>L d - l : c

Guaranteed Wage Plans

in the United States

A Report on the Extent and Nature of

Guarantee Plans and the Experience

o f Selected Companies

Bulletin No. 925

UNITED STATES DEPARTMENT OF LABOR

BUREAU OF LABOR STATISTICS

DRURY COLLEGE LIBRARY

U, S. DEPOSITORY COPY

it it 90 1CHS

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
UNITED STATES DEPARTMENT OF LABOR

L. B. Schwellenbach, Secretary

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

Guaranteed Wage Plans

in the United States

Bulletin No. 925

For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Price 35 cents

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Letter of Transmittal

U nited States D epartm ent of L abor,

B u reau of L abor Statistics,

Washington, December 29, 1947.

The Secretary of L abor:

I have the honor to transmit herewith a report on guaranteed wage and 

employment plans, which was prepared in the Bureau’s Wage Analysis Branch 

with the cooperation of the Labor Economics Staff. The field investigations were 

conducted by the regional offices of the Wage Analysis Branch under the direction 

of Edith M. Olsen. The text was prepared by Philip Arnow and Edith M. Olsen. 

John L. Afros, formerly of the Bureau’s Labor Economics Staff, participated in 

the planning of the study and prepared the appendix on clauses used in guarantee 

plans and union contracts. Theodore Allison, Ida Pepperman, and Herbert 

Abowitz assisted in the preparation of the final report.

E w a n C lag u e, Commissioner.

Hon. L. B. S C H W E L L E N B A C H ,

Secretary oj Labor.

Preface

In the summer of 1944 the Bureau of Labor Statistics began an inquiry into 

the subject of guaranteed wage and employment plans, anticipating a general 

demand for information on the nature of such plans and of the Nation’s experience 

with them. At the time the Bureau began its inquiry, union demand for a 

guaranteed annual wage was at issue in a dispute case before the National War 

Labor Board, involving the basic steel industry and the United Steel Workers of 

America. In rendering its decision in November 1944, the Board refused to grant 

the union’s demand under conditions prevailing at the time. However, in view 

of the lack of adequate information relating to guaranteed annual wage plans, it 

was recommended that a thorough study of the subject be made by a special 

commission to be appointed by the President.

On March 20, 1945, the President designated the Advisory Committee of the 

Office of War Mobilization and Reconversion to survey “ the whole question of 

guaranteed wage plans and the possibility of their future development in American 

industries as an aid in the stabilization of employment and the regularization of 

production.” Following this action, the Bureau’s program was carried on in 

cooperation with the Guaranteed Wage Study Staff, designated by the Office of 

War Mobilization and Reconversion to investigate the problem. In December 

1945, the Office of War Mobilization and Reconversion submitted to the Bureau 

of Labor Statistics a request for a survey of specific experiences with existing and 

discontinued guaranteed wage and employment plans.

Parts I and III of this report appeared as Appendix C of the Final Report of 

the Guaranteed Wage Study Staff to the Advisory Board of the Office of War 

Mobilization and Reconversion, and were reprinted as Bureau of Labor Statistics 

Bulletin No. 906.

iii

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Contents

Page *

I. What is a guaranteed wage plan?______________________________________________ 1

II. Historical development of plans:

A. Initiation of plans___________________________________________________________ 3

B. Discontinuance of plans______________________________________________________ 6

III. Extent and nature of guaranteed wage or employment plans in the United States:

A. Currently operating plans:

1. Prevalence_______________________________________________________________ 9

2. Characteristics___________________________________________________________ 10

B. Discontinued plans__________________________________________________________ 15 ,

IV. Experience with guarantee plans in 62 selected cases:

A. Circumstances of introduction:

1. Pre-plan employment situations___________________________________________ 17

2. Stable employment for part of the work force_____________________________ 21

3. Previous efforts to stabilize employment__________________________________ 22

4. Responsibility for initiating guarantee____________________________________ 25

5. Objectives of the plans___________________________________________________ 25

6. Extent of planning at time of introduction_______________________________ 28

7. Effect on wages and working conditions__________________________________ 28

B. Outstanding features of the guarantees:

1. Character of the obligations assumed_____________________________________ 30

2. Duration of the guarantee________________________________________________ 32

3. Firmness of the guarantee________________________________________________ 32

4. Computation of the guarantee____________________________________________ 33

5. Transfers________________________________________________________________ 33

6. Administration__________________________________________________________ 34

C. Experiences of operation:

1. Meeting of guarantee obligations_________________________________________ 34

2. Effects of business depression_____________________________________________ 35

3. Discontinued plans_______________________________________________________ 38

4. Operation under Section 7 (b) (2)________________________________________ 40

5. Costs____________________________________________________________________ 42

D. Management and labor evaluation of results:

1. Accomplishments of the plans in the field of employment security___________ 43

2. Other accomplishments__________________________________________________ 48

A p p e n d ix A. Basic data on 62 plans studied by the Bureau of Labor Statistics_______ 50

A p p e n d ix B. Clauses used in guarantee plans and contracts__________________________ 62

Index to Appendix B ________________________________________________________________ 89

v

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Guaranteed Wage Plans in the United States

I. What is a Guaranteed Wage Plan?

The Bureau of Labor Statistics has included 

in its study of guaranteed wage or employment 

plans arrangements, written or unwritten, by 

which an employer guaranteed or assured to some 

or all of his employees, in advance, a definite 

period of employment equal to at least 3 months 

a year, or an equivalent amount of wages.

This definition is broad, and covered plans 

framed in a variety of ways: plans which were 

designated as “ guarantees” by the employers and 

unions which operated under them, and plans 

which did not carry the title of “ guarantee” but 

which in fact operated as guarantees. In a relatively small number of cases, the plans provided 

for an “ annual wage.” In the majority of cases, 

employment was guaranteed for a stated number of 

weeks per year and hours per week, frequently 

less than 52 weeks per year and 40 hours per week. 

In practice, these guarantees of employment, as 

well as the few guarantees that were explicitly 

stated in terms of wages, did guarantee wages for 

the total number of hours a year over which employment was guaranteed. A distinction between 

“ guaranteed wage” and “ guaranteed employment” 

plans was unnecessary for the purpose of this 

study.

Despite the general inclusiveness of the definition employed, a number of problems arose respecting its application in borderline situations. 

The distinction between a guarantee plan and a 

private unemployment benefit plan, for example, 

was difficult to draw. The latter plans were included only where the period of time over which 

benefits were paid was 3 months or more and where 

there was a commitment to pay benefits regardless 

of the size of reserves set aside for this purpose.

It was difficult also, in many instances, to draw 

the line between a guarantee and an employer’s 

oral pledge that work in his establishment would 

be “ steady.” A large degree of stability is inherent in many types of industry. Moreover, 

many employers have maintained fairly stable employment in their plants, frequently as a result 

of planned production and hence employment 

regularization, without instituting formal guarantees. The volume of employment regularization planning in this country is, in fact, far greater 

than that encompassed by the actions of the firms 

that have guaranteed wages or employment. The 

practice of employing white-collar personnel on 

an annual rate basis is widespread, especially in 

government, financial, and institutional establishments. Guarantees of minimum weekly hours 

or wages are found in many labor agreements, 

notably in the meat-packing and trucking industries; the practical effect of these arrangements 

is to afford a guarantee of almost full weekly 

earnings even when wage earners work only during some part of each week. In none of these 

situations, however, is there a formal pledge or 

assurance of continued employment, and the employee is not free from the possibility of lay-off 

or loss of his job. Oral arrangements (amounting 

to 36 percent of the currently operating plans included in the study) were included only where 

there was a formal guarantee or assurance of continued employment or wages.

Many of the plans contained the theoretical possibility of abrogation or modification during the 

life of the guarantee period under various circumstances. Provisions for modification or cancellation of an announced guarantee did not result 

in exclusion of the plan from the study.

The so-called wage advance plan was another 

type of guarantee which raised questions of inclusion. Such plans are sometimes regarded as 

loan arrangements, because their central feature is 

the advancement of wages by the employer during 

short-hour weeks, and the repayment by workers 

during weeks in which longer hours are worked.

1

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
2 GUARANTEED WAGE PLANS IN THE UNITED STATES

They are different from loan plans in essential 

characteristics, however. Where there was no 

obligation to repay the advance unless the employer provided sufficient work to enable the 

advance to be repaid, the plan was considered to 

be a guarantee of wages or employment for the 

maximum period over which wages were advanced. 

These plans were included in the study.

On March 1, 1945, the Bureau of Labor Statistics mailed a brief questionnaire to about 90,000 

employers for the purpose of determining the 

extent to which guarantee plans had been adopted 

in the United States. From the replies to this 

questionnaire, from a canvass of previous studies 

and available literature on the subject, and from 

a list of employers who had filed contracts with the 

Wage and Hour and Public Contracts Divisions 

under Section 7 (b) (2) of the Fair Labor Standards Act, the Bureau was able to compile a list of 

firms which appeared to have had a guaranteed 

wage or employment plan in effect at -some time. 

The Bureau then conducted a field inquiry to determine finally whether these arrangements actually met the requirements of the definition of 

guaranteed wage or employment plans used in this 

study, and whether these plans had actually operated. At the same time, information was collected 

on the basic features and provisions of those plans 

which met the definition that had been established. 

A total of 241 plans (196 still in operation and 45 

that had been discontinued) were surveyed in this 

manner and are included in the tabulations in this 

report. To this group were later added 106 additional discontinued plans about which information was obtained subsequent to the field survey. 

This number included 96 cases which operated 

under the Wisconsin unemployment compensation 

law in 1934 and 1935.

In addition, the Bureau made more specific and 

detailed investigations of the operations of 62 

of the plans and the situations into which they 

were introduced. The material gathered in the 

course of this subsequent investigation is presented 

in part IV of this report.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
II. Historical Development of Plans1

A. Initiation of Plans

Until the passage of unemployment compensation legislation, the history of guarantee plans was 

part of the history of individual efforts, unaided 

by government, to mitigate the effects of unemployment in particular industries and plants. 

During this early period, the idea of guaranteeing 

wages was not differentiated from other unemployment compensation arrangements. In fact, 

the term “ guaranteed wages” was not used in 

connection with early plans that have since come 

to be known as “ guaranteed wage” or “ guaranteed 

employment” plans. A good example of this 

situation was reflected in the language of the 

Procter & Gamble Co. plan, introduced in 1923, 

which provided a 48-weeks-a-year guarantee of 

employment by assuring that no worker would be 

unemployed for more than 4 weeks a year.

Trade-union sponsorship and individual employer initiation were both important in the early 

history of guarantees. During the nineteenth 

century, trade-union activity had in several instances encompassed the furnishing of out-of-work 

benefits to members, but such arrangements, of 

course, carried no obligations by employers to 

furnish work. 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 

textile printers in a New Jersey dyeing and 

finishing establishment, and established by a 

small midwestern retailer of sporting goods.

