Organized Incentives Not to Work; F. A. Harper

These anomalies were brought to mind recently by the assertion in an issue of the AFL-CIO Collective Bar gaining Report (Vol. 2, No. 12) that unions in the United States cc;ordinarilyare opposed to wage incentive plans." The AFL-CIO argues that incentive pay "puts a strain on the entire collective bargaining process ... creates friction between workers." It charges that such schemes are 4:'based on the notion that workers will not perform an nonest' day~s work unless they are 4:bribed~ by the promise of 4:extra~ money," and that employers, in hope Dr. Harper is a member of the staff of the Foundation for Eco nomic Education. [68 ] of higher profits, promise monetary reward to induce workers to "produce more than a 'fair day~s work.' " Then comes the frank admission: "When workers are paid according to their individual eHorts, the union~s function of securing high guaranteed wages for all workers be comes more difficult. The local union's ability to present a unified position for base rate increases is weakened."

In other words, incentive pay plans take over the presumed union function of getting a fair and reasonable wage and thus threaten the maintenance of union power. "Wage incentives de-emphasize the union's role in secur ing higher wages," according to the report, and "may threaten the union's entire existence." A Continuing Problem There is no denial, of course, that incentive pay plans are often difficult to design. But this problem is not peculiar to incentive pay plans. It is a problem with any plan of pay determination. Incentive pay involves the question of how much Jones produces relative to Smith, his co-worker. This is the same sort of question that is involved in deciding how much of a product is "pro duced" by tool operators vs. tool investors vs. the electri cal power and telephone suppliers, etc. Problems of accurate determination of a fair wage exist, to be sure. But that only emphasizes that they should be solved as fairly as possible. Incentive plans may be one way to do this.

It will be readily admitted that in some instances the [69 ] fruits of an incentive pay system may not be worth its cost. Many of the points raised by the AFL-CIO report are important questions. But whether in an incentive pay system the cargo will be worth the freight, is a matter which management must judge in each case. To say that no industrial plants should design and use an incentive plan is as foolish as to say that all should use them. The former is the position of the AFL-CIO and of most other unions in the United States, whereas even socialist Rus sia and Sweden reject this form of equalism. When unions oppose the general policy of extra pay for extra work, under incentive or piecework payment, they are merely extending the practice of featherbed ding which is so common in union contracts. The differ ence is only one of degree-equal pay for less work is like equal pay for no work at all.

Something for Nothing Labor unions are not alone in demanding equal pay for less work. This is a policy which has been adopted again and again in our economy. Farmers demand a price for products not produced and a rent for land not farmed. Teachers demand about equal pay for unequal jobs of teaching, with salary based almost entirely on hours spent in training and in the classroom rather than on proficiency at the task. Many other illustrations could be given, too~ ·The whole question of incentive pay needs a point of focus. And, to me, it is this: So long as economic goods [70 ] and services are to be made available for exchange in our society, they will be made available either with or without incentive to the one who receives them. There is no avoidance of this choice, no possible com promise. A person gets goods in exchange for something, or he gets them in exchange for nothing. A ''laborer'' receives pay for working, or he receives pay for not working. What other alternative can there be?

On the question of incentive pay, it would appear that union leaders find it to their advantage in maintaining themselves in power to uphold the principle of pay for not working. This is just another instance where personal rights are being sacrificed for the furtherance of personal power. When incentive pay is denied in principle, the least diligent worker gets as an excess part of what the most diligent worker has earned but is not to be allowed to receive, according to the union policy propounded in this report. It is a late day for individual justice in the United States when we have to look to Russia and Sweden for some leadership in rejecting equalism-for leadership in upholding the rights of the more productive employee to receive the fruits of his handiwork. [71 ] TWO WAYS TO DEVELOP A COUNTRY SHORTLY before the Civil War in the United States, H. R. Helper produced a book dedicated to the proposi tion: Slavery is economically unsound.l Mr. Helper proved statistically that the free market economy of the North was superior to the Southern econ omy of compulsions and restrictions. Both the owners and the employees in the industrial North were rapidly becoming the world~s richest people because they oper ated under the competitive conditions of a free market.