about "leveling. "

It is also interesting to note that percentage wise the mortality rate (plans discarded) in the heavier industries is much higher than in the lighter industries.

Table 2 shows the distribution of (l) the case studies, (2)

currently operating guarantee plans, and (3) discarded guarantee plans, by product classification. This table shows the bulk of the plans both current and discarded, to be in the consumers' non­

durable classification. This classification is more than three - 36 -

TABLE NO. 2

Distribution of Case Studies, Current Guarantees and Pis continued Guarantees by Product Class

PD PND CD CND USC

Case Studies 2 2 19 6

Current Guarantees 4 16 - 3 45 6

Discont'd. Guarantees 3 10 13 40 8

Total 7 26 16 85 14

Legend

PD ...... Producers' Durable Goods PND...... Producers' Non-Durable Goods CD...... Consumers' Durable Goods CND...... Consumers' Non-Durable Goods USC...... Utilities - Cities - Services - 37 - times the size of the second largest grouping which appears in the producers' non-durable classification. This is consistent with the results of the classification by industry shown in Table 1.

It should be noted here that generally speaking these are the in­ dustries which experience marked seasonal fluctuations but less severe cyclical fluctuations than are experienced in the heavy lines or producers1 durable goods industries. It is also inter­ esting to observe that the mortality rate has been higher among those plans in consumers' durable lines than in any other group.

The tables presented in subsequent pages offer compara­ tive classification data only on those firms on which case studies have been developed and included in the Appendix. Table 3 gives the total employment and the number and percentage of employees covered by the plans. The yearly fluctuations in employment and yearly labor turnover figures are presented in this same table but without any claim for the accuracy of the turnover figures, which vary in the table from . 05% to 160%. The total employment of the

companies represented by these case studies ranges from Z3 to

150, 000^ and the percent of employees covered by the individual

3 The plan which covers the 150,000 employees is not a "guar­ antee" in the strict sense nor is the plan so considered by the guar­ antor. However, it is as much a "guarantee" as many of the other plans which are so labeled, hence its inclusion here. - 38 -

TABLE NO. 3

Coverage of Guarantees - Employment Fluctuations - Labor Turnover by Case Studies

Case Total No. Employees % Employees % Yearly % No. Employees Covered by Coveredby Employment Labor Plan Plan Fluctuations T/O

1 15,000 4, 801 32 5. 2 15. 6 2 4, 300 0 . 0 2. 0 3 1, 716 609 37 10.0 105. 6 4 4, 200 4, 200 100 3. 0 1. 0 5 1, 650 779 47 4. 5 0. 05 6 170,000 150,000 88 12. 0 7 12,000 2,585 22 15. 0 72. 0 8 910 480 53 10. 0 3. 0 9 3, 500 2, 400 69 9- 0 I. M. 10 200 150 75 0 . 0 3. 0 11 3, 500 2, 000 57 0 . 0 5. 0 12 1, 852 1, 852 100 0 . 0 13 260 260 100 0 . 0 8. 0 14 75 50 67 0 . 0 20. 0 15 6, 500 3, 000 48 9. 0 27. 0 16 325 50 15 10. 0 17 60 45 75 0 . 0 2. 0 18 23 23 100 40. 0 19 100 5. 0 5. 0 20 210 0 . 0 I. M. 21 7, 000 0 . 0 21. 0 22 3, 063 0 . 0 18. 0 23 2, 000 0 . 0 18. 0 24 46,400 12. 0 9. 0 25 27,000 0 . 0 23. 6 26 18,500 6. 5 27 350 2. 0 160. 0 28 16,738 2. 5 11.0 29 324 1.5 20. 0

Legend - Current Guarantees - Cases 1-17 Discarded Guarantees - Cases 18 - 20 No Guarantees - Cases 21 - 29 I. M. - Irreducible Minimum - 39 - plans ranges from 15% to 100%. The fluctuation in annual employ­ ment varies from 0 to 40%.

The percent of sales dollar represented by payroll in the guaranteeing companies listed in Table 4 is in all but three cases

36% or under. In one of these three cases 65 percent of the sales dollar is represented by payroll. In this case the guarantee is lim­ ited to 22% of the employees. In one of the other two cases the plan, while it includes many of the features of what others call a

"guarantee, " is not a guarantee nor is it so considered or spoken of by the management of that company. There are very few com­ panies in this group capitalized at under one million dollars and in those instances the companies have smaller operations, fewer employees and more limited scope. In approximately 50% of the cases the stock ownership is closely held and in the other 50% the ownership is widely dispersed. This is true of both the guarantee­ ing companies and those offering stabilized employment, sans guarantees.

Table 5 shows that process industries predominate as does continuous type of manufacture. Thirteen out of the seventeen guaranteeing companies included in the case study presentation have multiple plant operations as do most of the other companies included. In the great majority of the cases manufacture to stock - 40 -

TABLE NO. 4

Financial Data by Case Studies

Case No. Payroll as a Capitalization Stock % of Sales $ in $1, 000’s Ownership

1 17. 0 28,000 WD 2 11.0 23,000 CH 3 32. 5 4, 000 WD 4 22. 0 157,000 WD 5 25, 0 79,000 WD 6 50. 0 191,000 WD 7 65. 0 38,000 WD 8 16. 3 6, 000 WD 9 NA 24,000 WD 10 35. 0 124 CH 11 NA NA WD 12 52. 0 20,000 WD 13 27. 0 100 CH 14 36. 0 300 CH 15 11.5 79,000 WD 16 5.7 1, 500 CH 17 10. 0 165 CH 18 NA 1, 000 CH 19 24. 0 100 CH 20 15. 0 NA CH 21 30. 0 18,000 CH 22 49- 0 52,000 CH 23 17. 0 NA CH 24 41. 0 236,000 WD 25 13. 0 34,000 WD 26 NA 32,000 WD 27 20. 0 250 WD 28 14. 9 NA WD 29 15. 0 600 CH

Legend WD - Widely dispersed. CH - Closely held by present management group. NA - Not available. - 41 - is economical within reasonable limits and in a similar number of cases it is possible for the companies to forecast demand with reasonable accuracy. These are the industries where seasonal fluctuations are expected. It is interesting therefore that in only five cases are the seasonal fluctuations wide. This may be cause or effect. Cyclical fluctuations as might be expected are light to moderate in practically all instances.^ Finally, the secular trend is upward in all but eight cases and in those instances it is stable.

The Employee Relations activities of each company repre­

sented by a case study are shown in Table 6. It is interesting to note that some of the most successful "guarantors’1 offer the fewest

employee services. It is worthy of comment also that more than

two-thirds of all the companies have a job evaluation plan and/or

a merit rating program, both indices of good management.

Significance of the plans.

Table 1 gives information bearing on the degree of activity

in the field of guarantees in terms of numbers of companies having

guarantee plans currently operative. Table 3 throws some light

on the breadth and intensity of the coverage of those plans included

in the case study presentations. The case studies and contract

"^This falls largely in the area of an a priori forecast as no depression has been experienced since 1929. - 42 -

TABLE NO. 5

Business and Economic Factors by Case Studies

Case No. 1 2 3 4 5 6A 6B 6C

1 C 38 E WRA R L M U 2 C 4 NF WRA JR M M-H s 3 C 3 E WRA CR W M u 4 C 1 NP WRA CW M u 5 c 11 NP WRA cw SM u 6 c 26 E WRA c w L u 7 c 1 E WRA c w L u 8 c 3 E WRA RJW M L su 9 c 2 L WL BW CM WM u 10 c 1 E WRA w L N s 11 c 18 E WRA W S M su 12 TU 1 NP WL c LM u 13 TU 1 NP WL c L M u 14 C 1 NP WRA JM L M s 15 C 34 E WRA BJW L M s 16 S 3 E WRA CW M S u 17 C 1 E WRA R M M s 18 I 2 E WRA CM M L s 19 C 1 E WL JR M-H M s 20 c 1 NP WRA CLM u 21 c 4 E WA JWM N M s 22 c 4 NP WL CLL u 23 c 4 E WRA R L M u 24 IC 9 EL WA CRW M M u 25 c 23 E WA C L L u 26 c 8 E WRA CRW L M u 27 c 1 EL NP RW S M u 28 c 20 VP WRA W JR S M u 29 c 1 EL VL R HL s

Note : Legend appears on page 43. - 43 -

TABLE NO. 5

Legend

Column 1 Type of Manufacturing C Continuous I Intermittent TU Transportation Utility S Sales

Column Z - Number of Plants

Column 3 - Manufacture to Stock E - Economical EL - Economical within limits NF - Not feasible NP - Not possible L - Limited VP - Varies with products

Column 4 - Ability to Forecast Demand WRA - With reasonable accuracy WA - With accuracy WL - Within limits NP - Not possible VL - Very limited

Column 5 - Methods of Distribution C - Consumers B Brokers R - Retailers W Wholesaler s J - Jobbers M Manufacturers

Column 6 - Effects of Economic Conditions 6A - Seasonal 6B - Cyclical 6C - Secular L - Light M - Moderate W - Wide S - Stable H - Heavy N - None SL - Slight U - Upward - 4 4 -

TABLE NO. 6

Employee Relations Activities "by Caserr> i i

A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 X XXXX X XXX X X XX 2 XXX XX X 3 XX X X X 4 X X X X X X X X 5 XXX X X XX X X X X 6 XX X XX X X X X X XX 7 X X XX XX X XX X X 8 X X X XXXX X XXX 9 X X X X XX X 10 XX X X XX XXXX 11 XXX XX X X X XX 12 X X X XXXX 13 XX X XX 14 XXX XX X X XX 15 X XX X X XXX X

16 XX X XX X - X XXX X 17 XX X X X X 18 X X X XX X X X XX 19 XX X X 20 XXX X XX X X X X X 21 X X X X X X X X X 22 X X XX X XX XX 23 XX X X XXXX

24 XX X XX X X X X XX 25 XX X X XX X XX XX 26 X X XX X X XXX 27 X X X X X X 28 X X X X XXXX X 29 X X X X XX X E N O . 6

ctivities by Case Studies

1 12 13 14 15 16 17 18 19 20 21 22 23 X XX X X X X X X X X X X X X X X X X X £ XXX X X X X XX X X X X X X X X X X X XX X X X X X XX X X X X X X X XX X XX X X X X X X X X X X X X X XX X X X X X XX X X X X X XX X X X X X X X XX XX X X X X X X XX XX

X X f X X X X XX XX X X X X X X XX XX X X XX X X X XX XX X X

X X XX X XX X X X X X X X X X X X X XX X X X X X X X X X X XXX X X XX X - 45 -

TABLE NO. 6

Legend

A - Case Study Number Col. 13 - Surgical Benefits

Col. 1 - Vacations with Pay Col. 14 - Retirement Plan

Col. 2 - Paid Holidays Col. 15 - Disability Benefits

Col. 3 - Severance Pay Col. 16 - Credit Union

Col. 4 - Call-in Pay Col. 17 - Mutual Benefit Ass'n.

Col. 5 - Pay for Absence Col. 18 - Mutual Aid Society for Personal Reasons Col. 19 “ Savings and Loan Col. 6 - Profit Sharing Col. 20 - Employee Welfare Col. 7 - Bonuses Trust Fund

Col. 8 - Employee Savings Plans Col. 21 - Direct Company Loans

Col. 9 - Stock Ownership Plans Col. 22 - Job Evaluation

Col. 10 - Life Insurance Col. 23 - Merit Rating

Col. 11 - Accident and Health

Col. 12 - Hospitalization - 46 -

clauses offered in the Appendix further amplify this information

in some cases and in others give indication of the nature of the

coverage which the individual guarantee plan affords those eligi­ ble for its benefits.

Table 1 shows 13 current guarantees in Food and Kindred

Products. One of the listings here is a guarantee of weekly hours to production employees and another is a guarantee of minimum weekly earnings to certain categories of commission salesmen. Neither of these then meets the definition of a guar­ antee established for this study. Three of the other plans listed under this classification are new plans inaugurated within the year immediately preceding the publication of this study. There are thirteen firms classified under Textile Mill Products in Table 1.

Ten of these thirteen firms have guarantee plans which cover only one craft representing two to three percent of the employees of each of the several companies.

In a previous chapter indication was given that the word

"guarantee" was used advisedly. An examination of the case studies, the contract clauses and other related material pre­ sented in the Appendix will offer evidence of the many coats which the word "guarantee" wears in this connection. Some of the mate­ rial presented covers guarantees which do not fall within the limits - 47 -

described for this study but is offered there to indicate the breadth of the interpretation given to guarantees.

It will be noted that the several groups of plans, samples of which appear in. the Appendix, offer a wide variety of "guarantees" -

(l) guarantees for the payroll period; (2) guarantees which are really nothing more than "call-in pay" provisions ; (3) guarantees which in essence are simply severance pay provisions ; (4) guarantees which merely advance wages to employees during slack periods against future earnings, which advances must be repaid in some cases (loan plans) and in other cases need not be repaid, under certain conditions ;

(5) guarantees of work; (6) guarantees of wages ; and (7) varied com­ binations of the types listed above.

In the case material, the case studies and the miscellaneous material presented on companies not included in the case studies, so-

called "guarantee" plans are not segregated for treatment. Case ma­ terial is not classified in the presentation because it is virtually im­ possible, by any meaningful standard, to determine which plan is

a guarantee and which is not. Samples of all principle types of

"guarantees" are included as evidence of the multiplicity of plans,

and provisions in plans, directed toward objectives pertinent to

this study. A review of the texts of the guarantee plans included - 48 - in the case studies and in the contract clauses in the Appendix will give ample testimony to the statement made earlier in this study that there is only a hair line difference, if any, between stabilization plans and most guarantee plans. Limiting pro­ visions in the "guarantee" plans which qualify the ’’guarantee" are presented in succeeding paragraphs together with illustra­ tive clauses from some of the plans.

(l) Most guarantee plans are so hedged, for necessary protection, that they are not guarantees in the true sense of the word. The following protective provisions quoted from "guaran­ tee" plans serve to illustrate this point. Other examples may be found in the Appendix.

"This guarantee of employment has been established because the Company believes it to be sound business practice and a desirable protection for its employees. It is the intent of the Company to maintain it, but the Company must and does reserve the unqualified right, to be exercised at its soJ.e discretion, to withdraw this guarantee at any time.

"The Company agrees to guarantee employment of not less than 40 hours per week for 52 weeks in each year to employees covered by the agreement, who are reg­ ular full-time employees of the Company, provided this shall not be construed to prevent the Companyfrom releasing employees because of lack of work or for other proper and legitimate reasons."^

e ■'.■■■ " — — ■ — - See Case Study 1 - III. A. 2. g. in the Appendix.

^See Case Study 4 - III. A. 2. in the Appendix. - 49 “

Another form of protective provision is found in those plans which are commonly known (and in error) as "guarantee" plans. The managements of several of these companies have stated, for the record for this study, that their plan is not a guarantee and that it is not considered by them as such.

"There isn't anything guaranteed about it, (the plan), as the original purpose of it was to endeavor to supply a check each week to the workers in the factory who come under the plan.

"The plan is not a guarantee. It is an announced policy only.

"No guarantee of any kind is offered to employees. . . . the plan is neither called nor considered a guarantee.

The avowed statements immediately above testify that the companies to which reference is made do not offer "guarantees. "

The two clauses cited which contain the protective provisions are from plans which are considered by the managements of those companies to be "guarantees. " An appraisal and balancing of the protective clauses against the company statements cited prompts

7 See Case Study 3 - III. D. in the Appendix.

®See Case Study 8 - III. A. 4. in the Appendix.

o See Case Study 6 - III. A. in the Appendix. - 50 - the question, ’'What is the difference ? Are the plans labeled

"guarantees" any more guarantees because they are so labeled? 11

In each of the situations in which these individual plans are found, there is a long history of successful management and effective em­ ployee relations. It is believed that there is good faith on the part of each of these companies and that not one of them would abrogate on its plan, whether a "guarantee" or a policy, if there were any practical way to avoid so doing. This premise assumed, it then follows that the "label, " the name by which the plan is known, or the fact that it has no name, is not the important consideration.

Rather it is the integrity, the sincerity of purpose, the resources of the company behind the plan and the values it offers through its specific provisions which gives the plan its value. This is as true of un-named stabilization plans as of "guarantees. "

(2) The number of employees covered under many of the

"guarantees" is so limited that it is not conceivable that the cov­ ered employees would ever be laid off because of lack of work un­ der any conditions short of complete cessation of operations. This is a condition under which practically all guarantees are automati­ cally terminated. A few case examples justify this contention.

"Each employee of the Company with ten (10) years or more of continuous service shall be guaranteed pay for at least fifty (50) forty - 51

hoar weeks within the year covered by this agreement, unless laid off for discipline or discharged for cause, provided he accepts his regular rate for any work available should his regular job cease."^

"The Corporation guarantees to every em­ ployee, who has completed five years of continuous service in the employ of the Cor­ poration at (date) a minimum employment of 2080 hours for each yearly period begin­ ning (date) and continuing each year there­ after during the life of this contract. "*•*■

(Author's note: The maintenance of the orig­ inal wording of this clause reduces the cover­ age of the guarantee, year by year, thus re­ ducing management's potential burden and consequently its seeming value to employees. The group of employees now covered under the plan is limited to those now completing their 10th year with the Company. This group com­ prises only 10% of the working force. This represents am irreducible minimum if opera­ tions are to be continued at all. )

These two clauses are more extreme examples but there are many instances, examples of which may be found in the Appendix, where coverage is limited to five, three, two and one year em­ ployees. There are a few plans which provide coverage for em­ ployees following the completion of a probationary period or im­ mediately after employment, but these are the exception and not

^®See Contract Clause K in the Appendix.

^See Contract Clause J in the Appendix. - 52 - the rule. And in those cases where immediate coverage under the plan is provided the provisions of the plan are usually more

conservative to compensate.

(3) The benefits offered under most of the "guarantee" plans are substantially less than those regularly enjoyed by em­ ployees of that or any other company having stabilized operations and employment. This is easily understood because a company

cannot guarantee the maximum which it hopes to provide for its employees. In committing itself contractually it must confine its obligations to those which are distinctly possible of attainment or include provision for modification of the plan should circum­

stances require such action. To do otherwise would not be good business. The following quotations from current plans and con­ tracts illustrate such precautionary thinking.

"The Company agrees to make available for all employees who have eighteen months or more of continuous service as of (date) 1440 hours of employment during the contract year, based on the hourly rates of Exhibit A. attached unless prevented by fire, flood or other circumstances beyond the Company's control.

"The Company guarantees 70% of a full year's normal working time. The term 'full year's1

12See Contract Clause L in the Appendix. - 53 -

normal working time is understood to mean 2080 h o u rs."13

•'All male employees, who have a service record of one year or more shall, during their continuance on the payroll, receive a minimum pay on a weekly basis of not less than twenty-five dollars ($25. 00) per week throughout the period of this agreement, and also all female employees, who have a service record of one year or more shall, during their continuance on the payroll, receive a minimum pay on a weekly basis of not less than twenty dollars ($20. 00) per week through­ out the period of the Agreement; provided, how­ ever that in the application of the annual mini­ mum cost to the Employer shall not exceed twelve thousand dollars ($12, 000. 00)per year."14

"The Company reserves the right under the guarantee to transfer any employee to work other than that at which he is regularly em­ ployed, and to compensate him for the same in accordance with the wage rate which prevails for the work to which he has been transferred."^

"Upon authorization from the Board of Directors and without changing the established hour week, the hours of work for the employees coming within the terms of this guarantee may be limited to 75% of the established hour week less time lost for reasons stated above whenever in the opinion of the Board of Directors such action seems justified."16

I? JSee Contract Clause M in the Appendix.

^See Contract Clause H in the Appendix.

^See Contract Clause I in the Appendix.

^ e e Contract Clause I in the Appendix. - 54 -

The foregoing limitations each of which is included in one of the "guarantee" plans serve to indicate a few of the precau­ tionary measures which are incorporated in such plans. The first two clauses quoted above guarantee 1440 and 1456 hours respectively. It must be conceded that if the employees of these companies had been regularly working less than 40 hours per week (2080 hours per year) in the short labor market which has prevailed almost everywhere since the late 1930's and with pre­ vailing high living costs, there would not be many employees with eighteen months service remaining with either of the com­ panies. The third clause quoted guarantees minimum weekly earnings of $20. 00 to women and $25. 00 to men and then places a ceiling on the obligation of the employer. It can be stated with assurance that if the employees of this company were reduced to such minimum earnings they would not long have been nor would they long be employees of that company. It is believed that this clause, like the two preceding it, offers substantially less than the employees regularly enjoy through their employment with the respective companies and that therefore these guarantees mean little to the employees or to the company. The last two clauses are taken from the same plan and reserve the right, in effect, to reduce hours and earnings of employees whenever such action - 55 - seems justified. It should be clearly understood that issue is not taken here with the reservation of these rights nor with any of the other precautionary measures which these or any other plans em­ brace. These are fundamental rights of management which must be retained if the company is to insure its future. The point at issue is whether, since it appears necessary to include these measures, the plan is a guarantee in any meaningful sense.

The foregoing pages of this chapter have presented com­ parative information from guarantee and stabilization plans, past and present, along with a critical analysis and comments on their significance. The succeeding paragraphs carry an account of the effectiveness of several of the plans and an appraisal of "guaran­ tees" in general by representatives of management of companies, some of which offer "guarantees" and some of which do not.

Management Opinions

The management of one company which has offered a "guar­ antee" to its employees for a number of years believes that from the standpoint of the company and that of the employees the bene­ fits which have been derived from that guarantee outweigh any limitations it may have. "It is believed that the company has ef­ fected many economies only made possible through the instrument of the ’guarantee. ' The guarantee is of more importance than any - 56 - other single factor in the employee relations program. " Man­ agement is careful to point out however that the guarantee of employment does not directly affect production and that it will not take the place of sound incentives, good wage administration or effective methods work. It is believed by management that a guarantee means much more than stability of employment be­ cause". . . .the company with a guarantee, because of the com­ mitment added to the obligation, works to preserve the policy beyond the point at which it might be abandoned in the ordinary course of events under a program of stabilization. " In spite of its successful experience with a guarantee plan, management points out there is a possible negative effect so far as both the company and the worker are concerned. "In hard times, the guarantee may be somewhat of a burden to the company, while in good times, the worker can go elsewhere and get a job. "

The management of a company well known for its plan to provide worker security says :

"It seems to us that the use of the word 'guaranteed' is rather loose usage because the .implications connected with it can be carried awfully far and we all know there are some things you just cannot guarantee at least as far as some people might interpret it.

17See Case Study 3 - III. JD. in the Appendix. - 57 -

"It is the opinion of management that no one can, in the full sense of the term guarantee anything to employees. If a guarantee is to be made, it must be limited. This is not de­ sirable from the point of view of this company. Without guarantees of demand to the employer, he cannot actually guarantee employment. If the company fails, the guarantee is worthless. If the Government were to inaugurate such a plan, it would of necessity mean a planned and controlled economy.

"It is unsound to guarantee workers any more than that of which they are presently assured. Additional guarantees would merely add to the already growing feeling among employees of assured work and wages with less worry and effort expended on their part. A series of guarantees would be certain to be reflected in decreased production.

"What all managements can do is devote them­ selves to the stabilization of operations ...... which is certain to have a beneficial economic effect. "18

One company which discontinued its plan, after more than twenty years of operation under it, offered this explanation:

"The union by a vote of the membership decided to drop the guarantee in favor of greater holiday benefits. The employees covered had so little to lose because the Company has not missed a pay­ roll in forty-three years. The lowest point of operation in the depression was three seven hour days per week. "19

18 See Case Study 6 - III. D. in the Appendix.

19see Case Study 19 “ III. A. 5. b. in the Appendix. - 58 -

The coverage of one plan is confined to 15% of the company's employees. The management of the company offers the following explanation for this limitation :

"Experience has shown that the guarantee plan has been of indifferent interest to employees during the years of labor scarcity.

"Because of the attitudes of employees toward the plan, the program will not be expanded un­ til the contract is more highly regarded by the employees.

In the same vein as the comment immediately preceding another current guarantor comments :

"During busy times like this, older service men do not like a guarantee. They have year round work anyway. With a guarantee they do not gain. They want overtime pay. The company questions the value of the plan unless and until slack times occur. In a short labor market such a plan has little value.

One company currently offering a "guarantee" says :

"After many years of operation the Company be­ lieves the plan has worked to the advantage of all concerned. '*22

One company which has an Unemployment Benefit Plan has

^®See Case Study 16 - III. C. in the Appendix. 21 See Case Study 18 - III. C.in the Appendix.

^ S e e Case Study 17 - III. D. in the Appendix. - 59 - this to say about guarantees :

"When sales can be guaranteed, then it will be possible to guarantee wages. This Company reserves for its Unemployment Benefits. "23

A manufacturer of automotive products related the experi­ ence of that company very simply:

"Suffice it to say that this company a few years ago for one year only did agree to a guarantee wage plan with the Union, but the following year such plan was omitted in subsequent contracts with the Union, and has not since been considered as a bargaining requirement because we found it to be impractical. "

Another company which tried a guarantee plan for one year and then discarded it because of the misunderstandings which arose from its administration, made the following observations :

"Guaranteed plans which offer less than 52 weeks employment either involve no cost to the company and no real assurances to the employee or result in throwing the cost of unemployment on the newly hired group which are not usually covered by the guarantee. No individual company can possibly maintain its production if there is a general slump and no one wants the product. I personally disap­ prove of guarantees because I think they make em- ployee-management relations more precarious through misunderstandings. "

The foregoing comments are from the experience of compa­ nies with guarantee plans. These comments are not all inclusive

^^See Case Study 11 - III. JD. in the Appendix. - 60 -

but they are representative. The opinions which follow are from companies which have never guaranteed work or wages to their employees. In most instances these companies have offered sta­ bilized employment and/or income over an extended period of time.

One utility management expresses the conviction that:

"Workers already have too much security. This accounts for the low productivity of employees. More security would have an adverse effect on the workers, rather than an increasing amount of security increasing their productivity.

"Since stable employment is already offered, the only fluctuations coming at the very lowest point of employment in other industries, management believes that the workers would question the mo­ tives of the company if a guarantee were offered. The guarantee, of course, would be limited and could not offer as much as the workers have cur­ rently. .As a result, the workers would not gain anything from a guarantee. "24

The management of one company with a long record of sta­ ble employment sees no advantage to guaranteeing wages. To this company, stabilization is the important thing. A real moral obligation is felt to any individual becoming one of their employees.

Management feels that it could offer no more under a guarantee than it already offers its workers under stabilization. In fact, they feel that the limitations which would have to be written into any

^^See Case Study 12 - III. D. in the Appendix. - 61 - guarantee might result in fewer benefits and advantages to their workers. "A written commitment might result in management doing only those things necessary to fulfill that commitment and feeling relieved of the responsibility of doing anything more for employees — a thing which management currently considers as a heavy obligation. 11 Employee confidence in the company is at a high level. Following twenty five years of stabilized employ­ ment, the company believes that employee confidence and morale is as high as it could possibly be under a guarantee.

A manufacturer and distributor of consumers goods items suggests that guarantees are out of place in a free enterprise system and are a step toward regimentation.

'Guarantees might well be a wedge for a move­ ment toward government controls such as oc­ curred in the field of grade labeling. It would hinder management's freedom of action. Re­ stricting industry would soon lead to restric­ tion of the freedom of movement of the worker. Even under a full system of voluntary guaran­ tees with no governmental regimentation,the buying habits of consumers would be guided and regulated which would be regimentation of a sort and which would restrict consumer freedom of choice. A chain of guarantees would soon shackle the entire economic system.

"The worker's ambition is taken away by excessive security. The knowledge that if the benefits of­ fered by our economic system are to be realized, they must be continuously earned is a powerful incentive. As a result, there is no relaxing and resting by the worker until such time as he becomes - 62 -

eligible for a pension, as would be the case under a guarantee.

"Of much greater importance than a guarantee are the sincerity and the integrity of the em­ ployer plus sound business leadership and man­ agement control. Leadership is important in business and it must be business leadership. This is important. Stabilization should be en­ couraged by that business leadership. A full system of guarantees would detract from busi­ ness leadership." 25

A large company with highly stabilized operations and em­ ployment believes that:

"In the face of changing markets, new products, new methods, new competition and changing economic conditions, few companies can success­ fully guarantee annual wages. Most of the better known guaranteed wage plans have been initiated in industries characterized by job insecurity and large seasonal fluctuations in employment. As fluctuations in employment in this Company are slight, the employees have little to gain by such guarantees. We feel that the best and most real­ istic approach to this problem is by attempting to maintain employees' incomes by means of reg­ ularizing employment in so far as practicable and through liberal benefit plans. "26

One company now enjoying fine relationships with its em­ ployees has this to say:

"A guarantee in this company would mean less

25see Case Study 25 - III. D. in the Appendix.

^%ee Case Study 28 - III. D. in the Appendix. - 63 -

than present stabilization since in a formal commitment the company would have to protect itself and consequently not offer any unlimited guarantee. More has already been done for the workers than could be guaranteed. Workers now have confidence in the company and a guarantee might cause a loss of that confidence. ”27

One company having a record of stabilized employment and enjoying excellent employee relations fears that a guarantee might produce negative results.

"It would be possible to establish a guarantee covering 80% of all employee hours worked, but this would have little value because the guarantee would have to be limited, either as far as hours guaranteed per week, or total number of employees covered. In either case, the guarantee would be for less than the workers are currently receiving.

"At the same time, management would hesitate to tie itself to a principle calling for the layoff of workers according to seniority which they would do if the guarantee were established on the usual basis of 'All employees with more than X years of service . . . ' Management feels that merit must govern if operations are to be successful.

"It is believed that if the guarantee were limited to 80% of the employees (on the basis of length of service), the 20% not covered would become dissatisfied and the labor turnover would tend to increase. At the same time, employees with sufficient service to be included under the guar­ antee would relax and fail to produce up to their best standard, feeling that they were secure for so long as they did a passable job. Offering a

^^See Case Study 21 - III. D. in the Appendix. - 64 -

guarantee would decrease rather than increase productive effort.

"A guarantee or any other policy or group of policies will not create wholesome attitudes on the part of workers. The control of the whole situation rests with the management organization of a company. Good supervision is the key to sound management and wholesome employee attitudes. With good supervision, a guarantee does not seem essential. "28

Virtually all of the guarantee plans currently operative and those discontinued to which reference is made in this Chapter, are or were the result of negotiations with a national labor organiza­ tion or its duly authorized local and the majority of the national unions involved are affiliates of the CIO. Two AFL leaders were quite outspoken against guarantees. One of them, a local business agent, said :

"An employer cannot guarantee work unless he can know how much business he is going to have and how much work to distribute. "

The other, a national president, said in part:

"The 2080 hour guarantee clause is a clause which is perm itted under the Federal Wage Hour Law (Fair Labor Standards Act). It is a phoney method of evading proper overtime payment of wages. Employers need only sign a contract guaranteeing 2080 hours of work per year and if they do that they may then em­ ploy such employees up to 52 hours in any work week without payment of overtime. We have no such contracts. "

28see" Case Study 26 - III. D. in the Appendix. - 65 -

It is significant that in 1944 there were 67 contracts filed by employers with the Wage and Hour Division, U. S. Department of Labor, claiming exemption from overtime payments under

Section 7 (b) (2) of the Act. In late 1952 this number had been reduced to 15, ten of which were the contracts of one company.

The contacts with the union leaders indicated that the achieve­ ments of their unions and in some cases their interest in the field of guarantees has not been significant in recent years. This fact is confirmed by a recent report by The Bureau of Labor Statistics

29 in the Monthly Labor Review. This report states flatly - "Defi- nite guarantees of employment or wages have not been incorpor- porated in collective agreements to a significant extent. " The re­ port was based on an analysis by the Bureau of nearly 2600 agree­ ments. Only 184 of the 2600 (7%) provided for a guarantee of any

type. Out of the 184 there were only 18 guarantees, . 07% of the

2600 agreements analyzed, which fall within the scope of this study,

i.e. , that are guarantees for periods of time three months or more.

^9]\/[orton Levine and James Nix, "Guaranteed Employment and Wages Under Collective Agreements", Monthly Labor Review, May, 1952, Serial No. R-2080. - 66 -

Chapter IV

PRINCIPLES GOVERNING GUARANTEE CONSIDERATIONS

There are two bodies of principles which apply to the subject of guarantees. There are those which must be considered in making a decision to guarantee or not to guarantee. There is a subsequent body of principles which must be taken into account in the formula­ tion and establishment of a formal guarantee commitment.

The principles which have a bearing on the decision to guar­ antee or not to guarantee may be classified generally into three cate­

gories. First, there are the economic principles, including those of business and management. Second, certain social and sociological

principles must be noted, for guarantees have wider significance

than the mere application in the single business firm which offers a

guarantee. Third, since guarantees are intimately related to a con­

sideration of the individual human being and of his behavior as a

productive workman, it is essential that certain applicable psycho­

logical principles be discussed in connection with the subject. These

principles are set forth in the following pages.