Best-known among the early guarantee plans 

were those in the wallpaper industry. A guarantee of 11 months’ employment was first introduced in 1894, as a result of negotiations between 

the National Association of Machine Printers and 

Color Mixers and the National Wall Paper Company, then a newly formed amalgamation controlling from 50 to 75 percent of the,industry. In 

1896 the guarantee was extended to 12 months a 

year; modifications were made in subsequent

years. The independent companies in the industry 

followed the bargaining pattern set by the largest 

firm, and the plan became industry-wide for 

members of the wallpaper association who 

bargained with the union. Similar arrangements 

were made by negotiation with the National Print 

Cutters’ Association of America, which in 1923 

joined with the National Association of Machine 

Printers and Color Mixers to form the United 

Wall Paper Crafts.

Among the other early arrangements, the case 

involving the National Union of the United 

Brewery Workmen of the United States is known 

to have arisen in at least two areas, Philadelphia 

and New York, and took the form of contract provisions restricting lay-off of regular employees to 

no more than specified numbers of days during the 

dull season of the year. The agreement between 

the Machine Printers Beneficial Association and a 

New Jersey textile finisher provided each journeyman printer full pay for any period of unemploy- 

, ment prior to July 15 of each year, and half pay for 

any period of unemployment during the remainder 

of the year. The plan of the midwestern sporting 

goods retailer provided an oral guarantee of 52 

weeks’ pay each year to all employees who had 

passed a probationary period of approximately 90 

days.

Guarantee plans introduced during the early 

years of the twentieth century involved small 

establishments in which employers made oral commitments to all or some of their workers to provide-them with year-round employment. A retail 

men’s furnishing store, starting in 1905, guaranteed permanent employees 52 weeks of work at full 

weekly hour&; a coffee-roasting establishment, in 

1912, began to pay its production workers full 

weekly pay during slack season weeks; a poultrycleaning establishment began, in the following i

i The material in this section of the report is based upon data gathered by

the Bureau of Labor Statistics and upon published accounts of guaranteed

wage or employment plans.

772334° — 48- -2 3

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
4 GUARANTEED WAGE PLANS IN THE UNITED STATES

year, to guarantee 52 weeks of full-time employment to permanent workers; a small department 

store began the same guarantee in 1914; and a 

small drug firm about 30 years ago instituted 

a year-round weekly wage payment plan covering 

2 employees.

The next well-known plan, that of the Columbia 

Conserve Co., of Indianapolis, a producer of soups 

and other canned products, appeared in 1917. 

The guarantee was part of a broader social experiment which included profit-sharing and an employee council to give permanent workers a voice 

in the management of the enterprise. Phases of 

the experiment which attracted public attention 

included the steps taken by the company after 

introduction of the plan to level out its normally 

seasonal production pattern, and the eventual 

turning-over of ownership to the permanent workers covered by the guarantee.

Employer interest in the problem of employment security is reported to have increased substantially after the business depressions of 1914 

and 1921, and also as a result of the increasing 

general interest in scientific management and improved personnel procedures. A number of unemployment benefit plans, many of which had 

characteristics that are currently attributed to 

guarantee plans, were adopted during the period 

between 1919 and the passage of Federal and State 

unemployment compensation legislation. These 

plans typically provided for the payment of outof-work benefits rather than for a guarantee of 

continuous employment. Where the unemployment benefits covered an extended period of time, 

the line of demarcation between an unemployment 

benefit plan and a guarantee plan was difficult to 

distinguish. As has already been indicated, unemployment benefit plans that provided assurance 

of benefits for 3 months or more have been 

included in the data on guaranteed wage or employment plans presented later on in this report.

Several unemployment benefit plans are worthy 

of mention at this point because of their similarity 

to many of the early guaranteed wage or employment plans. None of them was included in the 

data contained in subsequent sections of this report, because they did not meet the 3-month 

guarantee test referred to above. In 1919 the 

Dutchess Bleachery, followed in 1920 by an affiliate, the Rockland Finishing Co., began setting 

aside part of its profits in order to provide its

workers half pay during periods of unemployment. The American Cast Iron Pipe Co. introduced an unemployment benefit plan in 1924; the 

Brown & Bailey Co. did likewise in 1927. During 

the same period of time, a number of unemployment benefit plans were introduced by joint agreement between management and labor, notably in 

the needle trades in New York and Chicago, and 

in the hat and lace industries.

Among the plans introduced during the 1920’s 

that can be classed as guarantees, the most notable 

were the joint agreements of the Cleveland garment industry and the In ti Ladies’ Garment 

Workers’ Union (1921), the plan of CrockerMcElwain Co. and its affiliate, the Chemical 

Paper Manufacturing Co. (1921), the Proctor &

Gamble Co. plan (1923), and the joint agreement 

between the Seaboard Air Line Railway Co. and 

a federation covering its shop craft employees 

(1928). The plan in the Cleveland ladies’ garment industry was the first of several unemployment compensation devices introduced in the 

apparel industry during the 1920’s, and the only 

one that qualified as a guarantee under the 

definition used in this study. By agreement 

with the Int’l Ladies’ Garment Workers’ Union, 

Cleveland apparel manufacturers guaranteed 20 

weeks of full employment in each 6-month 

period (later changed to 40 weeks a year), at 

two-thirds of minimum weekly wages (later 

changed to half of minimum wages). The 

Crocker-McElwain plan assured year-round employment at full pay to workers with at least 5 

years’ service; in subsequent years this plan was 

modified to provide, finally, less than 50 percent 

of full-time annual compensation. The Procter 

& Gamble plan assured 48 weeks’ employment to 

all workers with at least 6 months’ service. Since 

the time of its introduction, the plan has been 

somewhat modified, principally by limiting eligibility to workers with at least 2 years’ service. 

The Seaboard plan as originally introduced was a 

guarantee of annual employment for an agreedupon number of shop employees each year.

As was the case /during the earlier two decades 

of the century, the occasional introduction of a 

less formal plan by small employers continued. A 

shoe retailer -guaranteed and maintained yearround employment to 15 regular employees starting in 1923; a commercial machinery wholesaler 

guaranteed 52 full weeks’ pay a year to 2 service

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
HISTORICAL DEVELOPMENT OF PLANS 5

mechanics; beginning about 1924, a Michigan coal 

dealer guaranteed weekly wages throughout the 

year to 7 employees regardless of prevailing conditions; in the same year, a garment manufacturer 

introduced a guarantee of 52 weeks* full pay covering a group of key workers; from 1 to 4 plans of 

similar character were introduced during each of 

the remaining years of the 1920*s.

Introduction of guarantees and unemployment 

benefit plans continued during the depression of 

the early 1930*s. The General Electric Co. in 

1930 adopted an unemployment pension plan, 

covering 12 of its electrical apparatus manufacturing plants, and in 1931 adopted a plan guaranteeing 50 weeks* work of not less than 30 hours each 

(modified in subsequent years) to employees with 

2 years or more service in 12 lamp manufacturing 

plants. The Wm. Wrigley, Jr., Co. in 1934 adopted 

an employment assurance plan with unemployment benefits varying according to a sliding scale 

dependent on pay level and length of service. The 

plan of Geo. A. Hormel & Co., meat packers of 

Austin, Minn., was started on a small scale in 1931 

and its scope gradually extended until in 1940 it 

covered all but a small percentage of the company *s employees.

During and following the depression of the 

early 1930*s, the character of the plans introduced 

shifted from guarantees of unemployment benefits to guarantees of continued employment. 

Compulsory unemployment insurance legislation 

was adopted in Wisconsin in 1932 and at later 

dates in other States, the latter chiefly under the 

provisions of the Federal Social Security Act. 

The legislation permitted modification of the contribution of tax features in the cases of employers 

who provided guarantees of employment or wages 

equivalent to legislatively established standards. 

The chief, and as far as can be ascertained the 

only, direct effect of the legislation upon the introduction of guarantee plans occurred in the case 

of the Wisconsin law, which completely exempted 

from the unemployment tax employers who guaranteed 42 weeks* pay (at 36 hours a week, changed 

in 1935 to 40 weeks at two-thirds of full-time) to 

their workers. A total of 96 employers operated 

guarantee plans under this law for a period of 

slightly more than a year, beginning in 1934 and 

ceasing at the end of 1935. At that time the statutory provisions in Wisconsin were changed to 

conform to the requirements of the Federal statute, applicable to all State unemployment compensation laws, under which employers who guaranteed employment or wages were given tax 

credits, but not complete exemption. Only six 

additional States—California, Florida, Idaho, 

Indiana, Minnesota, and Oregon—are reported to 

have made provision in their unemployment compensation laws for guarantee plans, but none of 

them implemented the clauses with the necessary 

administrative regulations. No guarantee plans 

were ever adopted under these laws.

Further legislative provision affecting guarantee 

plans was made in 1938, when the Fair Labor 

Standards Act was adopted. Under Section 7 (b)

(2) of this act, exemption from penalty overtime provisions (up to 12 hours a day or 56 a 

week) was granted in cases where a worker was 

employed—

on an annual basis in pursuance of an agreement with 

his employer, made as a result of collective bargaining 

by representatives of employees certified as bona fide 

by the National Labor Relations Board, which provides that the employee shall not be employed more 

than 2,080 hours during any period of 52 consecutive 

weeks.2

To date, very few employers have used this exemption. The most substantial plan operating 

under the provision is that of Geo. A. Hormel &

Co., which had been in operation prior to the 

passage of the Act.

During the period following the depression of 

the early 1930*s, greater numbers of plans were 

introduced yearly than in any year prior to the 

depression. During the years 1938^2 new plans 

were introduced at the rate of from 19 to 23 a year, 

compared with a maximum of 4 a year during the 

1920*s, and from 2 to 6 during the early 1930*s. 

The latter half of the 1930*s saw the introduction 

of a number of “ basic crew** provisions in agreements in the wholesale and retail trades. Under 

these contracts, specified numbers of workers, 

ranging from less than half to well over threequarters of the work force, were guaranteed full 

weekly wages throughout the year.

Another of the well-known plans, that of the 

Nunn-Bush Shoe Co., was established in 1935. 

This plan early in 1946 guaranteed a continuous

2 Prior to October 1941, the maximum number of hours that an employee

might work in a year for the 7 (b) (2) overtime exemption to apply was 2,000

hours. In October 1941, an amendment to the Act changed the limit from

2,000 hours to 2,080 hours (the equivalent of fifty-two 40-hour weeks.)

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6 GUARANTEED WAGE PLANS IN THE UNITED STATES

employment relation to workers with the greatest 

seniority, and provided that the total earnings 

of all workers with 2 years’ service (including, 

but generally exceeding, the number of workers 

who had the employment relation guaranteed) 

should be a predetermined proportion, no less 

than 20 percent, of the wholesale value of the 

company’s product. Workers shared in this 

amount in proportions determined by rates which 

reflected job differences.

