Profit sharing:

ae Suddenness with which
* ie Reuther, president
“e : United Auto Workers,
ing rward his profit-shar-
eee lent it an air of
nis oe but such notions
nian en kicking around
tha ustrial arena for more
Na century.
oe daddy of profit-sharing,
og to historians, was a
es man, Edme - Jean Le
Gan (It is doubtful that
aie M oto rs President
acs H, Curtice had this
i mind when he called

th
N€ Reuther formula a “for-

elgn Scheme,”)

Beets, a painter and
Worker tT, employed some 300
parts ene were sent to all
ceived th France. “He con-
ing G € idea of profit shar-
tora in 1842),” says one his-
efficient as a means of getting
tered Work from his scat-
Sethe without undue

PRotit of supervision.”
a one seemed to
‘ ee — for LeClaire.
a — his economic life as
left an €ss apprentice and
franc estate of 1,200,000
S: (The historians have

not 3

Estates pes to record the
a b : > =

Ployees). y He Claire s em

te a United States the

ecord ofit-sharing scheme on

ay Si Introduced by the

Comban Shoe and Leather

Subseque, In 1867, and in the

Scheme €nt 30 years 50 such
S Were tried.

erg mmenting on the employ-
histoy; Ives in such plans, one
tig wrote:
tions © Most general expecta-
that - Probably, have been
€ loyalty and coopera-
@ Fgsoiege employees would
Over yy, ased, that labor turn-
that j ould. be reduced, and
dustrial disputes would
avoided.”
ese tstorian was Don D.
Nomicg er, brofessor ‘of eco-
sin, ana Niversity of Wiscon-
I in h co-author of Volume
Bat, © Monumental History
rr °r in the United States,
and hi by John R. Commons
“Lo S associates.
haye Yalty and cooperation”
.More than sentimental
ion » We Employee coopera-
Bans €scohier observed,
ey ,.) 0 the average employ-
‘ Scontinuance of restric-
efforts Output and unstinted
* Auto workers would

Put the ;
: e ( i eon
“Peedup idea more simply

tion A

a Traditionally, labor has taken
Shar diced view of profit-
«8 plans.

Chie, Perience revealed,’ Les-
Worke Wrote, “that they (the
dines were particularly in-
divig to look upon the profit

€nd’as withheld wages,

an,
a Something to which they

old

idea

with a

new

twist

By AL RICHMOND

had been entitled before it
was given them.”

Samuel Gompers, founding
father of the American Fed-
eration of ‘Labor and AFL
president for more than a
half-century, said acidly in
1916:

“Some employers who have
inaugurated systems of so-
called profit sharing have
pared down the wages of
their employes so that the
combined sharing of profits
and their wages did not equal
the wages of employees of
other companies in the same
line of industry.” :

John F. Tobin, one - time
president of the Boot and
Shoe Workers Union, was
sharper yet: “Profit sharing
schemes are intended to wean
employees away from unions
so that they may not be in a
position to bargain collectively
for wages, hours, and other
conditions for which unions

stand.”

As a matter of practice em-
ployers found that profit-
sharing did not turn out to
be the incentive they hoped
it would among production
workerss As a result, profit-
sharing was put on a selec-
tive basis.

The thinking behind the
switch was expressed before

Flow can

OW CAN schools be im-

proved? Seattle Federa-
tion of Teachers, an AFL-CIO
affiliate believes that there
are “glaring deficiencies’ in
the American educational sys-
tem.

In a brief to Seattle School
Board, the teachers comment-
ed that “the hue and cry is
that we must educate all
youth, but under the present
conditions we seem to be edu-
cating only a few.”

To correct shortcomings in
a system which now allows
students to graduate without
being “adequately educated,”
the teachers proposed:

the American Management
Association in 1925 in a policy
address by Ralph E. Heilman,
who said:

“T am sure you will agree
with me that the higher the
rank and the greater the re-
sponsibility of those who par-
ticipate in the plan, the larger
is their opportunity to exer-
cise any influence upon prof-
its. For instance, the pur-
chasing agent sitting in the
front office may by one im-
portant act have more influ-
ence on the business than a
mechanic will in a year, re-
gardless of how conscientious
and faithful he may be in the
performance of his duty... .
In my judgment, profit shar-
ing is better designed to oper-
ate successfully when applied
to this particular group... .”