A. Principles Bearing on the Decision to Offer or not to Offer a.

Guarantee.

1. Economic Principles, Including Business and Management. - 67 -

a. A company, the long-term trend of whose business is

upward and one which can foresee little risk of probable

wide spread technological changes, has better prospects for

guaranteeing work or wages with a minimum of risk to itself

than does the company whose business shows a downward

trend or whose manufacturing activities are subject to rapid

technological changes and a continuing introduction of labor-

saving machinery. ^ Technological changes, the introduction

of labor-saving machinery, ^ and the dimunition of demand

with its concomitant curtailment of operations offer the three

greatest risks to any company offering a guarantee. Any one

of the three can result in the company undertaking a tremen­

dous liability in paying continuing wages to a work force no

longer engaged in productive effort.

b. The smaller the percentage of labor costs to total costs,

the smaller the risk involved in a guarantee, all other things

being equal. ^

* Joseph L. Snider, The Guarantee of Work and Wages, (Boston: Harvard Graduate School of Business Administration, 1947) p. 82.

^Ibid, p. 82.

^Ibid, p. 81. - 68 -

The company in an industry characterized by a high degree of mechanization, where operations are highly continuous and automatic, is in a better position to offer a guarantee than the company in an industry in which a great deal of the product is produced directly through theefforts of the workers.

To cite an extreme example, a hydro-electric plant needs a bare minimum of employees. It requires approximately the same number of employees whether it is operating at capac­ ity or is not in operation at all. The employer in that situ­ ation can offer a guarantee with a minimum of risk. At the opposite extreme is a laundry which has a very high ratio of labor costs to total costs. If a laundry were to offer a guar­ antee, a slack season would cause a great loss in wages paid while little production was being carried on. c. A guarantee commitment has a much sounder basis when

stabilization of employment is an accomplished fact, rather than an objective yet to be attained. A company offering a guarantee before it has stabilized employment is assuming an excessive risk. The loss through wage payments during

slack periods may be of such magnitude as to endanger the financial position of the company. Stabilized employment is derived from stabilized operations where production is - 69 -

carried, on with such continuity that reductions in the size of

the work force or in the number of hours worked in any period

are negligible. Stability of operations should be an objective

of every company. The methods by which such stability is

attained are inherent in the applications of scientific manage­

ment which are prerequisite to effective business operations.

''Scientific management attempts to apply the s cientific method

of attack to the solution of business problems. The applica­

tion of the scientific method of approach implies the develop­

ment of a sound organization plan, the selection of the per­

sonnel to implement the plan, and the development of controls

to insure accomplishment according to the plan. Stabilization

is approached through and affects each of the primary organic

functions of a business which have been listed by Professor

Ralph C. Davis for Manufacturing, as Production, Distribu­

tion and Finance. ^ The first step to be taken is a study of

past irregularities in production to determine their causes

and possible means by which such irregularities may be elim­

inated in the future.

^Ralph C. Davis, Industrial Organization and Management, (New York: Harper & Brothers Pub., 1940), p. 41.

^Ibid. , p. 57. - 70 -

Some causes of such irregularities are :

(1) Fluctuations in demand due to custom ;

(2) Fluctuations in demand due to climatic conditions ;

(3) Irregularity of supply of raw materials due to small

quantity puchases ;

(4) Excess variety of products manufactured or its re­

verse inadequate line manufactured ;

(5) Failure to forecast and budget sales, personnel re­

quirements and financial requirements and commitments.

Some methods which have proven effective in the solution of the problems presented by these irregularities are :

(1) Simplification or extension of the product line or adapta­

tion to more stable production;

(2) Production to stock and storage in anticipation of

demand ;

(3) Large quantity purchase of raw materials and their

storage to insure adequate supply for production at all

times ;

(4) Planning the production of new equipment for the plant

itself, plant improvements and changes, maintenance and

repair and experimental work for dull seasons ;

(5) Product research and development - new lines, - 71 -

improvements and new uses of present lines ;

(6) Better production methods, and better planning

of production ;

(7) Subcontracting in peak periods if demands on equip­

ment are greater than its capacity;

(8) Accurate forecasts and budgets of production, per­

sonnel, sales and financial requirements ;

(9) Market research and consumer education directed

toward elimination or modification of seasonal fluctua­

tions;

(10) Advertising and other promotional efforts, discounts

for off-season purchases ; extra bonuses to salesmen for

off-season sales ; demonstrations of new uses ; long term

contracts all are useful in building up and spreading

demand ;

(11) Development of new channels of distribution, new

customers, new brands and exports ;

(12) Following stabilization of operations with approved

applications of effective employment stabilization.

Stabilization according to one author contributes the fol­ lowing values :

"Increases efficiency generally over a period of years - 72 -

by reducing the amount of time during which excessively high and excessively low operating rates obtain, both of which are more costly than an intermediate rate, reduces the amount of penalty overtime pay, permits a smaller amount of machinery and equipment for a given volume of production over the years, by reduc­ ing the peak production demands and, therefore, increases the productivity of capital and, thus, lowers the cost per unit of product for depreciation, obsolescence, and interest, tends to improve the financial stability of a company and, therefore, gives a company easier access to credit and capital at lower rates, increases the productivity of labor by reducing the incentive to work-stretching, reduces labor turnover and, consequently, reduces hiring costs and reduces training and retraining costs, enables a company to hold together more continuously an experienced and high-grade labor force and, thus, reduces waste and spoilage, reduces the need for supervision, reduces the cost of accidents, and improves the quality of products, enables a company to attract better, more conscien­ tious, and more versatile workers, improves the goodwill and morale of workers, improves the teamwork throughout a plant, assists management in securing the cooperation of workers in the development and introduction of mechanical aids and technological improvements, enables management to plan and schedule more efficient operating runs and, thus, reduces machine setup costs, makes it easier for management to solve its sales and advertising problems, and promotes community goodwill."

^Joseph L.. Snider, The Guarantee of Work and Wages, op. cit. , p. 110. - 73 - d. In the final analysis, a guarantee is only as good as the company which offers it. The value of any guarantee depends upon the company's ability to compete, its finan­

cial status, the ability of its managers and its integrity.

If offering a guarantee is to interfere with the competitive position of the company, the guarantee will weaken the

company and lead eventually to either the breaking of the

guarantee or the decline of the company. If a guarantee

is adopted by a company which is financially unable to as­

sume the additional risks and liabilities similar results

can be expected. If the abilities of the present manage­

ment make them barely able to cope with the day to day

situations without a guarantee, the added stresses and

strains of the problems brought with a guarantee may re­

sult in the disruption of management and the company. The

application of the test for measuring the effectiveness of

management supplied through the "criteria of executive

leadership" developed by Professor Davis indicates rather

clearly the importance of top flight leadership in manage­

ment if the objectives of the enterprise are to be achieved. ^

^"Some of the more important of these criteria are as follows : - 74 -

If a company has a reputation for a lack of integrity or if

it proposes a guarantee for various reasons but does not

sincerely believe in it, the results of the guarantee can

be expected to reflect unfavorably on the company and its

reputation. As Professor Davis has so aptly pointed out,

"The importance of ethical criteria is evidenced by the

fact that no form of organized activity can continue suc­

cessfully, over an extended period of time, without ob­

serving certain minimum standards of conduct, for other­

wise its members and those who must deal with it will

lose confidence and this eventually will result in a loss

- — 1. The degree of voluntary enthusiastic cooperation within the or­ ganization. 2. The nature and degree of discipline. 3. Evidence of a mutual understanding and confidence between executives and subordi­ nates. 4. A general knowledge and understanding, throughout the or­ ganization, of the functional relationships between executives, their responsibilities, and their authority. 5. The use of positive rather than negative methods of leadership. 6. The quality of the executive's subordinates. 7. A low rate of turnover among executives and opera­ tives. 8. The soundness of the principles and methods used in the so­ lution of business problems. 9- The presence of satisfactory methods of forecasting and anticipating the business future. 10. Definite writ­ ten business plans based on sound objectives and business ideals. 11. The extent to which plans are based on verified facts and recognize the 'law of the situation. ' 12. The extent to which the organization achieves its objectives. " Ralph C. Davis, Industrial Organization and Management, op. cit. , p. 37. - 75 -

O of effectiveness in some degree. M e. The good faith and sincerity of management in offering a guarantee must be generally recognized and above ques­ tion. When employees have no faith in management, em­ ployee relations projects are subject to hasty rejection.

Unless management itself believes wholeheartedly in the

advantages which it feels a guarantee will bring, the plan

will not succeed. Nor can it be assumed that management

will work zealously to maintain a plan which it does not con­

sider beneficial to the company. Such lack of sincerity on

the part of management in offering the guarantee predes­

tines the plan to failure, and the failure of the plan will

destroy completely employee morale and any confidence

which employees may have had in their employer.

f. A guarantee must be considered as only one of the fac­

tors of a good employee relations program. It will not

serve as a substitute for an adequate employee relations

program. There seems to be a tendency to regard a guar­

antee as both a means and an end in itself. Some apparently

consider a guarantee as a single employee relations factor

8 Ibid. , p. 30. - 76 - which, will result in the banishment of all problems. Some consider a guarantee as a thing to be achieved by a company for the sake of the guarantee itself. Neither viewpoint is

correct. A guarantee must never be considered as anything other than just one part of an employee relations program and as such of value not in itself, but only as it contributes

to the attainment of the overall objectives of the company.

Every successful guarantee plan only adds to and does not

try to take the place of a well rounded employee relations

program. "A staff organization renders, directly or in­

directly, some service values to the primary line organi­

zation that are intended to increase the economy or effec­

tiveness whith which they do their work. "9 A staff service is

never an end in itself but is useful only as it facilitates the

accomplishment of the objectives of the line organization

and the overall organization objectives. A guarantee plan is

no different from other staff functions in this respect,

g. A guarantee must never be considered as a substitute

for or as replacing good management and its tools, such

as sound incentive programs, effective methods work, and

^Ibid. , p. 28. - 77 good wage and salary administration. A guarantee alone

cannot possibly achieve all of the objectives of good man­

agement. The tools, devices and activities of management

are of value only when used in proper connection with each

other and when their interrelationships are understood and

properly evaluated by management. Values which a guar­

antee may yield to a company are not brought forth by the

guarantee plan alone, but rather, they are yielded by the

plan in conjunction with all the other practices and tools

which management employs. A guarantee plan alone will

not replace a well conceived and installed management pro­

gram any more than wage incentives alone will insure satis­

factory production.

h. Sound leadership is the greatest single factor in the mo­

tivation and stimulation of employees to greater productivity

and into a "unity of thought" with management. ‘Executive

leadership is the force in business that stimulates, motivates

and directs an organization. It is an established fact that

workers admire and have confidence in management at every

level if those in supervisory and executive positions show

10Ibid. , p. 31. - 78 -

themselves to be strong and positive leaders. Surveys of worker opinion show that workers want such leadership.

Conversely, there is nothing which workers despise or ridicule more than mediocrity or backwardness in super­ visory and executive ranks. There is nothing which can be substituted for dynamic leadership in business. On the other hand, there are very few problems which the pro­ gressive leader cannot eventually overcome. If there is any single answer to the business problems of today it is to be found in sound leadership. No single tool, policy, or practice of management can ever make the leader dispen­ sable. Only the good leader can mold an effective manage­ ment program by establishing sound policies, inaugurating worthwhile programs and organizing the whole into an inte­ grated, well planned and controlled business operation, i. The quality of the work force is an important factor to be considered when attempting to decide whether or not to

offer a guarantee. In some firms and in particular sections

of other firms, certain factors may be present which result

in a work force which is of low quality. For a variety of

reasons these factors may not be presently changeable so

that a better type of work force can be built. When the workers are of such a low caliber and there is no possibility of changing the causitive conditions, the introduction of a guarantee may permanently freeze the quality of the work force at a low level. Furthermore, a low quality work force may present serious administrative problems because the plan may never be fully understood by the workers. Without

such understanding and support, the plan cannot succeed.

Sociological Principles. a. Regularity of income is important to all members of

society. To the worker, a regular income almost inevitably

means an increase in the plane of living for him and his fam­

ily. To the employer, for the employee to have a regular

income meatis that the worker is more stable, has more

peace of mind, is more productive, and in general is a more

satisfactory workman. To society, for employees to have

regular incomes means a more stable society, a higher stand­

ard of living, a reduction in the number of social problems

and less possibility of social or political upheaval. These

benefits of regularity of income are of recognized importance.

However, it should be pointed out that we are speaking in terms

of regularity of income and that such regularity is attainable

by other means as well as by guarantees. - 80 - b. One company offering a guarantee can influence other companies to guarantee work or wages or at least to stabi­ lize operations and employment. This influence may be either direct or indirect. The direct influence on other companies is exemplified by the company which, having stabilized operations and employment and offered a guaran­ tee, places its orders with its various suppliers for long periods in advance and with regularity. These suppliers, in turn, find the task of stabilization and even of guaran­ teeing simplified because of an assured constant demand for their output. Where these suppliers, in turn, purchase from others, the effects are passed on back toward the orig­ inal source Of the basic raw material. Somewhere along the line such factors as seasonality of production may hinder

stabilization, but nevertheless, stabilization of operations

is facilitated by the original action of the first guaranteeing

company. The relationship of one company with its princi­ pal suppliers comes to mind as a case in point. This com­ pany is not only concerned with the stabilization of its own

employment but believes that if its own operations are to be

successful, it must assist its suppliers and its wholly owned

subsidiaries in stabilizing. To this end, warehouses are - 81 - built on or adjacent to the property of suppliers. Purchases are made on an annual basis with delivery schedules spread throughout the year. This permits adequate planning and

scheduling on the part of suppliers and subsidiaries and means

that those organizations are more sound financially. In addi­

tion, the company maintains "pool stocks" located at various

points throughout the country. This practice permits the

warehousing of merchandise during those periods when buying

is weak.

The indirect influence is exerted by pressures of public

opinion, labor and/or worker demand, and other such social

pressures. The company which successfully guarantees usu­

ally receives favorable publicity on its plan. The community

may decide that such plans are desirable and pressure is

exerted on other companies to follow suit.

Anything which brings about stability of operations and

employment by business benefits the employees and society

as a whole. However, if companies are pressed into guaran­

teeing wages or work before they can safely do so, any bene­

fits to society, to the workers, or to business will be can­

celled because of the adverse reaction to the resulting fail­

ures to maintain guarantees. - 82 -

3. Psychological Principles.

As the basic motivation of human behavior, certain drives,

such as sex, hunger, self-preservation, the desire for

achievement and others are generally recognized. These

drives motivate the human being in all of his activities.

A guarantee of work or wages tends partially to satisfy many

of these drives to such an extent that the worker no longer

expends his best efforts on his job. A part of the sex drive

is the desire for a family and family relationships. With

complete insurance of continuity of income, the worker has

little hesitancy in undertaking the burden of a family. Like­

wise, he is no longer worried about his ability to provide for

his family and fears for their plight, if he were to lose his

job, are banished. The hunger drive is no longer repre -

sented in the actual hunting and scavenging for food but has

been diverted to working for a medium of exchange with which

food may be purchased. The security offered by a guarantee

to the workman has the effect of guaranteeing him food so long

as he expends a specified minimum amount of effort. He is

placed in such a position that his basic desires are satisfied

almost indefinitely and the stimulus to further effort which

they provide is nullified. 83 -

Self-preservation is likewise affected by a guarantee. This

drive is diverted in modern times from the savage battle for

survival to such things as medical care for the worker and

his family, and luxuries which make living easier. As in

most other cases, this drive is fulfilled indirectly by means

of money earned from employment. Once again if the worker

is assured of a continuing income with little effort on his part,

he is likely to work no harder than necessary. If economic

security is his, under a guarantee, he feels that he need not

prove himself outstanding in order to merit that security.

Without the guarantee he would be stimulated to work hard to

prove his worth to his employer, hoping for recognition of

that worth and retention on the payroll.

Achievement is vital to man. To each individual it may

mean something different. To some it means constant pro­

gress up the ladder of success as measured by wage or sal­

ary increases and the prestige connected with the job. To

others achievement means the attainment of a certain level

as marked by a given job and the maintenance of that position.

It is not improbable that the vast majority of workmen are in

this latter group. A guarantee, then, assures them that they

will maintain their level without extra effort. There will be little fear of losing ground and they will not be stimulated to continuing efforts beyond a bare minimum in order to main­ tain their position.

The basic drives all work negatively. When a man is as­ sured of food, he is not anxious to find food. Most of the drives have been transferred, in our economy, to a seeking after money to provide for their fulfillment. It is the fear of not being able to provide which stimulates the modern man.

When the money is forthcoming to provide satisfaction of his wants, man does not usually exert himself further. It is when he is in doubt and fears that his drives will not be satisfied in the foreseeable future that he works diligently to try to keep

his job and his income. The extreme job security offered by

a guarantee removes almost every vestige of this fear of lack

of ability to provide for the satisfaction of the basic drives.

Consequently, the workman, as have all men everywhere when

their drives were satiated, relaxes and exerts himself as lit­

tle as possible. The primary incentives to efficient and good

work are removed, in large part, by the guarantee.

Political Principles.

The political soundness of the decision to guarantee or not

to guarantee depends on the economic, sociological and - 85 -

psychological soundness of the decision. Political considera­

tions have no place in the decision to offer or not to offer a

guarantee. The decision must be made by the individual com­

pany on the basis of economic and business, sociological and

psychological principles. As long as we operate under the

American enterprise system as we know it today political

interests will be served best when the principles listed above

are effectively applied. This statement is included in order

that it may not be suggested that this consideration has been

overlooked in our treatment of principles.

B. Principles to be Considered in Drawing and Inaugurating a. Guar­ antee Plan in a_ Particular Company.

1. A guarantee plan, if it is to be workable and successful, must

be tailor-made to apply to the particular situation which it is to

cover. This is one of the fundamental principles of management

stated to apply to the subject of guarantees. ^ No two companies

are identical. In the field of guarantees, the successful plan of a

soap manufacturer might prove disastrous if adopted by a machine

1 ^According to the "law of the situation, the successful solu­ tion of business problems depends in large part on the executive’s ability to determine the facts, his courage to facfe them, and his abil­ ity and willingness to follow the course of action they dictate. " Ibid. , p. 32. - 86 -

tool manufacturer or even by another soap manufacturer. The

very fact that no two guarantee plans which have been success­

ful over a period of years are identical^ is evidence that man­

agement must use its ingenuity in devising a plan to cover its

particular situation.

2. If it is to be successful, no guarantee plan can offer substan­

tially less than the workers presently feel relative assurance of

13 receiving, but at the same time, more must not be guaranteed

than the company can afford. ^ This principle poses a delicate

problem for those employers who might attempt to establish a

guarantee and who have offered their employees a high degree of

stabilization over a course of years. Employees of such com­

panies have come to expect little or no fluctuation in employment.

" . . .no two plans for establishing security of employment and earnings over the period of a year have exactly the same features." Jack Chernick and George C. Hellickson, Guaranteed Annual Wages, (Minneapolis: The University of Minnesota Press, 1945), p. 24.

13 "Such a guarantee might be so low, however, as to have the opposite effect from that intended; it might unsettle rather than reassure the workers. If such is likely to be the result, it would be better to postpone the introduction of the guarantee until the business has been stabilized further and a larger guarantee can be offered. " Joseph L. Snider, The Guarantee of Work and Wages, op. cit. , p. 80.

14 "A plan to be successful must not guarantee more than the guarantor can give." Ibid., p. 167. - 87 -

A guarantee would have to provide, at the very least, only slightly

less than the amount of employment of which employees now feel

relatively assured. To offer any less, either by way of fewer

hours or omission of some employees, would create unrest, in­

spire rumors, and invite employee dissatisfaction. Few, if any,

companies would be willing to guarantee a level of employment,

either in wages and hours or in number of employees covered,

equal to the level enjoyed by workers under a high degree of sta­

bilization. Such a guarantee is always subject to the inability to

meet his commitments on the part of the guarantor. The re­

trenchment of a guarantee can be catastrophic to employee rela­

tions and morale as well as to company reputation.

3. The guarantee plan must include adequate provision of the

means for withdrawal or modification of the arrangement in the

event of unforeseen occurrences which jeopardize the financial

condition of the company.^ While no conscientious management

would desire to terminate or modify a guarantee which it had es­

tablished, it is necessary to protect the company from the bank­

ruptcy which might result from continuation of the plan under

"As a protection to the company a guarantee plan should include adequate escape clauses, abrogating or modifying the guaran­ tee if conditions of unbearable financial strain, develop. " Joseph L. Snider, The Guarantee of Work and Wages , op. cit. , p. 69. - 88 - adverse circumstances. The consequences of a change or with­ drawal of the plan are serious, but the failure of the company because of the guarantee would be even more disastrous.

4. The prime requisite for the success of a guarantee plan is the enthusiasm of top management. When the enthusiasm for any project is sufficient at the top management level, it soon perme­ ates all supervisory levels of the organization. With the enthu­ siasm of all executives and supervisors, the workers are more easily sold on the plan. Likewise, top management and all the other levels of the organization will strive to make the plan work if they are enthusiastic about it. A plan conceived and inaugurated in a half-hearted manner stands little chance of success.

5. The inauguration of the guarantee plan must be carefully evolved. A guarantee hastily conceived and installed is doomed to failure. No company can guarantee quite as much as employ­ ees are accustomed to receiving under stabilization of employment.

Moreover, the limitations and escape clauses in the formal com­ mitment , which must be present to protect the company from

undue financial strain, may present some basis for suspicion by

employees. As a result, a superior job of gaining employee con­

fidence and support is required. Management must convince the

the employees that it is acting in good faith and that it has no - 89 - intention of invoking any of the protective clauses so long as it is within the company's power to avoid so doing. Unless em­ ployees are thoroughly in accord on the plan and enthusiastic

supporters of it, inauguration of the plan will be difficult, ad­ ministration of the plan will be impeded and the success of the plan will be doubtful. It is as true for a guarantee as it is for any other employee relations activity that the success or failure of any project is, in the final analysis, in the hands of those whom that activity is designed to serve. - 90 -

Chapter V

A CRITICAL EVALUATION OF GUARANTEES

A. Stabilization of Production and Employment.

Any guarantee of work or wages should be based on stability of

operations and employment. A discussion of guarantee theories,

therefore, should normally begin with an analysis of stability.

However, stabilization is not the subject of this study. The gains

to be derived from stabilization are listed here to invite a com-

parison with the values claimed for guarantees. It is not to be

inferred from the brevity of this discussion of stabilization that

it is considered unimportant. On the contrary, stabilization is

the very foundation of any guarantee and deserving of much more

attention than management in general has heretofore given it. A

comparison of the gains to be derived from stabilization with the

values claimed inherent in guarantees will demonstrate that many

of the values claimed to be derived from guarantees are actually

derived from the stabilization which should precede the guarantee.

The major benefits of stabilization are listed below.

1. Overhead costs and interest charges per unit are reduced

through the constant use of full capacity. Excess capacity, re­

quired prior to stabilization to meet peak loads, is no longer - 91 -

needed, or may be put to other uses.

2. The financial position of the company is improved. This makes credit more readily available and on more favorable terms.

3. Constant and leveled production makes possible more econom­ ical buying.

4. Worker productivity is improved because the principal reason for the inclination to "stretch" work has been eliminated.

5. Labor turnover is reduced with the following results :

a. Recruitment and employment costs are reduced;

b. Training costs are reduced ;

c. Savings are effected in unemployment compensation ;

d. It becomes easier to attract and hold the experienced

and more desirable workers ;

e. The values of a continuous work force are reflected in

greater quantity and higher quality production;

f. High caliber employees require less close supervision;

g. Experienced employees are less prone to accidents,

which results in less interference with production and lower

compensation costs.

6. Effective scheduling becomes possible ; lots of the most eco­

nomical size may be run ; and machine set-up costs are reduced.

7. Employees, not worried about layoffs, will cooperate more - 92 -

readily in methods improvement work and in the development

and introduction of mechanical and technological improvements.

8. Evidence of sound planning builds employee faith and confi­

dence in management. Morale is improved and the likelihood of

of industrial strife lessened.

9- Stabilized output makes possible the more effective planning

and execution of sales effort, sales promotion and advertising.

10. Relations with customers are improved because deliveries

can be made with dependable regularity.

11. Procurement becomes easier because vendors can accurately

schedule their own production and deliveries. Stabilized buyers

become valued and preferred customers.

12. A stabilized company meets with increasing acceptance by

the community.

13. The individual worker, no less than his employer, gains ap­

preciably when his income becomes regular and dependable. He

can plan his expenditures more readily and thus contribute to the

stabilization of the entire economy.

B. Guarantees of Work or Wages.

In the short time since guarantees have aroused the interest of management, labor and government, many individuals in each group have voiced opinions on the subject. Some have hailed the idea as a - 93 - panacea for all of our industrial and economic ills. Others have con­ demned guarantees as collectivistic and entirely anomalous in our existing order. It is the purpose of this section to enumerate all of the claimed advantages and disadvantages of guarantees and to dis­ cuss and evaluate each.

1. Advantage s and di s ad van tag e s claimed for employers.

a. Advantages.

(1) Workers will not be afraid of losing their jobs. Con­

sequently, they will not resist, but will cooperate in meth­

ods improvement work, in the installation of mechanical

aids, and in the introduction of technological improvemeits.

This has been cited as a prime advantage of a guarantee,

yet many companies which have achieved stability but do

not guarantee, have enjoyed this advantage. Worker co­

operation , then, is not exclusively a derivation of a guar­

antee but also of stabilization.

(2) Workers will be less prone to stretch work when se­

cure in the knowledge that they are guaranteed steady work.

It is highly desirable to develop this state of mind in the

worker. A guarantee, however, is not the only medium

through which this can be developed. Stabilization coupled

with sound and progressive management policies and - 94 - practices will achieve a similar result, especially if the worker is kept informed by management of its plans.

(3) Employee confidence in management will be increased.

Employee confidence is a result of the composite of the employee's relations with the company. Employees either have confidence in their company or they do not. If an employer is concerned about building employee confidence, in all probability, the time is not opportune for the instal­ lation of a guarantee. If employees lack confidence in management, a guarantee is meaningless to them and is more likely to inspire employee derision than confidence.

(4) A guarantee plan will improve employee attitudes and employee'relations. It is unlikely that a guarantee plan will contribute much to the improvement of employee atti­ tudes and employee relations where stabilization is a fait accompli and recognized as such ; where there is an ef­ fective employee relations program ; and where relations are generally right with employees. On the other hand, if these conditions do not exist, a guarantee could not be suc­

cessful and its installation should not be considered. It is

even possible to create adverse effects through the instal­

lation of a guarantee plan if the plan offers materially less - 95 - than employees have under stabilization, or if for any reason employees are not "sold" on the plan.

(5) Increased efficiency will more than offset the added cost of a guarantee. This claim is based upon the assump­ tion that the company offering a guarantee will find methods changes easier to make ; that employees will be less in­ clined to stretch work; that they will be more coopera­ tive; that their confidence in management will be increased; and that employee relations and attitudes will be improved.

Failure to challenge this claim would be tantamount to ad­ mitting that a guarantee is a substitute for good manage­ ment. A guarantee without good management is worthless.

Good management, on the other hand, can increase effi­

ciency without a guarantee. The introduction of a guaran­

tee may actually decrease worker efficiency because of

the feeling of permanent security engendered thereby.

This point will be more fully developed later in this report.

(6) Under the Fair Labor Standards Act, the employer of­

fering a guarantee to his employees may save the expense

of payments for overtime work. The particular provision

of the Act to which this claim has reference was intended

to encourage employers to offer guarantees, but for - 96 -

several reasons it has not been too successful. The Act provides that the guarantee must be a part of a contract between the employer and a union certified by the National

Labor Relations Board. This eliminates the possibility of

savings for employers whose employees are either not or­

ganized or whose organization is not certified for any one

of a number of reasons. A second limitation of this pro­

vision is the established maximum number of hours. This

sets a boundary which the employer cannot cross without

becoming liable for overtime payments. The administra­

tive detail involved in continuously watching the number of

hours worked plus the inflexibility imposed by this restrict

tion makes it difficult for an employer to operate in such a

way as to maximize his position. Many employers, who

currently guarantee work or wages, prefer not to take ad­

vantage of this provision of the Act. For all practical

purposes, this provision has offered little incentive to em­

ployers to offer guarantees. Even if the Act were some­

what less restricting in its provisions, it is doubtful that

an employer, having a high level of stability of operations

and employment, would necessarily find it advantageous to

guarantee work or wages. A high level of stability denotes - 97 - a situation in which, a nearly standard work week is in ef­ fect for all employees over a period of time, with over­ time work at a minimum.

(7) Employees whose work or wages are guaranteed will not be so susceptible to rumors of expected layoffs greater than those permitted by the guarantee, nor will such ru­ mors be fostered as frequently, spread as rapidly, or cause as much unsettlement among the workers. This claim is probably valid. However, it is so limited that it is of relatively little value. The claim implies by its own definition that rumors among and concerning members of the group not covered by the guarantee would not be qui­

eted. The portion of the workers not covered by most plans is sufficiently large to make rumors among this

group a matter for serious concern. Employees who are

offered a guarantee, which is of necessity hedged with

certain limitations and which guarantees a: minimum

amount of work or wages which may be somewhat below

the level presently enjoyed, may accept as fact a rumor

that the guaranteed level of work or wages is the level

which the company expects to reach and to maintain rather

than the currently higher level of hours and wages which - 98 - they have. As pointed out previously, employee confi­ dence is vital to any business and is the result of many

things. The employee who has faith in his company is

slow to accept idle rumors, whether or not he works under

a guarantee. The establishment of a guarantee plan in a

company which has neglected to build employee confidence

will not stop rumors. In such a situation the plan itself is

likely to fail.

(8) Workers will gain a sense of greater security, and

being free of worry concerning the future, will give more

attention to the job and consequently improve the quality

and increase the quantity of production. A guarantee alone

is unlikely to improve worker productivity. That is a

function of sound management, using all the known devices

such as methods work, training, incentives and others. It

is conceivable that under a guarantee management would

have to redouble its efforts to maintain efficient produc­

tion. This extra effort would be required if workers ac­

cepted the guarantee as assurance of a job so long as min­

imum standards of production and conduct were met. It is

not to be denied that the worker harassed by worry over

job insecurity is not an effective workman. The ideal - 99 - condition to be achieved is that in which the workers are freed from worry of insecurity without the employer being penalized by the problems that may result from excessive worker security.

(9) The employer will have a more flexible and versatile work force at his disposal. Most guarantee plans provide for the free transfer of workers from job to job according to the requirements of production and the availability of work. If a company is able to gain this flexibility only by offering a guarantee, then it is an advantage which may be definitely assigned to guarantees. However, such flexi­ bility exists in too many companies which do not offer guarantees to permit this assumption.

(10) The inclusion of wages into fixed costs (to the extent of the guarantee) will focus the employer's attention upon wage costs and thus emphasize the importance of increas­ ing stability of operations. This claim is an anachronism.

A number of those who have written on this subject, al­ though they do not state it so concisely, favor guarantees as a means of forcing employers to stabilize. A pro­ gressive employer is constantly striving to achieve an

ever greater degree of stabilization regardless of whether - 100 -

or not he is offering a guarantee. Employers who little

appreciate the value of stabilization will not strive for

its attainment. If such employers were to adopt a guar­

antee, it is unlikely that they would pay sufficient attention

to stabilization merely because of the realization that

wages had become a fixed cost.

(11) A guarantee of work or wages has a high public

relations potential. Some companies which have attained

rather complete stabilization have capitalized on the pub­

lic relations value of that achievement. However, it must

be recognized that the mere phrases "guaranteed wages",

"guaranteed annual wages", "guaranteed employmentsand

all the others have captured the fancy of the public and

have assumed an almost mystical significance. It cannot

be definitely stated that a guarantee always offers public

relations values in excess of those to be derived from sta­

bilization. If there are added values, they will vary from

case to case and depend on the factors involved in each

situation.

. b. Disadvantages.

(l) Managements freedom of action will be hindered.

A company offering a guarantee must always consider the - 101 - fixed charge for wages imposed on it by that guarantee.

In most cases extreme conservatism will necessarily influence all action and at times it may not be possible to act in the best interests of the business. Expansion may­ be delayed. Product development and changes may be re­ tarded. Methods improvements and technological changes may be resisted.

(a) Management will be hesitant to undertake anything

which might result in either an increase or decrease

in the size of the work force. Any increase in the size

of the work force would be made with reluctance be­

cause of the potential liability under the guarantee

when the new employees would be classified as "per­

manent". Employers, under a guarantee, would not

take normal risks in expanding but would wait until

such time as they might be able to foresee expansion

with practically no risks. Changes which would reduce

the size of the work force would result in regular pay­

ments to laidoff employees covered by the guarantee.

(b) Management will be hindered in its ability to com­

pete. Fixed wage costs, plus the expenses of a re­

serve which sound business practice dictates must be - 102 -

set up in a guarantee plan, add to the cost of the prod­

uct. These are fixed charges which must always be

met and which the employer must always take into

account in establishing his pricing policies. His abil­

ity to reduce prices in order to meet competition is

reduced.