By the beginning of 1946, according to the information which has been compiled by the Bureau, a total of 347 plans which met the definition 

used in this study had been introduced. A yearby-year tabulation of the time of their initiation 

is shown in table 1.

T a b l e 1.— Number of guaranteed wage or employment plans

covered in Bureau of Labor Statistics survey, by year of

initiation

Year of initiation Number of

plans Year of initiation Number of

plans

Total. _ ______ ' 1347 1928______ ____________ 1

199Q 4

Prior to 1900 3 1930___________________ 2

1905 1 1931___________________ 5

1912 ____ 1 1932___________________ 6

1913................................. 1 1933___________________ 6

1914 _______ _______ 1 1934___________________ 1102

1916______________ ____ 1 1935___________________ 17

1917_______ ___________ 1 1936___________________ 11

1918___ ____ __________ 1 1937__________________ 10

1919 ___ 1 1938___________________ 23

1920________ ___________ 4 1939___________________ 20

1921 3 1940___ _*_____________ 19

1922 ___ 1 1941___________________ 21

1923 ____________ 4 1942___________________ 19

1924 ____ _____________ 3 1943___________________ 8

1925 ............. .............. 2 1944___________________ 21

1926 ............................ 2 1945___________________ 9

1927______ _____________ 2 (Data not available)__ 11

1 Includes 96 plans initiated in 1934 under the encouragement of the tax

exemption provisions of the Wisconsin unemployment compensation law.

B. Discontinuance of Plans

Of the plans known to the Bureau of Labor Statistics that had been introduced up to the beginning of 1946, 196 were still in existence at that 

time. The remainder, a group including all of the 

96 plans introduced in 1934 under the Wisconsin 

unemployment compensation law and 55 others, 

had been discontinued before the end of 1945.

In the case of the 96 Wisconsin plans and a small 

number of others, discontinuance resulted from the 

circumstances surrounding the introduction of 

compulsory unemployment insurance legislation. 

In the case of the Wisconsin plans, amendment of 

the State law to conform with the requirements 

of the Federal Social Security Act removed the

tax exemption which the companies had enjoyed 

under the former statute, and the employers thereafter individually elected not to come under the 

guaranteed account provisions of the legislation. 

In a few other cases, plans that had been instituted 

prior to the passage of compulsory unemployment 

compensation legislation were discontinued upon 

the passage of such laws because it was believed 

that the objective which the plans were designed 

to meet was met by those laws.

In the remainder of the cases, discontinuance 

was largely the result of special individual circumstance, but on the whole the result of problems 

facing the individual employer. In a number of 

cases the general state of business conditions at 

the time the plans were discontinued was a minor 

influence.

Two of the earliest plans abandoned were those 

of the American Cast Iron Pipe Co., discontinued 

in 1926, and the Consolidated Water Power & 

Paper Co., discontinued in 1929. Only incomplete information is available on the reasons for 

their discontinuance: The former was discontinued 

on the eve of a major technological change in the 

industry, the latter during a period of relatively 

full employment. The wallpaper plan—one of the 

earliest begun—was discontinued in 1930, after a 

considerable amount of dispute over the plan’s administration, and in a period when depression 

conditions and the rise of substitute materials 

were seriously affecting the industry.

The plan of the United Diamond Works, under 

which benefits had been paid for almost a full year 

during the 1921-22 depression, ended in 1931, following a period of uncertainty in the industry to 

which international tariff problems contributed. 

In the same year the unemployment benefit plans 

of the Brown & Bailey Co. and the Cleveland garment manufacturers were discontinued; in the latter case the reason is reported to have been the 

long-range decline of the local market and the 

shift in the character of the industry. The plans 

of the Leeds & Northrup Co. and the Dennison 

Manufacturing Co. were discontinued in 1932 

when their unemployment benefit reserves were 

exhausted. The depression years also saw the disappearance of many of the unemployment benefit 

plans not included in this study (those that could 

not meet the test of a 3-month guarantee)-, resulting chiefly from depletion of their individual 

unemployment compensation reserves.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
HISTORICAL DEVELOPMENT OF PLANS 7

Of the plans discontinued after the depression 

of the early 1930’s, 15 were studied in detail by 

the Bureau, and information is available concerning the circumstances of their discontinuance. The 

effects of the depression seem to have been an important contributory cause of abandonment in only 

one case, where the guarantee was substantially 

modified to provide less than 50 percent of the 

earnings originally guaranteed, and the plan was 

finally abandoned in 1937. Four of the plans were 

abandoned during World War II, largely as a 

result of wartime business uncertainties. Four 

were abandoned after management had come to 

the conclusion that the plans were not needed, because the employer was able to provide substantially more work than the guarantee assured. All 

but one of these plans had been in existence for 

3 years or less, and all were abandoned between the 

years 1939 and 1942. Three plans— two of which 

were introduced to avoid overtime compensation 

and one of which was introduced as an alternative 

to a wage increase—were abandoned as a result of 

employee dissatisfaction with the plans and union 

opposition. One of the remaining three plans was 

abandoned following the passage of unemployment compensation legislation; another was ended 

during World War II when management became 

worried about possible conflict between its obligations under the plan and its obligations to returning veterans, and when a newly organized union 

showed indifference to the plan’s continued existence. Finally, the plan of the Columbia Conserve 

Co., which had operated successfully over a period 

of 25 years and through three periods of business 

depression, was abandoned as the aftermath of a 

labor dispute. Wages and union organization had 

arisen as issues among the employee-owners, resulting in a National War Labor Board dispute 

case and a court suit. The employee-ownership 

feature of the plan was ended by court order as a 

result of the suit, and the management of the company simultaneously ended the guarantee. In this 

case, as in a number of other cases where plans 

were discontinued, management and union representatives expressed great interest in possible future attempts at guaranteeing employment or 

wages.

As can be seen from table 2, guarantee plans 

were discontinued from time to time during the 

entire span of years over which plans have been 

in existence. With the exception of the year 1935,

T a ble 2.— Number of discontinued guaranteed wage or employment plans covered in Bureau of Labor Statistics survey, by year of discontinuation and number of years of

existence at time of discontinuation

1 Includes 96 plans initiated in 1934 under the encouragement of the tax

exemption provisions of the Wisconsin unemployment compensation law,

and discontinued in 1935 when the tax exemption was eliminated.

when the 96 Wisconsin plans were discontinued, 

there is no significant concentration. It is noticeable, too, that the discontinued group includes 

plans which had been in existence for varying 

lengths of time. Some, like the wallpaper plan 

and the plan of the Columbia Conserve Co., were

T able 3.— Total number of guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey that

were in operation each year, 1893—1945

Year

Number

of plans

in operation at the

end of each

year

Year

Number

of plans

in operation at the

end of each

year

1893__________ ________ 1 1929.................. .............. 35

1894-95____ ____ _______ 2 1930________ __________ 36

1896-1904______________ 3 1931___________________ 38

1905-11............................. 4 1932___________________ 41

1912___________________ 5 1933_______ ______ ____ 46

1913......... ......................... 6 1934........... ....................... i 148

1914-15................. ....... 7 1935_____________ _____ 68

1916 _______ ______ 8 1936____ ________ ______ 79

1917.................................. 9 1937___________________ 87

1918____ ______ _______ 10 1938_________ _________ 107

1919 .......................... 11 1939 ___________ _____ 125

1920.................................. 15 1940_____________ _____ 138

1921 ____________ ______ 18 1941.................................. 154

1922 ....................... 19 1942 ____________ ____ _ 166

1923_______ ____ _______ 23 1943....1______________ 167

1924______ ____________ 26 1944___________________ 183

1925____ _____ _________ 28 1945___________________ 185

1926___________ ______ 29 (Data not available—

1927___________________ 31 11 plans)____________ 196

1928______________ _____ 32

1 Includes 96 plans initiated under the encouragement of the tax exemption

provisions of the Wisconsin unemployment compensation law in 1934 and

discontinued in 1935 when the tax exemption was eliminated.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
8 GUARANTEED WAGE PLANS IN THE UNITED STATES

among the oldest plans on record, while others 

had been in operation for only a few years when 

they were dropped.

As has already been shown, the net result of 

the continued inauguration of new plans and the 

discontinuance of others was a total of 196 during 

January, 1946. With the exception of the year 

1935, when the 96 plans adopted under the Wisconsin unemployment compensation law were discontinued, the picture, as shown in table 3, has 

been one of constant growth of the number of 

plans in existence, at an accelerated rate during 

the period since 1934.

The plans that were in existence in January 

1946, as shown in table 4, had been in operation 

over varying periods of years. Approximately

one-third had been in operation for 10 years or 

longer, and 11 plans had been in operation for 25 

years or more.

T able 4.— Number of currently operating guaranteed wage

or employment plans in Bureau of Labor Statistics survey,

by number of years in existence (as of January 1946)

Number of years in

existence

Number

of plans

still in

operation

Number of years in

existence

Number

of plans

still in

operation

Total___________ 196 10 years 9

11 ypfl.rs 7

Less than 1 year______ _ 7 12 years 6

1 year______ ___________ 2 13 years 6

2 years __________________ 19 14 years 5

3 years. ______ ___________ 7 15 to 19 years 8

4 years. ________________ 17 20 to 24 years 8

5 years____ __ _______ 13 25 to 29 years 4

6 years___ _______ ____ 17 ’ 30 to 34 years 4

7 years____ _______ ._ _ 14 35 years and over 3

8 years________ __________ 11 Not available___________ 11

9 years___ _____ 8

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
III. Extent and Nature of Guaranteed Wage or Employment Plans in the

United States

A. Currently Operating Plans

1. Prevalence

In January 1946, the 196 guaranteed wage or 

employment plans known by the Bureau of Labor 

Statistics to be in operation in the United States 

covered a total of approximately 61,000 workers. 

Some of the plans were master contract arrangements, involving a number of employers and 

unions in the same industry and community, and 

others were plans which covered several plants of 

the same company. As a consequence, the number 

of establishments was, of course, considerably 

greater than the number of plans. There were, in 

all probability, additional bona fide plans that 

were not included in the study. Compared with 

the total number of establishments or wage earners 

in the United States, the coverage of all guaranteed 

wage or employment plans is small. It is estimated to be well below 1 percent of the total number of wage earners employed in nonagricultural, 

nongovernmental establishments. The significance 

of the plans lies, however, in their provisions and 

accomplishments, rather than in their prevalence.

The 196 plans were found in a great many industries. Almost 40 percent of them, involving 

38 percent of total employment covered, were in 

manufacturing industries. Within the manufacturing group, the plans were most frequently found 

in industries which have substantial seasonal 

variations, and those which produce for consumer 

demand. The greatest numbers of plans occurred 

in establishments manufacturing food products— 

brewing, meat packing, grain, and flour; in textile 

mills—primarily in dyeing and finishing establishments; and in apparel companies. Relatively few 

plans were found in heavy or basic manufacturing 

industries, which are subject to much wider cyclical 

fluctuations, but often to less marked seasonal 

variation (table 5).