Reuther’s formula for the
auto industry differs: in one
very important respect from
the traditional profit-sharing
schemes. Reuther’s plan would
be incorporated in the union
contract, and would be subject
to collective bargaining,
whereas the traditional plans
were introduced as the pater-
nalistic bounty of the employ-
ers, with all the rules and the
life of the plan subject ex-
clusively to the company’s
whim.

alter

euther president of the United Auto Workers, is

seen here discussing the record profits of the U.S. auto
industry. Now He has a proposal to share them.

The big question is: Does
this difference overcome the
reasons for labor’s traditional
hostility to profit - sharing
schemes? Specifically—

Does it remove the suspicion
that profit dividends are, in
reality, withheld wages?

Does it remove the peril
that: profit-sharing will be
used to discouarge resistance
to speedup, and encourage
other forms of “loyalty and
cooperation?”

Does it allay the fear that
profit-sharing will tend to sap
the worker’s militancy by
seemingly giving him a stake
in higher and higher profits
for the company?

Supporters of Reuther’s plan
say its chief virtue is that it
gets around the labor-causes-
inflation charge. The argu-
ment runs that if added com-
pensation is given workers in
the form of wages, it becomes
part of “cost” and is: com-
puted in setting the price. But
if the added compensation
takes \the form of a bonus
siphoned from profits it is not
part of “cost”.

That is economic razzle-daz-
zle, a bookkeeping sleight of
hand. If some form of profit-
sharing is introduced for pro-
duction workers, the compan-
ies will seek to estimate it in
advance, regard it as a fixed
charge and set prices at a
levels that will permit them
to retain (after “sharing”’) the
same degree of profit as be-

fore.
@

If the Reuther plan does

schools do better?

@ Reduction of class size to
a maximum of 25 pupils.

@ Removal from regular
class rooms of pupils who will
not or cannot conform to dis-
cipline standards.

@® Segregation on an ability

basis and the addition of spe-
cial and technical schools.

® Better testing programs.
@ A more advanced curricu-
lar for college preparation.
@ A more reailstic policy to-
ward academic failures.

@® Raising of curriculum
standards and elimination of
non-essential “snap” courses.

® Salary standards sufficient
to insure progurement and ‘re-
tention of competent teachers.
® Teacher freedom from ex-
tracurricular school activities
© Better equipped  class-
rooms and laboratories.

® A more effective home-
work program.

® Cooperation between par-
ents and teachers in scholar-
ship efforts.

® Improvements in the qual-

ity of instruction, with re-
sponsibility for “social ad-
justments” left to other
agencies.

@ Fuller and more informed
public support for education.

January 31, 1958 —

in fact become a serious bar-
gaining point, one of the sorest
issues will be the formula for
computing profits and any ef-
fective union check on the
intricate financial manipula-
tions of the companies.

One justification the auto
companies have used for
greater speedup is that it was
necessary to improve the com-
petitive position of the indi-
vidual company. With such
reasoning, the profit-sharing
bonus can become another
whip on the assembly line.

Of course, workers want a
share of the fat profits raked
in by the auto companies. The
question is whether it is not
better sought in the form of
wages,. fewer hours (without
reduction in take-home pay),
and other conditions, rather
than as a bonus dividend.

Another big question is
whether in the process of bar-
gaining the scheme would not:
emerge as an incentive plan
with the companies “giving”
a bonus in return for more
sweat and blood: on the as-
sembly line.

Reuther suggested that the
formula for profits be the
same as has been used in com-
puting bonuses for executives.
He pointed out than in the
ten years, 1947-56, “a rela-
tively small group of (GM)
executives divided up a bonus
of $635 million.”

All profits above 10 percent
on net capital would be di-
vided — half to the company,
a fourth to the workers, a
fourth to the customers.

For the purposes of execu-
tive bonuses, GM listed its net
capital at the end of 1956
at $4,545,175,149. On this basis,
according to the Wall Street
Journal, there would have
been $343,200,543 to divide up
among the workers, or a
bonus of $636 per worker.

The UAW’s more modest
figure was $550 per GM work-
er. The figure for Ford’s would
have been $350 to $380.

This discrepancy pointed to
another “bug” in the plan. A
GM worker would have got-
ten $170 to $200 more than a
Ford worker. Workers. at
Chrysler, to say nothing of
American Motors and Stude-
baker-Packard, would have
gotten less than Ford workers,
or nothing at all.

PACIFIC TRIBUNE—PAGE 9