(c) Tenure of employment will be governed by senior­

ity rather than merit. Whether this condition results

from a guarantee or whether it is a provision of a la­

bor contract, it is equally harmful. It restricts the

introduction of new blood into an organization and, in

actual practice, places a premium on mediocrity.

(2) Guarantees might become the opening wedge for in­ creasing government controls. Many of the companies contacted for this study felt that the demand for their prod­ ucts, the labor supply, and the flow of m aterials would have to be guaranteed to them before they could guarantee work or wages to their employees. Such a guarantee to industry would imply government controls and a planned economy.

(3) If a guarantee plan offers fewer benefits than employ­

ees enjoy under stabilization, management good faith may - 103 - be questioned. Employment under stabilization is proba­ bly at a higher level than the level that could be insured by a guarantee. Under such circumstances workers are likely to consider the guarantee as a backward step and suspect the company of intending to reduce operations to the level of the guarantee. However, this objection can usually be overcome through good employee communica­ tions .

(4) The inauguration of a guarantee plan may cause dis­

satisfaction, lowered morale, and a high rate of labor

turnover among the employees not covered by the plan.

This is one of the major problems posed by the installa­

tion of a' guarantee. The problem will not be difficult of

solution among those employees- who will subsequently

qualify for inclusion in the plan. The plan and its provi­

sions can be explained to them, pointing out the benefits

which they will derive when they qualify for inclusion.

The problem is vastly more complex in its effects upon

those workers who are not included and who have no pros­

pect of being included in the plan at any time.

(5) A guarantee serves as a block to motivations resulting

from basic human drives, and tends to lower worker 104 -

productivity. There are certain recognized basic drives

which motivate the individual in all of his activities. When

any one drive is temporarily satisfied, the individual

moves to another field of endeavor to satisfy the others.

When all are satisfied, he is no longer moved to strive

and to work. He relaxes his efforts. In our modern eco­

nomic society man works for a medium of exchange with

which to purchase the means for satisfying his economic

wants. Work also provides the means for satisfying man's

psychic desires. A guarantee offered to an employee, in

the instant accepted by him, assures him of the continuing

satisfaction of his wants and at once removes the incentive

to effective performance and effort, provided through the

free functioning of his basic drives. In most cases the

result will be decreased effort and lowered productivity.

2. Advantages and disadvantages claimed for employees,

a. Advantag e s.

(l) Employees will have greater assurance of continuing

employment under a guarantee because it is a published

formal statement of policy. The pride of a company in

meeting its stated obligations provides a strong incentive

to insure the continued effectiveness of the plan. The value - 105 - of both a guarantee and. stabilization depends entirely on the integrity of the employer. Virtually all guarantees are limited and have escape provisions for the employer.

There is no reason to assume, that in the face of extreme difficulties, those provisions would not be invoked. The company which has maintained stability over a long period of time and has reaped its multiple benefits is likely to be just as reluctant to abandon its position as is the company offering a guarantee.

Guarantee plans generally include workers only after they have sufficient length of service to be classified as permanent employees, and furthermore, a guarantee nev­ er covers all of the employees of a company. A guarantee­ ing company may feel little obligation to employees not under the plan. We know of other companies who do not guarantee, but who feel a very great obligation to each person from the moment of hire. A guaranteeing company may live up to the letter of its obligation and yet fail to provide for the continuing employment of all of its em­ ployees as adequately as the company which has only sta­ bility of employment. That a company in either case would abandon either its stabilization or its guarantee, - 106

except as a last resort,is improbable.

(2) The employee assured of continuing minimum income is better able to determine the limits of his expenditures, to budget, and to plan for major purchases. Generally speaking, salaried employees have been able, through standardized income, to maintain a much higher plane of living than have hourly paid employees, in spite of the fact that many members of the former group have received considerably less income. However, a guarantee is not the only way to insure the hourly paid worker of a stand­ ardized income as witnessed by the fact that only in a few cases have salaried employees been covered by a guaran­ tee. Many more workers than the comparatively few now working under guarantees feel assured of continuing in­ come. Workers whose employment has been stabilized over a period of time are not lacking faith in the provi­ sions made by their company for them to retain their jobs.

They, too, feel able to plan and to spend and to raise their plane of living. To what extent they feel less certain of their jobs for the future than those employees whose work or wages is guaranteed is indeterminable. In either case it rests on the soundness of the company and its policies - 107 - and on the confidence of the employees in that soundness.

It is entirely within reason that some workers, whose employment is stabilized, have more faith in the future of their jobs than do some employees who are under a guar­ antee plan.

(3) A guarantee frees the worker from worry about his own and his family*s future and gives him greater peace of mind. The validity of this claim cannot be denied.

However, the same results can be attained through sta­ bilization effectively applied.

(4) The worker*s standing in the community will be im­ proved. It has been said in support of this claim that an an employee who is happy in his job and is confident of his future is a better citizen in his community. Regular­ ity of income doubtless contributes to this better citizen­ ship. This is particularly true of smaller communities.

It has been stated that in Austin, Minnesota, Hormel employees are noted for their stability. As evidence it is cited that they are considered in that community to be bet­ ter credit risks than other workers in similar industries.

The employee's position in the community is of great

importance to him, and the foregoing factors undoubtedly - 108 - contribute to the improvement of his position. However, all of these conditions could come from effective stabili­ zation - a guarantee is not implied. Good citizenship, stability in the community, and a good credit rating are individual matters. In the final analysis then, continuing income provides the means for, but does not insure, that the individual will automatically place himself in a posi­ tion commanding the respect of the community.

(5) A guarantee, by eliminating periods of unemployment, enables a worker to maintain his self-respect. The indi­ vidual who is thrown out of work is likely to become very depressed and to condemn the company which laid him off and the Society which is so unstable as to permit economic

crises, and finally he will come to condemn himself for being unable to find and hold a job and to support himself

and his family. The loss of individual morale, self-con­

fidence and self-respect is a tragedy to the individual and

to society which must combat this as well as other social

ills. This tragedy is a concomitant of unemployment.

However, a guarantee will not solve the problem. The

guarantee may be abandoned at the depths of a cyclical de­

cline and workers not included because of the eligibility - 109 - limitations are certain to be dismissed. The curse of unemployment can be overcome only through the coopera­ tive stabilization efforts of businesses and through further investigation and study of the causes of the business cycle.

(6) A country-wide system of guarantees would increase the real income of every worker. This claim has its basis in the theory that guarantees would provide a constant mass buying power which would be spent rapidly because work­ ers would no longer hesitate to spend if they knew that income would be forthcoming regularly. Such a constant demand would result in the full use of all productive re­ sources which in turn would increase national income, as­ sure continued prosperity and make available to everyone a greater number of goods and services. Every individual would then have a greater real income than ever before.

There are several fallacies in this line of reasoning.

(a) It is based on the premise that guarantees are to

be universal. Universal guarantees are likely to re­

sult only from direct governmental action and such is

not imminent. Only if business fails to give workers

a reasonable amount of security and to gain their con­

fidence, is it to be expected that the pressure may - 110 - become great enough to cause the Government to act.

(b) It is based on the further premise that employment

security is attainable only through a system of guaran­

tees. It has been pointed out previously that a reason­

able amount of security is offered many employees by

many companies and that only a very few of these have

guarantee plans.

(c) The statement further assumes that productivity

of the individual workers will increase sufficiently

under a guarantee plan to allow the company to recoup

the costs of the plan and still produce more goods or

services more cheaply so that workers can have more

of them. However, it is unlikely that productivity

would increase at all under such a system. Even if

such an increase were forthcoming, it probably would

not be great enough to offset these increasing costs.

Prices necessarily would rise (unless off-setting

economies in manufacturing and/or sales could be ef­

fected) and there would be little chance that competi­

tion would tend eventually to lower them in the con­

trolled economy which is implied by a system of

guarantees. - Ill -

remain constant. Just because total purchasing power

remains constant is no reason to assume that demand

for all types of goods and services will always remain

constant also. The only way that this can be accom­

plished is through government controls and a planned

economy. This would mean that the worker would

have exchanged freedom of choice in purchasing goods

and services for complete job security, b. Disadvantage s.

(1) The worker*s freedom of movement will be restricted.

Under a compulsory system of guarantees, external re­

strictions would be a certainty. Employers would turn to

the Government for controls on labor if they were forced

to guarantee work or wages. Even without compulsion,

and in the case of a single company offering a guarantee,

the worker may feel a psychic restriction - a reluctance

to take the risk involved in changing jobs and to leave the

security offered by the guarantee.

(2) The employee's security in any case depends upon the

ability of his employer to compete successfully. A guar­

antee may interfere with that ability and thus destroy the - 112 - very thing that made a guarantee possible. The primary statement in the claim here presented - that employee security depends directly on the ability of the employer to compete - is indisputable. The company which is unsuc­ cessful in its competitive efforts because of a guarantee has no choice but to annul the guarantee. If the guarantee is not voided soon enough and the company fails, the guar­ antee is worthless. A guarantee, then, by restricting the employer to such an extent that he can no longer compete successfully, may actually contribute to worker insecurity and unemployment.

(3) A guarantee usually implies that men will be shifted from job-to job according to the requirements of produc­ tion and the availability of work. This means that the boundaries between skills, crafts and departments will have to be crossed. This seems to the union workman, -> and especially to the craft union member, to be an impor­ tant disadvantage. It is a tradition of craft unionism that craft lines are not to be crossed. It should also be re­ membered that many of these artisans are highly skilled and have spent many years acquiring the skills of which

they are very proud. It is possible that, in spite of the - 113 - apparent value to an employer of this provision, trusted and valuable employees may be affronted and even lost.

No general determination can be made of the validity of this claimed disadvantage. Such an evaluation must be made on the basis of the factors involved in each individ­ ual situation. - 114 -

Chapter VI

SUMMARY

The guarantee of work and wages is a subject which focuses attention on several important considerations and raises certain moot questions.

The first of the questions raised and one most basic to guarantee considerations is one of semantics. Just what is meant by "guaran­ teed annual wage", "guaranteed wage", "guaranteed employment" and the word "guarantee" itself when used in this connection? In spite of all the attention which has been devoted to this general field of study, both in theory and in practice, there is yet no standard ter­ minology generally used and/or accepted by those having especial interest in the field.

The attempt to categorize and consider all such efforts as "guar­ anteed annual wage" plans or to relate them to the subject is regret­

table. It only serves to focus attention on and continue interest in an

idea, the popular concept of which is utopian, which will not stand up

under close scrutiny. The emphasis should be on the practical val­

ues which-each individual plan has to contribute to the regularization

of employment and earnings in the individual company. Discussions

of efforts to stabilize employment and earnings should be treated and

referred to as such and not labeled "guarantees". - 115 -

This study has assumed general recognition of the problems created by worker insecurity, or the danger of it, and the necessity of their elimination where they exist. However, an analysis of the guarantee theories advanced indicates that there are marked differ­ ences of opinion and many points of issue among students of the sub­ ject concerning both the positive and negative values and effects of

"guarantees".

The stimulation of the guaranteed annual wage idea to date has come about in large part through appeal to the emotions and as is usually the case where emotions are involved logic and economic soundness are secondary considerations. This belief is borne out by a critical analysis of the theories advanced supporting the idea of a guaranteed annual wage. There is insufficient evidence to be found in the theories advanced to warrant the conviction that "guarantees11 will solve the individual social and economic ills attending the prob­ lem of worker insecurity.

The gravest problems to be solved in efforts to provide employ­ ment security are those which arise out of cyclical fluctuations and our inability to understand and cope with them. The effects of the

cycle and its movements are much greater and less can be done about

counteracting them in producers* goods industries than in consumers*

goods lines. Yet a review of the current guarantee plans reveals that - 116 - a great majority of the plans cover consumers* goods industries.

The leveling of seasonal fluctuations in consumers* goods lines is important and necessary to stabilized employment and income. How­ ever, this is only a short run correction in one portion of industry.

Guarantees are directed toward long run security which implies that the leveling process must be long run as well as short run and that if worker security is to result they must be applied not only to consum­ ers* goods industries but to producers1 goods industries as well.

Evidence does not support the conviction held by some that guaran­ tees in consumers' goods industries will help to stabilize operations and employment in producers* goods industries, at least to any ap­ preciable extent. Further, those plans which are operative today in producers* goods iiidustries are so limited or qualified that the guar­ antees mean very little. The fact is that employment and income se­ curity are needed most in the producers* goods industries and that is the segment of industry where there is general agreement that guar­ antees are least feasible.

The high mortality rate among guarantee plans in the consumers* goods industries where experience indicates they have the greatest application and the greatest possibility of success suggests that there

is much more to providing a guarantee than the desire of a manage­ ment and/or a union to see its employees or members have greater - 117 - security of work or wages. The high mortality rate among guaran­ tees in the consumers' goods industries, where they are most feasi­ ble, is sufficient cause for doubt concerning the wisdom of a general application of guarantees in any industry.

The review and analysis of guarantee plans made for this study indicates that most guarantee plans are so hedged that they are really not guarantees at all. If the plan really does offer a guarantee either its coverage or the benefits it provides are so limited that the guar­ antee is not meaningful. This is understandable because no company

can guarantee work or wages to its employees unless its sales can be guaranteed for a like period. This would only be possible under a controlled economy which this study assumes is not a likely pros­ pect. A great deal of leaven can be added to the situation then if

there can be general recognition that guarantee plans are necessarily

so limited and hedged that they are really not guarantees in the true

sense of the word. Such general recognition would remove much of

the mystery, the glamour and the appeal from guarantees and make

possible more objective consideration of guarantees and consequently

more logical conclusions concerning their value.

It is contended here that a guarantee has a better chance of

success when it is inaugurated only after stabilization of operations

and employment is an accomplished fact. Since most guarantee plans - 118 - are really not guarantees at all, it can be said that they are in effect formalized stabilization plans. Most guarantees offer little more than window dressing above those values contributed by the stabiliza­ tion on which they must depend for their effectiveness.

There are some very serious difficulties which loom as potential problems to the guaranteeing company. It can be stated with assur­ ance that management freedom of action is limited under a guarantee.

It is entirely probable under certain circumstances previously de­ scribed that a guarantee may have a negative effect on employees, their opinions of and attitudes toward the company and their produc­ tivity. Consideration of these potential situations and the problems which they pose for solution leads to the conclusion that stabilization, properly applied, can be made to do everything that a guarantee can do while imposing few of the penalties.

The conclusions drawn above are oriented largely from the view­ point of the company in its considerations of the wisdom of under­

taking a guarantee of work or wages to its employees. However, each

of the conclusions is drawn with full consideration of the point of view of

the employees because it is believed that unless such action is in the

best interest of both management and its employees, it is in the best

interest of neither. Moreover, viewed directly from the standpoint

of employee benefits or disadvantages the same conclusions stand. - 119 -

The mortality rate among guarantee plans known to have been negotiated by labor unions has been high. The fact that many of these negotiated plans have been dropped by unions indicates that for some reason(s), and the reasons are unimportant here, their

continuance was not desirable or at least not as desirable as it was

originally thought to be. A number of the plans negotiated by ag­

gressive unions which still remain in effect offer so little that they

can only be considered as token guarantees. The experience with

guarantees from the standpoint of unions, as well as those of man­

agement and employees, has not been impressive and certainly

does not augur well for their successful application on an expanded

basis in the future. .Furtherm ore, the acceptance of "guarantees'1

as a proper subject for collective bargaining involves an agreement

between Capital and Labor to levy a social security tax of wide im­

port without benefit of legislative sanction by the elected representa­

tives of the people.

The detailed critical analysis of guarantees, experience with

guarantee plans to date, the values they offer and the limitations they

impose have been considered against a background of the benefits to be

derived from stabilization. This analysis leads to only one conclusion :

The values to be derived from guarantees are actually derived from

the stabilization which should precede the guarantee. APPEND IX - 121 -

FRESENTAT ION OF CASE STUDIES

The questionnaire employed to collect information for this study was prepared only after the form in which the case studies were to be presented had been decided upon. The form in which these case studies are presented was designed to achieve three objectives :

1. To present information which may have influenced manage­

ment thinking ;

2. To present information which will serve as one yardstick of

the management in each case — its success, progressiveness,

policies and problems ; and

3. To tabulate all standard data in a manner that will permit

more adequate comparisons.

An accurate interpretation of the case studies is precluded with­ out a clear definition of the terminology employed. In the succeeding pages of this section, the reasons for including certain information are set forth and the nomenclature is defined.

CASE STUDY NO. "X|<

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

Size is a major factor in any consideration of a guarantee - 122 of work and wages ; and would bear not only upon the feas­ ibility of a guarantee plan, but also upon the scope of any such plan. Whether ownership is closely held or widely dis­ persed is one measure of the freedom with which manage­ ment may undertake major reforms or depart from present policies. Centralized control oyer operations may present one set of problems with respect to guarantees, while de­ centralized control may pose problems of an entirely differ­ ent nature.

1. Number of Plants : Each operation of a company re­

garded by the management as a separate unit is listed

as a plant and, unless otherwise indicated, is located

within the continental limits of the United States.

a. Number of Plants of Manufacturing Subsidiaries :

A subsidiary, for purposes of this study, is con­

sidered to be a company in which controlling stock

interest is held by the parent company.

2. Capitalization: These figures include stocks and bonds.

The figures were obtained directly from the company or

from the most recent standard reference work on the

subject to which access could be had.

3. Stock Ownership: The ownership of the stock of the - 123 -

company was reviewed to determine whether it is close­

ly held by the present management group or whether

ownership is widely dispersed.

4. Control over Operations : The degree to which responsi­

bility and authority over all matters of management has

been delegated to the managements of the various plants

and subsidiaries.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND MANUFACTURING

This section includes a general description of the products

of the company, a statement of the kind of economic goods

which those products are, and a classification of the indus­

try and type of manufacturing. It has been established that

the kind of goods produced by a company, the nature of the

industry and the type of manufacturing affect its ability to

stabilize its production and employment or to make a guar­

antee of any kind to its employees.

1. Kind of Products : A descriptive statement of the prod­

ucts manufactured (or distributed) by the company.

2. Classification of Products : The general economic

classification into which the products of the company

fall. The four classifications are used in this study

and defined below : - 124 -

Consumers1 goods are those economic goods which are to be utilized in the form in which produced by the ulti­ mate consumer. Such goods are not subject to further manufacture nor are they used in the creation of other products. Rather, they are ready to be sent into dis­

tributive channels which will place them in the hands of

the consumer who purchases them for the utility which

they afford him in and of themselves.

Producers* goods are those economic goods which are

to be utilized in the creation of other utilities. They

are purchased, not for the utility which they in them­

selves afford to the purchaser, but rather for the other

utilities which can be created by means of them.

Durable goods are those economic goods which are con­

sumed, used up, or worn out slowly. Goods which have

a utility in and of themselves for a period of more than

one year are considered as durable.

Non-durable goods are those economic goods which are

consumed, used up or worn out in a relatively short

period of time. Goods which have utility in and of them­

selves for less than one year are considered as non­

durable. - 125 -

3. Classification of Industry: The general kind of operations

performed on materials by the company in producing its

products. The three categories as used in this study

are defined below :

A process industry is one which changes the size, shape,

form, composition, characteristics or appearance of

the raw material as it is manufactured into the finished

product. No appendages or appurtenances are added and

no separate parts are brought together with the raw ma­

terial. All products go through the same general stages

of the basic process. At each stage of manufacture, the

product as a whole maintains identity but the components

which have entered manufacture lose their identity and

are identifiable only as a part of the whole.

An assembly industry is primarily characterized by the

placing together of component parts and subassemblies

into a completed whole or a completed subassembly.

Some operations of a process nature may be performed

simultaneously on the various individual parts but such

operations are only preliminary to the placing of indi­

vidual segments in relationship to each other and thus

completing an integrated final product. At each stage of - 126 -

manufacture, the components which make up the whole

are identifiable in themselves and also as a part of the

whole.

A semi-process industry is a combination of process

and assembly operations with neither so predominant

as to make it either assembly or process.

4. Classification of Type of Manufacturing : The method

by which the product is created. The two classifica­

tions used in ‘this study are defined below:

Intermittent manufacture is characterized by raw ma­

terials entering the manufacturing processes, passing

through the successive stages of manufacture, and

leaving the manufacturing process with no regularity.

Operations do not have an established constancy. Plans

are made, the necessary tools and materials are se­

cured, and set-ups are made for a given order or lot

which is completed in a relatively short period of time.

Continuous manufacture is characterized by an uninter­

rupted processing of the raw material through the suc­

cessive stages of manufacture with a constant expendi­

ture of effort and an uninterrupted flow of finished prod­

ucts from the manufacturing processes. Movement - 127 -

from one stage of manufacture to the next is regular­

ized and continuing.

C. CHARACTERISTICS OF PRODUCTS

The characteristics of a company's products must be scru­

tinized in order to determine their effect on any plans to

stabilize production or to guarantee wages. Size and cost

of unit, weight, bulk and risks of storage are only some of

the factors which bear heavily on any plans for advance pro­

duction planning. Advance planning is a sine quo non of any

stabilization or guarantee program.

1. Manufacture to Stock: Manufacture to stock, as used

herein, means the manufacture to stock above and be­

yond that required by normal business operations. At

some time nearly every firm has stock on hand. How­

ever* here is meant the building of an inventory of fin­

ished products in excess of day to day requirements by

manufacturing to future demand rather than to current

demand. The ability of a company to produce in excess

of daily demand is influenced by:

a. Size per Unit: The amount of storage space neces­

sary and some of the difficulties which may be en­

countered in handling. - 128 - b. "Weight per Unit: Whether special facilities are

required, for storage and whether as a result of

size there are extreme difficulties in handling.

c. Cost per Unit: The amount of capital necessary to

carry inventory sets the financial limits on the

possibility of producing to stock. While it is evi­

dent that a high cost per unit may prohibit storage,

it should be pointed out that the relationship which

may exist between cost, size and weight per unit

may also affect a decision to manufacture to stock.

A product which is large and heavy but which costs

little may be impractical to warehouse for the sin­

gle reason that the costs of storage would add ex­

cessively to the low cost of the product itself.

d. Risk of Obsolescence : The degree of risk incurred

through possible technical or other changes, except

style changes, during a prolonged storage period.

e. Risk of Physical Deterioration: The possible

changes within the stored product itself which would

depreciate its value.

f. Risk of Style Changes : The possible changes in de­

mand for the product often not accounted for by - 129 -

obsolescence but rather are the result of a change

in consumer preference.

2. Method of Distribution: The channels through which the

products of any given company are distributed; that is,

to whom is its product sold. The companies least far

removed from the ultimate consumers can most easily

stabilize production and employment and are in the best

position to guarantee work or wages.

3. Effects of Economic Conditions : The severity with

which a given company reacts to recognized economic

fluctuations and to the long term growth or decline of

the industry in which the company is engaged.

a. Seasonal Fluctuations : The regular movements of

demand and business activity upward and downward'

within the course of a year and which occur as a re­

sult of seasonal weather changes, holidays, lengths

of months, etc.

b. Cyclical Effects : The movements of the economy

upward and downward over a period of several years.

They are characterized by periods of business pros­

perity, followed by decline, depression and finally

recovery. c. Secular Trends : The long term tendencies in a

given industry to expand or decline.

4. Ability to Forecast Demand: The degree of reliability

with which predictions can be made of future demand

for the products of a given company. In cases where

demand can be forecast, it is not implied that the com­

pany practices forecasting. Where companies are

known to predict demand, it is so stated.

EMPLOYMEN T DATA

In this section we present basic information and statistics on employment in order that comparisons may be facilitated and evaluations may be made more accurately.

1. Yearly Average Employment: The average number of

employees over the course of a year.

a. Yearly Fluctuations in Employment: The largest

and smallest number employed during the course of

a year. In some cases exact figures were not avail­

able and the figures used are approximations, or

percentages, furnished by the executive contacted.

2. Employee Representation: The name of the union or

unions representing the employees in collective

bargaining. a. Labor Relations : The degree of amicability in the

dealings of the company with the representatives of

the employees.

Labor Turnover : The number of employees separated from the company, expressed as a percentage of total employment, on an annual basis.

Worker Productivity: The executive's estimate of the general level of productivity of the employees in his company and his opinion as to whether that level is the result of efforts expended by the management of the company or the result of the efforts of the employees.

Percent of Sales Dollar Represented by Payroll: The cost of labor in proportion to the total sales. This gives an index of the amount of fixed charges which may have to be assumed by a company if it is to offer a guarantee to its employees. If sales were to decline where there

is no guarantee, this percentage might conceivably re­ main relatively constant. However, where there is a

guarantee, a decline in sales would mean an increasing­

ly higher ratio of labor costs to sales income. It be­

comes immediately apparent that the company which

finds its present percentage of labor costs low is in a - 132 -

much better position to consider a guarantee than the

company whose relation of payroll to sales is high.

II. EMPLOYEE RELATIONS ACTIVITIES

Up to this point the case studies have discussed information

which sheds light upon the feasibility of a guarantee -- that is-,

what problems would face a company and what factors it must

evaluate in its consideration of a guarantee. The section to fol­

low develops information concerning present personnel and hu­

man relations policies and practices. It is manifest that what

a company is now doing in the area of employee relations is an

aid in evaluating the opinions of management. We have chosen

for study and inclusion in this presentation only those activities

which were believed to have the most direct bearing on a con­

sideration of guaranteed wages.

A. POLICY ON PAYMENTS TO EMPLOYEES

I . Vacations with Pay : The vacation policy for hourly-paid

employees. Such vacations as are listed are those for

which the employee receives full pay.

2. Paid Holidays : The number of holidays not worked for

which employees receive full pay.

3. Severance Pay: The payment received by an employee

at the time of his separation from the company without - 133 -

cause on his part.

4. Call-in Pay: The payment received by, or the amount

of work which is assured to, any employee reporting

for work upon call from his employer or upon failure of

that employer to notify him that no work is available

when due to reasons within the employer's control.

5. Pay for Absence for Personal Reasons : The payment

received by an employee for periods of excused absence

for a valid personal reason.

B. PROFIT SHARING, BONUSES, AND EMPLOYEE SAVINGS PLAN

Additional payments or income, other than those listed in A

above, which the employee may receive as a result of his

employment.

1. Profit Sharing: The payment to employees of a portion

of the profits of the enterprise.

2. Bonuses : Gifts or presents to employees by an employ­

er which have no direct relationship to the productivity

of the individual employee, as distinguished from incen­

tive or production bonuses.

3. Employee Savings Plan : Any plan whereby the employee

contributes to an earning fund ; the employer may also

contribute to the fund, increasing the employee's - 134 -

account.

4. Stock Ownership Plan: Any plan under which employees

purchase stock in the company which employs them. The

employer may or may not contribute to the employees*

accounts.

C. INSURANCE BENEFITS

Information on the insurance coverage available to employ­

ees, whether it is financed entirely by the company, whether

the cost is borne entirely by the employee, or whether costs

are shared - a contributory plan.

1. Life Insurance: Regular or group life insurance, pay­

able at death.

2. Accident and Health: Benefits paid weekly in case of

incapacity due to illness or accident.

3. Hospitalization (or Hospital Care): The former term is

used when such coverage is with a private company; the

latter is used when such coverage is a standard Blue

Cross Hospital Care Plan. Such coverage pays for

hospital room and other hospital expenses within limits,

a. Surgical: Payments for surgical expenses accord­

ing to a published fee schedule.

D. RETIREMENT PLAN - 135 -

Payments made to an employee by his employer following

the cessation of active service.

1. Retirement Plan : Any plan providing for payments to

employees upon retirement due to age or infirmity.

a. Disability Benefits : Payments to employees no

longer in active service because of disability not

resulting from age alone.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

Information concerning the means available to employees

to obtain cash from their employers for emergencies.

1. Credit Union:

2. Mutual Benefit Association :

3. Mutual Aid Society:

4. Savings and Loan :

The above four activities are carried on by organizations

which are usually employee owned and controlled and are

sometimes sponsored by the company. Employees pay dues

or deposit money, which funds are used to provide various

benefits and services to employees.

5. Employee Welfare Trust Fund : Plans under which

assistance is granted to employees in the form of loans

or gifts from a trust fund established by the company - 136 -

for that purpose.

6. Direct Company Loans : The granting of loans to em­

ployees from company funds by specified company

officials.

F. WAGE AND SALARY ADMINISTRATION

Information concerning the efforts of the company to formal­

ize and put on a scientific basis its wage and salary structure.

This is a definite index of the progressiveness of the manage­

ment of a company.

1. Job Evaluation: The scientific and systematic measure­

ment of the jobs performed and their placement into

their proper relationships.

2. Merit Rating : The systematic appraisal of the individual

worth of an employee to the company by which he is

employed.

m. GUARANTEES AND STABILIZATION

After having established the background of the company, the

case study offers the opinions expressed concerning guarantees

and stabilization.

A. GUARANTEES

Formal guarantees of work or wages by a company to its

employees. - 137 -

B- S TAB ILIZ AT ION

Efforts which the company may have made to bring about

stability of production and employment and the degree to

which stabilization has been achieved.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The statements of the executive contacted concerning any

difficulties which his company may have experienced in its

program of stabilization or guarantees, or statements con­

cerning problems which the executive believes prevent or

hinder his company from taking steps toward stabilization

or toward a guarantee.

D. OPINIONS OF MANAGEMENT

Direct statements of opinions and beliefs of executives on

the subject of guarantees of work or wages. In every case

an accurate report of the statement has been made and these

statements should not be construed as representing the opin­

ion of the w riter.

The questionnaire employed in this study is presented in the pages

immediately following. The case studies then follow in succeeding pages. The final section of the Appendix includes clauses covering

guarantee plans pertinent to this study. - 138 - GUARANTEE OF WORK OR WAGES Request for Information e of Company: ______

Identifying information about the Company

A. Size, Ownership, and Control

1. Number of plants______Number of Manufacturing subsidiaries_

2. Capitalization ______

3. Stock Ownership

a - / 1 closely held by present management group

b. / / widely dispersed

Explanatory comments: ______

Control over operations--(the degree to which responsibility and authority over all matters of management has been delegated to the managements of the various plants and subsidiaries)

B. Classification of Products, Industry, and Manufacturing

1. Kind of products--(a descriptive statement of the products manu­ factured by the Company)

2 . Classification of products 3* Classification of Industry

a. / / consumers’ goods a. / / process industry b. / / producers' goods b. / / assembly industry c • / / semi-process industry c. / / durable goods d. / / non-durable goods

b. Classification of type of manufacturing

a. / / intermittent manufacturing b . 7 / continuous manufacturing EH OH VJ^FJv OB WAGES (Bequest for Information--continuefi) - P a g e 2

Characteristics of Products

1. Possibility of manufacture to stock

a. size per unit

b. weight per unit

c . cost per unit

d. risk of obsolescence

e. risk of physical deterioration

f. risk of style changes

2. Methods of Distribution

3. Effects of Economic Conditions

a. seasonal fluctuations T, OF WORK OR WAGES (Request, for Information- - continued) - Page 3 -

"o. cyclical fluctuations

c. secular trends

It-. Ability to Forecast Demand

Employment Data

1. Yearly Average Employment______

a . yearly fluctuations in employment ______

2 . Number of Employees Covered by the Plan ______

a . yearly fluctuations in employment ______

3- Employee Representation - (name of union or unions representing employees in collective bargaining any time during the life of the guarantee.

a . labor unions

b . degree of amicability in the dealings of the company with employee representatives

Labor Turnover--(the number of employees separated from the company yearly expressed as a percentage of total employment)______- 141 - OF WOP.K OR. WAGES (Request- for Inforiaaxj.cn- -continued) - Pape h

^. Worker Productivity

'. Per Cent of Pales Dollar Represented tv Fay Boll loyee Relations Activities

P olicy on Payments to Employees

1. V a ca tio n s -with, pay

Paid holidays

3. Severance Pay

Call-in Pay

Vo.y for Absence for Personal Beasons SflBAiSKCEF OF WORK OR WAGES (Request for Information--continued) - Page 5 -

3. Profit-Sharing, Bonuses, and Employee Savings Flans

1. Profit-Sharing

2. Bonuses

3. Employee Savings plans

b. Stock-Ownership plans

C. Insurance Benefits

1. Life insurance

2. Accident and health

^ - 143 - fAT'TEF OF WORK OR WAGES (Request for Information--continued) - Page ( -

3. Hospitalization

Surgical Benefits

D. Retirement Plans

1. Disability benefits

E. Facilities provided or sponsored to render financial assistance to employees

f ~ 1 1. Credit union

/ 7 2. Mutual benefit association

/ / 3- Mutual aid society

/ 7 k-. Savings and loan

/ / 5. Employee welfare trust fund

I / 6. Direct company loans

F. Wage and Salary Administration Yes Mo 1- Job evaluation plan in effect / / / /

Yes No 2. Merit Rating Plan in effect no noj - 144 - PARANTBS OF WORK OR WAGJ& (Request for Informal; i. «r.~- com: 1 nucti5 • v-

Guarantee end Stabilization (A,B,C, and D solicit your appraisal of guarantees, stabilize-.'or . th<- -oroblRms and limitations which they imply, and tho opinions of Management »,e to the effectiveness of the guarantee or stabilization plan in operate :-v. your company at the present time.