Outside manufacturing industries, the greatest 

number of plans was in the retail trade group.

As in the case of the manufacturing industries 

which produced consumer products, the establishments in retail trade were in many instances 

in lines of activity that were subject to significant 

seasonal variation: mail order houses, clothing 

stores, department stores. The same was true of 

establishments in wholesale trade, which contained the next most numerous group.

T a b le 5.— Number of currently operating guaranteed wage

or employment plans covered in Bureau of Labor Statistics

survey, by industry group

Industry group

Number of

currently

operating

plans

Total plans___________________________________________________

Manufacturing, total_________________________________________

Food and kindred products_______________________________

Textile-mill products_____________________________________

Apparel and other finished products made from fabrics and

similar materials_______________ ____ ___________________

Lumber and timber basic products_______________________

Paper and allied products________________________________

Printing, publishing, and allied industries________________

Chemical and allied products_____________________________

Leather and leather products_____________________________

Stone, clay, and glass products____________________________

Iron and steel and their products_________________________

Nonferrous metals and their products_____________________

Machinery (except e le c trica l)______ ___________________

Electrical machinery_____________________________________

Transportation equipment (except automobiles)__________

Miscellaneous manufacturing industries__________________

196

7521

15

121

3

8

5

1

1

2

1

2

1

1

1

Nonmanufacturing, total_______________

Nonmetallic mining and quarrying. _

Construction—general contractors__

Wholesale trade____________________

Retail trade________________________

Real estate_________________________

Railroads___________________________

Water transportation_______________

Warehousing and storage___________

Services incidental to transportation.

Communication____________________

Heat, light, and power______________

Services________________: ___________

Nonprofit membership organizations.

1211

3

23

562

1

101

1

1

2

191

The majority of the establishments that guaranteed employment or wages were located in the 

industrial regions of the country. More than 70 

percent of the 196 were in the Middle Atlantic 

and Great Lakes regions, and almost 45 percent 

were in the cities of New York, Chicago, Cleveland, and Philadelphia. Very few were found

9

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
10 GUARANTEED WAGE PLANS IN THE UNITED STATES

in the Southeast, Southwest, or West. The following cities had the largest numbers of plans:

Chicago, 111_________________________________ 10

Cleveland, Ohio____________________________ 10

Detroit, Mich______________________________ 6

Milwaukee, Wis____________________________ 5

New York, N. Y _____________________________ 61

Philadelphia, Pa____________________________ 5

Plans were found in establishments of all sizes, 

although most of them were in small establishments. Table 6 contains a distribution of the 

total number of wage earners in establishments 

covered by the plans in 172 cases for which such 

information was available. While in several cases 

the employment data for individual plans group 

together the employment of a number of establishments, as in the cases of master contracts and 

companies with more than one establishment under the same plan, the table gives a fairly good 

picture of the size of the establishments involved. 

About 55 percent of the plans were in employing 

units of less than 50 persons; an additional 10 percent of the plans were in employing units of 50 

to 100 persons. Ten percent of the plans were in 

employing units of 1,000 persons or more.

T a b l e 6.— Number of currently operating guaranteed wage

or employment plans covered in Bureau of Labor Statistics

survey, by total number of wage earners

Total number of wage earners in establishment or establishments covered by plan

Number of

currently

operating

plans

Total. ___________ _____________________________________ 1196

Less than 25_____________________ _ ______ _______ ______ 64

25 to 49___________________________________________________ 29

50 to 74____________________________________________________ 13

75 to 99_____________ ______________________________________ 5

100 to 249_____________________ _________________________ 23

250 to 499__________________________________________________ 2 14

500 to 749__ _______________________________________________ 3

750 to 999__________________________________________________ 3

1,000 to 2,499____ ____ ________________________________ 2 6

2,500 to 4,999 ___________________ _____________________ 2 6

5,000 to 7,499 _____________________________________________ 2

7,500 to 9,999 _________________________________ ____________ 1

10,000 and over ______ ___________________________________ 3

Total employment not available___________ _____________ 824

1 A guaranteed wage or employment plan embodied in a master contract

between a trade association and a union is counted as a single plan, and is

classified according to the total number of wage earners in all of the covered

establishments. There are 10 such cases.

2 Includes 1 master contract plan.

8 Includes 7 master contract plans.

In 130 of the 196 plans, unions represented the 

employees covered by the guarantees in general 

collective bargaining relations (table 7). Where 

one union was involved, the unions were AFL 

affiliates in 36 cases, CIO affiliates in 64 cases, 

and were unaffiliated in 13 cases. In 17 cases there 

were 2 or more unions of different affiliation representing the workers. Where unions represented 

the workers, the provisions of the guarantee were 

generally incorporated in a collective bargaining 

agreement. In a number of cases, however, the 

plans were introduced prior to unionization and 

have not since been included within the scope of 

collective bargaining.

T able 7.— Number of currently operating guaranteed wage

or employment plans in Bureau of Labor Statistics survey, by representation of covered workers

Representation of covered workers

Number of

currently

operating

plans

Total__ ______________________ ___________________ ________ 196

Nonunion____________________________________________ __ 66

Union______________________________________ _____ __ __ 130

AFL affiliate_______________________________ ___________ _ 36

CIO affiliate_________ . . . _______. . . ........................ - 64

Unaffiliated union______ __________ _________ ___ _ 13

2 or more unions with different affiliations_____ _ ........... 17

2, Characteristics

The basic features of the guarantee plans may 

be characterized best in terms of the kinds of 

workers eligible for coverage and the requirements which workers must meet before they are 

eligible for benefits, the proportions of workers 

actually covered, and the amounts of wages or 

employment guaranteed.

In 101 of the 196 plans, as indicated in table 8, 

coverage under the plan was open to all or nearly 

all workers (in some cases to all production 

workers, and in others to some or all other wage 

earners as well, including office workers, supervisory force, salesmen, etc.). In 63 of these cases, 

employees automatically became eligible upon hiring or within 30 days thereafter. Service requirements, ranging from 3 months to more than 5 

years, were applicable in all but 4 cases; in these 

the duration of the requirement was indefinite, 

depending upon the employer’s judgment concerning the necessary probationary period. In a large 

number of cases, especially where there were union 

contracts, the eligibility period coincided with the 

probationary period provided in the contract for 

the attainment of permanent status or a place 

upon the seniority rolls.

Coverage was open only to employees in “ regular” jobs in 35 of the 196 plans. The limits of 

this kind of coverage were in some cases established by “ basic crew” contract provisions that 

specified the number of workers who were to be

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXTENT AND NATURE OF GUARANTEE 11

T a b l e 8 .— Eligibility requirements in currently operating

guaranteed wage or employment plans in Bureau of Labor

Statistics survey, by representation of covered workers

T a b le 9.— Proportion of wage earners covered in currently

operating guaranteed wage or employment plans in Bureau

of Labor Statistics survey, by eligibility provisions

Eligibility requirement

Number of currently

operating plans

Total Union Nonunion

Total---------------------------------------------------------------

Coverage open to all employees.______________

Upon hiring or after service of 30 days or

less_____________________________________

Upon service of 3 months_________________

Upon service of 6 months_________________

Upon service of 1 year____________________

Upon service of 1 Mi to 5 years_____________

Upon service of 5 years or more..................

Upon selection by employer______________

196 130 66

101 54 47

63 37 26

4 2 2

9 4 5

9 5 4

7 4 3

5 2 3

4 4

Coverage includes only employees in “ regular”

jobs'________________________________________ 35 29 6

Coverage open only to employees in specific

departments or occupations________________

Upon hiring or after service of 30 days or

less________________________ ____________

Upon service of 3 months or more________

Upon selection by employer........................

Employees in “regular” jobs only-------------

Unknown________________________________

51

36

9

2

3

1

45 6

32 4

7 2 2 _______

3 ________ 1 _____

Coverage confined to key employees. 9 2 7

covered, and in other cases were established by 

specific elimination of “ temporary,” “ extra,” or 

other similar groups of workers. Limitation of the 

guarantee to regular workers occurred chiefly in 

retail and wholesale establishments, and additional 

length-of-service requirements were either nonexistent or brief.

In 51 cases, coverage was confined to employees 

in certain departments or occupations; for example, to machine printers in textile finishing and 

dyeing mills, and to pressmen in a newspaper 

plant. More than two-thirds of these cases had 

length-of-service requirements of 30 days or less.

Coverage in 9 cases was confined to key employees, usually selected upon an individual basis 

with an eye to the importance of the job and the 

service record of the individual. Plans of this 

variety included one which covered a small group 

of key production and nonproduction workers in a 

garment plant but excluded the bulk of the production workers, and another in an ice-cream factory 

which covered a small selected group of employees 

in a number of key skilled jobs during the dull 

season.

The proportions of workers covered were, of 

course, highest in the group of plans which permitted all employees to be eligible, and lowest in 

the plans restricting coverage to employees in 

specific departments or occupations and to key

772334°— 48---------- 3

Percentage of total wage earners covered by guarantee

Number of

currently

operating

plans

Number of currently operating

plans with eligibility open to—

All

employees

Employees in

regular

jobs

Employees in

specific

departments or

occupations

Key

employees

Total_________________________ 196 101 35 51 9

Under 5 percent. _. . .... 12 12

5 and under 10 percent___ 13 12 1

10 and under 20 percent___ 7 5 2

20 and under 30 percent.. ___ 12 3 1 7 1

30 and under 40 percent 10 5 3 2

40 and under 50 percent______ 10 2 4 3 1

50 and under 60 percent______ 11 4 2 4 1

60 and u n d er 7ft p ercen t 17 13 3 1

7ft and u n d e r 8ft p ercen t 15 11 4

80 and under 90 percent 14 12 2

Oft and u n d er Iftft p ercen t 9 8 1

100 percent 38 38

Data not available_____ _____ 28 5 18 4 1

employees (table 9). Among the 101 plans where 

all the employees were eligible for coverage, there 

were 38 where every employee in the establishment 

was actually covered by the guarantee; in the 

remainder of these plans, the minor exclusions of 

small groups of workers and the length-of-service 

provisions reduced the proportion of workers 

actually covered, but only in a small number of 

cases to less than 60 percent. Among the 60 plans 

restricting coverage to specific departments or 

occupations or to key employees, generally less 

than 30 percent of the total number of workers in 

the establishment were actually covered by the 

guarantee. A tabulation of proportions of workers 

covered, showing union and nonunion establishT able 10.— Proportion of wage earners covered in currently

operating guaranteed wage or employment plans in Bureau

of Labor Statistics survey, by representation of covered

workers

Percentage of total wage earners covered

by guarantee

Number of currently operating

plans

Total Union Nonunion

Total______________________________________ 196 130 66

Under 5 percent___________________________ 12 11 1

5 and under 10 percent_____________________ 13 12 1

10 and under 20 percent______________ ____ 7 5 2

20 and under 30 percent................................ . 12 10 2

30 and under 40 percent____________________ 10 5 5

40 and under 50 percent____________________ 10 7 3

50 and under 60 percent------------------------------- 11 7 4

60 and under 70 percent________________ _ 17 14 3

70 and under 80 percent__________________ _ 15 10 5

80 and under 90 percent--------- ----------------- 14 9 5

90 and under 100 percent---------------------------- 9 5 4

100 percent__________ ____ __________ _____ 38 17 21

Data not available------------------ ------------------- 28 18 10

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
12 GUARANTEED WAGE PLANS IN THE UNITED STATES

merits separately, indicates a great range in both 

groups, but with more restricted coverage in the 

case of the plans in unionized establishments (table 

10). This reflects to some extent the influence of 

the “ basic crew” contracts, and the fact that the 

plans were limited to those parts of the establishments over which the unions had jurisdiction.

