A Rational Wages System

Some Notes on the Method of Paying the Worker a Reward for Efficiency in Addition to Wages

It is universally admitted that the war will bring about great changes in industry. The readjustment of financial affairs, the greatly increased taxation, the displacement of labour due to the employment of men now at the front, the dilution of labour by the employment of women, the development of new industries and the modification of present ones in order to meet new markets, changes in the old methods of manufacturing and trading, will all add to the difficulties of the situation.
Some of the greatest of these difficulties will be in connection with Labour, and the trade-unions will be faced with problems the solution of which will tax their ingenuity and statecraft to the utmost.
Already one predominant assertion is being made, and will be made with greater insistence when the war is over—namely, that it will be necessary to make wealth as quickly as possible in order to make good the disastrous losses incurred by the war, and that this can only be done by increased production with low labour costs.
This haste to make wealth will induce many employers to endeavour to retain war conditions when there is no longer any need for them. They will try to "dilute" Labour permanently by employing women; they will endeavour to lower permanently the age at which children may leave school; they will lower wages where possible; and they will refuse to carry out their promises to reinstate the men who volunteered at the beginning of the war.
Everything, indeed, points to a renewal of the old wage war with all its absurdities, tyrannies, and slanders, its starvation and misery, its strikes and lockouts, its waste and blundering. Anything that can be done to avoid or to ameliorate this state of things should be done; and if it can be shown that a method exists for keeping up wages while at the same time lowering the labour costs, serious attention should be given to it, and its advantages and defects should be carefully studied.
Low wages are not the same thing as low labour costs, for a greater production with low labour costs may be obtained by paying high rather than low wages if proper management and organisation be exercised. The Reward System described herein is part of a method (that part which affects the worker) whereby this result has been obtained. It is based on paying the worker for efficient workmanship, and during the past twenty years it has been adopted in a large number of American factories and in a few (a very few) British ones. It has such a sound basis that it should meet with the favour of both worker and employer, and the writer is of opinion that some of the more serious difficulties between Capital and Labour may be solved by its adoption.
Many papers have been read on the subject in America, and some books have been written about it; but, so far as the writer knows, no simple description has been attempted, and certainly none that appeals to the person chiefly concerned, the worker himself.
The subject may be considered from the point of view of the nation, the employer, the trade-union, or the worker. The following is an attempt to show the worker how it affects him and how he benefits by it.