21: there is no such pien currently operative :in your companyr a notation X., u'.vt effect and your comments on each of these items will be appreciated./

A, Guarantee

year of o r i g i n ______Year discontinued _ _ _ _ _

1. Initiated by:

2. Basic provisions of the guarantee plan

1. Coverhge ahd Eligibility Requirement

h. Safeguards and Escape Clauses

£>. 3asic reasons for introduction of plan - 145 - IHEA$T53? OF WORK OR WAGES (Request for Information-- • to =.-.r* • r - ■ '

6 , Basie reasons for discontinuation of plan

Yes Ho 7. Has company paid for time not worked? / / / /

B. Stabi 11 zat ic n

C. Froblems and Limitations of a Guarantee or Stabilization

D. Opinions of Management - 146 -

CASE STUDY 1

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Thirteen in the United States, one in Canada, three in England, one in Cuba, one in the Phillippine Islands, one in Java and one in Mexico. a. Number of Plants of Manufacturing Subsidiaries: Seventeen. 2. Capitalization : $28, 000, 000. 3. Stock Owner ship : Widely dispersed. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Soaps, shortening, tooth wash, shampoos and related products. 2. Classification of Products: Consumers’ non-durable goods ; a very small proportion of some of the products serve as producers’ goods in consumer service industries. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Low. d. Risk of Obsolescence: Little or none. e. Risk of Physical Deterioration: Little or none. f. Risk of Style Changes : Little or none. 2. Method of Distribution: Direct to retailers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Some fluctuation but no periodicity. b. Cyclical Effects : Not too severe. c. Secular Trend: Upward. - 147 -

4. Ability to Forecast Demand : Accurate forecasts are currently made.

D. EMPLOYMENT DATA

1. Yearly Average Employment: Total - 15,000; Manu­ facturing - 9» 100. a. Yearly Fluctuations in Employment: Total not available ; Manufacturing - High 9, 100, Low 8, 626. 2. Number of Employees Covered by the Plan: 4, 801. a. Yearly Fluctuations in Employment: High 4,986, Low 4, 801. 3. Employee Representation: Eleven plants have independ­ ent unions, one of which also bargains with three A. F. L. units ; one plant has an A. F. L. union and one plant has no union. a. Labor Relations : Good. 4. Labor Turnover : Manufacturing 15. 6% per year ; Guarantee employees 6% per year. 5. Worker Productivity: Current information was not made available for this study; however, it is estimated that productivity is higher than in pre-war years due to im­ provements in methods. Such changes are reported to be easier to make under the system of guaranteed em­ ployment offered by this company. 6. Percent of Sales Dollar Represented by Payroll: Not made available for this study; however, the writer's estimate is approximately 17 %.

II. EMPLOYEE RELATIONS ACTIVITIES

A- POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One year of more of employment - five days ; two or more years of employment - ten days; fifteen or more years of employment - fifteen days. 2. Paid Holidays : The pattern is eight holidays at average take home rate. 3. Severance Pay: One week's pay or one week's notice. 4. Call-in Pay: Three clock hours at applicable overtime rate. 5. Pay for Absence for Personal Reasons : Granted within reasonable limits. - 148 -

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing: The employee and the Company con­ tribute to a Profit Sharing Dividend Plan and a Profit Sharing Trust Plan operated entirely from Company funds. 2. Bonuses : None. 3. Employee Savings Plan : Stock and bond purchase plans through payroll deduction. 4. Stock Owner ship Plan : Yes.

C. INSURANCE BENEFITS

1. Life Insurance : Each employee is eligible for about the equivalent of his base pay for one year. The actual amount is the even $500. equal to, or next above the base pay for the year. Participation is at employee^ own expense. 2. Accident and Health: Two-thirds of weekly income, up to $38.46 per week, for a duration of fifty-two weeks with half pay up to $28. 85 for one to two years with benefits scaled down for disability beyond two years de­ pending on length of participation in the plan. Participa­ tion is at employee's own expense. 3. Hospital Care : Standard Blue Cross plan at employee's own expense. a. Surgical: Blue Cross Doctors1 plan at employee's own expense.

D. RETIREMENT PLAN

1. Retirement Plan : Pension plan based on length of service. a. Disability Payments : Made for complete disability.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : Building and Loan Plan only. - 149 -

5. Employee Welfare Trust Fund: None. 6. Direct Company Doans : Interest-free loans up to $200.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Complete and current. 2. Merit Rating : Complete and current.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1923. 2. Basic Provisions of the Guarantee Plan: Employment is guaranteed to 4, 801 hourly paid employees. In effect, this also guarantees employment to salaried employees since they are necessary in order that the hourly paid employees may keep "working. The plan, in operation since 1923, includes the following provisions in the re ­ vision published September 10, 1946:

"1. The following provisions constitute the plan known as the . . . Guarantee of Regular Employment and will apply at such factories of . . . and ... as have been duly notified in writing of their inclusion in said plan by order of the Board of Directors o f ......

M2. This plan supersedes all former plans for guarantee of regular employment and will become effective Septem­ ber 10, 1946, and thereafter will be the only plan in ef­ fect, until terminated, modified or withdrawn as herein­ after provided.

"3. To the employees located at such factories as above stated whose pay is computed on an hourly rate, and who have had at least twenty-four (24) consecutive months of employment immediately preceding the appli­ cation of this plan to their employment, the undersigned Company hereby guarantees regular employment for not less than forty-eight (48) weeks (or its time equivalent) in each calendar year less only time lost by reason of holiday closings, vacation with pay, disability due to sickness or injury, voluntary absence, or due to fires, - 150 - floods, strikes or other emergency whether like the foregoing or not, and subject to the following provisions:

na. Regular employment shall be understood to mean employment for not less than the hour week established from time to time by the Company as the standard hour week at each of its factories.

Mb. When an employee first comes under this guar­ antee after January 1 of any calendar year, the Company guarantees to him under the terms and provisions outlined herein that he shall not be un­ employed in excess of four (4) weeks (or its time equivalent), plus time lost for reasons herein stated, during the remainder of the calendar year.

"c. The Company reserves the right under the guarantee to transfer any employee to work other than that at which he is regularly employed, and to compensate him for the same in accordance with the wage rate which prevails for the work to which he has been transferred.

Md. Upon authorization from the Board of Directors and without changing the established hour week, the hours of work for employees coming within the terms of this guarantee may be limited to 75% of the established hour week less time lost for rea­ sons stated above, whenever in the opinion of the Board of Directors such action seems justified.

Me. Any individual hired to replace an employee leaving for military service or training, or for other services made necessary by a national emer­ gency, shall be considered a temporary employee and he shall be so informed at the time of his em­ ployment. The Company will not consider such an employee within this guarantee. If at a later date subsequent to his employment conditions should warrant it, within the sole discretion of the Com­ pany, he may be informed that he is then eligible for this guarantee in accordance with the terms of this plan. -151 -

"f. The right to discharge any employee at anytime is reserved to the Company employing such em­ ployee.

"4. This guarantee of employment has been established because the Company believes it to be sound business practice and a desirable protection for its employees. It is the intent of the Company to maintain it, but the Company must and does reserve the unqualified right, to be exercised at its sole discretion, to withdraw this guarantee at any of its factories, or to terminate or to modify this guarantee at any time. "

3. Coverage and Eligibility Requirement : See Paragraph 3, under A2. 4. Safeguards and Escape Clauses : See Paragraphs 3, 3c and 4 under A2. 5. Basic Reasons for Introduction of Plan: See Paragraph 4 under A2. 6. Has Company Paid for Time not Worked? No.

No guarantee of any kind is offered to employees in the seventeen plants of a subsidiary or in any of the plants out­ side the United States. Employment in the subsidiary plants is highly seasonal.

B* S TAB ILIZ AT ION

Although no actual guarantee is given them, policy in the plants in which the guarantee is in effect calls for the reten­ tion of workers with twelve or more months of service. In practice, the company reports that it determines at the end of six months of employment whether the worker is one with whom the company "wants to live for the rest of his life" (guarantee) and if not, he is then released. Actually, stabi­ lized employment is offered to all workers with more than six months service.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZ AT ION

The guarantee of employment does not directly affect pro­ duction. Management states that it will not take the place of sound incentives, good wage administration or effective methods work.

While recognizing the many benefits which are claimed to be derived from the guarantee, management points out that there is a possible negative effect so far as both the Com­ pany and the worker are concerned. In hard times, the guarantee may be somewhat of a burden to the Company while in good times, the worker can go elsewhere and get a job.

OPINIONS OF MANAGEMENT

Management believes that the benefits which have been de­ rived from the guarantee outweigh any limitations it may have. Management says that costs of operation, recruiting and training have been reduced; taxes have been saved and Industrial Commission costs have been cut; production has improved both in quantity and quality; labor relations, em­ ployee morale and employee cooperation have been benefited (especially is this noticeable in methods improvement work where employees cooperate with and do not object to or ob­ struct methods work since they are not afraid of losing their jobs); and finally, the Company has been able to obtain a more regular supply of materials with less trouble and sup­ pliers have been benefited from its regularized production.

According to management, the guarantee is of more import than any other single factor in the employee relations pro­ gram. It is believed that the effect of a written guarantee cannot help but give the workers a great deal more confi­ dence in their employer than employees could possibly have under a program of stabilized employment. In the opinion of management, this confidence has a tremendous bearing on the attitude of the workers toward the company and improves employee relations more than any other item in the person­ nel program.

While management does not at all question the sincerity and the sense of moral obligation which companies with a stabil­ ization program must feel toward their employees, manage­ ment believes that the same sincerity and moral obligation is present under a guarantee and that it becomes a matter of - 153 - pride on the part of the company in living up to its commit ments. Therefore, although companies with stability of employment strive to maintain that stability, the company with a guarantee, because of the commitment added to the obligation, works to preserve the policy beyond the point at which it might be abandoned in the ordinary course of events under a program of stabilization. - 154 -

CASE STUDY 2

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL.

1. Number of Plants: Four. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $23,000,000. 3. Stock Ownership : Closely held by present management. 4. Control over Operations : Management control is largely in the Board of Directors and Executive Committee al­ though sales and manufacturing units away from the home plant have authority to carry on and make decisions for various operations so long as the same are in accord­ ance with the company policy.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUF AC T UR ING

1. Kind of Products : Food and some by-products. 2. Classification of Products: Consumers* non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC TERIST ICS OF PRODUCTS

1. Manufacture to Stock: Economical for only a small per­ cent of the Company*s products. a. Size per Unit: Small to very large. b. Weight per Unit: Very light to heavy. c. Cost per Unit: Variable with weight, form and quality of unit. d. Risk of Obsolescence : None. e. Risk of Physical Deterioration: Great. f. Risk of Style Changes : None. 2. Methods of Distribution: Through Company's own sales organization, direct to retailers and jobbers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Moderate. b. Cyclical Effects : Moderate to heavier. c. Secular Trends : Stable. 155 -

4. Ability to Forecast Demand : Daily and weekly varia­ tions are difficult to forecast accurately due to irregu­ lar flow of raw materials to the Company. Longer range forecasts are currently made with reasonable accuracy.

D. EMPLOYMENT DATA

The figures presented in this section coyer that plant in which a guarantee operates.

1. Yearly Average Employment: 4,300. a. Yearly Fluctuations in Employment: Practically none. 2. Number of Employees Covered by the Plan : 4, 300. b. Yearly Fluctuations in Employment: See 1 a above. 3. Employee Representation : United Packinghouse Work­ ers of America - C. I. O. a. Labor Relations : Good. 4. Labor Turnover: 2%. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll: 10 to 12%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week after one year ; two weeks after five years ; three weeks after fifteen years. 2. Paid Holidays : Eight. 3. Severance Pay: None. 4. Call-in Pay: None. 5. Pay for Absence for Personal Reasons : None except for personal illness.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : The Company has a joint earnings plan which provides for an immediate cash benefit and also a profit-sharing trust plan on a deferred payment basis. 2. Bonuses : None. - 156 -

3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: A Company financed plan provides $500 coverage after one year of service. This is increased to $1 , 000 after five years of continuous service. Additional coverage is available on a con­ tributory basis up to a limit of $3,000. The "free" insurance carries a like amount of accidental death and dismemberment coverage. Z. Accident and Health: Plan pending. 3. Hospitalization: Plan pending, a. Surgical Benefits : None.

D. RETIREMENT PLAN

1. Retirement Plan: The company does not have a formal pension plan. The purpose of the Profit-Sharing Trust Plan is to provide a fund to be used at retirement, a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. Z. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

I. Job Evaluation: For foremen and office workers only. Z. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1933. - 157 -

2. Basic Provisions of the Guarantee Plan: 52 pay checks per year, 52 weeks notice to the individual of layoff be­ cause of lack of work and yearly hours not to exceed 2,080. 3. Coverage and Eligibility Requirements : Every employee in the bargaining unit is covered by the plan. 4. Safeguards and Escape Clauses : None. 5. Basic Reasons for Introduction of the Plan: To provide steady employment for employees. 6. Has Company Paid for Time Not Worked? Yes.

B. S TAB ILIZATION

The Company has been successful in achieving a marked degree of stability in its operations.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The problem is to co-ordinate the work in the many depart­ ments so that the work can be done and the hours paid for used.

D. OPINIONS OF MANAGEMENT

Management is well satisfied with the plan. - 158 -

CASE STUDY 3

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL.

1. Number of Plants : Three. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization : $4, 000, 000. 3. Stock Ownership: Widely dispersed - 583 stockholders. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Mens1 welt dress shoes. . 2. Classification of Products : Consumers* non-durable goods.. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Possibility of Manufacture to Stock: Economical. a. Size per Unit: Small. b. Weight per Unit: Medium light. c. Cost per Unit: Moderate. d. Risk of Obsolescence : Marked risk due to style factor. e. Risk of Physical Deterioration: Little or none. f. Risk of Style Changes : There are five points of difference which bring about a risk - color, style of pattern, style or shape of last, size and width. Other extremes can take in two-toned shoes as in present season when nylon mesh is used in conjunc­ tion with regular leather. 2. Methods of Distribution : The Company manufactures almost wholly for stock and distributes through 114 of their own individual retail stores, together with depart­ ments operated principally in men's clothing stores, to the extent of about 30% of the output. The balance is distributed through 2500 independent dealers who take approximately 70% of the output. - 159 -

3. Effects of Economic Conditions : a. Seasonal Fluctuations : Fluctuations with the sea­ sons and the changing demands they bring. b. Cyclical Fluctuations : Moderate. c. Secular Trends : Upward with population increase. 4. Ability to Forecast Demand: It is necessary that the Company accurately forecast and hold its. averages reasonably high.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 1,716. a. Yearly Fluctuations in Employment: 10%. 2. Number of Employees covered by the Plan: 639- a. Yearly Fluctuations in Employment: 10%. 3. Employee Representation: There is only one factory under the plan. This plant has an independent union - Industrial Union of Master Craftsmen. a. Labor Relations : Excellent. 4. Labor Turnover : For April 1951 the turnover was 8.8% for the one factory's production employees. 5. Worker Productivity: Not available. 6. Percent, of Sales Dollar Represented by Payroll : 32. 47%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Yes. 2. Paid Holidays : Yes. 3. Severance Pay: Yes. 4. Call-in Pay: None. 5. Pay for Absence for Personal Reasons : None except to the extent that employee can draw from his own reserve.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing: The Company offers to its employees, with one or more years of service, participation in a profit sharing and retirement plan financed entirely by the Company. 2. Bonuses : None. 3. Employee Savings Plans : None. - 160 -

C. INSURANCE BENEFITS

1. Life Insurance: None. 2. Accident and Health.: Employees have their own insur­ ance plan which the Union handles, called Sick and Death Benefit Plan. 3. Hospitalization : None. a. Surgical Benefits : None.

D. RETIREMENT PLAN

1. Retirement Plan: See B1 above, a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: Yes. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEE

1. Initiated by Management and the Union in 1935. 2. Basic Provisions of the Guarantee Plan: A specified group of workers, constituting the bulk of the workers in one plant share production and cannot be laid off (except for cause). The weekly check is in the form of a drawing account against his estimated annual income. This annual income depends upon the volume of produc­ tion ; the workers (covered) as a group receive 36% of the value of all production and a pay check each week regardless of business conditions and hours of work - 161 -

available in. the plant. Members of the plan assign up to 30% of their yearly earnings to a reserve as a cush­ ion against irregular earnings. Each worker is given a yearly differential rate based upon the skill required for his job, the long term volume of his production and the quality of his work. 3. Coverage and Eligibility Requirements : Employees with two or more years service are eligible for partici­ pation in the plan. 4. Safeguards and Escape Clauses : "It is generally under­ stood that if this reserve goes down as low as 10% there will be an adjustment downward in the drawing accounts." 5. Basic Reasons for Introduction of the Plan: To give em­ ployees the security of a steady annual income paid week by week. 6. Has Company Paid for Time Not Worked? Not in the sense implied in this question.

B. STABILIZATION

A marked degree of success (for this industry) has been attained in regularizing operations and employment.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

See D below.

D. OPINIONS OF M ANAGEMEN T

"There isn’t anything guaranteed about it (the plan), as the original purpose was to endeavor to supply a check each week to the workers in the factory who come under the plan.

"It seems to us that the use of the word 'guaranteed' is rather loose usage because the implications connected with it can be carried awfully far and we all know there are some things you just cannot guarantee at least as far as some people might interpret it. " - 162 -

CASE STUDY 4

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Two major plants and many small operations in the area. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $157,000,000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUF AC TURING

1. Kind of Products : Production, transmission and dis­ tribution of electricity, gas, water and steam. 2. Classification of Products : Producers' and consumers' non-durable goods (service). 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing : Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration : Not applicable. f. Risk of Style Changes : Not applicable. 2. Method of Distribution : Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Usual effect of winter and summer loads on public utility commodities. b. Cyclical Fluctuations : Some variation with economic conditions in the area. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Fairly accurate estimates are made under normal conditions, but estimates can be and are affected by wars, economic conditions, inven­ tions, etc. - 163 -

D. EMPLOYMEN T DATA

1. Yearly Average Employment: 4,200. a. Yearly Fluctuations in Employment : Very limited.. 2. Number of Employees Covered by the Flan: 4, 200. a. Yearly Fluctuations in Employment : Very limited. 3. Employee Representation: International Brotherhood of Electrical Workers of America (AFL), United Mine Workers of America (IND), and Independent Utilities Union. 4. Labor Turnover : 12%. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll: 22%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week after one year ; two weeks after two years ; three weeks after twenty years continuous service. 2. Paid Holidays : Seven. 3. Severance Pay: None. 4. Call-in Pay: An employee called out for overtime work receives a minimum of four hours pay at time and one- half and double time if on the employee's second sched­ uled off day or on a holiday. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1 . Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : Yes.

C. INSURANCE BENEFITS

1. Life Insurance : Group life insurance on a contributory basis. The amount varies with the earnings level. 2. Accident and Health: The Company supplements Work­ ers Compensation up to two—thirds of the employee's - 164 -

weekly wage. Benefits "begin with the second week and extend for a maximum of six weeks. A sick leave plan covers non-industrial illness. 3. Hospitalization : Standard Blue Cross Plan, a. Surgical Benefits : None.

D. RETIREMENT PLANS

1. Retirement Plan : A non-contributory retirement plan is administered by the Company through a Trustee. It provides for pensions for regular employees with more than ten years of service at age 65. Benefits based on accumulated earnings amount to $100 per month mini­ mum for thirty years of service at age65, including Federal Old Age Benefits. a. Disability Benefits : The group life insurance plan pays benefits for permanent partial disability.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association: None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. M erit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by Management in 1945. 2. Basic Provisions of the Guarantee Plan: The Company agrees to guarantee employment of not less than 40 hours per week for 52 weeks in each year to employees cov­ ered by the Agreement, who are ready, available and able to work and who are regular full-time employees of the Company, provided this shall not be construed to r

- 165 -

prevent the Company from releasing employees be­ cause of lack of work or for other proper and legiti­ mate reasons. 3. Coverage and Eligibility Requirements : Regular full­ time employees available and able to work. 4. Safeguards and Escape Clauses : See A2 above. 5. Basic Reasons for Introduction of Plan : A general overall modern industrial relations program is in effect. This part of the program was designed to assure the regular employees of a minimum salary each week and to give the employees a feeling of security and confi­ dence in the future. 6. Has Company Paid for Time Not Worked? No.

B. STABILIZATION

General stability characterizes the industry, but there is some fluctuation with economic conditions in the area.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZA T ION

None to date with this plan.

D. OPINIONS OF MANAGEMENT

Both Management and employees are satisfied with the plan. - 166 -

CASE STUDY 5

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Twenty-six. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization : $79, 000, 000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Electric, gas and bus service. 2. Classification of Products : Consumers' and producers' non-durable goods (service). 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration: Not applicable. f. Risk of Style Changes : Not applicable. 2. Method of Distribution: Direct retail with some whole­ sale. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Varies with business in the area served. b. Cyclical Fluctuations : Dependent upon economic conditions in the area served. c. Secular Trends : Generally upward. 4. Ability to Forecast Demand: The attempt is made to forecast on the basis of past experience, progress of the industry and economic trends in the area.

D. EMPLOYMENT DATA - 167 -

1. Yearly Average Employment: 1,650. a. Yearly Fluctuations in Employment: Plus 75 in summer. 2. Number of Employees Covered by the Plan: 779. a. Yearly Fluctuations in Employment: None. 3. Employee Representation: International Union of Oper­ ating Engineers (AFL); Amalgamated Association of Street Electric Railway and Motor Coach Employees of1 America (AFL). a. Labor Relations : Good. 4. Labor Turnover : 6%. 5. Worker Productivity: Not available for this study. 6. Percent of Sales Dollar Represented by Payroll: 25%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Two weeks after one year ; three weeks after fifteen years. 2. Paid Holidays : Six. 3. Severance Pay: Informal plan. Pay on merits of case. 4. Callrin Pay: Minimum of two hours at straight time. 5. Pay for Absence for Per sonal Reasons : The Company pays for necessary time off without employee being docked. The time is made up from future overtime with two overtime hours cancelling three undertime hours. A single absence is limited to one week.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Discretionary year-end bonus. 3. Employee Savings Plans : None. 4. Stock Ownership Plan: None.

C. INSURANCE BENEFITS

1. Life Insurance : Group policy for $2, 000 paid by the Company. The amount of contributory insurance depends on the wage bracket. The average employee has $4, 800. The Company pays 30% of the cost. 2. Accident and Health : None. - 168 -

3. Hospitalization: Yes, Company financed. a. Surgical Benefits : Yes, Company financed.

D. RETIREMENT PLANS

1. Retirement Plan: Non-contributory plan. Compulsory retirement at age 65. Pension plus Social Security is slightly more than half pay. a. Disability Benefits : Extended sick leave program. Payments depend on merits of the case.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : Yes. 3. Mutual Aid Society : Yes. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : Yes, as merited.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1946, negotiated with Union. 2. Basic Provisions of the Guarantee Plan: Employees who have five or more years of service are guaranteed two years of work from the effective date of the current labor agreement. If a transfer to a lower paying job is required the Company will pay a differential of up to 30% of the employee's average monthly wage for the last year of regular employment. 3. Coverage and Eligibility Requirements : See A2 above. 4. Safeguards and Escape Clauses : The transfer differen­ tial cannot exceed 30% of base pay. Right of the Com­ pany to suspend or discharge is not infringed. 5. Basic Reasons for Introduction of Plan: To provide additional employee security. - 169 -

6. Has Company Paid for Time Not Worked? No.

B. S TAB ILIZ ATION

General stability has been attained but volume fluctuates somewhat with economic conditions in the area served.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZ AT ION

No comment.

D. OPINIONS OF MANAGEMENT

Both Management and employees like the plan. - 170 -

CASE STUDY 6

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Eleven plants and over one thousand retail stores. a. Number of Manufacturing Subsidiaries : Ten. 2. Capitalization: $191>000,000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Management has been decen­ tralized to local stores and plants, within the frame­ work of general company policies.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : An extremely wide variety of prod­ ucts is handled. 2. Classification of Products: Consumers' goods, both durable and non-durable. 3. Classification of Industry: Primarily distribution. In the manufacturing operation of subsidiaries, all types. 4. Classification of Type of Manufacturing : In the manu­ facturing operations there is both intermittent and con­ tinuous manufacturing.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per TJnit: All sizes, very large to very small. b. Weight per Unit: Very heavy to very light. c. Cost per Unit: Range from very low to moderately high. d. Risk of Obsolescence : Varying with the products. e. Risk of Physical Deterioration : Varying. f. Risk of Style Changes : Varying. 2. Method of Distribution: Direct to Consumers. 3. Effects of Economic Conditions: a. Seasonal Fluctuations : Wide. b. Cyclical Fluctuations : Relatively mild. c. Secular Trend: Upward. - 171 -

4. Ability to Forecast Demand : Accurate forecasts are currently made.

D. EMPLOYMENT DATA

1. Yearly Average Employment: Approximately 170,000. a. Yearly Fluctuations in Employment: 20,000. 2. Number of Employees Covered by the Plan: No guar­ antee plan; 150,000 covered by the Constant Income Plan, a. Yearly Fluctuations in Employment: Very slight. 3. Employee Representation: Various craft unions repre­ sent not more than 5% of all employees. a. Labor Relations : Very good. 4. Labor Turnover : Exact figures were not available for this study but the addition of a great number of extra workers at the rush seasons would necessarily make the rate high. 5. Worker Productivity: Not available for this study. 6. Percent of Sales Dollar Represented by Payroll: Not available for this study. It is estimated by the writer that 50% of the cost of operating is represented by payroll.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year ; two weeks after two years ; three weeks after fifteen years ; four weeks after twenty-five years of service. 2. Paid Holidays : Six. 3. Severance Pay: Under specified conditions and subject to administrative determination, regular employees receive a severance allowance based on length of service. 4. Call-in Pay: Not applicable. 5. Pay for Absence for Personal Reasons : Subject to administrative decision in local store or plant.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing: Employees contribute 5% of their pay to an Employee Savings and Profit Sharing Pension Fund. - 172 -

The Company contributes a minimum of 5% and a maxi­ mum of 9% (before dividends and Federal Income taxes) to the fund to be divided among the accounts of the par­ ticipants. The Fund is controlled by elected Trustees who have full jurisdiction over its use. It is used pri­ marily to buy capital stock in the Company but may be used for a variety of other investments. Employees re­ ceive, in installments, the cash and securities credited to their accounts upon retirement or under certain pro­ visions prior to retirement. 2. Bonuses : At the discretion of management, annual bonuses are paid to salaried personnel. 3. Employee Savings Plans : See B1 above. 4. Stock Ownership Plan : See B1 above.

C. INSURANCE BENEFITS

1. Life Insurance: $1,000 to $10,000 contributory. 2. Accident and Health : None. 3. Hospitalization: Company plan, contributory. Provides up to $8. 00 per day for seventy days plus "extras", ma^ ternity and surgical benefits. a. Surgical Benefits : Included in Hospitalization plan.

D. RETIREMENT PLAN

1. Retirement Plan : Full retirement benefits include the share in the Profit Sharing Pension Fund, a retirement allowance and continuation of Group Life Insurance premiums without cost, a. Disability Benefits : No plan.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : None. - 3. Mutual Aid Society: None. 4. Sayings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION - 173 -

1. Job Evaluation : Yes. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees. The problem has been studied and a plan developed which could be installed on very short notice if the occasion required. A Constant Income Plan, offering most of the provisions offered by what other companies call a guarantee, is pro­ vided for employees of this Company. However, the Plan is neither called nor considered to be a guarantee.

B. S TAB ILIZ AT ION

Employment has been stabilized for all regular employees. Within the retail stores, however there are,a large number of extra employees added to the work force for the seasonal peak periods. These employees are considered as tempo­ rary.

Company policy calls for keeping all workers busy at all times for the entire work week, if in any way possible. If work is not available, the Constant Income Plan provides for the payment of advances to the employee for the differ­ ence between hours actually worked and forty hours. In those weeks when the employee works more than forty hours, he repays the debt hours to the Company. He is credited for time and one-half for all hours over forty. All advances are cancelled if employment is terminated by the Company.

The Company is not only concerned with the stabilization of its own employment but believes very sincerely that if its own operations are to be successful, it must assist its sup­ pliers and its wholly owned subsidiaries in stabilizing. To this end, warehouses are built on or adjacent to the property of suppliers. Purchases are made on an annual basis with delivery schedules spread throughout the year. This per­ mits adequate planning and scheduling on the part of suppli­ ers and subsidiaries and means that those organizations are more sound financially. In addition, the Company maintains "pool stocks" at various points throughout the country. This - 174 -

practice permits the warehousing of merchandise during those periods when buying is weak.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STAB ILIZA TION

This Company believes that it is not possible for many in­ dustries to stabilize their production, and therefore their employment, to the point where a guarantee of any kind could be offered with safety to the company. Consequently, it is felt that consumers' goods industries , if they offer a guarantee, make the situation more difficult for those who, because of the nature of their business find it impossible to offer a guarantee of wages or employment.

D. OPINIONS OF MANAGEMEN T

Employees have confidence in this Company. The history of operations shows that there has been security of employ­ ment for a long period of time. The older employees of the Company are its best salesmen to new employees and, de­ spite the fact that few of them are paid on an incentive basis, the older, employees show a very high level of productivity. Apparently, employees have little fear for their jobs since they have not requested a guarantee. It is believed that the employees would wonder why a guarantee, offering less than they presently receive, was suddenly offered by the Com­ pany. It is felt that unrest might result.

It is the opinion of Management that no one can, in the full sense of the term, guarantee anything to employees. If a guarantee is to be made, it must be limited. This is not desirable from the point of view of this Company. Without guarantees of demand to the employer, he cannot actually guarantee employment. If the company fails, the guarantee is worthless. If the Government were to insist on guarantees by employers or were to inaugurate such a plan, it would, of „necessity, mean a planned and controlled economy.

It is unsound to guarantee workers any more than that of which they are presently assured. Additional guarantees would m erely add to the already growing feeling among employees that they should have assured work and wages - 175 - with, less worry and effort expended, on their part. A series of guarantees would be certain to be reflected in decreased production.

What all managements can do is to devote themselves to the stabilization of operations. Anything which can be done, such as is being done in this Company, to stabilize produc­ tion in as many industries as possible is certain to have a beneficial economic effect. - 176 -

CASE STUDY 7

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One plant plus one hundred fifty- three retail stores. a. Number of Manufacturing Subsidiaries : One. 2. Capitalization: $38,000,000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Highly centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUF AC TURING

1. Kind of Products : General merchandise. 2. Classification of Products : Primarily consumers1 goods, both durable and non-durable. 3. Classification of Industry: Retail distribution.. 4. Classification of Type of Manufacturing : Not applicable to retail operations. The manufacturing operation is continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Accumulation of stock within limits and such activities as pre-packing are economical. a. Size per Unit: Varies from small to very large. b. Weight per Unit: Varies from light to very heavy. c. Cost per Unit: Varies from very low to high. d. Risk of Obsolescence : Varies with the products. e. Risk of Physical Deterioration : Varies. f. Risk of Style Changes : Varies. 2. Method of Distribution: Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Wide. b‘. Cyclical Fluctuations : Relatively mild, c. Secular Trend; Upward. 4. Ability to Forecast Demand : Accurate forecasts are currently made for periods up to six months. - 177 -

D. EMPLOYMENT DATA

1. Yearly Average Employment: 12,000 plus temporary employees during rush, seasons. a. Yearly Fluctuations in Employment: 11,000 to 13, 000, not including temporary employees. 2. Number of Employees Covered by the Plan: 2, 585. a. Yearly Fluctuations in Employment: Very slight. 3. Employee Representation: Wholesale Dry Goods and Hardware Warehousemen's Union (AFL) ; International Union of Operating Engineers (AFL.). These unions o r­ ganized the employees six years after the guarantee was inaugurated. a. Labor Relations : Good. The unions favor the Plan. 4. Labor Turnover : Mail Order Division - 72% ; among employees covered by the guarantee - 6% ; in the re­ tailing operations turnover is much higher. 5. Worker Productivity: Questionable level and not meas­ urable. However, operations are geared so that work­ ers must keep up with the str earn. 6. Percent of Sales Dollar Represented by Payroll: 10% in Mail Order Division; 65 - 70% in Retailing Division.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year : two weeks after two years ; three weeks after ten years ; and four weeks after twenty-five years of employment. 2. Paid Holidays : Six. 3. Severance Pay: Granted in all separations except dis­ charges for misconduct. Employees with more than one year of service receive one-half to two days pay for each month of service. 4. Call-in Pay: Four hours. 5. Pay for Absence for Personal Reasons : Illness, funer­ als and jury duty.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. - 178 -

2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: $1,000 plus $1,000 additional in case of accidental death or dismemberment. Contributory. Male employees are' eligible for $2, 000 coverage. 2. Accident and Health: A sick benefit plan pays full pay for a forty hour week up to a maximum of twelve weeks, depending on length of service. Financed by the Company. 3. Hospitalization: A Company plan shares the expense of hospital care with the employee. No premiums are paid. Standard Blue Cross coverage is available in addition to the Company plan. a. Surgical Benefits : A Company plan shares the ex­ penses of surgery with the employee. No premiums are paid.