The proportion of coverage was highest in plans 

in small employing units, as shown in table 11. 

Thus, 34 of the 38 plans in which 100-percent coverage was reported were in establishments employing fewer than 50 workers. There were, however, a small number of plans covering 70 percent 

or more of the total work force in establishments

T a b le 11.— Proportion of wage earners covered in currently operating guaranteed wage or employment plans included in Bureau

of Labor Statistics survey, by total number of wage earners

Number of currently operating plans by total number of wage earners

Percentage of total wage earners covered

by guarantee

Total

Less

than

25

25-49 50-74 75-99 100-249 250-499 500-749 750-999

1,000

and

over

Total

employment

not

available

Total..................................... ............................... ............ 196 64 29 13 5 23 14 3 3 18 24

Under 5 percent__ _________________________________ 12 1 4 6 1

5 and under 10 percent_____________________________ 13 1 2 3 1 1 1 4

10 and under 20 percent____________________________ 7 1 1 1 2 2

20 and under 30 percent____________________________ 12 5 2 3 1 . 1

30 and under 40 percent____________________________ 10 1 2 1 5 1

40 and under 50 percent____________________________ 10 5 1 1 3

50 and under 60 percent____________________________ 11 4 1 3 1 1 1

60 and under 70 percent__________ ________________ 17 7 3 2 1 2 1 2

70 and under 80 percent ____ _______________ 15 9 1 2 3

80 and under 90 percent__________ _______________ 14 4 4 1 1 2 1 1

90 and under 100 percent...______________________ 9 2 4 1 1 1

100 percent________ _______________________________ 38 25 9 1 1 1 1

Data not available... _________________ _____ _____ 28 1 1 1 ' 1 24r

or employing units with several hundred or more 

than one thousand workers. In absolute figures 

respecting numbers of covered wage earners, 149 

of the 188 plans for which information was available covered less than 100 wage earners, 18 covered from 100 to 500 wage earners, 7 covered from 

500 to 1,000, and 14, or 7 percent of the total number, covered 1,000 or more workers (table 12).

T a b le 12.— Distribution of number of wage earners covered

by currently operating guaranteed wage or employment

plans in Bureau of Labor Statistics survey

Number of wage earners covered

Number of

currently

operating

plans

Total_______ ______________________________________________ i 196

Less than 5__ _______ ________________________________ . _. 33

5 to 9______________________________________________________ 32

10 to 24___________________________________________________ 41

25 to 49____________________________________________________ 30

50 to 99 _________________________________________________ 13

100 to 499 ________________________________________________ 218

500 to 999 ___ ________________________________________ 2 7

1,000 to 4,999 ______________________ _________________ 3 13

5,000 and over. ________________ ______ ____________ ____ 1

Covered employment not available______________________ 28

1 A guaranteed wage or employment plan embodied in a master contract

between a trade association and a union is counted as a single plan, and is

classified according to the total number of wage earners in all of the covered

establishments. There are 10 such cases.

2 Includes 2 master contract plans.

3 Includes 4 master contract plans.

For purposes of comparative analysis of the 

duration of the guarantees, the Bureau has classified the plans in accordance with the amount of 

wages or employment guaranteed or advanced, in 

terms of weeks of full-time or part-time hours or 

pay. In the few cases in which the duration of the 

guarantee was adjusted according to a sliding 

scale on the basis of such factors as wage rate or 

length of service, the maximum duration of the 

guarantee was used for the tabulation. The number of weeks of employment guaranteed was chosen as the means of expressing the common 

denominator because guarantees in terms of number of weeks of employment per year occurred 

most frequently. The actual wording of the guarantees reflected a wide range of plan and contract 

terminology. The variety of language used is illustrated by a listing (on p. 14) of extracts from 

the texts of plans which guarantee substantially 

the same employment—a full year, at full-time 

wages.

Almost two-thirds of the plans (128 out of 196) 

guaranteed employment for a full year at fulltime hours or pay (table 13). Most of these arrangements were guarantees of 52 full weeks of 

employment, or pay in the absence of employment;

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXTENT AND NATURE OF GUARANTEE 13

T a b le 13.— Duration of guarantee in currently operating

guaranteed wage or employment plans covered by Bureau of

Labor Statistics survey, by representation of covered workers

Duration of guarantee

Number of currently

operating plans

Total Union Nonunion

Total ______ ________________________________ 196 130 66

Full year (52 weeks, 2,080 hours, etc.)________ 140 80 60

At full-time hours or pay______ _________ 128 69 59

At less than full-time hours or pay_______ 12 11 1

50 weeks’ full-time hours or pay ____________ 9 9

48 weeks’ full-time hours or pay______________ 7 5 2

47 weeks’ full-time hours or pay ___________ -- 4 4

46 weeks’ full-time hours or pay ___________ 8 8

40-45 weeks’ full-time horn's or pay____________ 10 9 1

38-39 weeks’ full-time hours or pay____________ 11 10 1

13-37 weeks____________________ ______________ 7 5 2

At full-time hours or pay____ ____________ . 3 2 1

At less than full-time hours or pay________ 4 3 1

very few were expressed in terms of an annual 

wage. Eighty-five percent of the plans (166) 

guaranteed full-time pay for 40 weeks or more. 

The total of 61,000 workers covered by the 196 

plans was distributed in approximately the same 

manner as the number of plans (table 14).

Most of the guarantees were expressed in terms 

of employment rather than in terms of wages. 

The detailed studies made by the Bureau in 62 

cases indicated that this manner of expression 

arose largely from the employer’s confidence that 

he could provide the stated amount of work, and 

where the worker failed to make himself available 

for work, no pay was generally given.

T a b le 14.— Duration of guarantee in currently operating

guaranteed wage or employment plans covered by Bureau of

Labor Statistics survey, by number of workers covered by

guarantee

Duration of guarantee

Total number.

of workers

covered in

currently

operating

plans

Total_______________________________ _________ _________ 161,229

Full year (52 weeks, 2,080 hours, etc.) _____________________ 2 51,250

2 41,529

9,721

1,465

3 4,176

41

20

745

4 138

3,394

1,206

2,188

At full-time hours or pay _____________________ _____

At less than full-time hours or pay____________________

50 weeks’ full-time hours or pay___________________________

48 weeks’ full-time hours or pay__________________________

47 weeks’ full-time hours or pay__________________ ________

46 weeks’ full-time hours or pay______________ ___________

40 to 45 weeks’ full-time hours or pay_____________________

38 to 39 weeks’ full-time hours or pay_____________________

13 to 37 weeks ___________________________________________

At full-time hours or pay_____________________________

At less than full-time hours or pay____________________

1 Data not available for 8 plans.

2 Data not available for 5 plans.

2 Data not available for 2 plans.

4 Data not available for 1 plan.

Thus far, it has appeared that a major proportion of the guarantees provided full-time pay for 

an entire year, and that a large group provided 

coverage for all employees upon hiring or after 

a relatively short period of time. A cross-tabulation of these two characteristics provides a method 

of determining the extent to which full-year guarantees and guarantees to all employees after a 

short period of time coincided. Table 15 shows 

the multiplicity of combinations of guarantee and 

eligibility provisions that were embodied in the

T a b le 15.— Duration of guarantee in currently operating guaranteed wage or employment plans covered by Bureau of Labor

Statistics survey, by eligibility requirements

Number of currently operating plans

Coverage open to all employees

Duration of guarantee

Grand total

Total

Upon hiring or

after 30 days or

less

Upon service of 3

months

Upon service of 6

months

1 Upon service of 1

year

Upon service of IK

to 5 years

Upon service of 5

years or more

Upon selection by

employer

Coverage includes or

ployees in regular

Total

Upon hiring or

after 30 days or less

Upon service of 3

months or more

Upon selection by

employer

Employees in regular jobs only

UnknownCoverage confined i

employees

Total_____________________________ _______ 196 101 63 4 9 9 7 5 4 35 51 36 9 2 3 1 9

Full year (52 weeks, 2,080 hours, etc.)____ 140 70 40 4 6 8 5 3 4 32 29 19 6 1 3 9

At full-time hours or pay____________ __ 128 67 39 4 6 7 4 3 4 27 25 16 5 1 3 9

At less than full-time hours or pay ____ 12 3 1 1 1 5 4 3 1

50 weeks’ full-time hours or pay _______ 9 4 3 1 2 3 1 1 1

48 weeks’ full-time hours or pay __ ______ 7 4 1 1 2 3 3

47 weeks’ full-time hours or pay________ _ __ 4 4 4

46 weeks’ full-time hours or pay _ _ _ __ 8 8 8

40-45 weeks’ full-time hours or pay ______ 10 4 3 1 1 5 4 1

38-39 weeks’ full-time hours or pay _____ _ 11 4 4 7 7

13-37 w e e k s_ _________ 7 3 2 1 4 2 1 1

At full-time hours or pay 3 2 1 1 1 1

A t less than fu ll-tim e h o u rs or p a y 4 1 1 3 1 1 1

Coverage open only to employees in

specific departments or occupations

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
14 GUARANTEED WAGE PLANS IN THE UNITED STATES

T a b le 16.— Distribution of 56 currently operating plans

guaranteeing full-time employment or wages for 52 weeks

a year to all workers upon hiring or upon service of 1 year

or less, by number of covered workers

Number of wage earners covered

Number of plans

Upon hiring or after

30 days or

less

Upon service of1 year

or less

Total_____ 39 56

Less than 5....... .............................................................. 5 5

5 to 9................................................................................. 9 12

10 to 24............................................. ............................... 9 10

25 to 49............................................................................. 10 15

50 to 99_______________ _____________ ______________ 1 3

100 to 499................................................. ......................... 3 5

500 to 999._______ _________________________________

1,000 to 4,999______________________ ________________ 1 3

5,000 and over. . ........ ................................ 1

Covered employment not available........................... 1 2

plans. For example, of the group of 128 plans 

which guaranteed full-time employment for an 

entire year, 39 afforded coverage to all employees 

upon hiring or within 30 days thereafter. The 

remainder had additional length-of-serviee requirements, or restricted coverage to employees in 

“ regular” jobs, to employees in specific departments or occupations, or to key employees.

