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David Coolidge

Wage Raises Remain the Fundamental Need –

Beware of “Incentive Pay”!

It Is Only Another Scheme to Work Labor Harder Without a Real Wage Boost

(12 April 1943)

From Labor Action, Vol. 7 No. 15, 12 April 1943, pp. 1 & 4.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Donald Nelson’s WPB Management Labor Council met last Saturday to discuss ways and means of establishing what the government and the employers are pleased to call “incentive pay. This is the old-fashioned “merit system” under a new high-sounding name. It is a piece-work, push-’em-up method of getting a lot more production for a little more money.

The “incentive pay” system is a form of rationalization. Rationalization is a nice term for getting higher production without installing new types of tools. Under rationalization, the intention is to get increased production irrespective of any improvement in the machines. Its central aim is to obtain greater production by an improvement in production methods, by a more advantageous division of work, by stricter control .and especially by the introduction of piece work production based on time and motion studies.

The question might be asked: “What objections can be raised to improving methods of production?” The answer is none, provided the “improvement” is one that simultaneously permits a real and substantial improvement in wages, hours and working conditions. Also, the “improvement” in production methods must be such that normal and correct functioning of the union is not interfered with.

The “incentive pay” scheme does not, will not, and cannot produce this result. What is the concrete proposal of the Roosevelt-Nelson War Production Board? They propose to give extra pay for increased output. Bonuses are to be paid for team work. The bonus will be paid to the plant, a department or perhaps to units of a department, and not for individual production.

Under this system the responsibility for increasing production will rest primarily on the workers, whether the bonus is paid for plant, department or unit production. Virtually no responsibility will rest on management or the government bureaus. They will not have to improve in efficiency. The same old skullduggery that has been so prevalent in the past can continue. The same incompetence in the allocation of materials, the same mix-ups in the matter of priorities can prevail as before. The same inefficiency on the part of management may intrude as now to retard production.

But despite these conditions and despite the important fact that labor has no control whatsoever over this situation, the workers will be expected to drive production to the highest limits – or find themselves without the additional wages they have been led to expect.

The “incentive pay” proposal is the revival of an old scheme to get labor to work harder, faster and longer hours. The worker will get a little more money in his pay envelope, but this increased pay will not be a real wage increase and will not be commensurate with the increase in production and profits.

The individual bonus system is vicious enough, but this group bonus system is worse. Under the individual system a worker was paid a little increase for what he did himself. But under the system proposed by the WPB the bonus must be earned by a group – plant, department or unit.

This means, first, individual striving within the unit to raise production. A “fast” man (who might be a company stooge) would set the pace. All others would have to follow or incur the disfavor of fellow workers, because the pay would depend on the production of the group. Then the various units or departments would be hurled into competition with each other. Management or its stooges would attempt to develop unit, plant or departmental “pride.”

No matter why the looked-for increase in wages failed to materialize, management would always be in position to say that the failure to receive a bigger bonus was due to the absence of team work on the part of the workers involved.

Why the Scheme?

How does it happen that the bosses and the government are willing to take a chance on this “incentive pay” scheme. The primary reason is that both industry and government know that a pay rise must be granted. They know that the Little Steel formula is finished. They have heard the organized and constant grumbling from labor. They have heard the demands of the miners. They know that the UMWA cannot be waved aside like a Stalinist-dominated United Radio Workers, a Murray-dominated, United Steel Workers, or a Thomas-led UAW.

But they know too that despite the weasel words of Murray, Thomas or the Stalinists, the rank and file of the CIO are not in a mood to continue blindly following these leaders. And so, in an attempt to bottle up the dissatisfaction of the masses of labor, they come out with their “incentive pay” scheme.

But how is it that the government and the bosses can agree to a step which they claim will raise wages? All of them – Roosevelt, Byrnes, Nelson and the employers – have sworn by all that is holy that wages must be “stabilized” in order to ward off INFLATION. Now a very simple question must be asked. If granting the miners a $2.00-a-day increase in wages, or the railroad workers a 30 per cent increase, or the aircraft workers a substantial increase in daily pay will cause inflation, why is it that giving these workers an opportunity to earn the same increase by way of the “incentive pay” scheme will not result in inflation?

The government, in explaining inflation, has said that there is more money than there are consumers’ goods. In relation to what is called inflation, this means that workers have money to spend for the things they want, but that the goods are not present in sufficient quantities. The price of the goods goes up and we have to pay more than we did before. Therefore the value of the dollar is less than before and we can not buy as much meat, bread and potatoes as before.

Right now the scarcity of consumers’ goods is at least in part due to war production. Factories which formerly made radios and electric irons are now making bullets. Canneries and shoe factories are producing for the armed forces. This means reduced production for civilian use. Therefore, since the goods aren’t in the stores, the government wants to restrict the amount of money the worker gets in wages.

But again we ask: if there is a danger of something called inflation being brought about by raising wages, why are the bosses and the government willing to grant a pay rise in any manner whatsoever? The Little Steel formula said that wages would be stabilized as of September 15, 1942, except in such cases where a rise was necessary to correct inequalities. But the WPB announces that the “incentive pay” plan will be tried out in a few aircraft plants and if successful “would be extended to the entire aircraft industry and to all war production.”

WPB officials estimate that their “incentive pay” plan will increase production “at least ten per cent.” What labor will want to know of course is what wage increase will result from a ten per cent increase in production?

There is some question as to whether the WLB will agree with the WPB on the incentive wage. The WLB may decide that the incentive wage is a breach of the Little Steel formula. Of course, it is if the incentive wage really produces higher wages for labor. This is true, despite the nonsense talked by some WLB members about incentive wage proppsals being “anti-inflationary”, because they may mean lower unit cost of production. This is certainly a brazen reversal of position.

The government, as we have pointed out, formerly took the position that inflation, and therefore higher prices, would result from an increase in wages at a time when there was a scarcity of consumers’ goods. This was drummed into everyone’s head

Now we are told that wage increases through incentive pay “can be construed as anti-inflationary rather than the reverse.” And why? Because such a step may mean “lower unit cost of production.” But what has lowering the unit cost of production to do with the fact that the worker has more money in his pocket available for consumers’ goods which are not available? Under these conditions, won’t there be inflation even though the unit cost of production has been reduced? (We do not here enter into a discussion of the relation of wages to the so-called cost of production.)

Its Real Meaning

The whole barefaced scheme would add up to nonsense except for one important and significant fact, and that is the fact of the clear intention of the employers and their representatives in the government to intensify the exploitation of labor. This can be the only meaning of the talk about “more goods per dollar invested in labor.” You pay out a little more in wages, work them harder, faster and longer and you get profits all out of proportion to the slight increase in wages.

Whatever their motives, we know enough about the whole business to be against this incentive pay scheme. It means trouble for labor and for the unions. It can only benefit the bosses.

Labor knows a simpler scheme: more money per hour and more money per day. Higher straight wages based on the forty-hour week. Time and a half and double time for over forty hours. Straight wages to meet the rising cost of living and to improve the standard of living. None of the bonus hokus-pokus!

The UMWA is correct. The Murray Body Local is correct. They demand a $2.00-a-day increase for the present working day. That’s simple. Every worker can understand it and every boss can understand it. You don’t have to be a mathematician to find out what your pay is at the end of the week. And above all, when you get a $2.00 boost you know exactly what your envelope is going to contain at the end of the week.

There is only one sensible course for labor: keep the heat on their leaders, make them come across, force them to fight for the interests of the men and women who elect them to office and who pay their their ten and twenty thousand dollar yearly salaries!

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Last updated: 23 May 2015