D. RETIREMENT PLAN

1. Retirement Plan: No formal plan. On an informal basis, employees with more than twenty-five years of service who have reached retirement age ( 65 for men and 60 for women) receive supplements to Social Security. Viz. , an employee with twenty-five years of service receives each month after a retirement a sum equal to : 50% of the first $100 of his monthly earnings; 40% of the next $50 of his monthly earnings ; and 33 l/3% of the remainder of his monthly earnings. a. Disability Benefits : The life insurance policy pays a varying lump sum.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Planned for the future. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. - 179 -

6. JDirect Company Loans : Up to $100 for medical or dental care for an employee or a member of bis family or for funeral expenses of a member of an employee's immediate family. The Company also has an arrange­ ment with a nearby bank to loan employees up to $300 with the Company paying 5% interest and the employee the remainder of the interest charges.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: In effect and current on all jobs. 2. Merit Rating : In effect and current on all jobs. m. GUARANTEES AND S TAB ILIZ A TION

A. GUARANTEES

1. Initiated by the Company in 1939. 2. Basic Provisions of the Guarantee Plan: The plan pro­ vides that all Mail Order Division employees with one year service who have worked 2, 000 hours during that period are eligible. Of the 4, 062 employees in the Mail Order Division who are classified as regular, 2, 585 are covered by the guarantee. Each male em­ ployee is guaranteed 40 hours of pay per week and each female employee is guaranteed 36 hours of pay per week. The guarantee is in the form of a wage advance plan which employees pay back from weeks when they have more than 40 hours of work. All hours over 40 are paid for at time and one-half which means that every two hours of overtime cancels three hours of a wage advances. All advances are cancelled at the end of each year or upon separation by the employee. 3. Coverage and Eligibility Requirements : See A2 above. 4. Safeguards and Escape Clauses : None. 5. Basic Reasons for Introduction of the Plan: Greater security for employees and a sounder foundation for the growth of the business in the future. 6. Has Company Paid for Time Not Worked? No.

B. S TAB ILIZ AT ION

Prior to stabilization efforts which preceded the establish­ ment of the guarantee, the work heeds in one division of this Company often resulted in a fluctuation of more than 2, 000 employees. Among the steps taken to level employment have been: The concentration of sales effort in off-peak periods; pre-packing and other activities during slack seasons to streamline operations during rush periods ; and the training of employees for a variety of jobs. At the pres­ ent time the Company feels that it can maintain its stabiliza­ tion and its guarantee for its permanent employees through any period.

PR OB LEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The primary problem which this Company faced, and which is still a problem, is the occurrence of extreme seasonal peaks and valleys in its operations.

OPINIONS OF MANAGEMENT

A guarantee of a full week's pay every week in the year means that employees have greater security and that there is a sounder foundation for the growth of the business in the future. The success of the Company is largely dependent on the employees. Experience shows that the most success­ ful business organization is that one which provides itself with a plan that takes into account every person on the pay­ roll, planning for his work, his development, and his wel­ fare and security. Management believes that the Annual Wage Plan gives employees a sounder and happier basis for everyday living and a future on which to build.

It is pointed out that many firms have a definite policy of providing for their employees through stabilization and yet have made no formal statement of that policy. Manage­ ment of this Company believes that there is something wrong with any policy which a company is unwilling to put in writing. An unwritten policy cannot be uniformly applied. Over a period of time such a policy will change. For that reason, it is better to record a policy of providing work for employees than to chance the misinterpretation and lack of uniform administration of the unwritten policy. - 181 -

CASE STUDY 8

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL,

1. Number of Plants : Three. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization : $6, 000, 000. 3. Stock Ownership: Widely dispersed among employees, management and the public. 4. Control over Operations : Decentralized control except for major policies.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Coffee, teas, spices, flavoring extracts and insecticides. 2. Classification of Products : Consumers' non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock : Economical. a. Size per Unit: Small to moderately large. b. Weight per Unit: Light to heavy. c. Cost per Unit: Low. d. Risk of Obsolescence : None. e. Risk of Physical Deteripration : Some risk with salad products only. f. Risk of Style Changes : Some danger in packaging too far ahead of sales. 2. Methods of Distribution : Through wholesalers and job­ bers and direct to retailers. The Company does its own warehousing. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Items are primarily seasonal. b. Cyclical Fluctuations : Less than some but raw ma­ terial difficulties are encountered and business is affected by peoples' eating and buying habits. - 182 -

c. Secular Trends : Generally stable with some movement upward. 4. Ability to Forecast Demand : Sales are forecast with reasonable accuracy.

D. EMPLOYMEN T DATA

1. Yearly Average Employment: 910. a. Yearly Fluctuations in Employment: 10% maximum. 2. Number of Employees Covered by the Plan: 480. a. Yearly Fluctuations in Employment: None. 3. Employee Representation : Two plants are unorganized. One plant has International Association of Machinists (AFL) for mechanics and maintenance men ; and the International Longshoremen's Association (AFL) for plant employees. a. Labor Relations : Very good. •4. Labor Turnover : 3% per year for permanent employees, 5. Worker Productivity: Generally no increase. 6. Percent of Sales Dollar Represented by Payroll: 16. 35%.

II. EMPLOYEE RELATIONS ACTIVITIES

The information furnished in the balance of this study applies only to the plant where the assured employment policy is in operation.

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week during first year : two weeks after first year ; three weeks after fifteen years, 2. Paid Holidays : Seven. 3. Severance Pay: Earned vacation pay. 4. • Call-in Pay: None. 5. Pay for Absence for Personal Reasons : Death in im­ mediate family and other reasons at discretion of the supervisor.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : Quarterly, based on profit as determined by the Board of Directors ; and fixed profit sharing through - 183 -

2» Bonuses : Employee dividends. See Bl above. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : Through payroll deduction.

C. INSURANCE BENEFITS

1. Life Insurance: Group insurance coverage. 2. Accident and Health : None. 3'. Hospitalization: Group plan available. Contributory. a. Surgical Benefits : Group plan available. Contributory.

D. RETIREMENT PLAN

1. Retirement Plan : A pension plan paid for entirely by the Company provides retirement income based on earnings up to $10,400 and on years of service, pays up to a maximum of $5, 000 yearly. a. Disability Benefits : Group life plan provides per­ manent disability benefits from $36 to $180 based on weekly salary received. Contributory.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : Yes. Each employee con­ tributes one percent of pay. 3-. Mutual Aid Society : Yes. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None. 7. Loans from Local Bank: Payroll deduction if desired.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

There is no guarantee plan in effect. There is a policy - 184 -

herein discussed which assures employees of regular employm ent.

1. Initiated by the Company in 1931. 2. Basic Provisions of the Guarantee Plan : No guarantee but forty-eight weeks of forty hours at the regular rate are assured through an announced policy. 3. Coverage and Eligibility Requirements': All permanent employees ( those with at least six months service) except 10% who are so notified. The selection of the 10% is on a merit basis. The temporary employees would be released first, then the 10%. 4. Safeguards and Escape Clauses : The Plan is not a guarantee. It is an announced policy only. 5. Basic Reasons for Introduction of the Plan: Sound human relations and the security of employees. 6. Has Company Paid for Time Not Worked? No.

B. STABILIZATION

Very little fluctuation in employment is now experienced due to stabilization efforts.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STAB ILIZATION

Dovetailing of seasonal complementary products has been necessary in this instance.

D. OPINIONS OF MANAGEMENT

Management and employees alike are satisfied with the plan. -1 8 5

CASE STUDY 9

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Two. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $24,000,000. 3. Stock Ownership : Widely dispersed. 4. Control oyer Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Refined cane sugar . 2. Classification of Products: Primarily consumers1 non­ durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical for short run only. a. Size per Unit: Small to large bulk. b. Weight per Unit: Light to heavy. c. Cost per Unit: Low, per retail unit. d. Risk of Obsolescence : None. e. Risk of Physical Deterioration : High. f. Risk of Style Changes : None. 2. Methods of Distribution : Brokers, wholesalers, chains and manufacturers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Busy summer ; off in winter. b. Cyclical Fluctuations : Not too severe. The Sugar Act and Government quotas minimize any cyclical effect. c. Secular Trends : No marked trend, other than an increase due to population growth. 4. Ability to Forecast Demand : "Cannot forecast demand which is determined by the world market, by the trade on the sugar market and by the trade in futures. " - 186 -

E>. EMPLO YMEN T DATA

1. Yearly Average Employment: 3,500. a. Yearly Fluctuations in Employment: 8-10%. 2. Number of Employees Covered by the Flan : 2, 400. a. Yearly Fluctuations in Employment : Very slight. 3. Employee Representation: United Packinghouse Work­ ers of America (CIO); International Longshoremen's A ssociation (AFL). 4. Labor Turnover : Irreducible minimum. 5. Worker Productivity: No experience since the guaran­ tee ; however, productivity is generally up with a full work week. 6. Percent of Sales Dollar Represented by Payroll: Not available for this study.

EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : The Company grants vacations with pay to employees who have over one year of cumu­ lative service prior to a specified date and who have been employed 1, 250 hours or more in the year imme­ diately preceding, according to the following schedule :

Years Vacation Pay Hours 1 5 working days 40 2 7 working days 56 3 8 working days 64 4 9 working days 72 5 10 working days 80 10 12 working days 96 15 15 working days 120

2. Paid Holidays : Nine. 3. Severance Pay: None. _ 4. Call-in Pay : The Company guarantees eight hours work or pay to employees who have not been notified not to report for work,, except in case of emergency. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS - 187 -

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : The Company provides group life cov­ erage, at its own expense, for all employees with over six months service beginning with $500 for the first year and stepped—up $100 per year to a maximum of $1,000 after five years. 2. Accident and Health: The Company provides health and accident coverage for all employees after 30 days. 3. Hospitalization: Blue Cross family coverage is pro­ vided by the Company for each employee after 30 days, a. Surgical Benefits : A Family Surgical Expense Indemnity Contract with the United Medical Service is provided by the Company for each employee after 30 days.

JD. RETIREMENT PLAN

1. Retirement Plan: $115 per month, including Social Security, after thirty years service and at age 65. Less service proportionately, a. Disability Benefits : See C2 above.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : None. - 188 -

III. GUARANTEES AND STABILIZATION

A. GUARANTEE

1. Initiated by the Company and the Union in 1952 in the first plant and in 1952-53 in the second plant. 2. Basic Provisions of the Guarantee Plan:

"a. Each employee with more than one year's seniority and on the active payroll of the Company on January 1, 1952, who shall not have been provided with opportunity to work at least 1, 936 hours during the calendar year 1952, shall receive a sum of money computed by mul­ tiplying his regular rate of pay by the difference between 1, 936 hours and the number of hours he was given the opportunity to work, subject to the conditions set forth in this section. Each employee with more than one year's seniority who shall be recalled to work prior to July 1, 1952, and who continues on the active payroll through December 31, 1952, shall receive a propor­ tional guarantee. b. For the purpose of this subsection B, the number of hours which an employee was given the opportunity to work shall include eight (8) hours for each day on which such employee shall be scheduled or called to work and all hours paid for as vacation and unworked holidays. c. In computing the sum, if any, due under this sub­ section B, the figure of 1, 936 hours shall be reduced by the number of hours (1) lost by an employee as a result of (I) failure to work as scheduled or called ; (II) suspension for disciplinary purposes ; (no sickness or disability to work; (IV) leave of absence ; or (V) retirement; and (2) in which it shall not be practicable for the Com­ pany to provide such employee with work by reason of (I) shortage of raw sugar due to reasons be­ yond the Company's control adversely af­ fecting the Company’s operations ; or (II) repeal or modification of the Sugar Act of 1948 adversely affecting the Company's operations ; or - 189 -

(III) labor disputes which result in depletion of the Company's raw stock or which prevent the production or delivery of refined sugars, major breakdowns or causes beyond the Company's control. If any of the conditions specified in this subdivision 2 occur, the Company shall promptly notify the Union and furnish all information upon which it is basing its decision that such condition has occurred. If the Com­ pany and the Union cannot agree that such condition has occurred or to the reduction of guaranteed hours caused by such condition, either party may, within ten days of such notice, process the dispute in Step No. 4 of the grievance procedure and both parties shall use their best efforts to obtain a prompt decision by the impartial umpire. d. The provisions of this section shall not apply to an employee who quits or is discharged for just cause. e. Each employee shall do any work to which he may be assigned by the Company, provided that he is physi­ cally capable of performing the work and the assign­ ment does not depart substantially from usual practice. f. The term 'regular rate of pay' of an employee means the base rate of pay set forth in section NINTH plus the job differential and shift differential, if any, applicable to such employee. If during the calendar year the regular rate of pay of an employee shall vary in amount, then for the purposes of the guarantee pro­ vided in this section his regular rate of pay shall be his weighted average regular rate of pay. g. If the Company shall permanently close down the Refinery, the guarantee provided in this section shall be reduced proportionately to the unexpired period of the year. h. Any amounts due to an employee under the provi­ sions of this section shall be paid not later than January 31, 1953. i. The prevailing pay practices with respect to sala­ ried employees will not be altered by virtue of putting this subsection B into effect. " 3. Coverage and Eligibility Requirements : Employees with one year's seniority and on the active payroll of the Company on a specified date. - 190 -

4. Safeguards and Escape Clauses : "If the Company shall permanently close down the Refinery, the guarantee provided in this section shall be reduced proportionately to the unexpired period of the year . " 5. Basic Reasons for Introduction of the Plan: Union negotiations. 6. Has Company Paid for Time Not Worked? No.

B. S TAB ILIZ AT ION

The industry is considered stable.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comment from Management.

D. OPINIONS OF MANAGEMENT

Insufficient experience to justify any opinions at this time. - 191 -

CASE STUDY 10

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : One. 2. Capitalization: $125,000. 3. Stock Ownership : Closely held by present management. 4. Control over Operations : Close centralized control.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Mechanics'hand tools and miniature saw blades, such as jewelers' saw blades, and garden tools. 2. Classification of Products: Consumers' durable goods. 3. Classification of Industry: Process and assembly. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per unit: Small. b. Weight per Unit: Light to slightly heavier. c. Cost per Unit: Low. d. Risk of Obsolescence : None. e. Risk of Physical Deterioration : None with proper storage. f. Risk of Style Changes : Possible, but not probable. 2. Methods of Distribution:- Through wholesale hardware distributors and large mail order houses. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Practically none except on garden tools on which peak is January through March. b. Cyclical Fluctuations : None. c. Secular Trends : Stable. 4. Ability to Forecast Demand : Can forecast with reason­ able accuracy because the hardware industry does not - 192 -

hit the peaks and valleys as do many other industries and particularly luxury industries. In times of busi­ ness recession, sales of tools remain relatively high because many unemployed perform carpenter work for themselves, and enjoy hobbies.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 200. a. Yearly Fluctuations in Employment: Practically none. 2. Number of Employees Covered by the Plan: 150. a. Yearly Fluctuations in Employment: Practically none. 3. Employee Representation : No union, a. Labor Relations : No union. 4. Labor Turnover : 2-3 %. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll: 35%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Salaried employees receive one week after six months’ service and two weeks after one year. Wage-earning employees receive one week after one year and one additional day for each extra year up to five years at which time they have two weeks . Em­ ployees with 25 years of employment are given three weeks with pay. 2. Paid Holidays : Six. 3. Severance Pay: Usually, if severance is involuntary. 4. Call-in Pay: At least four hours. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : The wages and salaries ofevery employee from the president on down are tied in with a Cost of Living Index, the same as General Motors, except that - 193 -

it is based upon the Cost of Living Index from the area instead of the national figure. 3. Employee Savings Plans: None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: $1, 000 group life insurance. 2. Accident and Health : A Company plan pays weekly benefits to $17. 50, contributory. 3. Hospitalization: A Company plan pays benefits to $5. 00 daily, contributory. a. Surgical Benefits : A Company plan pays surgical fees to a maximum of $150, contributory. Note : All four above listed benefits are paid for by employer and employee until employee has been with the Company for five years ; from that point on the Company pays the full premium.

D. RETIREMENT PLAN

There is a pension plan whereby any employee who has been with the Company for fifteen years continuously and is 65 years old can apply for and receive a pension. а. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : Yes. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. б. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation : None. 2. Merit Rating : Yes.

HI. GUARANTEES AND STABILIZATION - 194 -

A- g u a r a n t e e s

1. Initiated by the Company in 1939. 2. Sasic Provisions of the Guarantee Plan: The Com­ pany's Annual Wage Policy guarantees a minimum of 1800 hours pay annually to each employee with a record of five years continuous employment based upon the seniority policy of the Company. In accordance with the above policy, any qualified employee who fails to re­ ceive at least 1800 hours of work in any calendar year, will be paid by the Company, at the end of such year, an amount sufficient to cover the balance of the hours not worked up to 1800 hours, less any amounts received in Unemployment Insurance benefits, Workmen's Compen­ sation benefits, sickness, accident and health benefits, and wages received from other regular employment. Payment on the Guaranteed Annual Wage policy will be computed on the regular base rate of the employee. 3. Coverage and Eligibility Requirements : Limited to employees with five years continuous service. 4. Safeguards and Escape Clauses : a. "The term 'Continuous Employment' shall mean time when an employee is either working daily or is on a granted leave of absence. b. 'Continuous Employment' shall not include layoff periods or working periods where an employee is in­ formed that such period will be temporary. c. The minimum of 1800 hours of guaranteed work shall include all vacation allowances. d. This guarantee applies only to wage earners and salaried employees earning $5, 000 or less annually, and shall immediately cease should the employee re ­ sign, be discharged for cause, attain the age of 65, or if, for any reason whatsoever, he should fail to work at least 320 hours in any calendar year. e. We reserve the right to give employees of either company who are included in the plan, employment in the other company rather than lay them off. We also rfeserve the right to transfer any employee to work other than that at which he is regularly employed and to compensate him with the wage rate which prevailed for the work to which he has been transferred. Such tem­ porary changes would not affect the employee's seniority - 195 -

standing with, the original company. f. The judgment of the Company shall be final on all questions concerning the guarantee, and the Company may at any time modify or alter the rules or may at any time terminate the guarantee, although the Com­ pany fully expects to continue it permanently. g. This guarantee must necessarily be made subject to the restrictions and limitations of any Federal or State Laws, either present or future, which of course are beyond this Company’s control. " 5. Basic Reasons for Introduction of the Plan: To give the employees additional security as a reward for their loyalty, cooperation, and ability and their con­ tribution to the success the Company has enjoyed. 6. Has Company Paid for Time Not Worked ? No.

B. STABILIZATION

A high degree of stabilization is enjoyed by this Company and by the industry.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comments were offered by Management.

D. OPINIONS OF MANAGEMENT

No opinions were expressed for this study. - 196 -

c a s e : stu d y 11

I. IDENTIFYING INFORMA TION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Fifteen to twenty. a. Number of Manufacturing Subsidiaries: Four. 2. Capitalization: Not available for this study. 3. Stock Ownership : Widely dispersed. 4. Control oyer Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Proprietary and ethical drugs, toiletries, tubes and brushes. 2. Classification of Products: Consumers1 non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC T ERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Small. b. Weight per Unit: Light per retail .unit. c. Cost per Unit: Low to high. d. Risk of Obsolescence : Slight. e. Risk of Physical Deterioration: Low generally over reasonable storage periods for most items. Some few items are perishable and must be stored under ideal conditions and then "moved" quickly. f. Risk of Style Changes : Slight. 2. Methods of Distribution: Sales directly to wholesalers, jobbers and retailers. 3. Effects of Economic Conditions: a. Seasonal Fluctuations : The peak month is 50% higher than the normal month. b. Cyclical Fluctuations : Some variation with eco­ nomic conditions. c. Secular Trends : Stable and upward. - 197 -

4. Ability to Forecast Demand : Current forecasts are made with reasonable accuracy.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 3,500. a. Yearly Fluctuations in Employment: Very slight. 2. Number of Employees Covered by the Plan: 2, 000. a. Yearly Fluctuations in Employment: Very slight. 3. Employee Representation : No union. a: Labor Relations : Excellent employee relations. 4. Labor Turnover: 5%. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll: Not available for this study.

II. EMPLOYEE RELATIONS ACTIVITIES

A* p o l ic y ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Three weeks after one year. 2. Paid Holidays : Six to twelve. 3. Severance Pay: None. 4. Call-in Pay: Three hours. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Yes. 3. Employee Savings Plans : Yes. 4. Stock Ownership Plans : Yes, for executives only.

C. INSURANCE BENEFITS

1. Life Insurance: Each employee, after three months service, receives coverage in an amount approximately equal to his annual earnings. Company financed. 2. Accident and Health: Short term disability coverage after three months ; long term disability coverage after twelve months ; permanent disability coverage after ten years service. Company financed. - 198 -

3. Hospitalization: All Tegular employees with three months service are covered by a liberal Company plan, at no cost to themselves, a. Surgical Benefits : Same as 3 above.

D. .RETIREMENT PLAN

1. Retirement Plan: For all employees thirty years of age. a. Disability Benefits : See C2 above.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

HI. GUARANTEES AND STABILIZATION

A. GUARANTEE

1. Initiated by the Company in 1946. 2. Basic Provisions of the Guarantee Plan :

"Whenever the Company discontinues the services of a regular full-time employee because of lack of work, such employee will be paid the following benefits : 1. His regular salary for the week in which such dis­ continuance occurs, and 2. 50 per cent of his regular salary during the period of his unemployment up to the maximum period set forth in the following schedule : - 199 -

Completed Years of Duration of Active Service Benefits 6 months 4 weeks 1 year 5 weeks 2 years 10 weeks 3 years 15 weeks 4 years 20 weeks 5 years 25 weeks 6 years 30 weeks 7 years 35 weeks 8 years 40 weeks 9 years 45 weeks 10 years 50 weeks

Minimum Benefit $ 20 00 per week Maximum Benefit 100 00 per week

Completed periods of active service will be computed from the most recent date of employment with the Company, except that an employee rehired not later than six months after the date of layoff shall be imme­ diately reinstated to the completed period of active ser­ vice standing to his credit on the date of such layoff. In any such case of rehiring the aggregate number of weeks in any consecutive period of twelve months for which benefits shall be paid shall not, however, exceed the number shown in the foregoing schedule. Any period of time in excess of six months during which an employee has been continuously absent from or unable to perform his regular duties with the Company, whether by reason of accident or illness, will ordinarily not be credited in computing either months or years of active service. Any period of time in excess of one month during which an employee has been continuously absent on a leave of ab­ sence from the Company will ordinarily not be credited in computing either months or years of active service.

Limitations - 1. Before becoming entitled to the above benefits in the case of permanent discontinuance of service, the employee must be unable to secure other em­ ployment and, as proof thereof, must present to the Company a photostatic copy of his Unemployment Compensation check covering each period for which he claims Unemployment Benefits hereunder. 2. Since the various states provide unemployment benefits of varying amounts, any payments due un­ der the Company plan shall be reduced by any ben­ efits received or receivable under Unemployment Insurance Acts. " 3. Coverage and Eligibility Requirements : All employees after six months of employment. 4. Safeguards and Escape Clauses: See A2 above. 5. Basic Reasons for Introduction of the Plan: To tide employees over a period of search for a new job. 6. Has Company Paid for Time Not Worked ? Yes.

STABILIZATION

No problem in this industry.

PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TABILIZATION

No comment.

OPINIONS OF MANAGEMEN T

When sales can be guaranteed, then it is possible to guar­ antee wages. The Company reserves for its Unemployment Benefits. - 201 -

CASE STUDY 12

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One local operation. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $20,000,000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Street railway transportation service. 2. Classification of Products : Consumers' service. 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing: Not applicable.

C. CHARAC TERISTICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration : Not applicable. f. Risk of Style Changes : Not applicable. 2. Method of Distribution: Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Practically none. b. Cyclical Fluctuations : Volume fluctuates directly with the number of persons employed in the area. c. Secular Trends : Upward. 4. Ability to Forecast Demand: Forecasts, within limits, are currently made.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 1,852. a. Yearly Fluctuations in Employment: Very slight. - 202 -

2. Number of Employees Covered by the Plan: 1, 852. a. Yearly Fluctuations in Employment: Very slight. 3. Employee Representation : Amalgamated Association of Street and Electric Railway Employees of America (AFL). a. Labor Relations : Very good. 4. Labor Turnover : Exact percentage not available but known to be high among employees with less than one year of service and low among employees with more than one year of service. 5. Worker Productivity: With the exception of one group of employees who, in accordance with their particular jobs, must maintain the pace, productivity is 75% of pre-war productivity. 6. Percent of Sales Dollar Represented by Payroll: 52%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: 88 hours after one year; 104hours after five years ; and 128 hours after fifteen years. 2. Paid Holidays : None. 3. Severance Pay: None. 4. Call-in Pay: One hour. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLAN

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Sayings Plans: None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : $1, 000 after ninety days. 2. Accident and Health: Twenty-six weeks at $24. 50 per week. Company financed. 3. Hospitalization: Blue Cross. Paid by Company. a. Surgical Benefits : Blue Shield. Paid by Company. - 203 -

D. RETIREMENT PLAN

1. Retirement Plan: No formal plan. Several superan­ nuated employees are selected each year by Manage­ ment and the Union, jointly, for retirem ent. Pay­ ments supplement Social Security benefits up to a total of $115 per month. a. Disability Benefits : Maximum benefits of $60 per month are paid to employees under 65 who are not eligible for Social Security.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: In effect on some jobs. 2. Merit Rating : None. m. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company and the Union some years ago. 2. Basic Provisions of the Guarantee Plan : Extra men are guaranteed eight hours per day for five days until on the regular list. Regular men are guaranteed forty hours per week. No restriction on reduction of force. 3. Coverage and Eligibility Requirements : All employees as indicated under 2 above. 4. Safeguards and Escape Clauses: None. 5. Basic Reasons for Introduction of Plan : To offer regu­ lar income to employees each pay period. 6. Has Company Paid for time not Worked? Yes.

B. STABILIZATION - 204 -

There is great stability of employment in the industry as a result of its very nature. The only fluctuations occur when there is a very deep cyclical dip in the employment in other businesses in the area. Then it is of minor importance only.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

This is a service industry. There is nothing to manufacture to stock. Demand for the services rendered must be satis­ fied on the moment. Hence, there is practically nothing which can be done to stabilize employment to a greater de­ gree and a guarantee is a virtual impossibility.

D. OPINIONS OF MANAGEMENT

No organized attention has been given to the problem of a guarantee (in the sense in which it is used in this study) in the past, nor does management contemplate any work on the problem now or at any time in the future. It is felt that the inherent stability of the industry offers workers a great deal of security at the present time. In fact, Management feels that workers already have too much security. On this is blamed the low productivity of employees. More security would have an adverse effect on the workers, rather than an increasing amount of security increasing their produc­ tivity.

Since stable employment is already offered, the only fluc­ tuations coming at the very lowest point of employment in other industries, Management believes that the workers would question the motives of the Company if a guarantee were offered. The guarantee, of course, would be limited and could not offer as much as the workers have currently. As a result, the workers would not gain anything from a guarantee. - 205 -

CASK STUDY 13

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One central terminal operation, a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $100,000. 3. Stock Ownership: Closely held. This is a wholly owned subsidiary of a large utility. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Transportation of passengers and their baggage by motor coaches. 2. Classification of Products : Consumers' service. 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing : Not applicable.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration: Not applicable. f. Risk of Style Changes : Not applicable. 2. Methods of Distribution: Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Low peak summer and win­ ter ; high peak summer ; and intermediate fall. b. Cyclical Fluctuations : Not observed. c. Secular Trends : Not observed. 4. Ability to Forecast Demands : Limited.

D. EMPLOYMENT DATA

• 1. Yearly Average Employment: 260. a. Yearly Fluctuations in Employment: Generally nil. - 206 -

2. Number of Employees Covered by the Plan : 260. a. Yearly Fluctuations in Employment: Generally nil. 3. Employee Representation : Brotherhood of Railroad Trainmen (IND) for Motor Coach Operators. a. Labor Relations : Fair. 4. Labor Turnover : 8%. 5. Worker Productivity: Not available for this study. 6. Percent of Sales Dollar Represented by Payroll: 27%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : Two weeks maximum. 2. Paid Holidays : None. 3. Severance Pay: None. 4. Call-in Pay: If called to protect extra assignment and not used, pay ranges from l/4 to one whole day. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Safety vacations with pay in addition to regu­ lar vacations. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: None. 2. Accident and Health : None. 3. Hospitalization: Company Hospital Association, a. Surgical Benefits : As above.

D. RETIREMENT PLAN

1. Retirement Plan : Railroad Retirement Act. a. Disability Benefits : Railroad Retirement Act.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES - 207 -

1. Credit Union : Yes. 2. Mutual Benefit Association : None. 3. Mutual Aid Society: None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: None. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1930. 2. Basic Provisions of the Guarantee Plan: Minimum daily guarantee of 8 hours or 160 miles. Twenty-one days per month for extra operators. Twenty-five days per month for regular operators. 3. Coverage and Eligibility Requirements : All employees. 4. Safeguards and Escape Clauses : Work stoppage or Act of Providence. 5. Basic Reasons for Introduction of the Plan: Based on railroad practices for train and engine personnel. 6. Has Company Paid for Time Not Worked? Yes.

B. STABILIZATION

Operations are generally stabilized.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comments from Management.

D. OPINIONS OF MANAGEMENT

No opinions expressed for this study. 208

CASE STUDY 14

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $300,000. 3. Stock Ownership : Closely held by management group. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Flour milling ; wheat flour and mill feeds. 2. Classification of Products : Producers' non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC T ERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical within limits. a. Size per Unit: Medium. b. Weight per Unit: Moderately heavy (l00 pounds generally). c. Cost per Unit: Relatively low. Bakery flour is $5. 00 to $6. 00 per 100 pounds. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration : Moderate. f. Risk of Style Changes : None. 2. Methods of Distribution: Direct to bakers and to jobbers for sale to bakers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Not too wide, but January to June are less active than the rest of the year. b. Cyclical Fluctuations : Moderate. c. Secular Trends : Stable. 4. Ability to Forecast Demand : By forward shipment. Sales contracts calling for 120 day shipment are standard practice in the industry. 209 -

D* EMPLOYMENT DATA

1. Yearly Average Employment: 75. a.. Yearly Fluctuations in Employment: Very slight. 2. Number of Employees Covered by the Plan : 50. a. Yearly Fluctuations in Employment: Very slight. 3. Employee Representation : American Federation of Grain Processors, Local 1, (AFL). a. Labor Relations : Very cordial. 4. Labor Turnover: 20%. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll: 36%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Yes. Detail not available. 2. Paid Holidays : Six. 3. Severance Pay: None. 4. Call-in Pay: Yes. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing: Yes. Detail not available. 2. Bonuses : None. 3. Employee Savings Plans : Yes. 4. Stock Ownership Plans : None.

C: INSURANCE BENEFITS

1. Life Insurance : None. 2. Accident and Health : Yes. 3. Hospitalization: Yes. Company financed. a. Surgical Benefits : Yes. Company financed.

D. RETIREMENT PLAN

1. Retirement Plan : Yes. Detail not available. a. Disability Benefits : Yes. Detail not available. - 210

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: None. 2. Merit Rating : None.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1936. 2. Basic Provisions of the Guarantee Plan : Forty hours of work per week guaranteed for life of union contract. "In consideration of the following guarantee, the above wage rates have been established at 5£ per hour less than the standard rate for each classification. The Company agrees that all regular employees are guaran­ teed forty hours work each week. " 3. Coverage and Eligibility Requirements : Union members with forty-five days of employment with the Company. 4. Safeguards and Escape Clauses : "It is understood that this guarantee of regular work does not apply in the event a prolonged shutdown is caused by an Act of God, Lightning, Fire, Explosion, Governmental Regulations or other conditions beyond the control of management. " 5. Basic Reasons for Introduction of the Plan: The Com­ pany has to operate steadily or there is no chance of profits and by giving the guarantee it pays slightly lower pay rates. 6. Has Company Paid for Time Not Worked? Yes, but only to men willing to work and on the job.

B. STABILIZATION

General stability prevails. - 211 -

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comment from Management.