LISTING OF GUARANTEED WAGE OR EMPLOYMENT PLAN CLAUSES, ILLUSTRATING THE 

VARIETY OF METHODS EMPLOYED TO EXPRESS GUARANTEES OF FULL-TIME ANNUAL 

EM PLOYM ENT 1

1. The employer agrees to continuously employ_________

union persons * * *. These shall constitute the

basic staff and shall not be subject to lay-offs at any 

time.

2. The tenure of employment of permanent employees

shall be 52 weeks in each year without any lay-off 

whatsoever.

3. For each full year of service after the first year, 2

months of indemnity in case of complete lack-ofwork lay-off, or 346% hours of straight-time pay in 

case of partial lack-of-work lay-off, will be added 

to the indemnity or guarantee until, after 6 full 

years of service, a maximum of 1 year or 2,080 hours' 

indemnity or guarantee is provided.

4. All employees shall receive 12 months of uninterrupted

employment.

5. All steady employees who come under the scope of this

agreement shall be guaranteed steady employment 

throughout the life of this contract.

6. The basic gang employed by the employed hereunder

shall consist of 3 mechanics, 2 helpers, and 1 car 

washer. Each of such men shall be employed by 

the employer for 2,000 hours during the period of 

1 year covered by this agreement * * *.

7. All skilled employees covered by this agreement who

have passed their probationary period as hereinbefore set forth, shall be paid on the basis of 52 

weeks per year.

8. * * * each of the said members of the said association in the employ of the company * * * shall

* * * work not more than 2,000 hours during

50 calendar weeks of the period covered by this 

contract. It is the intent of the parties hereto that 

the members of the association shall have 2 weeks' 

vacation with full pay.

9. Each employee * * * will be offered 2,000 hours

of work during the calendar year. In addition 

to offering each employee 2,000 hours of work, each 

employee will be given paid time off at times to be 

designated by the employer to make this agreement 

conform to the 40-hour provision in the regular 

contract.

10. The employer guarantees to the 5 maintenance men

named in the contract between the parties, dated 

November 1, 1941, not less than 48 hours of work, 

or the monetary equivalent thereof, in every week 

during the 52-week period which is the term of this 

contract.

11. It is further agreed that regular employees be employed 52 weeks per year.

12. Whenever the term “ steady employee" or “ steady

employees" shall be used in this agreement, it shall 

refer to such employees of the employer who are 

guaranteed under this agreement 12 months' work 

in each year during the period of the contract.

13. A salesman may be discharged upon 2 weeks' written

notice by the employer to the union * * *

(slack season, however, shall not be deemed a cause 

or a reason for the discharge of a regular salesman).

14. Said employer agrees to employ said employee as

______ for a term of 1 year from the date hereof,

at a weekly salary o f _______

T a b le 17.— Distribution of 56 currently operating plans

guaranteeing full-time employment or wages for 52 weeks

a year to all workers upon hiring or upon service of one

year or less, by industry

Industry group

Number of plans

Upon hiring or after

30 days or

Upon service of 1 year

or less

Total. 39 56

Manufacturing, total..................................................... 7

Food and kindred products.................................. 3

Textile-mill products_____________________________________

Apparel and other finished products made

from fabrics and similar materials.........................................

Printing, publishing, and allied industries____ 3

Chemicals and allied products....... ..................... 1

14

7

1

1

4

1

Nonmanufacturing, total. ____ _____

Construction—general contractors.

Wholesale trade____ ______________

Retail trade........................................

Real estate..........................................

Communication__________ ________

Heat, light, and power____ ______

Services.____ ____________________

32

2

9

141

1

5

422

13

18

2

1

1

5

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXTENT AND NATURE OF GUARANTEE 15

T a b le 18.— Discontinued guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey, by

number of covered workers

T a b le 20.— Discontinued guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey, by

duration of guarantee

Number of wage earners covered

Number of discontinued

plans

Total................................... ............................................................. i 151

Total, excluding 96 plans which operated under Wisconsin

unemployment compensation law, 1934-35_______________ 55

Less than 5 ................................................................................ . 11

5 to 9_ ................................................................ 2

10 to 24__........................................................... ................... 6

25 to 49_ ..................................................................................... . 6

50 to 99__......................................................................................... 6

100 to 499. ........................................................ _ . _ _ 13

500 to 999....................................................... ............. .................... 3

1,000 to 4,999_______ I...................................... ............................ 2

5,000 and over_______________ __________ ___________________ 2

Covered employment not available_______________________ UOO

1 Includes 96 Wisconsin plans for which data are not available.

Total

Duration of guarantee

Number of

discontinued

plans

1151

Total, excluding 96 plans that operated under the Wisconsin

unemployment compensation law, 1934-35__________________

Full year (52 weeks, 2,080 hours, etc.)_________________________

At full-time hours or pay_________________________________

At less than full-time hours or pay_________ ______________

50 weeks’ full-time hours or pay___________ _____ ____________

48 weeks’ full-time hours or pay.._____ __________ .____________

47 weeks’ full-time hours or pay___________ _______ ___________

46 weeks’ full-time hours or pay_______________________________

40 to 45 weeks________________________________________________

At full-time hours or pay_________________________________

At less than full-time hours or pay________________________

38 to 39 weeks’ full-time hours or pay_________________________

13 to 37 weeks________________________________________________

At full-time hours or pay_________________________________

At less than full-time hours or pay________________________

55

31

23

8

2

3

0

0

U03

11021

3

9

2

7

T a b le 19.— Discontinued guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey, by

eligibility requirements

1 Includes 96 Wisconsin plans operating from 1934 to 1935 under State unemployment compensation law which set a minimum standard of 42 weeks’

guarantee (at 36 hours per week in 1934 and % of full-time hours in 1935).

Total

Eligibility requirements

Number of

discontinued

plans

U51

Total, excluding 96 plans that operated under the Wisconsin

unemployment compensation law, 1934-35__________________ 55

Coverage open to all employees_____________________ _________

Upon hiring or after service of 30 days or less......................

Upon service of 3 months..................... .......................................

Upon service of 6 months_____________ ___________________

Upon service of 1 year____________________________________

Upon service of 1 ^ to 5 years_____________________________

Upon service of 5 years or more___________________________

Upon selection by employer______________________________

Coverage includes only employees in “regular” jobs___________

Coverage open only to employees in specific departments or

occupations_____________________________________________

Upon hiring or after service of 30 days or less______________

Upon service of 3 months or more_________________________

Coverage confined to key employees__________________________

36

162

5

8

3

2

0

3

12111

4

1 Includes the 96 Wisconsin plans, which are not shown in the body of the

table.

Further examination of the group of cases which 

provided the most substantial guarantees to the 

broadest groups of workers shows that they were 

for the most part cases that involved small or medium-sized groups of workers (table 16) and that 

more than half of them occurred in wholesale and 

retail trade (table 17). The proportion of unionized establishments was substantially less in this 

group than in the entire group of 196 plans.

B. Discontinued Plans

A total of 151 plans are known to have operated 

in the United States and to have been discontinued 

prior to 1946, including the 96 which were in existence for slightly more than 1 year under the

T a ble 21.— Discontinued guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey, by

industry group

Industry group

Number of

discontinued

plans

Total ___ ___________________ ________ ____________________ i 151

Total, excluding 96 plans that operated under Wisconsin State -

unemployment compensation law, 1934-35 __ _________ __ 55

Manufacturing, total _________ ________ _ ____ __ 44

Food and kindred products_________ _____________ 12

Textile-mill products 3

Apparel and other finished products made from fabrics and

similar materials _ _ __ ________________________________ 4

Furniture and finished lumber products____________ __ 1

Paper and allied products __ ______________________ 6

Chemical and allied products_________________ ____ _______ 3

Rubber products __________________________ _______ 1

Stone, clay, and glass products___________________________ 2

Iron and steel and their products _______ ______ _______ 1

Nonferrous metals and their products ____ __ _____ ____ 2

Machinery (except electrical) __ _____ _________ ______ 2

Electrical machinery ______________ ____________________ 3

Automobiles and automobile equipment _________________ 1

Miscellaneous manufacturing industries___________________ 3

Nonmanufacturing, total _ __________ _________ 11

Bituminous and other soft coal mining________ _ _________ 1

Nonmetal lie mining and quarrying ______ ___ 1

Construction—special trade contractors (subcontractors). . .

Wholesale trade___________ ______________ _____ _ __ __

1

1

Retail trade __________ - __ ___________________ ________ 4

Highway freight transportation____________ _ _ _________ 1

Water transportation ___ ___________________ - _ _ __ 1

Heat, light, and power__________________ _______ _ ____ 1

1 Total includes 96 plans in Wisconsin for which industry data are available only on the basis of broad industry groupings, and by establishments,

rather than plans, as follows:

Number of

Industry group establishments

Total............................................. 176

Manufacturing. ---------- 21

Transportation, communication, and public utilities___________ 37

Wholesale and retail trade_____________________________________ 57

Finance, insurance, and real estate-------------------------------- 25

Miscellaneous services_________________________________________ 23

Educational, religious, medical, etc., services----------------------------- 12

Municipal--------------------- 1

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
16 GUARANTEED WAGE PLANS IN THE UNITED STATES

provisions of the Wisconsin unemployment compensation law during 1934 and 1935. The discontinued plans involved total employment of nearly

180,000, of which approximately 3 percent involved the 96 Wisconsin plans and more than 85 

percent the plan of 1 large manufacturing concern. 

The reasons for their discontinuance have already 

been discussed in an earlier section.

The plans that have been discontinued exhibit 

no characteristics essentially different from those 

of the plans which are still operating. Information concerning the number of wage earners covered under the plans (table 18), the coverage

provisions and eligibility requirements of the 

plans (table 19), and the duration of the guarantees provided (table 20), show the same general 

picture that has already been presented with respect to the plans that are still in operation. As 

far as industry distribution is concerned, the discontinued plans show a substantial scattering 

among virtually all of the same industries in which 

guaranteed wage or employment plans continue to 

exist (table 21). Aside from the 96 Wisconsin 

plans, it appears that plans in retail and wholesale 

trade were discontinued to a lesser extent than in 

other industries.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
IV. Experience With Guarantee Plans in 62 Selected Cases

The guaranteed wage and employment plans 

that have been introduced in the United States 

do not reflect a uniform pattern of motivation, 

operating problems, or results. They reflect the 

experience of a group of employers and unions 

which has attempted to increase the security of 

the worker in a variety of situations. In order to 

present information on the actual experience of 

labor and management operating under guaranteed wage or employment plans, the Bureau of 

Labor Statistics studied in considerable detail the 

operations of 62 individual plans—approximately 

one-fifth of the group of 347 discussed in part III 

of this report.