D. OPINIONS OF MANAGEMENT

The guarantee works well in this case, but the Company feels that it should have a larger discount in wage rates now that wages are more than twice as high as when the plan was first effective. The discount is 5^ per hour under rates paid by other mills in the city of the Com­ pany's location. - 212 -

CASE STUDY 15

IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Twenty-one in the United States, a. Number of Plants of Manufacturing Subsidiaries r Eight. 2. Capitalization: $79,000,000. 3. Stock Ownership : Widely Dispersed. 4. Control over Operations : Centralized. Subsidiaries and foreign units are decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Cereals, flour and feed, chemicals and pet foods. 2. Classification of Products : Consumers' and producers1 non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical within limits. a. Size per Unit: Variable, from small to very large, car loads. Most products are very bulky. b. Weight per Unit: Variable, from light to very heavy. c. Cost per Unit: Low, considering weight and size. d. Risk of Obsolescence : None. e. Risk of Physical Deterioration : Great. Products require adequate storage even for the short run. f. Risk of Style Changes : None. 2. Methods of Distribution: Largely through wholesale grocers, feed dealers and jobbers ; chemicals by con­ tract purchase ; and cat foods through brokers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Not too wide, but March through June are less active than the rest of year. b. Cyclical Fluctuations : Moderate. c. Secular Trends : Stable. - 213 -

4. Ability to Forecast Demand: Reasonably accurate forecasts are made through study of previous experi­ ence, study of crop conditions, weather forecasts and condition of the consumer economy.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 6, 500 in the United States, a. Yearly Fluctuations in Employment: 8 - 10%. 2. Number of Employees Covered by the Plan : 3, 000. a. Yearly Fluctuations in Employment: Slight. 3. Employee Representation: International Union of United Brewery, Flour, Cereal and Soft Drink Workers of America (CIO) ; Paper Workers (CIO); D.P j O.W.A. (IND); International Association of Machinists (AFL) ; Chemical Workers (AFL); and International Ladies Garment Workers* Union (AFL). a. Labor Relations : Generally very good. .4. Labor Turnover: 27%. 5. Worker Productivity: Not available for this study. 6. Percent of Sales Dollar Represented by Payroll: 11. 5%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. .Vacations with Pay : Salaried - two weeks after one year and three weeks after fifteen years ; Hourly - one week after one year, two weeks after three years and three weeks after fifteen years. 2. Paid Holidays : Six. 3. Severance Pay: None. 4. Call-in Pay: Most hourly employees receive a mini­ mum of four hours pay at time and one-half plus one hour travel time. 5. Pay for Absence for Personal Reasons : Illness and accident plan for hourly employees ; with salaried employees each case is considered on its own merits.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : Yes. - 214 -

2. Bonuses : Staff and executive bonus plans in lieu of Profit Sharing for selected management personnel. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: A group life plan provides coverage approximately equal to one year's base earnings on a contributory basis. 2. Accident and Health: A Company financed plan pro­ vides benefits for all employees with six months service. 3. Hospitalization: Blue Cross at most locations. a. Surgical Benefits : Blue Shield at most locations.

D. RETIREMENT PLAN

1. Retirement Plan : A retirement annuity plan provides an annual annuity for each employee equal to forty percent of the employee's total contributions, a. Disability Benefits : Through the group life plan.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Four plants only. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMIN IS TRA T ION

1. Job Evaluation: None. 2. Merit Rating : For clerical jobs only.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1934. 2. Basic Provisions of the Guarantee Plan : - 215 -

»'l. QUALIFIED EMPLOYEES All employees, men and women, working on an hourly or piecework basis who have service credit of not less than six months accumulated within a continuous twelve months period, and have been approved as white card employees by the plant management, shall be entitled to the benefits of the plan. For the purposes of this sec­ tion, a month of service shall be a calendar month in which at least 70 hours have been worked. 2. HOURS GUARANTEED WHILE ON PAYROLL The Company guarantees qualified employees while they are on the payroll 140 hours of work in each month, for which they will be paid their base hourly rate. 3. HOURS GUARANTEED WHILE ON LAYOFF hi case qualified employees are laid off, that is re­ moved from the payroll, they will be paid for 70 hours per month at their base hourly rate for such total peri­ od of layoff within any continuous twelve month period as specified below : Length of cumulative service - Max. benefits per 12 mo. 6 months but less than 1 year 2 months 1 year but less than 2 years 3 months 2 years but less than 3 years 4 months 3 years and over 6 months 4. TIME OF PAYMENT Guaranteed time will be calculated once a month and will be included in pay for the week in which the last day of the month occurs. 5. ABSENCE If an employee is absent from his or her work for any personal reason, sickness or otherwise, or by reason of accident, the guaranteed time will be reduced by the number of hours of such absence. 7. TRANSFER OF EMPLOYEES The Company policy of transferring employees from one department to another when necessary will not be changed by this plan. If an employee does not accept the work resulting from such transfer, he may be de­ nied the benefits of this plan. 8. VACATION TIME A qualified employee on vacation who works in that month will be considered as being on the 140 hour guar­ antee basis which shall include his vacation time. - 216 -

"Qualified employees who are laid off and who do not work in that month may request any vacation pay to which they are entitled in addition to their 70 hour layoff pay. 9. RETURN FROM LAYOFF When a qualified employee is recalled from layoff and returns to work, he will automatically come under the 140 hour guarantee for the calendar month in which he returns. "

3. Coverage and Eligibility Requirements : See Item 1 under A2 above. 4. Safeguards and Escape Clauses :

”6. DISCONTINUANCE OF PAYMENTS No further payments will be made to any employee un­ der this plan if he is not recalled to work within 12 months from the date of his layoff, or if upon demand he fails to reenter the employ of the Company, or if he obtains full-time employment elsewhere. No further payments under this plan will be made to employees who leave the employ of the Company volun­ tarily, who are discharged for cause, or who are laid- off because of destruction of the plant or accident there to or to its machinery, or because of the permanent closing of a plant or department. In the event of failure to operate the plant or any de­ partment thereof due to a strike, or other conditions beyond the control of the Company, the plan shall be suspended for the duration of such strike or such conditions. 10. MODIFICATION OR TERMINATION OF THE GUARANTEED WORK PLAN. The Company reserves the right in its sole judgment to modify or terminate this plan at any time. It is hoped that this plan will be permanent but changed laws conditions or relationships may require modifications or termination of the plan. If for any reason the pres­ ent base week of 40 hours is changed, an adjustment of the plan will be necessary. "

5. Basic Reasons for Introduction of the Plan: To guar­ antee a minimum income to qualified employees during periods of slack business. - 217 -

6. Has Company Paid for Time Not Worked? Yes.

B. S TAB ILIZA TION

No formal plan.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The Guaranteed Work Plan is now somewhat nullified in some states by state unemployment compensation plans. Possibility of revising this plan is now being studied.

D. OPINIONS OF MANAGEMENT

Efforts toward stabilization or guarantees of employee income should be directed toward leveling out fluctuations in production demands over the year thus providing steadier employment. - 218 -

CASE STUDY 16

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Three. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: Corporation net worth $1,500,000. 3. Stock Ownership : Closely held by management group. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Automobiles and parts. 2. Classification of Products: Consumers1 durable goods. 3. Classification of Industry: Distribution, wholesale and retail. 4. Classification of Type of Manufacturing: Not applicable.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: No manufacturing. The business requires stocking items for distribution. a. Size per Unit: Small to larger. b. Weight per Unit: Light to heavy. c. Cost per Unit: Low to high. d. Risk of Obsolescence : Great on automobiles ; slight on parts. e. Risk of Physical Deterioration: Slight to moderate with proper storage, varying with the item. f. Risk of Style Changes : Great on cars. 2. Methods of Distribution : Retail to consumers and wholesale to dealers and garages. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Heavier in spring and sum­ mer ; lighter in late fall and winter. b. Cyclical Fluctuations : Automobile distribution is seriously affected by adverse economic conditions. Parts distribution is affected to a lesser degree. c. Secular Trends : Generally upward. - 219 -

4. Ability to Forecast Demand: Current forecasts are made with reasonable accuracy.

D. EMPLOYMEN T DATA

1. Yearly Average Employment: 325. a. Yearly Fluctuations in Employment: 310 - 340. 2. Number of Employees Covered by the Flan: 50. a. Yearly Fluctuations in Employment: None. 3. Employee Representation : No union, a. .Labor Relations : No union. 4. Labor Turnover : Not available for this study. 5. Worker Productivity: Not available for this study. 6. Percent of Sales Dollar Represented by Payroll : 5.7%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

' 1. Vacations with Pay: Hourly workers ; one week during the first five years, two weeks after five years. Sal­ aried workers ; two weeks during the first fifteen years and three weeks after fifteen years. 2. Paid Holidays : Six. 3. Severance Pay: Variable. The following clause covers employees under annual contract: '•If Employee is dismissed because of misconduct, the Company agrees to pay dismissal wages in an amount equal to 80 percent of Employee's average monthly earnings during the preceding twelve months, but not in excess of $150 per month. This dism issal wage will be paid for not more than one month for each full year Employee has been employed by the Company, but all payments shall cease on the date of termination of this contract. "Misconduct shall not include minor infractions of rules, but shall include serious infractions such as, stealing Company property or property of customers or other employees, -- being intoxicated on the premises of the Company, -- insulting or offensive attitude toward other employees, or deliberately offending Company customers. " 4. Call-in Pay: None. - 220 -

5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : A substantial plan was inaugurated in 1940 on a contributory basis. 2. Bonuses : Monthly bonuses are paid in addition to annual profit sharing. 3. Employee Savings Plans : Through profit sharing plan. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : $1, 000 life plus $1, 000 total and permanent disability. Contributory for first year, after that the Company pays the premiums. 2. Accident and Health: $10 weekly benefits under the policy and conditions described under Life Insurance. '3. Hospitalization: Available at employee's expense. a. Surgical Benefits : Available at employee's expense.

D. RETIREMENT PLAN

1. Retirement Plan: Retirement benefits available at age 65 through Profit Sharing Plan, a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: None. 2. Merit Rating : Yes. 221 -

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by Management about 1941. 2. Basic Provisions of the Guarantee Plan: "The Com­ pany agrees that Employee shall be continued on the payroll for one year from the date of this agreement, regardless of reduction in business volume, lack of work or the closing or curtailment of the particular department in which Employee works. " 3. Coverage and Eligibility Requirements : At discretion of Management: "It is the intention of (name of Com­ pany) to eventually furnish this type of contract to all employees who have demonstrated their value to the Company and are regarded as permanent employees. In no event, however, shall this contract be given employees who have been with (name of Company) less than one year. " 4. Safeguards and Escape Clauses:

" (Name of Company) agrees that in the event of changed business conditions so that Employee is not needed in the particular job in which he is now employed, he will be transferred to some other department of the busi­ ness at no reduction in his hourly rate for the period of this contract. Should Employee refuse transfer or sub­ stitute work offered by (name of Company), he shall be considered to have resigned and no further wages shall be paid under the terms of this agreement.

"If business conditions are so poor that the Company can find no work for Employee, (name of Company) shall not require Employee to report for work, but shall, until such time as Employee has obtained other employment, but not beyond the period of this contract, pay Employee wages equal to 80% of his average month­ ly earnings for the preceding twelve months, but not in excess of $150 per month.

"If Employee finds other work at a wage less than that paid him by (name of Company), the Company shall, for the period covered by this contract, pay to Employee - 222 -

the difference between the wage earned in his new job and the average earnings of his last twelve months with (name of Company) , but such deficit payment shall in no event be in excess of $100 per month.

"Sixty days or more before the expiration date of this contract, (name of Company) may notify Employee in writing of the termination of this contract, in which event Employee is subject to dismissal or layoff without compensation at the end of the period covered by this contract.

"Should (name of Company) give to the Employee no notice in writing regarding termination of this contract, then the contract will automatically be continued from year to year for twelve month periods.

"Only such cancellation of the agreement as is made prior to sixty days before the date of termination of the contract shall apply.

"Should any of the terms of this contract violate any Federal or state labor regulations, then those partic­ ular terms of this agreement become null and void without in any way effecting other items in this contract.

"The contract is based on (name of Company) being able to operate as a going concern, hence all the terms and conditions of the contract are null and void if a fire or tornado destroys (name of Company) place of business or if because of legal regulations or the cancellation of (name of Company) 1 s dealer franchise, (name of Com­ pany) is unable to operate its business on a normal b a s is ."

5. Basic Reasons for Introduction of the Flan: For better employee relations and to give the employee the great­ est possible security of employment. 6. Has Company Faid for Time Not Worked? Yes.

B. STABILIZATION

Reasonable stability, considering the business, has been attained. - 223

G. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZA TION

Experience lias shown that the guarantee plan has been of indifferent interest to employees during the years of labor scarcity.

D. OPINIONS OF MANAGEMENT

Because of the attitudes of employees toward the plan the program will not be expanded until the Contract is more highly regarded by employees. CASE STUDY 17

IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $165,000. .3. Stock Ownership : Closely held by management group. 4. Control over Operations : Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

.1. Kind of Products : Paints, varnishes and enamels. 2. Classification of Products : Consumers' durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Small to large. b. Weight per Unit: Variable. c. Cost per Unit: Variable. d. Risk of Obsolescence : Little risk. e. Risk of Physical Deterioration: Little risk. f. Risk of Style Changes : Little risk. 2. Methods of Distribution: Through retailers (paint and hardware). 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Slow winter, busy spring, fair summer and busy fall. b. Cyclical Fluctuations : Moderate. c. Secular Trends : Stable. 4. Ability to Forecast Demand: Can forecast within 15 to 20% based on previous experience.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 60. 225 -

a. Yearly Fluctuations in Employment: None. 2. Number of Employees Covered by the Plan : 45. a. Yearly Fluctuations in Employment: None. 3. Employee Representation : CIO. a. Labor Relations : Good. 4. Labor Turnover : 2%. 5. Worker Productivity: Fair to good. 6. Percent of Sales Dollar Represented by Payroll: 10%.

II. EMPLOYEE RELATIONS ACTIVITIES

A- POLICY on p a y m e n t s t o e m p l o y e e s

1 . Vacations with Pay : From one week to two and one- half weeks, depending on length of service. 2. Paid Holidays : Eleven. 3. Severance Pay: None. 4. Call-in Pay : None. 5. Pay for Absence for Personal Reasons : None, unless due to death in family.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Bonus is issued after three months, based on productivity of plant. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : $1, 000 per employee, paid by Company. 2. Accident and Health: $5. 00 per hospital day; $20. 00 per week for lost time. Company financed. 3. Hospitalization: None. a. Surgical Benefits : None.

D. RETIREMENT PLAN

1. Retirement Plan : None. a. Disability Benefits : None. 226

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. 6. Direct: Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: None. 2. Merit Rating : None.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company and the Union in 1938. 2. Basic Provisions of the Guarantee Plan : Minimum 48 weeks work, including vacation. 3. Coverage and Eligibility Requirements : All Union employees. 4. Safeguards and Escape Clauses : Sales must be no less than 80% of previous year. 5. Basic Reasons for Introduction of the Plan: Improved employee relations, due to increased security of employment. 6. Has Company Paid for Time Not Worked? No.

B. STABILIZATION

Generally stable.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZ A T ION

The Company's basic problems are (1) space for ware­ housing and (2) financing production through slow season.

D. OPINIONS OF MANAGEMENT

The plan has worked to the advantage of all concerned. - 227 -

CASE STUDY 18

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Two. a. Number of Manufacturing Subsidiaries : One. 2. Capitalization': $1,000,000. 3. Stock Ownership : Closely held by present management. 4. Control over Operations : Centralized, close control.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUF AC T UR ING

1. Kind of Products : Mastics, paints, enamels, protec­ tive coatings and materials used in the construction and maintenance of buildings and structures. 2. Classification of Products : Consumers' durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Intermittent.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical, within limits. a. Size per Unit: Variable, from small to large. b. Weight per Unit: Variable, from light to heavy. c. Cost per Unit: Variable, from low to higher. d. Risk of Obsolescence: Little or none on most items. e. Risk of Physical Deterioration : Variable. f. Risk of Style Changes : Slight in most cases. 2. Methods of Distribution: Direct to industrial consumers. 3.f Effects of Economic Conditions : a. Seasonal Fluctuations : 20 - 25% of normal. b. Cyclical Fluctuations : Low. c. Secular Trends : Stable. 4. Ability to Forecast Demand: With reasonable accuracy.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 23. a. Yearly Fluctuations in Employment: 9. - 228 -

2. Number of Employees Covered by the Plan : 23. a. Yearly Fluctuations in Employment: 9. 3. Employee Representation: No union, a. Labor Relations : No union. 4. Labor Turnover : Not available for this study. 5. Worker Productivity: Increased, due as much to new machinery and methods as to worker productivity. 6. Percent of Sales Dollar Represented by Payroll: Not available for this study.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year ; two weeks after two years ; three weeks after fifteen years. Z. Paid Holidays : Eight. 3. Severance Pay: One-half vacation with one week's no­ tice or 2% of last year's earnings, whichever is greater. 4. Call-in Pay: None. 5. Pay for Absence for Personal Reasons : Full pay if "pressing" personal reason.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Christmas bonus, 3. Employee Savings Plans : None. 4. Stock Ownership Plans : Stock is sold to those making a special contribution.

C. INSURANCE BENEFITS

1. Life Insurance: $2, 000,contributory. 2. Accident and Health : None. 3. Hospitalization: Available at employee's expense, a. Surgical Benefits : None.

D. RETIREMENT PLAN

1. Retirement Plan: $2. 50 per month per year of service, contributory. a. Disability Benefits : None. - 229 -

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society: None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. M erit Rating : None.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1939- 2. Basic Provisions of the Guarantee Plan :

"a. On a 43 3/4 hour week basis, there are 2, 275 hours in a year, provided a worker takes no vacation and loses no time whatever. This assumes that full pay is given for holidays, vacations and for time lost on account of illne s s. b. The Company guarantees all regularly employed workers who have been employed three consecutive months, 52 weeks pay a year at rates which will be de­ termined by mutual agreement, such weekly pay checks being estimated at l/52 of the annual pay. c. It is the Company's intention to employ in the factory regularly only the number of workers to operate on the basis of 43 3/4 hour week during the period of normal business volume, i. e. , July, August, September and October, and at such other times as may be deemed necessary, the regular work week may be increased. During this period, however, each worker would receive his regular rate of pay for 43 3/4 hours, the pay for the extra hours being placed to his individual credit in the '•Employees Pay Reserve Fund. ' d. During the four months (17 weeks) of slack period - 230 -

production, i. e. , January, February, March and April, the regular work week may be decreased, but the em­ ployees will receive pay for 43 3/4 hours at the regular rate, the pay for the hours not worked being withdrawn from the 'Employees Fay Reserve Fund. 1 e. Except in emergencies, no employee shall be re­ quired to work more than 6 days in any 7 day period. f. Any balance standing to the credit of any individual employee in the 'Employees Fay Reserve Fund' on June 1, of each year will be paid to the employee at that tim e. g. If there is not sufficient work to require an employ­ ee's service during a slack period, he may be paid in advance for time he has not worked. Such time will be carried in the 'Employees Fay Reserve Fund' as a debit balance and worked off during the following busy season. h. Any balance standing to the credit of any individual employee in the 'Employees Pay Reserve Fund' would be paid to him in the event that he left the employ of the Company for any reason. Any debit balance would be deducted from money due the employee, including separation allowance. "

3. Coverage and Eligibility Requirements : Regular employees with at least three months service. 4. Safeguards and Escape Clauses : See 2 above. 5. a. Basic Reasons for Introduction of the Flam.: To give full employment and to have more hours avail­ able during busy season. It is sound business practice and desirable for employees, b. Basic Reasons for JDiscontinuation of the Flan : Flan discontinued in United States plant during World War II. Men wanted overtime pa.y. Still in effect in Canadian plant. 6. Has Company Paid for Time Not Worked? Yes.

B. STABILIZATION

Efforts to stabilize further continue.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION - 231 -

During busy times like this, older service men do not like a guarantee. They have year-round work anyway. With a guarantee they do not gain. They want overtime pay. The Company questions the value of the plan.

D. OPINIONS OF MANAGEMENT

The Company questions the value of the plan unless and until slack times occur. In a short labor market such a plan has little value. - 232 -

CASE STUDY 19

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : One. 2. Capitalization: $100,000. 3. Stock Ownership : Closely held by management group. 4. Control over Ope rations : Centralized control with participative management.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Envelopes. 2. Classification of Products: Consumers' non-durable goods. 3. Classification of Industry: Semi-process. 4. Classification of Type of Manufacturing : Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Variable, from small to large. b. Weight per Unit: Variable, from light to heavy. c. Cost per Unit: Varies with unit. d. Risk of Obsolescence : Slight. e. Risk of Physical Deterioration: Slight. f. Risk of Style Changes : Slight. 2. Methods of Distribution: Through stationers, printers and jobbers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : 25% fluctuation, high to low. b. Cyclical Fluctuations : Moderate. c. Secular Trends : Stable. 4. Ability to Forecast Demand: Follow Graphic trends. The industry is usually the last to go down and the first to pick up.

D. EMPLOYMENT DATA - 233 -

1. Yearly Average Employment: 100. a. Yearly Fluctuations in Employment: 5%. 2. Number of Employees Covered by the Plan: 75%. a. Yearly Fluctuations in Employment: 5%. 3. Employee Representation : Independent Union. • a. Labor Relations : Very fair. 4. Labor Turnover: 5%. 5. Worker Productivity: Effect of guarantee was good at first, now it has little effect. 6. Percent of Sales Dollar Represented by Payroll: 24%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year ; two weeks after two years; three weeks after fifteen years. 2. Paid Holidays : Five, after three years. 3. Severance Pay: None. 4. Call-in Pay : None. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans: None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: Group life coverage. 2. Accident and Health: In process of negotiation. 3. Hospitalization: In process of negotiation. a. Surgical Benefits : In process of negotiation.

D. RETIREMENT PLAN

1. Retirem ent Plan: Up to $125 per month after attain ment of age 65 and on completion of twenty years service. - 234 -

a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

1. Initiated by the Company in 1925. Discontinued in 1946. 2. Basic Provisions of the Guarantee Plan: Not available. 3. Coverage and Eligibility Requirements : Employees with five years service. 4. Safeguards and Escape Clauses : Not available. 5. a. Basic Reasons for Introduction of the Plan: To offer additional security to employees, b. Basic Reasons for Discontinuation of the Plan : The independent union by a vote of the membership decided to drop the guarantee in favor of greater holiday benefits. The employees covered had little to lose because the Company has not missed a pay­ roll in forty-three years. The lowest point of oper­ ation in the depression was three seven hour days per week. 6. Has Company Paid for Time Not Worked? No.

Note : Management comments on B, C and D were not available. - 235 -

CASE STUDY 20

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: Not available for this study. 3. Stock Ownership: The common and preferred stocks are wholly owned by utility companies. 4. Control over Operations: Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Production, transmission and distribution of electricity. 2. Classification of Products : Consumers1 and producers' service. 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration: Not applicable. f. Risk of Style Changes : Not applicable. 2. Methods of Distribution: Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Loads are usually higher in winter than in summer. b. Cyclical Fluctuations : Volume varies with general business conditions. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Fairly accurate forecasts are made on normal loads, but estimates can be affected by wars, economic conditions and other such factors. - 236 -

D. EMPLOYMENT DATA

1. Yearly Average Employment: 210. a. Yearly Fluctuations in Employment: Practically nil. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation: Utility Workers Union of Am erica (CIO). a. Labor Relations : Generally good. 4. Labor Turnover : Practically none. 5. Worker Productivity: Generally good. 6. Percent of Sales Dollar Represented by Payroll: 15%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year; two weeks after two years ; three weeks after fifteen years. 2. Paid Holidays : Ten. 3. Severance Pay: Awarded in the few rare instances that occur. Fitted to conditions surrounding the case. 4. Call-in Pay: Four hours. 5. Pay for Absence for Personal Reasons : Pay is granted in some instances but the practice is not general. Three days are allowed for death in family, for example.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : Christmas bonus of $25. 00 is usual. 3. Employee Savings Plans : Informal plan. 4. Stock Ownership Plan: None.

C'. INSURANCE BENEFITS

1. Life Insurance : $1 ,000 per $1,000 of base earnings. Contributory. 2. Accident and Health: None. 3. Hospitalization: Blue Cross. a. Surgical Benefits : Blue Shield. - 237 -

D. RETIREMENT PLAN

1. Retirement Plan : A plan provides the equivalent of approximately half pay after twenty-five years , in­ cluding Social Security. a. .Disability Benefits : One week per year of service up to twenty weeks in any one year.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society: None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation : None. 2. Merit Rating : None.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

No plan in effect.

B. S TAB ILIZATIQN

General stability has been attained.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comment by Management.

D. OPINIONS OF MANAGEMEN T

No particular reason for such a plan in a public utility industry which is very stable as to work provision and "take home" pay. - 238 -

CASE STUDY 21

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Four, plus forestry operations, a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $18,000,000. 3. Stock Ownership : Control held by management group. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Wood pulp, chemical pulp, turpen­ tine, chlorine, paper, paper board and paper products. 2. Classification of Products : Producers1 non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing : Continuous.

C. CHAR AC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Low. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration: Little or none. f. Risk of Style Changes : Little or none. 2. Methods of Distribution: Direct to manufacturers, to jobbers, wholesalers and subsidiary merchant houses for resale. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : None. b. Cyclical Fluctuations : Not too severe. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Accurate forecasts are currently made.

D. EMPLOYMENT DATA - 239 -

1. Yearly Average Employment: 7,000. a. Yearly Fluctuations in Employment: Negligible. 2. Number of Employees Covered by the Flan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation: Independent union in one plant, remainder unorganized. 4. a. Labor Relations : Very good. 4. Labor Turnover : 21%. 5. Worker Productivity: Remains constant because this is a stream industry in which workers must maintain the pace. 6. Percent of Sales Dollar Represented by Payroll : 30%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay : One week after one year ; two weeks after five years. 2. Paid Holidays : None. 3. Severance Pay: Two weeks notice or two weeks pay. 4. Call-in Pay: Four hours. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : A service bonus is added to the base rates of employees at the rate of five percent for each five years up to twenty-five percent for twenty five years. Incen­ tives are based on the base rate exclusive of service bonuses. A Christmas bonus is paid at the end of the year if profits justify such a payment and upon action of the Board of Directors. 3. Employee Savings Plans: None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: $1,300 to $10,400 depending on earnings, contributory. 2. Accident and Health : Provided in one plant by a Mutual Aid Society; none in other plants. - 240 -

3. Hospitalization: Blue Cross Plan, contributory. a. Surgical Benefits : $150 maximum, contributory.

D. RETIREMENT PLAN

1. Retirement Plan : Yes, contributory. a. Disability Benefits : In process of formulation.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: All plants. 2. Mutual Benefit Association : One plant only. 3. Mutual Aid Society : One plant only. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: In effect and current. 2. Merit Rating : In effect and current.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees.

B. STABILIZATION

A bigh degree of stabilization has been attained by this company. Attempts to stabilize even further are continuing. New products, new methods of using existing and newly de­ veloped products, and new uses for old products are being sought constantly. There is an extensive program of mar­ ket research.

Workers in this company have never been let out because of a change in methods. A very liberal policy has been estab­ lished which in effect guarantees income to the workers dis­ placed by methods changes, although no formal commitment is made. An even more liberal policy is applied to fore­ men in the same situation. - 241 -

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The difficult problems of stabilization have been met and overcome by this company. Nevertheless, continuing ef­ forts are being made to strengthen and add to the program of stabilization. Since the Company offers an unusual amount of security to its employees and since those em­ ployees are well aware of the intense sincerity of the man­ agement and the constant attempts by the Company to add to the security of the workers, a guarantee would not be acceptable to employees. They would feel that the Com­ pany was taking a step backward and they might begin to doubt its good faith. It so happens that in this instance, stabilization has been such a success that anything which might detract from what is already offered employees would be open to suspicion.

D. OPINIONS OF MAN AGEMEN T

A guarantee by the Company would mean less than present stabilization since in a formal commitment the Company would have to protect itself and consequently not offer any unlimited guarantee. More has already been done for the workers than could be guaranteed. Workers now have con­ fidence in the Company and a guarantee might cause a loss of that confidence. By formally offering less than is now offered, the Company would not be believed to be sincere by the workers. They would regard the guarantee as a piece of paper and nothing more.

A full program of employee services is offered. There is continuing personnel research, working toward more bene­ fits for the workers and a more contented work force. These, together with the stability of employment which has been achieved, offer to the employees more than possibly could be included in a guarantee. Compared with what has already been done, a guarantee is a hollow thing, devoid of positive meaning. case: study 22

IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : This is a local associated, company of a nation-wide public utility. It has four district operations. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $52,000,000. 3. Stock Ownership : Widely dispersed. Controlling interest retained by parent company. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Service. 2. Classification of Products : Consumers' service. 3. Classification of Industry: Public utility. 4. Classification of Type of Manufacturing : Not applicable.

C. CHARAC TER IS T ICS OF PRODUCTS

1. Manufacture to Stock: Not applicable. a. Size per Unit: Not applicable. b. Weight per Unit: Not applicable. c. Cost per Unit: Not applicable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration : Not applicable. f. Risk of Style Changes : Not applicable. 2. Methods of Distribution : Direct to consumers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Virtually no seasonal fluc­ tuations except for a ten day rush period before Christmas and a slight rush in the spring. b. Cyclical Fluctuations : Practically none. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Forecasts, within limits, are currently made. - 243 -

D. EMPLOYMENT DATA

1. Yearly Average Employment: 3,063. a. Yearly Fluctuations in Employment: 4%. 2. Number of Employees Covered by the Plan : No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation: American Union of Tele­ phone Workers (IND). a. Labor Relations : Good. 4. Labor Turnover : 18%. 5. Worker Productivity: Good. 6. Percent of Sales Dollar Represented by Payroll : 49%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week after one year ; two weeks after two years ; three weeks after fifteen years. 2. Paid Holidays : Seven. 3. Severance Pay: Only in reduction of work force. 4. Call-in Pay; Three hours. 5. Pay for Absence for Personal Reasons : Granted.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : $100 death benefits paid for each year of service up to a maximum of $2, 500, financed by the Company. 2. Accident and Health: Benefits on a graduated scale up to payments, after twenty-five years of service, for fifty-two weeks of an amount per week equal to forty hours times the basic hourly rate, Company financed. 3. Hospitalization: Blue Cross Plan, Company financed, a. Surgical Benefits : Blue Shield, Company financed. - 244 -

D. RETIREMENT PLAN

1. Retirement Plan: Benefits begin at ages 55, 60 or 65, depending on length of service with the Company, a. Disability Benefits : Provided.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : .None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation : None. 2. Merit Rating : No formal plan.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees.

B. S T ABILIZA TION

By the very nature of the industry, employment is, for all practical purposes, completely stabilized. The service furnished by this utility has been so accepted by the public that it is now the last of the home conveniences which is released in times of depression. It is no longer considered a luxury item. Consequently, stability of operations is present here to a degree found in almost no other industry.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STAB ILIZA TION

This is a service industry in which demand is constant and of the moment. It must be served immediately and there is no manner in which advance operations can be performed. - 245 -

As a result, there is nothing which can be done to add to the high degree of stability now enjoyed and a guarantee is not needed. Employment is on a career basis.

D. OPINIONS OF MANAGEMEN T

No serious consideration has been given by management to the problem of a guarantee, nor is any consideration of the question contemplated. Neither the Union nor individual employees have made any serious request for consideration of a guarantee.

Any guarantee could mean little to the workers. It would, of necessity, offer less than they now receive since they are employed on a career basis. In addition, the increasing mechanization which is constantly occurring in the industry would mean that any guarantee offered would have to be revised downward almost constantly, including fewer indi­ viduals as time passed.

NOTE: In this particular case, in view of the widespread and closely coordinated activity of the whole group of com­ panies, of which this one is a part, the opinions of this individual must be considered primarily as his own and not, as in other cases, as the reflection of management opinion throughout the whole enterprise. - 246 -

CASE STUDY 23

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Three in the United States and one in Canada. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: Not available for this study. 3. Stock Ownership : Control held by management group. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Soaps, lotions and cosmetics. 2. Classification of Products : Consumers' non-durable goods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock:. Economical. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Low. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration: Little or none for some products ; other products deteriorate if stored for more than six weeks at normal temperatures or for more than three months in cold storage. f. Risk of Style Changes : Little or none. 2. Methods of Distribution: 90% direct to retailers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Leveled by action of the Company. b. Cyclical Fluctuations : Usually not too severe. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Reasonably accurate forecasts are made. D. EMPLOYMENT DATA

1. Yearly Average Employment: 2, 000 in all plants ; in the three United. States plants, 1, 800. a. Yearly Fluctuations in Employment: Negligible. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation : No union. a. Labor Relations : Employee relations good. 4. Labor Turnover : 18%. 5. Worker Productivity: High. 6. Percent of Sales Dollar Represented by Payroll: 17%.

EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1 . Vacations with P ay: One week after one year ; two weeks after five years. 2. Paid Holidays : Six. 3. Severance Pay: None. 4. Call-in Pay: Two hours ; three hours inemergencies. 5. Pay for Absence for Personal Reasons : None.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1.. Life Insurance: $1,000 for men, $500 for women, financed by the Company. Additional coverage available on a contributory basis. 2. Accident and Health: $10 to $32 per week, contributory. 3. Hospitalization: $3 to $6 per day, contributory. a. Surgical Benefits : $150 maximum, contributory.

D. RETIREMENT PLAN

1. Retirement Plan: $100 minimum, upward with length - 248 -

of service and earnings. Employee contribution is 1% for the first $3000 and l/2% above that amount, a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None..

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Complete and current. 2. Merit Rating : Complete and current.

HI. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees.

B. S TAB ILIZA T ION

A high degree of stabilization has been attained. Only one layoff of regular employees within the last twenty-five years.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

The primary problem in the maintenance of existing stabili­ zation is that presented by current trends in the industry.

D. OPINIONS OF MANAGEMENT

Management sees no advantage to guaranteeing wages. To this company, stabilization is the important thing. A real moral obligation is felt to any individual becoming an em­ ployee of the Company. - 249 -

Management expresses the opinion that they could do no more under a guarantee than they already offer their em­ ployees under stabilization. In fact, they feel that the limitations which would have to be written into a guarantee might result in fewer benefits and advantages to the em­ ployees. A written commitment might result in manage­ ment doing only those things necessary to fulfill that com­ mitment and feeling relieved of the responsibility of doing anything more for employees — a thing which management currently considers as a heavy obligation.

Employee confidence in the Company is at a high level. Following twenty-five years of stabilized employment, the Company believes that it is as high as it could possibly be under a guarantee. - 250 -

CASE STUDY 24

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Eight manufacturing divisions, a. Number of Manufacturing Subsidiaries : One. 2. Capitalization : $236, 000, 000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Chemicals, photographic equipment, photographic supplies, gelatines, vitamins, plastics and related products. 2. Classification of Products : Consumers* and producers* goods, both durable and non-durable. 3. Classification of Industry: The industry cannot be classified as any one type. The varied products re­ quire process, semi-process and assembly types of production. 4. Classifi cation of Type of Manufacturing : Continuous and intermittent, varying with the product.

C. CHARACTERISTICS OF PRODUCTS

L. Manufacture to Stock : Economical. a. Size per Unit: Small to moderately large. b. Weight per Unit: Light to moderately heavy. c. Cost per Unit: Low to relatively high. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration : Slight if storage is not unduly prolonged. f. Risk of Style Changes : Little or none in most instances. 2. Methods of Distribution: Direct to consumers, retail­ ers and wholesalers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Slight to moderately wide. - 251 -

b. Cyclical Fluctuations: Not too severe. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Accurate forecasts are currently made.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 46,400. a. Yearly Fluctuations in Employment: 10% to 13%. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation; No union, a. Labor Relations : No union. 4. Labor Turnover : 9% based on one plant which em­ ploys l/4 of the total number employed. 5. Worker Productivity:' Good. 6. Percent of Sales Dollar Represented by Payroll: 41%.

II. EMPLOYEE RELATIONS ACTIVITIES

A- POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One year or more of continuous employment - two weeks ; five, six and seven years of service - two weeks and one day; eight, nine, and ten years of service - two weeks and two days ; eleven and twelve years of service - two weeks and three days ; thirteen and fourteen years of service - two weeks and four days ; fifteen years of continuous service - three weeks ; compensated at straight time service rate ( or average earnings for those on incentive ) for declared schedule of working hours. 2. Paid Holidays : Six. 3. Severance Pay: No severance pay as such. 4. Call-in Pay : Minimum reporting time pay and call-in pay equivalent to four hours granted where employees are not notified in advance not to report or where em­ ployee is called in prior to normal starting time. 5. Pay for Absence for Personal Reasons : Personal ab­ sences of hourly employees are generally not compen­ sated. Clerical non-exempt people are compensated at discretion of the supervisor. Salaried exempt employees are compensated. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing: Each employee receives a wage divi­ dend based on his earnings with the Company during the previous five calendar years, and upon the amount of dividends declared on the Company's common stock during the previous year. 2. Bonuses : None, unless wage dividend is so considered. 3. Employee Sayings Plans : A Company Savings and Loan Association provides plans for employee saving for long range projects, for expenses recurring annually and for investment purposes. 4. Stock Ownership Plan : None.

INSURANCE BENEFITS

1. Life Insurance : Group life plan with disability clause is available at option of employee and is contributory. The amount of insurance is determined by multiplying the weekly rate by fifty-two, rounding the total out to the nearest $100 and multiplying by two. 2. Accident and Health : A Company administered plan. Compensation begins with the second week of absence and is based on straight time rates, declared schedule of working hours and length of service. 3. Hospitalization: Blue Cross Plan, contributory. a. Surgical Benefits : Blue Shield Plan, contributory.

RETIREMENT PLAN

1. Retirement Plan: Retirement plan covers men with twenty years of service and women with fifteen years of service upon reaching normal retirement age - 65 for men and 60 for women. Those who qualify receive an­ nuities for life after normal retirement age even though employee may have retired earlier. Payments deter­ mined by a formula based on earnings. a. Disability Benefits : The group life plan makes dis­ ability payments to employee subscribers totally and permanently disabled before age 60 and during the first 15 years of employment. These benefits are paid monthly starting at the end of twenty-six - 253 -

weeks of disability. The total amount of such payments would be limited to the amount of life insurance in force at the time. Company plans cover employees with 15 or more years service.

£. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society: None. 4. Savings and Loan: Yes. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : Yes.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes.

ID. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees.

B. S TAB ILIZA TION

The Company has for many years given constant attention to the planning of its production schedules. This has made possible the achievement of a marked stability of employ­ ment over the years.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comment from Management.

D. OPINIONS OF MANAGEMENT

No opinions were offered for this study. - 254 -

CASE STUDY 25

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Twenty-three plants and retailing operations in twenty states. a. Number of Manufacturing Subsidiaries : Two. 2. Capitalization : $34, 000, 000. 3. Stock Ownership : Widely dispersed. 4. Control over Operations : Decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Foodstuffs. 2. Classification of Products : Consumers' non-durable goods. 3. Classification of Industry: Process and retail distri­ bution. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Low. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration: Little or none if storage is not prolonged. f. Risk of Style Changes : Little or none. 2. Methods of Distribution: Direct to the ultimate con­ sumer through Company owned and operated ware­ houses and retail outlets. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Very slight, generally. b. Cyclical Fluctuations : Slight. c. Secular Trends : Upward. 4. Ability to Forecast Demand: Accurate forecasts are currently made. - 255 -

D. EMPLOYMENT DATA

1. Yearly Average Employment: 35,000 of which 27,000 are full-time and. the remainder part-time ; 2, 810 are engaged in manufacturing, 4, 000 in warehousing and transportation and the remainder in retailing. a. Yearly Fluctuations in Employment: Negligible. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation : United Brotherhood of Car­ penters and Joiners (AFL) ; Retail Clerks International Protective Association (IND) ; Amalgamated Meat Cut­ ters and Butcher Workmen (AFL) ; International Broth­ erhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (AFL) ; International Brotherhood of Firemen and Oilers (AFL) ; and the United Associa­ tion of Journeyman Plumbers and Fitters (AFL). a. Labor Relations : Very good. 4. Labor Turnover: 33.6% for regular employees. 5. Worker Productivity: Approximates pre-war years. 6. Percent of Sales Dollar Represented by Payroll: 13%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week after one year; two weeks after three years. 2. Paid Holidays : Six.. 3. Severance Pay: One pay period or comparable notice. 4. Call-in Pay : Four hours. 5. Pay for Absence for Personal Reasons : Death in family and jury duty only.

B. PROFIT SHARINC t, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : All employees with two or more years of service are eligible for a liberal plan. 2. Bonuses : None. Each employee is given a Christmas present, not considered a bonus by the Company. 3.- Employee Savings Plans: See B1 above. 4. Stock Ownership Plans : None. - 256 -

C- insurance BENEFITS

1. Life Insurance: $2,000, Company financed. 2. Accident and Health: $15 to $40 per week depending on earnings. Company financed. 3. Hospitalization: Blue Cross Plan, contributory. a. Surgical Benefits : Standard Surgical and Medical Policy, contributory.

D. RETIREMENT PLAN

1. Retirement Plan: Retirement is at age 65 unless low­ ered in special cases by action of the Board of Direc­ tors. The employee receives monthly an amount equal to 3/4 of 1% of the first $3, 000 of wages or salary per year of his average pay in the last ten years, and 1 l/2% of all earnings over $3, 000. A minimum of fifteen years of service is required for retirement. A $500 payment is made to the beneficiary of a deceased, re­ tired employee. The plan is financed by the Company, a. Disability Benefits : Only on full retirement after age 55, as a part of the retirement program.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: Yes. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMIN IS TRATION

1. Job Evaluation: Office and management groups. 2. Merit Rating : Comprehensive coverage. in. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind is offered to employees. - 257 -

B. STABILIZATION

Production and employment have been stabilized generally with some seasonal fluctuations in manufacturing. Man­ agement recognizes all of the advantages of stabilization and considers it essential.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

Stabilization has been attained and is successful in this organization. The diversity of operations and the varying conditions under which they are performed would make the establishment of a guarantee difficult. Management feels that no further advantages would accrue to the Company or to the employees under a guarantee.

D* OPINIONS OF MANAGEMENT

Management suggests that guarantees are out of place in a free enterprise system and are a step toward regimentation. Guarantees might well be a wedge for a movement toward government controls such as occurred in the field of grade labeling. It would hinder management freedom of action. Restricting industry would soon lead to restriction of the freedom of movement of the worker. Even under a full system of voluntary guarantees with no governmental regi­ mentation, the buying habits of consumers would be guided and regulated which would be regimentation of a sort and which would restrict consumer freedom of choice. A chain of guarantees would soon shackle the entire economic system.

The worker's ambition is taken away by excessive security. The knowledge that, if the benefits offered by our economic system are to be realized, they must be continuously earned, is a powerful incentive. As a result, there is no relaxing and resting by the worker until such time as he becomes eligible for a pension, as would be the case under a guarantee.

Of much greater importance than a guarantee, are the sin­ cerity and the integrity of the employer, plus sound busi­ ness leadership and management control. Leadership is important in business but it must be business leadership. - 258 -

This is important. Stabilization should be encouraged by that business leadership. A full system of guarantees would detract from business leadership. 259 -

CASE STUDY 26

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : Six plants and two retail stores, a. Number of Manufacturing Subsidiaries : None. 2. Capitalization : $32, 000, 000. 3. Stock Ownership : Widely dispersed. 4. Control over Op erations : Highly decentralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : Plants produce textiles. Retail stores handle a complete line of department store merchandise. 2. Classification of Products : All products made or handled by the Company are consumers’ goods. Retail store products are both durable and non-durable. Products of the plants are non-durable. 3. Classification of Industry: Process and distribution. 4. Classification of Type of Manufacturing: Continuous.

C. CHARACTERISTICS OF PRODUCTS

1. Manufacture to Stock: Economical within limits. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Relatively low. d. Risk of Obsolescence : Little or none. e. Risk of Physical Deterioration: Slight. f. Risk of Style Changes : Moderate. 2. Methods of Distribution: Retail stores each sell direct to consumers ; plants send 5% of output to the Company retail stores, the remainder is distributed through wholesalers, jobbers and brokers. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Not too wide. The Company is much more stable than the balance of either of the industries in which it is engaged. - 260 -

b. Cyclical Fluctuations : Not too severe due to the Company's unique stability in its fields. c. Secular Trends : Upward. 4. Ability to Forecast Demand : Currently forecast with accuracy, within reasonable limits.

D. EMPLOYMENT DATA

1. Yearly Average Employment: 18,500, distributed as follows - Store A, 10, 000 ; Store B, 2, 500 ; plants 6, 000. a. Yearly Fluctuations in Employment : Practically non-existent except for retail employees hired on a temporary basis. For regular employees, 7%. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment : No plan. 3. Employee Representation : Stores -Building Service Employees International Union (AFL) and various craft unions (AFL); Plants - Textile Workers Union of Amer­ ica (CIO). a. Labor Relations : Good. 4. Labor Turnover : Exact percentages not available but known to be high because of the large number of young women who want employment for short periods. 5. Worker Productivity: No noticeable change. 6. Percent of Sales Dollar Represented by Payroll: "Impossible to ascertain on any meaningful basis. "

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: Store A - two weeks after one year, three weeks after two years and four weeks after twenty-five years ; Store B - policy not available but known to be somewhat less liberal; Plants - one week after one year and two weeks after five years. 2. Paid Holidays : Store A - six; Store B - unknown but fewer than six; Plants - one. 3. Severance Pay : No definite policy. 4. Call-in Pay: Four hours. 5. Pay for Absence for Personal Reasons : Stores - granted; Plants - none. - 261 -

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans: None. 4.' Stock Ownership Plans : None.

C. INSURANCE PLANS

1. Life Insurance: Variety of contributory plans. .2. Accident and Health: Available on a contributory basis. 3. Hospitalization: Blue Cross Plan in stores ; hospitali­ zation insurance in plants ; all contributory, a. Surgical Benefits : Blue Cross Doctors' Plan in stores, contributory; none in plants.

D. RETIREMENT PLAN

1. Retirement Plan : Provides for compulsory retirement at age 65, optional retirement at age 60 and retirement with Company approval at age 55. a. Disability Benefits : Provided.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan : None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: In effect and current in stores ; none in plants. 2. Merit Rating : In effect and current in stores ; none in plants.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES 262

No guarantee of any kind is offered to employees.

B. STABILIZATION

Concerted efforts to stabilize employment have been suc­ cessful to such an extent that even the truck drivers have not been organized. All during the depression, they had a minimum of four days work each week. The employees themselves feel that unionization could not bring them more benefits. This company claims to be much more stable than most retail operations.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

Management feels that there is an inherent danger of stir­ ring the imaginations of workers by guaranteeing less than they have enjoyed without a guarantee. If the Company were to set up a guarantee with the usual limitations, the employees would think that to be the level of business activity which the Company planned for the future.

D. OPINIONS OF MANAGEMENT

Management states that it could establish a guarantee cov­ ering 80% of all employee hours worked, but that they see little value in guaranteeing because the guarantee would have to be limited, either as far as hours guaranteed per week, or total number of employees covered. In either case, the guarantee would be for less than the workers are currently receiving.

At the same time, management hesitates to tie itself to a principle calling for the layoff of workers according to seniority which they would do if the guarantee were es­ tablished on the usual basis of MAll employees with more than 'X' years of service ..." Management feels that merit must govern if operations are to be successful.

It is believed that if the guarantee were limited to 80% of the employees (on the basis of length of service), the 20% not covered would become dissatisfied and the labor turn­ over of the Company would tend to increase. At the same - 263 -

time, employees with sufficient service to be included under the guarantee would relax and fail to produce up to their best standard, feeling that they were secure for so long as they did a passable job. Offering a guarantee would decrease, rather than increase, productive effort.

The idea was expressed that a guarantee or any other policy or group of policies will not create wholesome attitudes on the part of the workers. The control of the whole situation rests with the management organization of a company. Good supervision is the key to sound management and wholesome employee attitudes. With good supervision, a guarantee does not seem essential.

On the whole, workers are more emotionally unstable today than ever before. Actually, security means little to them. They will quit their jobs on a •’whim”. The real problem of management is to create a set of values which will seem worthwhile to the workers and one which they will accept. - 264 -

CASE STUDY 27

I. IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants: One. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $250,000. 3. Stock Ownership : Closely held by management group. Company is family owned. No outsiders hold stock. 4. Control over Operations : Completely centralized control rests in the hands of the president.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Ladies1 low cost dresses. 2. Classification of Products : Consumers' non-durable goods. 3. Classification of Industry : Assembly. . 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical within limits set by style factor. a. Size per Unit: Small. b. Weight per Unit: Light. c. Cost per Unit: Moderate. d. Risk of Obsolescence : Very great. e. Risk of Physical Deterioration: Small. f. Risk of Style Changes : Very great. 2. Methods of Distribution : Through retail stores and mail order houses. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Very great. b. Cyclical Fluctuations : Inconclusive. Have never seen any direct correlation. c. Secular Trends : Same as 3b above. 4. Ability to Forecast Demand : "Well-nigh" impossible. - 265 -

D. EMPLOYMEN T DATA

1. Yearly Average Employment: 350. a. Yearly Fluctuations in Employment: 20%, plus or m inus. 2. Number of Employees Covered by the Plan : No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation: International Ladies Gar­ ment Workers Union (AFL); International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Hel­ pers of America (AFL). a. Labor Relations : Highly amicable with both unions. 4. Labor Turnover: 120% to 200%. 5. Worker Productivity: Little difficult to comprehend. Company figures show that productivity per employee has dropped 6% over the past two years. 6. percent of Sales Dollar Represented by Payroll: 20%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week up to five years and two weeks thereafter. 2. Paid Holidays : Six. 3. Severance Pay: None. 4. Call-in Pay: Four hours. 5. Pay for Absence for Personal Reasons : None, except for office employees and supervisors. Sick pay granted on a sliding scale from one day to two weeks, adminis­ tered very liberally.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. ■ Profit Sharing : Not as such. See B2 below. 2. Bonuses : Year-end bonuses granted all employees. Department heads receive bonuses based on depart­ ment efficiency. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS - 266 -

1. Life Insurance: None. 2. Accident and Health: None. 3. Hospitalization: Company financed for each employee, a. Surgical Benefits : Same as 3 above.

D. RETIREMENT PLAN

1. Retirement Plan : None. a. Disability Benefits : None.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

1. Credit Union: The Union has one. .2. Mutual Benefit Association : None. 3. Mutual Aid Society: None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : None, it is contra-union.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

There is no guarantee given to employees. The Company attempts to provide full employment through the sales pol­ icy. It has been successful in so doing for the past sixteen years, but this is not a guarantee to the employees.

B. STABILIZATION

Stability of operations and employment are yet to be obtained.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TABILIZATION

In the garment industry, which is so radically affected by style changes, guarantees are highly impracticable. - 267 -

D. OPINIONS OF MANAGE MEN T

A guarantee would, (and stabilization , to the degree attained, has in the case of this firm) give the guaranteeing firm an edge in the labor market as opposed to a firm with less sta­ bility paying higher rates. Such an advantage might be readily exploited sales-wise. - 268 -

CASjs STUDY 28

I. IDENTIFYING IN FORj^lA TIQN

A. SIZE, OWNERSHj$> AND CONTROL

1. Number of Pla;*its : Twenty. Three refineries and seventeen natural gasoline plants. There are also a large number

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFACTURING

1. Kind of Products : A complete range of petroleum products and c ertain petroleum derived chemicals. 2. Classification of Products: Consumers' and producers' non-durable g^ods. 3. Classification of Industry: Process. 4. Classification of Type of Manufacturing: Continuous.

C. CHARAC TER IS TIC S OF PRODUCTS

1. Manufacture Stock: Possibility varies withproducts. a. Size per Unit: Variable. b. Weight per Unit: Variable. c. Cost per lUnit; Variable. d. Risk of Obsolescence : Not applicable. e. Risk of Physical Deterioration : Variable. f. Risk of Changes : Not applicable. 2. . Methods of Distribution : Subsidiaries, salaried branch operations, j°Lbers, wholesalers and retail dealers. 3. Effects of Economic Conditions : a. Seasonal fluctuations : Although seasonal fluctua­ tions vary- among products, gasoline running high in sumi»el and heating oils in winter, total petro­ leum deiAsand through the year is not subject to marked variations and therefore employment within the industry continues relatively stable. - 269 -

b. Cyclical Fluctuations : Cyclical variations ordi­ narily are not as great in petroleum consumption as in general business activity. Motor gasoline and heating oils exhibit less cyclical variation than do fuel oils, which represent largely indus­ trial use and therefore follow business activity more closely. c. Secular Trends : Secular growth over the long terms has characterized petroleum demand in general and most individual petroleum products in particular. Total petroleum demand is now over half again its volume of the mid-twenties. 4. Ability to Forecast Demand : Considerable effort is devoted to estimating future demands by uses for the various product groupings. Results are generally considered good, with the minor exception of the un­ predictable influences of weather upon the heating oil segment of demand.

D. EMPLOYMEN T DATA

1. Yearly Average Employment: 16,738. a. Yearly Fluctuations in Employment : 421. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment : No plan. 3. Employee Representation: Oil Workers International Union (CIO); Petroleum Workers Union (IND); the following AFL unions - Boilermakers, Bricklayers, Carpenters, Electricians, Machinists, Pipe Fitters and Sheet Metal Workers ; Tankers Officers' Associa­ tion (IND) ; Radio Officers Union (AFL); Sailors Union of the Pacific (AFL); and Masters, Mates and Pilots (AFL). a. Labor Relations : Satisfactory; only one major strike in the history of the Company. 4. Labor Turnover: 11%. 5. Worker Productivity: No statistics available. 6. Percent of Sales Dollar Represented by P ay ro ll: 14. 9%.

II. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: After one year of continuous - 270 -

service two weeks. In the fifteenth anniversary year - three weeks. In the twenty-fifth anniversary calendar year and thereafter - four weeks. 2. Paid Holidays : Eight. 3. Severance Pay: No published policy. 4. Call-in Pay: If employee is called in to work after completing his daily work schedule or on his day off, all work is paid for at time and one-half. Guaranteed minimum equal to five hours pay at the straight time rate includes one hour travel allowance. If seven hours or less are worked, one hour travel allowance at time and one-half is paid ; if 7 l/2 hours are worked, one- half hour travel allowance is made ; if eight or more hours are worked there is no travel allowance. 5. Pay for Absence for Personal Reasons : For employees with one or more years of continuous service, personal leave with pay may be granted depending on the circum­ stances of the case, e.g. , personal business, serious illness in the family, deaths, etc. No fixed maximum ; usually limited to no more than three days at one time. Reasons for such leave must be acceptable to the Company.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : None. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance : a. Group Life Insurance : Employees eligible after six months continuous service. Amount of insur­ ance approximates one year's pay. Contributory. b. Company Life Insurance : Employees eligible after one year's continuous service. Provides pay for three months to one year, at time of death, depend­ ing on length of service. Company financed. 2. Accident and Health: Company has Sickness Benefits Plan and Industrial Injury Benefits Plan. Employees - 271 -

eligible under both plans after one year of continuous service. Duration of payment varies with length of service ; maximum under each plan is twenty-six weeks during which time regular earnings are continued. Un­ der Industrial Injury Benefits Plan, payment equals reg­ ular earnings less Workmen’s Compensation. Company financed. 3. Hospitalization: Upon completion of six months of con­ tinuous service, employees within the State become eligible to join either of two voluntary hospital and med­ ical plans. Single plan available for all other employees outside the State. Company financed, a. Surgical Benefits : Included in above plans.

D. RETIREMENT PLAN

Employees are required to join annuity plan after one year of continuous service. Depending on age when first joining, employee contributions comprise 4% to6% of current earn­ ings in excess of $50 per month. Annuity for current ser­ vice equals 2% of earnings on which employee contributes. Normal retirement age for men is 65 ; for women it is 60. Employees may retire early after twenty-five years of ser­ vice with reduced annuity. Contributory.

E. FACILITIES PROVIDED OR SPONSORED TO RENDER FINANCIAL ASSISTANCE TO EMPLOYEES

‘I. Credit Union: Yes, Company encouraged. 2. Mutual Benefit Association : None. 3.- Mutual Aid Society: Mortuary funds. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund : None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. Merit Rating : Yes. Not directly related to Salary Administration. in. GUARANTEES AND STABILIZATION

A. GUARANTEES - 272 -

There is no guarantee plan in effect.

B* S TAB ILIZA TION

Rather than a guaranteed annual wage plan, the Company has adopted a program of employment stabilization. Through this program, they attempt to stabilize employment require­ ments throughout the year by means of forecasting and then contracting peak loads so that the actual work force can re­ main at a stable level. Secondly, their benefit policies are designed to protect an employee's income to the greatest possible extent. Each department manager is responsible for employment stabilization within his department and is also responsible for achieving Company-wide coordination in this program through the Company's Personnel Department.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR S TAB ILIZA T ION

The Company feels that the program, on the whole, has been very satisfactory. Turnover rate is low and approxi­ mately one-third of all employees with at least one year of service have been with the Company for ten years or more. Their attempts at employment stabilization, however, are not without difficulties and occasionally problems arise as a result of unexpected demands on manpower, serious changes in economic conditions, manpower shortages and unforeseen curtailments in certain types of operations.

D. OPINIONS OF MANAGEMEN T

In the face of changing markets, new products, new methods, new competition and changing economic conditions, it is felt that few companies can successfully guarantee annual wages. It is also felt that employment in the Company is remarkably stable and could not be improved upon by the adoption of a guaranteed annual wage. Most of the better known guaranteed wage plans have been initiated in industries characterized by job insecurity and large seasonal fluctuations in employment. As fluctuations in employment in the Company are slight, the employees have little to gain by such guarantees. The Com­ pany feels that the best and most realistic approach to this problem is by attempting to maintain employees' incomes by regularizing employment and through liberal benefit plans. CASE STUDY 29

IDENTIFYING INFORMATION

A. SIZE, OWNERSHIP AND CONTROL

1. Number of Plants : One. a. Number of Manufacturing Subsidiaries : None. 2. Capitalization: $600,000. 3. Stock Ownership : Closely held by management group. 4. Control over Operations Centralized.

B. CLASSIFICATION OF PRODUCTS, INDUSTRY AND TYPE OF MANUFAC TURING

1. Kind of Products : Women’s lingerie - slips, gowns, panties and pajamas. 2. Classification of Products : Consumers' non-durable goods. 3. Classification of Industry: Assembly. 4. Classification of Type of Manufacturing : Continuous.

C. CHARAC TER IS TICS OF PRODUCTS

1. Manufacture to Stock: Economical within limits. a. Size.per Unit: Small. b. Weight per Unit: Low. c. Cost per Unit: Low to high. d. Risk of Obsolescence : High on 50% of production. e. Risk of Physical Deterioration: Small. f. Risk of Style Changes : Very high. 2. Methods of Distribution: Direct to retail department stores and women's specialty shops. 3. Effects of Economic Conditions : a. Seasonal Fluctuations : Second half of year nor­ mally substantially more active than first half. b. Cyclical Fluctuations : Little. c. Secular Trends : Stable. 4. Ability to Forecast Demand : Long forecasts hazardous.

D. EMPLO YMEN T DATA

1. Yearly Average Employment: 324. - 274 -

a. Yearly Fluctuations in Employment: 15%. 2. Number of Employees Covered by the Plan: No plan, a. Yearly Fluctuations in Employment: No plan. 3. Employee Representation : Textile Workers Union of A m erica (cio). a. Labor Relations : Excellent. 4. Labor Turnover: 20%. 5„ Worker Productivity: Not available. 6» Percent of Sales Dollar Represented by Payroll: 15%.

III. EMPLOYEE RELATIONS ACTIVITIES

A. POLICY ON PAYMENTS TO EMPLOYEES

1. Vacations with Pay: One week up to five years ; two weeks from five to ten years ; three weeks over ten years of service. 2. Paid Holidays : Six. 3. Severance Pay: Office and supervisory only. 4. Call-in Pay: Four hours minimum. 5. Pay for Absence for Personal Reasons : None to pro­ duction employees ; office and supervisory employees with six months to two years of service, five days ; the same group with over two years of service - ten days.

B. PROFIT SHARING, BONUSES AND EMPLOYEE SAVINGS PLANS

1. Profit Sharing : None. 2. Bonuses : None. 3. Employee Savings Plans : Deductions as authorized, for deposit in local bank. 4. Stock Ownership Plans : None.

C. INSURANCE BENEFITS

1. Life Insurance: $1,000 per employee, Company pays all premiums. 2. Accident and Health : Company pays all premiums on a policy which provides $25 per week for thirteen weeks. 3. Hospitalization:. Company pays all premiums on a pol­ icy which provides benefits for seventy days maximum, a. Surgical Benefits : Company pays all premiums on - 275

a policy which provides for maximum surgical fees of $225 per employee, $120 pear dependent.

D. RETIREMENT PLAN

1. Retirement Plan : None. a. Disability Benefits : Life insurance an d accidental death and dismemberment coverage continued for full period, hospital expense and surgical benefits for three months.

E. FACILITIES PROVIDED OR SPONSORED T O RENDER FINANCIAL ASSISTANCE TO EM PLOYEES

1. Credit Union: None. 2. Mutual Benefit Association : None. 3. Mutual Aid Society : None. 4. Savings and Loan: None. 5. Employee Welfare Trust Fund: None. 6. Direct Company Loans : None.

F. WAGE AND SALARY ADMINISTRATION

1. Job Evaluation: Yes. 2. M erit Rating : No.

III. GUARANTEES AND STABILIZATION

A. GUARANTEES

No guarantee of any kind.

B. S TAB ILIZATION

Stability is yet to be attained.

C. PROBLEMS AND LIMITATIONS OF A GUARANTEE OR STABILIZATION

No comment.

D. OPINIONS OF MANAGEMENT -276 -

This business is too subject to retailer sensitivity to economic climate and vagaries of fashion to make a guarantee possible. The Company is trying to stabilize through overtime in the busy season and work sharing in the slow season. - 2 7 7 -

GUARANTEE

CONTRACT CLAUSES

5 - 278 -

The clauses which appear on this page are of interest because, while they guarantee nothing, they give Mlip service" at least, to the desirability of guarantees.

A.

"The Company recognizes the benefits to be gained for itself and its employees by guaranteeing either wages or employ­ ment on an annual basis. It believes, however, the abnormal national economy presently existing does not permit the inau­ guration of any definite plan at this time. When it is possible to establish reliable determining factors the Company is quite willing to again discuss this matter with the idea of instituting at least a tentative plan toward this objective. "

B.

"The Union's Objectives In the interest of achieving sound industrial relations as well as establishing the kind of cooperation which allows real benefits to all concerned, the Union's ultimate objectives are as follows : That employees of the Company be guaranteed a minimum annual wage.

Joint Respons ibilitie s The Company and the Union both recognize that neither party can attain its objectives except as each party assists the other in attaining its objectives. In entering into this Agreement the (Company) and the (Union) , pledge themselves to assume their full responsibilities in devoting their joint efforts to the accomplishment of both the Union's and the Company's ob­ jectives , " - 279 -

One packer offers a weekly guarantee to employees through the contract provisions described below. While this study has excluded from its considerations plans for periods of time less than three months, this plan is included here as a distinct type of company and union effort toward employment security.

C.

MThe Company guarantees to each regular full-time hourly paid employee, pay equivalent to thirty-six (36) hours of work at his regular rate of pay for each week at work for the Company, subject to the following rules for eligibility: (a) Except as hereinafter provided, all hourly paid em­ ployees are guaranteed thirty-six (36) hours' pay in weeks when they are present each day for the full time worked by the gang in which they are employees.

(g) No employee shall be laid off until the end of the payroll week unless the gang has made thirty—six (36) hours at the time of reduction or else has been paid for thirty- six (36) hours. (h) The application of the thirty—six (36) hour guarantee shall be the same in holiday weeks as all others. (i) The Company's liability under this paragraph shall be reduced by the amount of : (1) All compensation paid in excess of an employ­ ee's regular rate of pay for hours worked on Sundays, holidays, or days designated as a day of rest in lieu of Sunday. (2) All compensation paid under Paragraphs 29 (Call Out Guarantee) and 30 (Recall Guarantee). (3) Compensation paid for holidays not worked under Paragraph 18(b). (4) Compensation paid under Paragraph 21 (Clothes changing Time). (J) A r egular part-time employee shall be guaranteed pay equivalent to that proportion of thirty-six (36) hours of work, at his regular rate of pay for each week at work for the Company, which the number of hours in his nor­ mal work week bears to forty (40) hours. The rules for eligibility set forth in (a) through (i) above apply to reg­ ular part-time employees, suitably modified with refer­ ence to the number of hours.

29. Employees called to work will be provided with a minimum of four (4) hours' work or pay in lieu of work, such pay to start from the hour the employee is required to report for work.

30. Any employee who has completed his day's work and is re­ called to perform work within twenty-four (24) hours from the time he started such day's work, shall be paid for all time work­ ed, pursuant to such recall, within such twenty-four (24) hour period at one and one-half (1 l/2) times his regular rate, and will be guaranteed a minimum rate, and will be guaranteed a minimum of four (4) hours work at time and one-half (1 l/2). This shall not apply : (a) When shifts are being changed ; or (b) When the starting time of a gang or an employee is being changed or to any work performed by an employee after he has started a new day's work in accordance with his pre-arranged starting time. - 281 -

A bakery offers two different types of guarantees. The first clause covers the production workers employed and is quoted im­ mediately below.

D.

"The regular work week shall be not more than forty (40) hour s. There shall be no stretch-out hour system as that term is or­ dinarily understood. Each regular employee who reports for work each day during the work week shall be guaranteed not less than forty (40) hours pay except that this shall not apply to the employees in the cake department whose hours of work are limited by the availability of material. "

The same bakery, in a contract with a union, guarantees min­ imum wages to the various classes of salesmen and routmen which it employs. An example of such contract clause provisions is the one which covers the wholesale salesmen.