The 62 plans selected for special study were 

chosen to represent as nearly as possible the variety 

of individual situations found in the entire group 

of cases. Such factors as type of plan, size of 

establishment, unionization, industry, and geographical location were taken into account in the 

selection of the cases. Because of the small number of plans studied in detail, choice of representative cases rather than a balanced sample was 

the goal. Where there was a choice of alternative 

plans the better-known plan was generally selected. 

The group is also believed to include the establishments in which the greatest degree of employment 

regularization was undertaken. The 62 cases included 47 plans still in operation and 15 that had 

been discontinued; 42 in which the employees 

were represented by unions at the time the plans 

were introduced and 20 in which they were not. 

Included were guarantees providing a full year's 

work, guarantees limited to less than a full year's 

work, and four wage advance plans. The group 

included contractual guarantees as well as some 

plans which were in actuality little more than 

written or oral statements of the employer's 

intention to guarantee a certain amount of 

employment.

The 62 cases were studied in detail through 

plant visits made by field representatives of the

Bureau. Management officials, union officials, 

and individual employees were interviewed personally on the basis of detailed schedules developed specifically for this purpose.

Generally, throughout part IV of this report 

the cases are discussed as a group without regard 

to union status, kind of guarantee, or active status 

of the plan, where these characteristics do not 

affect the topic under discussion. The cases have 

been examined, however, to determine where these 

characteristics and others do affect the analysis, 

and specific discussion of these facts has been 

introduced at relevant points.

A. Circumstances of Introduction

Appraisal of the achievements of the plans cannot be made without a brief background picture 

of the variety of situations into which plans have 

been introduced; the great range of motives— 

many unrelated to the issues raised in current discussions about a “ guaranteed annual wage"; 

the kinds of specific labor relations and business 

problems which the plans were designed to solve; 

the immediate occasions for introducing the plans; 

and the effects of their introduction upon existing 

wages and working conditions.

1. Pre-Plan Employment Situations

It has already been indicated in part III of this 

report that guaranteed wage or employment plans 

were introduced in a variety of industries, both 

manufacturing and nonmanufacturing, and by 

large as well as small employers. Whether companies that have guaranteed employment or 

wages had unusual conditions of stable employment which made it possible for them to introduce 

guarantees is an important question to explore at 

the outset.

Stability of employment is, of course, difficult 

to define. It can be measured by the absolute 

degree of fluctuations in employment or manhours; by the regularity of employment variations;

17

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
18 GUARANTEED WAGE PLANS IN THE UNITED STATES

by the numbers and the kinds of workers affected 

by employment fluctuations; by a comparison of 

employment fluctuations in one company with 

fluctuations in others in the same business; and 

by comparison of present fluctuations in employment or man-hours with past experience, present 

prospects, or long-run possibilities. It has not 

been possible within the scope of this study to 

measure the situation in the 62 cases from all of 

these points of view. Information was generally 

available chiefly with regard to the degree and 

character of present and past employment fluctuations.

Some fluctuation in both employment and manhours was anticipated— either from month to 

month or from year to year—in each of the 62 

cases prior to the initiation of a wage or employment guarantee. No combined measure of these 

fluctuations can be satisfactorily compiled, because of the wide range of different individual 

situations. The most important conclusion to be 

drawn from the employment and man-hours data 

collected by the Bureau of Labor Statistics is that 

there is a great variety in the kinds and degree of 

fluctuation among firms that have had guaranteed 

wage or employment plans—probably as great a 

variety as exists in all American industry.

It was impossible to determine with precision 

whether employment fluctuations in the firms 

under study were normally smaller or greater 

than in other firms engaged in similar work. In 

general, comparisons with broad industry averages 

of employment variation were not used because 

it was believed that they would yield limited 

results; and it was difficult to make specific 

comparisons with exactly comparable groups of 

individual firms. Nothing in the general business 

situations of the firms under study or in their 

technical methods of operation was reported, 

however, which set them off as a group from other 

firms doing similar work. Company and union 

officials stated almost uniformly that there was 

little or no difference between the situations of 

firms under study and those in similar business 

activity. Information obtained on employment 

and business regularization activities which the 

companies had undertaken did not point to the 

existence of special situations or exclusive processes 

that might have led to greater employment 

stability or served to give competitive advantage. 

An overwhelming majority of the guarantees, in

fact, were introduced by firms which faced employment stabilization problems of substantially the 

same kind that are faced by employers generally.

A more specific idea of the kinds of employment 

fluctuations involved in the cases studied can be 

best obtained by a review of individual situations, 

cited in the following paragraphs.

Monthly Employment Variations. Month-tomonth fluctuation in employment and man-hours 

of work within the year varied substantially from 

firm to firm. Among the companies with the 

smallest variations were three electric light and 

power concerns. Their month-to-month employment varied hardly at all, except as affected by 

normal turn-over. Despite substantial fluctuations in power production, these companies 

reported the continuing necessity for crews of 

uniform size to operate productive equipment. 

Occasional variations in the monthly employment 

level, although not on a recurrent seasonal basis, 

were caused by changes in the size of the utilities’ 

construction programs. In contrast, an icecream company studied produced about 80 percent 

of its volume for summertime road sales, and, 

prior to the introduction of the plan, its operations, 

which called for peak employment of about 85 

workers during the summer months, required less 

than 15 workers in the months from November to 

March. A Great Lakes carrier shut down completely when freezing weather set in and seagoing 

personnel had no opportunity for winter work 

on company operations ashore.

Between these extremes, the firms ran the 

gamut of month-to-month fluctuations in employment, as the following examples illustrate:

In the Crocker-McElwain Co. and the 

Chemical Paper Manufacturing Co., affiliated New England paper manufacturers, 

employment on direct production operations 

was remarkably stable from month-to-month 

between 1921 and 1940, because of the necessity for a crew of constant size to operate 

productive equipment, regardless of volume 

produced. Temporary instability of employment was caused by annual water 

failures or freezes that resulted in shutdowns. Employment in the auxiliary rag 

and finishing departments was much less 

stable than employment in direct productive 

operations.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 19

Employment in the Barlow & Seelig Manufacturing Co., a midwestern washing machine 

firm, prior to the introduction of a plan 

varied annually from a spring peak which 

rose to 17 percent above the annual average 

to a year-end slump 6 percent below.

Month-to-month employment variations 

in the small plant of an eastern manufacturer 

of men’s and boys’ clothing showed a substantial year-to-year difference in the amount 

of seasonal fluctuations: in 1940, from a low 

of 47 percent of the annual average to a 

high of 125 percent of the annual average; 

in 1937, from a low of 20 percent to a high 

of 210 percent.

Employment in an eastern chain of readyto-wear apparel stores showed the seasonal 

fluctuation typical of this industry: Easter 

and Christmas peaks 6 and 18 percent, 

respectively, above the annual average and 

slumps to about 85 percent of the annual 

average during the months of February and 

August.

The employment pattern in two midwestern cereal and feed companies followed 

month-to-month fluctuations in shipments 

of cereals to brokers and wholesalers, declining during spring and summer months and 

rising to a peak in the fall of each year.

Prior to employment stabilization efforts 

and the introduction of a guarantee, employment in the Proctor & Gamble Co. was 

highly unstable. Activity ranged from threeshift, round-the-clock operation to almost 

complete standstill.

Erratic receipts of livestock affected production at Geo. A. Hormel & Co. and caused 

wide month-to-month man-hour fluctuations, 

which sometimes ranged from 24 percent 

above the annual average to 19 percent 

below average in the years immediately 

prior to introduction of the plan.

Examination of the specific month-to-month 

employment stabilization situations faced by the 

firms at the time guarantee plans were introduced 

reveals a wide variety of business management 

problems.

772334°— 48--------4

Seasonal weather factors were involved in a 

number of the month-to-month employment variations: a sand and gravel operation, a road construction firm, and a Great Lakes transportation 

company ceased or virtually ceased operations 

when freezing weather set in.

The operations of a number of companies 

depended in whole or in part on seasonal farm 

activity: a canning company relied heavily on the 

annual tomato crop for its production of soups and 

catsups; and a chemical company’s main product— 

fertilizer—was bought largely during spring and 

fall planting seasons. Agrarian operations also 

affected a meat packer whose production activity 

was dependent on farm shipments of cattle and 

hogs, as well as a spice manufacturer whose 

products sold best during the home canning and 

pickling season.

The indirect effects of seasonal weather changes 

were the most frequently reported causes of employment instability. Increased spring and summer demand for tires, ice cream, insecticides, beer, 

baby carriages, car seats and swings, and construction and maintenance materials were reported to 

stand in the way of stabilized employment in firms 

manufacturing these products. Activity expanded 

during spring and summer months in a fur storage 

and repair firm. Another large group of firms 

experienced their greatest activity during the fall 

and winter months: a battery manufacturer, oats 

and cereal companies whose hot cereals sold largely 

in winter and were subject to deterioration in 

summer, and a southern railroad whose heaviest 

traffic resulted from winter tourist trade and fruit 

and fertilizer freight. Style changes reflecting 

seasonal weather changes affected the operations of 

two women’s apparel manufacturers who produced 

their specialties in advance of seasonal sales.

Holiday season peaks in consumer purchasing 

also affected employment fluctuations: a retail 

apparel chain’s employment increased sharply at 

the Easter and Christmas seasons; a wholesale 

jewelry firm’s employment followed the same 

pattern, and frequent style changes made it 

impracticable for the firm to package extensively 

for stock during slack months of the year; mail 

order firms, a variety store, a men’s clothing store, 

retail shoe chains, and a department store were 

similarly affected. Increased consumer purchasing during holiday seasons was also the chief cause 

of employment instability in a hosiery, a liquor,

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
20 GUARANTEED WAGE PLANS IN THE UNITED STATES

and two silverware manufacturing firms, as well as 

in a daily newspaper whose advertising volume 

fluctuated in direct relation to retail sales activity 

in the community.

Purchasing policies of wholesale and distribution firms caused varying amounts of employment 

fluctuation. The most noted situation of this 

kind was the case of the Procter & Gamble Co., 

whose officials came to the conclusion, after lengthy 

investigation, that ultimate consumer demand for 

the company’s product was relatively stable from 

month to month, and that fluctuations in demand 

for the product at the factory resulted from fluctuations in wholesale prices and from the purchasing 

policies of distributors. In a number of other 

companies, including a wholesale grocery concern 

and the two midwestern cereal and feed companies, 

reduction of annual inventories was also a factor 

causing slack periods. In the latter two companies, in addition, wholesalers’ policy of keeping 

inventories at an absolute minimum during summer months, when cereals were subject to greatest spoilage, caused the plants’ major annual slack 

periods. In two New England paper companies, 

a general drop in wholesalers’ activity during the 

summer months led to a slight drop in production, 

although not to any major fluctuation in employment, because of the necessity for maintaining 

crews of constant size to produce at any volume.