E.

"Wholesale salesmen shall be paid a basic salary of Thirty Dollars ($30. 00) per week, plus eight and one-haif per cen­ tum (8 l/2%) of the cash collected during the week, but not less than a total of Sixty-five Dollars ($65. 00) per week. 11

A wholesale hardware dealer has contracted to provide a guaranteed weekly wage, as follows :

F.

"The Company guarantees to each employee, whose employ­ ment has been continuous for six (6) months, and whose serv­ ices are available to the Company, a minimum weekly wage during the period of his employment within the life of this contract, this ia to be computed by multiplying the employee's hourly rate of pay by forty, providing nothing herein shall im­ pair the right of the employer to terminate employment of any employee because of change of business conditions or for cause." - 282 -

A good example of a loan plan is found in a contract entered into by a Middle West cereal manufacturer with a union represent­ ing his employees.

G.

•'GUARANTEED HOURS LOAN PLAN"

"All employees who obtain a seniority of three (3) years or more, and provided such employees have reported and worked whenever work was available, shall be guaranteed a minimum of 1, 704 working hours including vacation time at the regular existing rates of pay in any calendar year, subject to a deduction for time lost through sickness or ac­ cident (actual time that the classification was in operation) or shut down of the mill caused directly or indirectly by fires, strikes, riots, tornadoes, cyclones, explosions, floods, military or civil commotion, and other causes be­ yond the control of the Company.

"Any employee who has attained a seniority of three (3) years or more employment and shall in any week earn wages for less than thirty (30) hours due to work not having been made available, shall be paid for the actual hours worked ; and at the employee's expressed request to the auditor a sum sufficient to make up a total payment for thirty hours (30) will be paid with the understanding that the excess payment will be collected without interest or other charges in the next following week or weeks in which the employee receives in excess of thirty (30) hours work. When employment is ter­ minated for any reason, all excess payments become imme­ diately due and payable in full. " 283 -

One textile company in an agreement -with a union has pro­ vided minimum wage guarantees through the clause quoted below.

H.

"All male employees, who have a service record of one year or more shall, during their continuance on the payroll, re­ ceive a minimum pay on a weekly basis of not less than twenty- five dollars ($25. 00) per week throughout the period of this Agreement, and also all female employees, who have a serv­ ice record of one year or more shall, during their continu­ ance on the payroll, receive a minimum pay on a weekly basis of not less than twenty dollar s ($20. 00) per week throughout the period of this Agreement; provided, however, that in the application of the annual minimum cost to the Employer shall not exceed twelve thousand dollars ($12,000) per year. This twelve thousand dollars ($12, 000) shall be applied during the period when the workers ordinarily earn less than twenty-five ($25. 00) and twenty dollars ($20. 00) per week respectively. On such occasions, the Employer shall add to the workers' actual weekly earnings the difference between the amount earned and the weekly minimum as herein above set forth. The above method shall be continued until the entire twelve thousand dollars ($12, 000) have been exhausted. Be it further understood that any employees who fail to report for work when notified to do so, shall have deducted from their weekly minimum, an amount equivalent to the amount earned by the workers in their department. Such deductions shall be applied only during slack periods when application for the weekly min­ imum is made. " - 284 -

A retail shoe chain has a contract with the union which holds bargaining rights for its clerks, which reads in part as follows :

I.

"The Employer in the past, in arranging its wage schedules has taken into consideration the ability, efficiency and future potential value to the Employer of each individual Employee.

"In accordance with the aforesaid policy, the Employer in discussing with the Union its demands, has agreed to adjust the wages of its present Employees in accordance with the terms contained herein as of the signing of the Agreement and the Employer agrees that during the term of this Agree­ ment, the wages, as agreed upon with the Union, shall not be reduced. The Employer further agrees that no employee except a manager or an assistant manager, shall have his guaranteed salary reduced as a result of transfer from one store to another or as a result of demotion.

"The Employer will apply the same policy in determining wages to be paid to the new employees, but in no effect shall wages to such new employees be less than those as stipulated herein. "

A number of clothing stores in a large Eastern city have an agreement with a union which represents their clerks. This agreement reads in part as follows :

I - a.

"Steady Employees whose names appear on the schedule at­ tached hereto shall be employed for the entire time of this contract with full employment at the pay set forth as long as they remain members in good standing in the Union herein mentioned.

"Whenever such employee or employees hereunder cease to work because of discharge, resignation, sickness, suspen­ sion or expulsion from Union membership, or any other cause, such employee shall be replaced at once by another Union employee or employees in good standing with the Union at the same rate of pay, employment rights and work­ ing conditions of the individual or individuals replaced. " - 285 -

The clause which is cited here describes an arrangement which at its inception may well have imposed a burden on the Company or at least a potential burden. At the same time it offered a guarantee of significance to employees of the Company. The maintenance of the original wording of the clause reduces the coverage of the guar­ antee year by year thus reducing management's burden or potential burden and consequently its seeming value to employees as the group of employees now covered under the plan is approximately 10%. This represents an almost irreducible minimum of men who could expect to be employed at all times if operations are to be continued at all.

J.

"The Corporation guarantees to every employee, who has completed five years continuous service in the employ of the Corporation at April 30, 1946 a minimum employment of 2080 hours for each yearly period beginning May 1, 1946 and con­ tinuing each year thereafter during the life of the contract. All hours worked by said employees, both straight time and over­ time, shall be credited against the 2080 hours. If the Corpor­ ation does not provide work for any part of the 2080 hours, the employee shall be paid for the unworked hours at his straight time hourly rate.

"An employee failing to accept other work assigned by the Cor­ poration when his own job is not working, or discontinued be­ cause of production requirements, shall not be entitled to the guarantee herein provided. An employee who voluntarily leaves the employ of the Corporation, or who is discharged for cause, shall not be entitled to the guarantee. In the event of an employee's failure to take advantage of available work hours, such hours shall be deducted from the guarantee of 2080 hours. In the event of a strike, the Corporation shall be relieved of its guarantee for the current one year period as to the employees striking. " - 286 -

A manufacturer of electrical equipment lias contracted to pro­ vide a guarantee to employees with, ten years or more of service. This clause, listed below, contains an escape provision in the event of complete shut down and interestingly enough provides for the sub­ stitution of profit sharing when the company is able to work it out.

K.

"Each employee of the Company with ten (10) years or more of continuous service shall be guaranteed pay for at least fifty (50) forty-hour weeks within the year covered by this Agreement, unless laid off for discipline or discharged for cause, provided he accepts at his regular rate any work available should his regular job cease. This guarantee shall not apply in case of a complete cessation of productive fac­ tory operations at any time other than Saturdays, Sundays, holidays and vacations. Any man retained on the payroll through the operation of the 50 weeks of pay guarantee may be used on any work so long as there is no reduction in pay. This guarantee shall not apply if the employee is physically unable to work, or is not available for work. The above agreement may be changed if the Company can arrange for a profit sharing plan to provide the above benefits. "

A Middle West manufacturer has an agreement with a union which calls for a guarantee of minimum hours to employees. This clause has not been changed since it was negotiated and consequently covers fewer employees year after year.

L.

"The Company agrees to make available for all employees who have eighteen months or more of continuous service as of March 1, 1946, 1440 hours of employment during the Contract year, based on the hourly rates of Exhibit A at­ tached unless prevented by fire, flood or other circum­ stances beyond the Company's control. " - 287 -

The following guarantee provisions are included in the contract of a manufacturer of mining machinery with the union representing its employees.

M.

"The Company undertakes to guarantee every employee a certain minimum annual wage based on the following con­ ditions : A. Employee must have not less than one (1) full year con­ tinuous service with the Company before January 1st of the calendar year before becoming eligible to the annual guarantee. B. Work stoppage-due to fires or damage to plant or from other causes including strikes by this or any other union, shortages of raw material or any other causes beyond the Company's control must be considered as time lost which the Company is not expected to make up. C. The Company guarantees 70% of a full year's normal working time. The term 'full year's normal working time' is understood to mean 2080 hours. Annual earnings shall be at rates prevailing under the Standard Wage Schedule with the exception that if work stoppage occurs due to causes in paragraph B of this section, the 70% guarantee shall be fig­ ured on a full year's normal working time less the time lost due to causes beyond the Company's control. D. Time taken off by the employee when work is available under normal work schedule shall be considered as hours worked. It is agreed that 'absenteeism' as defined in paragraph C, Section 6, is an example whereby an employee does not avail himself of all the normal working hours offered by the Company. " - 288 -

A meat packer has contracted with a union to provide a guar­ antee on an annual basis to his employees. This guarantee, quo­ ted below, is in terms of hours and Weeks work per year.

N.

"The Employer agrees and guarantees each regular employee forty (40) hours straight-time for 52 weeks per year, pro­ vided that this guarantee shall not be effective : (a) For any week in which an employee is laid off, but the employer must give such employee notice of such contem­ plated lay-off not later than the last day of the last week he works prior to the lay-off. (b) During any work week in which a regular employee is called back to work following a lay-off, if such employee is called back after one working day or more shall have elapsed in that work week. (c) During such time as the plant or any department wherein the employee is working is closed or operations are termi­ nated on account of a breakdown, fire, accident, strike or other unusual conditions or emergencies. (d) For any work week in which an employee is absent for more than one-half shift or has refused work in some other department during such work week. (e) In the case of employees who are hired on a day to day basis.

"The guarantee shall be subject to the following rules : (a) Any absence for one-half shift or less shall be deducted from the total hours of pay guaranteed. (b) Guaranteed pay shall not be used in computing overtime pay except that he will be paid daily overtime when earned. (c) Employer's liability shall be reduced by the amount of compensation paid for holidays not worked. 11 289 -

The guarantee provisions quoted below are taken from the con­ tract of three cemeteries in a large Mid-Western city with a union.

O.

"There shall be a guaranteed work week for regular employees of 52 calendar weeks in each year ; this guarantee shall extend to regular employees only.

’•This guaranteed work week shall consist of 44 hours of straight time work, comprising 5 weekdays of 8 hours each, and the first 4 hours on Saturday, provided, however, such employee shall report for and perform the work assigned to him.

" Unjustified absenteeism (including, but not in limitation hereof, absenteeism caused by inebriety) in any work week, shall null­ ify for the employee affected his guarantee for that particular week.

"When an employee requests and is allowed, a leave of absence by Employer, Employer is not obligated to pay for such leave time and said employee's guarantee shall be put in force by Employer upon his return to work for the remainder of said week. "

The guarantee provisions which have been negotiated by several firms described in this study as Textile Bleachers, Finishers, Dyer s and Printers with a union covering one craft only employed by these firms, cover only 2% to 3% of the employees of these companies. These guarantee agreements are typified by the following clause in­ cluded in the contract between one of these companies and the union.

P.

"The Company agrees to pay each journeyman printer and apprentice full pay for any period prior to July 15, 1951 during which the journeyman printer or apprentice is not employed.

"The Company further agrees to pay each journeyman prin­ ter or apprentice one-half (l/2) pay for any period after July 15, 1951 to December 31, 1951 during which the journey­ man printer or apprentice is not employed. " - 290 -

The contract currently effective between eight motion picture studios and the American Federation of Musicians presents an­ other distinctive type of agreement. The Consolidated Basic Agreement provides under "Contract Orchestra:"

Q.

"The Producer agrees to enter into exclusive personal service contracts with not less than recording Musicians on (date) on terms not less favorable than those provided in the attached •Wage Scales, Hours of Employment and Working Conditions. 1

"Personal service contracts referred to above shall cover two periods, each independent of the other, to wit: (a) The first term (date) , up to and including (date) ; (b) The second term (date) , up to and including (date) .

"Recording Musicians employed for such first term or for such second term, as the case may be, shall receive for each such term so employed, a guarantee at the rate of $7, 956. 00 per annum. "

The Personal Service Contracts to which reference is made above describe the guarantee provisions as follows :

"2. Except as provided in Paragraph 4 hereof, the Producer guarantees that the earnings of the Employee, computed on a month basis for the term hereof, will not be less than $ ______exclusive of vacation pay. The Employee shall periodically receive a drawing account of $______against his contract guarantee.

"3. The Employee accepts said employment on the terms and conditions herein set forth and agrees to put forth his best ef­ forts and to render his exclusive services to the Producer in connection with the production of motion pictures only, during the term of this agreement, faithfully and well.

"4. In the event that the Employee, for any reason whatsoever, fails to render his services hereunder when the Employee is called to render such services by the Producer, the amount - 291 -

of guaranteed compensation to be paid to the Employee pursu­ ant to the provisions of Paragraph 3 hereof, shall be reduced by the amount the Employee would have received had he ren­ dered such services upon such call. j

"6. If at any time during the term hereof the Producer is pre­ vented from or materially hampered-or interrupted in preparing or producing motion pictures by reason of a public calamity such as fire, pestilence, riot, state of war, rebellion, flood or bliz­ zard then the Producer may, at its election suspend the operation of this agreement for such time as any such condition or conditions exist and continue and no compensation shall be paid or become due to the Employee during such suspension and the term hereof shall be extended for an equivalent period provided that in the event such period of suspension shall continue for longer than six weeks the Employee may, at his election cancel and termin­ ate this agreement and in such event he shall be paid pro rata of his guaranteed compensation.

M9. Any member or members who are parties to or affected by this contract, whose services thereunder or covered thereby, are prevented, suspended or stopped by reason of any strike, ban, unfair list order or requirement of the A.F. of M. shall be free to accept and engage in other employment of the same or similar character, or otherwise, for other employers or persons without any restraint, hindrance, penalty, obligation or liability whatever any other provisions of this contract to the contrary no twiths tanding.

"10. If the Employee shall have completed five or more years of continuous employment with the Employer, the Producer and/or the Employee agree to give each other a sixty-day notice prior to the termination of this agreement, of the desire of either party not to renew this contract. Failure of either of the parties to give this notification will mean that the Employee will be auto­ matically re-engaged for the unexpired term of the basic agree­ ment. If the Employee shall have been employed less than five years, the notification period shall be thirty days. 11 - 292 -

A ship yard has contracted with a union as follows :

R.

"An employee who establishes three (3) years' or more continu­ ous employment as hereinafter defined, shall be entitled to two (2) weeks' vacation with eighty (80) hours pay in advance ; and in addition thereto, the Employer shall warrant not less than forty— eight (48) weeks' employment, including the aforementioned two (2) weeks' vacation with pay, during each year following the date of this Agreement, so long as this Agreement remains in full for ce and effect and this provision remains without modification. 11

Two companies in the millinery industry have the following clause in their contracts with a union representing their workers :

S.

"Minimum Number of Employees - the permanent crew covered by the presently existing annual wage plan shall be 21 employees and they shall be employed for fifty-two (52) consecutive weeks and shall be guaranteed full pay for that period. If however, dur­ ing the term of this agreement any of said members of the perma­ nent crew are severed from their employment for any reason not in violation of the contract or leave of their own choosing, they shall not be replaced. Employees hereafter employed during the duration of this contract as replacement or otherwise shall be considered as temporary employees for the duration of this con­ tract and not as members of the permanent crew, and shall not be eligible to the annual wage plan herein provided. "

The following clauses are typical of those found in contracts covering bushelmen employed in mens* and boys' clothing stores in New York City, New Jersey and Connecticut.

T.

"The Employer agrees to guarantee each permanent employee forty (40) hours of work each week, fifty-two weeks per year. No permanent employee shall be laid off during the term of this contract. " - 293 -

The following clause providing a guarantee is found in a con­ tract between a cement manufacturer and the union with which it bargains.

U.

"During the period October 1, 19— to October 1, 19--r, the Company will assign work to eight (8) men forty (40) hours a week. It is understood that length of continuous service shall govern the selection of these eight (8) men. "

A hardware wholesaler has contracted with a union to provide what is termed as a Weekly Guarantee Rate. The covering pro­ visions in the contract read as follows :

V.

"Each employee of the Company who is continuously employed and whose services are available to the Company is guaranteed a minimum weekly wage for each week during the life of this contract and the Company agrees to make up the difference to the employee who does not receive a sum equal to the mini­ mum as outlined below.

"The guaranteed minimum weekly wage shall be computed in the following manner : The individual employee's straight time average hourly rate of earnings for the year preceding the effective date of this contract, or such portion thereof during which the employees may have been employed by the Company, plus the general wage adjustments included in this Agreement, shall be multi­ plied by 40 hours. " - 294 -

One Mid-West garment manufacturer has developed, in cooper­ ation with a union, an extensive plan for guaranteeing employment. The contractual agreement is presented here in its entirety because such an agreement in this industry is most unusual today.

W.

(COMPANY) GUARANTEED ANNUAL, EMPLOYMENT PLAN

This agreement shall constitute and shall be known as the (Company) Guaranteed Annual Employment Plan.

I.

Declaration of Purposes and Principles

This Guaranteed Annual Employment Plan is instituted by the Company and the Union, after ten years of uninterrupted, friendly and cooperative relations, in recognition of the dignity of labor and of the fundamental justice of providing the qualified workers, in ad­ vance, with the security of assurance of income producing time bal­ ancing income-consuming time, thereby placing those workers upon a basis of annual, employment and sustaining and continuing the coop­ eration between the Company and the Union. The Company and the Union are united in the belief that this plan will operate to the best interests of both the Company and the workers and, mutually pledge their best efforts toward its fair and effective operation, realizing that the progressive policies herein provided can succeed, to the greatest benefit of all concerned, only through coop­ erative thought and action of the highest type to make possible year- round employment. The Company recognizes that such employment is impossible, except for production by loyal and interested workers, and that the regularization of production hereby required will create a difficult and ever-changing task upon all departments of the Com­ pany, managerial and executive as well as manufacturing and will re­ quire sustained coordination between all departments. The Union rec­ ognizes the multiplied difficulties of the Company in providing year- round employment. Both declare their confidence in this plan and their determination that it be made a significant step forward freeing the workers from the instability of daily, hourly, and seasonal em­ ployment, and from uncertainty of annual income, and an advance - 295 - toward raising the standards of the entire garment industry by stabi­ lized employment, continuous production and increased understanding, respect, responsibility and cooperation between employer and em­ ployee and employer and Union.

II.

Definitions

Wherever used in this agreement, certain specific terms are in­ terpreted as hereinafter set out. ’Company1 means (Company) Garment Company, a (state) Cor­ poration. ’Union' means (name of Union). 'Plan' means the (Company) Guaranty of Annual Employment Plan. 'Payroll Week' means forty (40) hours not to exceed nine hours in any one day, (the ninth hour in any day to be paid for at the rate of- time and a half) during each week, Thursday to the following Wednes­ day, both included, but Saturday excepted. 'Guaranteed Annual Wage Reserve' means a special reserve so set up in the accounts and statement of the Company at the time of preparing its fiscal statement for the preceding fiscal year, annually, and so maintained, less only benefits paid therefrom by the Company to qualified workers throughout the ensuing fiscal year. 'Fiscal Year1 means the fiscal year period. 'Eligible Worker' means every worker covered by the Union con­ tract, who has been in continuous and regular service of the Company for not less than the period from the beginning of the first work week in January through the last week in June of the fiscal year immedi­ ately preceding the guaranteed period, and hereinafter referred to as Group One, and every worker covered by the Union Contract who has been in continuous and regular service of the Company for not less than the period from the beginning of the first work week in July through the last work week in December of the fiscal year immedi­ ately preceding the guaranteed period, and hereinafter referred to as Group Two. 'Determined Rate of Pay' means that hourly rate of each eligible worker determined as herein provided.

III.

Periods of Employment Guaranteed - 296 -

Subject to the terms and conditions hereinafter set out, the Com­ pany hereby guarantees as follows - 1. To provide not less than fifty (50) payroll weeks of employ­ ment during the work year for all workers in Group One, who have been continuously employed by the Company for less than one year. 2. To provide not less than fifty-one (51) payroll weeks of em­ ployment during the work year for all workers in Group One who have been continuously employed by the Company for one year or more and less than five years. One week of vacation time, paid or unpaid, is included as a part of this guaranteed time. 3. To provide not less than fifty-two (52) payroll weeks of em­ ployment during the work year for all workers in Group One who have been continuously employed by the Company for five years or more. Two weeks of vacation time, paid or unpaid, are included as a part of this guaranteed time. 4. To provide not less than the remaining payroll weeks of the work year, beginning with the first work week in January, annually, for all workers in Group Two. 5. All holidays on which no work is performed and for which wages are paid under the Company-Union contract, and all days on which, by Company-Union agreement, no work is performed, shall be included as a part of this guaranteed time as a part of the week in which they occur. 6. Time lost due to sickness, injury, voluntary absence or sus­ pension of manufacturing operations by reason of epidemic, fire, tornado, flood, jury service, court attendance or military service is included as a part of this guaranteed time. 7. Time lost by reasoh of extreme emergency making it impos­ sible for the Company to operate its plant or any part of its plant may be included as a part of this guaranteed time. 8. Time so lost shall not be considered as an interpretation of continuous and regular employment in determining any worker's eligibility to receive payments under this plan. 9. In the event the presently existing straight-time work week maximum of forty (40) hours hereafter shall be changed by federal or state legislation, the guaranty herein provided shall be adjusted, concurrently therewith, so that the guaranteed number of hours in each payroll week and each week of employment hereby guaranteed shall be the number of hours per week prescribed by such legislation as the maximum for which straight time is to be paid. - 297 -

IV.

Workers Entitled to Receive Unemployment Compensation

In order to qualify to receive any unemployment payment under this plan, the employee must - 1. Be a production worker covered by the Company-Union contract. 2. Be an eligible worker with his or her determined rate of pay.

V.

Determined Rate of Pay of Unemployment Pay

1. For Group One the determined rate of unemployment pay hereunder shall be the worker's average straight time hourly earn­ ings (excluding overtime) for the month of May, immediately pre­ ceding the then current work year multiplied by forty (40) hours in the normal work week. 2. For Group Two the determined rate of unemployment pay hereunder shall be the worker's average straight time hourly earn­ ings (excluding overtime) for the month of December, of the then current work year multiplied by forty (40) hours in the normal work week. This determined rate of pay shall remain unchanged throughout the work year for which it is determined. However, if no work is available in any worker's regular department, that worker may be employed in another department at a lower rate of pay than that re­ ceived during the month in which such rate is determined. In that event his or her rate of pay shall be adjusted by being based on the average earnings of all workers in said other department for said month (excluding overtime) multiplied by forty (40) hours in the nor­ mal work week, but in no event shall the worker be paid less than ninety percent (90%) of the worker's determined rate of pay.

VI.

When No Payments Made - Resignation or Discharge for Just Cause Terminates Worker's Rights

1. In the event of any unauthorized strike, an agreement of the - 298

Company and the Union or a decision through arbitration shall de­ termine the nature and extent of any forfeiture of the rights of any worker or workers hereunder 2. Separation from service by resignation by a worker or dis­ charge for just cause of a worker by the Company shall forfeit and terminate all rights hereunder of said worker as of the date of such resignation or discharge, unless said employee shall be rehired within twenty (20) days (regular working days) from the date of separation from service.

VII.

Special Reserve - How and When Determined and Set Up

1. Forthwith, upon the certification by a certified public ac­ countant of the Company's annual statement for the fiscal year ending June 30, 1947, and annually thereafter, the Company shall set up and maintain, thereafter, throughout the then current fiscal year, as a separate entry in its statement and accounts, an item styled and des­ ignated ‘Special Reserve as Guaranty for Annual Employment Flan' said item and reserve to be in a sum and amount equal to ten percent (10%) of the total straight time wages, less wages paid for vacations and holidays, of all production workers covered by the Company- Union contract during the fiscal year ending June 30, 1947 and annu­ ally thereafter. The certificate of said accountant as to the correct­ ness of said reserve under the terms of this plan shall be furnished to the Union. 2. The Special Reserve herein provided, shall be maintained in­ tact throughout the ensuing work year, except as reduced by pay- ments made therefrom under the Company's obligation under this plan. At the end of the work year, annually, all and any part of said Special Reserve remaining so unexpended shall revert to the Com­ pany, free from all obligation under this plan and all further liability of the Company under the plan for said work year shall end, except as to all claims that may have been asserted hereunder prior to the end of the work year and which have not been settled or disposed of prior thereto. A new Special Reserve, as herein provided, shall be set up for the next ensuing year.

VIII. - 299 -

Payments - When Accrued - How Long Continued - How and When Paid

The right of a qualified worker to receive payments hereunder shall accrue upon the inability or failure of the Company to fulfill its guaranty hereunder and shall continue so long as said inability or fail­ ure continues and so long as any balance for the payment of the same remains in the Guaranteed Annual Wage Reserve for the year then current. In the event that payments hereunder become due and payable, payments shall be made from the Special Reserve Fund as follows - a. Each qualified worker shall receive his or her determined rate of pay, less one-fortieth (l/40) for each hour of employment provided or offered by the Company during the payroll week for which payment is being made. b. Payment shall be made on the weekly pay day of the Company, namely, Friday of each week, at the office of the Company. c. Such payment shall be subject to all deductions and withhold­ ings required by law or authorized by the worker receiving the same. d. No worker qualified to receive such payment shall have any priority over any other worker so qualified.

IX.

Maximum Possible Liability of Company Under Plan

The maximum possible liability of the Company at any time dur­ ing any one work year under this plan shall equal but never exceed the amount of the Special Reserve determined and set up for said work year, less any and all payments made therefrom during said year under said plan.

X.

Duration of This Plan

1. This plan shall continue during such time as the Company and the Union maintain contractual relations. 2. In the event, however, that during the continuance of this plan, state or federal legislation be enacted guaranteeing annual employment and requiring the payment of taxes, contributions or assessments therefor by the Company, then this plan shall cease with the effective date of such legislation. - 300 -

XI.

This plan is the result of mutual agreement, is based upon the considerations and obligations herein set out and is made an integi-al part of the contract executed contemporaneously herewith between the Company and the Union and is declared to be contractual in its nature and interpretations.

IN WITNESS WHEREOF, the parties hereto have set their hands this 10th day of June, 1947.

(Company) Garment Company

By(s) ______President

(Name of Union)

By (s) ______Vice President -301 -

B IB L IOGRAPHY - 302 -

BIBLIOGRAPHY

Books and Pamphlets

American Legion, Employment Stabilization Service. To Make Jobs More Steady and to Make More Steady Jobs. Minnesota : Webb Publishing Company, 1940.

American Management Association. Research Report Number Eight. Annual Wages and Employment Stabilization Techniques. New York: American Management Association, 1945.

Brower, F. Beatrice. Annual Wage and Employment Guarantee Plans. New York: National Industrial Conference Board, Studies in Personnel Policy, No. 76, 1946.

Calder, Alexander and Knipe, James L. The Guaranteed Annual Wage. Washington, D . C. : National Planning Association, 1948.

Chamber of Commerce of the United States. The Economics of the Guar ante ed Wage. Washington, D. C. : Economic Research Department, Chamber of Commerce of the USA, 1948.

Chernick, Jack and Hellickson, George C. Guaranteed Annual Wages. Minnesota: University of Minnesota P ress, 1945.

Congress of Industrial Organizations. Guaranteed Wages the Year Round. Washington, D. C.: Department of Research and Edu­ cation, Congress of Industrial Organizations, n. d.

Davis, Ralph C. The Fundamentals of Top Management. New York: Harper and Bros. , 1951.

Davis, Ralph C. Industrial Organization and Management. New York: Harper and Bros. , 1940. - 303 -

Deupree, Richard R. Management1 s Responsibility Toward Stabi­ lized Employment, October 11, 1944.

Feldman, Herman. Stabilizing Jobs and Wages Through Better Business Management. New York: Harper and Bros. , 1940.

Fisher, Waldo E. The Guaranteed Annual Wage. Pasadena: Indus­ trial Relations Section, California Institute of Technology, 1945.

General Motors Corporation. 1939 Employee Benefit Plans. Detroit: General Motors Corporation, 1938.

Huddle, Frank P. Wage Security. Washington, D. C. : Editorial Research Reports, Vol. 11, 1944.

Jucius, Michael J. Personnel Management. Chicago ; Richard D. Irwin, Inc. , 1947.

Kaplan, A.D.H. , DuBrul, S.M. , Shishkin, Boris, Sawhill, Donald V. The Guaranteed Annual Wage. New Wilmington, Pa. : The Eco­ nomic and Business Foundation, 1946.

Kaplan, A.D.H. The Guarantee of Annual Wages. Washington, D. C.: The Brookings Institution, 1947.

King, Willford I. The Causes of Economic Fluctuations : Possibili- ties of Anticipation and Control . New York: The Ronald Press Company, 1941.

Latimer, Murray W. Guaranteed Wages. Washington, D.C. : U.S. Govt, print, off. , 1947-

Mee, John F. Personnel Handbook. New York: The Ronald Press Company, 1951. - 304 -

National Industrial Conference Board. Will the Guaranteed Annual Wage Work? An Evening with the Economists. New York: National Industrial Conference Board, Inc. , 1946.

Olds, Irving S. Some Aspects of the Proposed Guaranteed Wage. May 14, 1945 17 pages.

Ruckeyser, Merryle Stanley. The Quest for Economic Security Through Guaranteed Employment. 1945

Schmidt, Emerson P. The Economics of Guaranteed Wages. (In American Management Association, Personnel Series No. 91, New York, 1945.)

Snider, Joseph L. The Guarantee of Work and Wages. Boston: Division of Research, Graduate School of Business Administra­ tion, Harvard University, 1947.

U.S. Department of Labor. Bureau of Labor Statistics. Bulletin No. 828. Guaranteed Employment and Annual Wage Provisions in Union Agreements. Washington, D.C. : U.S. Govt, print, off., 1945.

U.S. Department of Labor. Bureau of Labor Statistics. Bulletin No. 925. Guaranteed Wage Plans in the United States. Washington, D.C. : U.S. Govt, print, off., 1948.

U.S. Department of Labor. Bureau of Labor Statistics. Bulletin No. 908-15. Provisions Guaranteed Employment and Wage Plans. Washington, D.C. : U.S. Govt, print, off., 1950.

U.S. Department of Labor. Wage and Hour Public Contracts Divi­ sion. Collective Bargaining Agreements under Sections 7(b)(1) and 7(b)(2) of the Fair Labor Standards Act. New York: n.d. - 305 -

U. S. National War Labor Board.. Wage Stabilization Division. Research and Statistics Report No. 25, Guaranteed Employment and Annual Wage Flans. Washington, D. C. : 1944. '

University of Chicago Round Table, Broadcast No. 388. A Guaranteed Annual Wage ? 1945.

Wilson, Howard. Wage Guarantee Flans. Chicago: Economic Institute, 1948. - 306 -

Periodical Articles

Bajork, Leonard C. "The Visking Guaranteed Income Plan, " Factory Management and Maintenance, v. 105, No. 10, (October 1947), 129-30

Carr, James. "Is the Guaranteed Annual Wage Desirable?, " Forum, (March, 1949), 166-73.

Dale, Ernest. "Guaranteed Wages and Employment, " The South- western Social Science Quarterly, v. XXIX, No.l, (n. d. ), 49-66.

Feldman, Herman. "The Annual Wage - Where Are We?, " American Economic Review, v. XXXVII, No. 5, (December, 1947), 823-47.

Levine, Morton and Nix, James. "Guaranteed Employment and Wages Under Collective Agreements, " Monthly Labor Review, No. R. 2080 (May, 1952).

Reuther, Walter P. "Why An Annual Wage ? , " Ammunition , (June, 1944), 5-7.

Schmidt, Emerson P. "Annual Wage and Income-Security Plans, " The Journal of Business of the University of Chicago, v/XIV, No. 2, (ApriC 1941), 127^49^

Witte, Edwin E. "Steadying the Worker's Income, " Harvard Busi­ ness Review, Spring, 1946. AUTOBIOGRAPHY

I, Dillard Eugene Bird, was born in Covington, Kentucfc-y , October 8, 1906. I received my secondary school education the public schools of the city of Covington, Kentucky. My u n d e r ­ graduate training was obtained at the University of Cincinnati , from which I received the degree of Bachelor of Arts and a Certificate in Public Management in 1933. The following fou.n-' years, 1933 to 1937, were spent in governmental administra.t;^3_^ve work. From the Ohio State University, I received the d e g re e Master of Business Administration in 1938. While in residen. =ce at The Ohio State University, I acted in the capacity of graduaL ie assistant to Professor Ralph C. Davis during the year 1937 — 3 . In 1938 I received an appointment as Instructor in M anagem ent at the Wharton School of Finance and Commerce, University o f Pennsylvania. I held this position for two years while p u rsu in .g further graduate study toward the degree of Doctor of Philoso^>h.y, at the University of Pennsylvania and at The Ohio State U nivear sity. The ensuing five years, 1940 to 1945, were spent in ad m in istr ntive capacities in government and industry. Since 1945 I have ser* v e d business, industry, education and government as a professior=*_stl management consultant. The years 1949 to 1951 were devoteo. to service as national president of the Society for A dvancem ent of Management. I returned to The Ohio State University in year 1950-51 for further graduate study and since that time h.£a.ve been working toward the completion of the requirements for t i n e degree of Doctor of Philosophy.