Employment variations in manufacturing or 

wholesaling establishments in several cases paralleled the seasonal patterns of the firms to which 

their products were sold. A West Coast paper 

converter produced largely for the food products 

industry, and production operations followed the 

seasonal patterns of food manufacture. A button 

and buckle wholesaler’s employment pattern took 

its course from production fluctuations in the 

women’s cloak and suit industry. Textile dyeing 

and finishing operations followed textile and apparel style changes; production and employment 

in the manufacture of construction materials followed the seasonal pattern of construction activity; 

and battery manufacturing operations varied with 

model changes in the automobile industry.

Year-to-Year Employment Variations. It has already been noted in part III of this report3 

that very few plans were found in the heavy or 

basic manufacturing industries that are subject to

8 See page 9.

wide cyclical fluctuations. Information directly 

relating to the effects of the 1930-34 and 1937-38 

business depressions on employment and manhours was available in the 8 cases in which the 

plans originated before 1931 and were in existence 

during the depression of the early 1930’s, and in 

the 26 cases in which the plans operated during the 

recession of 1937-38. In these cases, the effects 

of business depression may have been mitigated by 

the existence of a guarantee. It is not possible, 

therefore, to trace the situation in each company 

back to a pre-plan period which also shows the 

effect of depression upon year-to-year operations. 

Both the statistical material available and the 

reports of union and management officials, however, attest to the positive effects of the depression 

of the early 1930’s on business and employment in 

most instances. These effects can be appraised 

best by citation of specific situations:

In the Crocker-McElwain Co., a New England paper manufacturer, depression employment reached a low point during the year 

1932—during the existence of the plan— 

when average annual employment dropped 

to 78 percent of the 1929 level, and operating 

days for the year dropped to 38 percent of the 

1929 level.

In the Detroit & Cleveland Navigation Co., 

freight tonnage declined by 33 percent between 1929 and 1932, and the number of 

passengers carried dropped by 67 percent.

No adequate employment records over a 

series of years were available from a number 

of small retail and wholesale establishments 

which introduced guarantees covering basic 

crews, but volume of sales and employment 

was directly related to volume of consumer 

purchasing power available to buy their merchandise—furs, costume jewelry, and women’s 

and men’s apparel.

Sensitivity to the business recession of 1937-38 

appears to have been substantially less prevalent 

than the effect of the earlier depression, as was 

true in the case of many firms which did not introduce guarantees. Most of the firms on which information is available reported no decline of 

consequence in business operations or employment during the years 1937 and 1938.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 21

Relative constancy of year-to-year employment, 

or a sizable, and frequently steady, increase in 

employment characterized most of the firms 

during the 10-year period preceding 1946. In 

some cases increases in employment were the result 

of post-depression recovery; in several cases 

employment increases since 1940 were attributable 

to the effects of the war. Over and above these 

causes, however, a number of the companies 

demonstrated an expansion in activity and employment resulting from a long-range increase in 

demand or from aggressive business management. 

Only a small number of firms showed a downward 

trend in total employment, resulting in large part 

from the effects of the war.

2. Stable Employment for Part of the Work Force

Despite the existence of varying degrees of 

employment instability, as described above, almost 

all of the 62 firms were able to give a substantial 

degree of stable employment to certain groups of 

their employees. Like most employers, they found 

it necessary to retain a basic force at all times. 

This core of stable employment varied from an 

occupational group or a handful of key employees 

in some cases to virtually the entire work force in 

others. In a number of cases, the size of the stable 

core had been enlarged substantially by employment stabilization efforts undertaken during the 

years preceding the introduction of the guarantee.

The scope of this study did not permit the elaborate analysis of pay rolls that would have been 

necessary to determine the size of the core of 

stable employment in each establishment. The 

character of the situation is, however, readily 

apparent from several typical cases:

Employees of the three utility companies 

surveyed who were engaged in regular power 

production operations and in customer servicing had much greater stability of employment 

than those engaged in the construction of new 

power lines or in sales of electrical equipment.

Key employees in an East Coast garment 

plant— cutters, foremen, and sewing machine 

operators with long service records—had 

much more stable employment than did operators hired during seasonal peaks.

Labor and management, in several cases 

involving wholesale and retail distribution

establishments, reached agreement upon the 

number of employees whom they regarded as 

constituting basic crews, normally required 

by the firms to perform regular business operations. Basic-crew size in these cases varied 

from 35 percent to 90 percent of total employment.

Prior to the institution of a guarantee, few 

of the employees of the Columbia Conserve 

Co. had year-round employment. After the 

institution of the plan, the employee-owners 

of the company, numbering about 100 at the 

peak of the plan’s coverage, had much more 

stable employment than the temporary workers who continued to represent up to 60 percent of total employment during canning 

seasons.

Temporary workers hired for peak season 

operations in a number of other companies— 

a road construction firm, a sand and gravel 

operation, and cereal and food companies— 

obviously had less stable employment than 

regular workers. In the case of a large cereal 

company, management reported that the existence of a sizable “ cushion” of temporary 

help was one of the factors making a guarantee 

to the rest of its work force practicable.

In every case, of course, month-to-month employment stability was greatest for employees 

with high seniority status.

The majority of guaranteed wage or employment plans in the United States (as has already 

been pointed out in part III) limit coverage of 

employees or the proportion of annual wages 

guaranteed. It is important therefore, to compare 

the terms of the guarantees with the extent to 

which stable employment was reasonably to be 

expected by at least part of each company’s work 

force without a guarantee. Such comparison can 

be made only roughly, of course, and must be 

based in part on employment data and in part on 

the judgments of company and union officials as 

to the intent and significance of the guarantees at 

the time of their introduction. Analysis of this 

type indicates that in some cases the guarantees 

can be said to have assured more, in some cases 

equivalent amounts, and in some cases less stable 

employment or income than the workers possessed 

without guaranteed wages or employment.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
22 GUARANTEED WAGE PLANS IN THE UNITED STATES

Greater employment or income stability than had 

existed in the past was expected in cases where 

the employer consciously decided to keep skilled 

workers during slack seasons, where the plans 

were designed as unemployment compensation 

devices and wage earners were paid for lay-off 

periods, and where, as in the case of the Hormel 

Co. and the Seaboard Air-Line Kailway, and a 

master contract covering Cleveland fur repair 

workers, the plan inaugurated a new stage in employment stabilization efforts as well as a guarantee. In a small number of cases, the plans clearly 

guaranteed less employment than was already 

provided without a guarantee. A New England 

utility company, for example, guaranteed 2,000 

hours of employment under Section 7 (b) (2) 

of the Fair Labor Standards Act, which was less 

than total annual working hours had been in the 

past. In other cases, guarantees covering individual groups of skilled workers were introduced, 

no consideration being given to the possibility of 

covering others—even those with the longest service records—whose employment opportunities 

were equally stable.

The majority of the guarantees were not framed 

to go beyond the degree of employment stability 

that management and labor already believed to 

exist in the establishment, or which had been 

achieved after a program of employment stabilization. Employers, in most of the cases, believed 

that they were taking little or no financial risk in 

instituting the plans. Their attitude in this 

respect may in some cases have been influenced 

by the fact that their plans were largely introduced 

during periods of rising business activity, when 

their sights were fixed upon an optimistic future 

rather than upon past periods when the same 

guarantees might have involved greater risks. 

Labor unions did not as a rule press employers 

into assuming heavy obligations, and were themselves, in many cases, seeking security for only 

small groups of workers. How far the guarantees 

could have gone beyond what was actually given 

in amount and coverage without going outside 

the bounds of existing stable employment was in 

most cases a matter of conjecture that could be 

treated only by extended individual case analysis.

3. Previous Efforts to Stabilize Employment

In approximately one-third of the cases the 

firms reported attempts to minimize or eliminate

employment fluctuations prior to the adoption of 

their guarantee plans. In the remainder of the 

cases, the employers had concluded that their 

employment problems were beyond their own 

control or had been solved as far as was feasible, 

or that they could work out only limited plans 

within the existing framework of employment 

fluctuations.

Even where a program of employment regularization or stabilization had been undertaken 

prior to the introduction of a guarantee, it was 

usually done with no specific intention of laying 

the ground work for a guarantee. Such was the 

case, for example, in one of the utilities, which 

had for years been studying its operations with a 

view to the elimination of fluctuations within the 

year. Much of its program centered around the 

regular replacement of equipment, an activity 

previously done almost entirely on an emergency 

basis and resulting in somewhat erratic fluctuations 

in man-hours and employment. A rubber company tried to lift low winter demand for tires by 

a program of consumer education. In these and 

other cases like them, employment stabilization 

programs had generally been part of company 

policy for years, undertaken as a matter of good 

business administration rather than for the specific 

purpose of laying a foundation for an employment 

or wage policy. This planning, nevertheless, had 

the effect of increasing the number of workers to 

whom stable employment was available and who 

would eventually be covered under the guarantee.

A small number of companies consciously 

undertook to stabilize employment with a fairly 

concrete idea in the minds of management officials 

that they were laying a foundation for some kind 

of guarantee plan. This group consisted largely 

of the companies most famous for their plans, 

which on the whole, guaranteed substantially 

more, either as to length of employment or number 

of workers covered, than most of the other and 

less well-known plans.

As was to be expected, employment regularization programs of some kind were reported in most 

of the medium-sized and larger companies studied, 

and were absent among most of the companies 

that employed less than 250 workers. Among 

the establishments having guarantee plans covering more than 500 workers, some degree of preplan stabilization or preparation was reported in 

all but two cases— the Seaboard Air Line Railway

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 23

Co. and the ffm . J. Wrigley, Jr., Co. In the 

case of the Seaboard Air Line Railway the inauguration of the guarantee ushered in an important employment regularization program, without which it would have been impossible to effectuate the guarantee; in the case of the Wrigley Co. 

production was considered to be stable, and the 

company’s inauguration of an “ income assurance” 

plan in 1934 was specifically designed as an 

unemployment compensation measure.

Since most of the stabilization measures undertaken were part of general company program, 

not specifically related to the introduction of a 

guarantee, they were outside the scope of collective 

bargaining activity. Unions or employees were 

not initially informed of regularization actions 

taken by management. In several instances, 

management preferred not to raise the question 

of a possible guarantee until the results of employment regularization were clear or until 

management had formulated the exact kind of 

guarantee it planned to introduce. In a few other 

instances, the most noted example of which was 

the Nunn-Bush Co., management officials followed 

a deliberate policy of discussing their employment 

stabilization problems and their hopes for the 

introduction of a guarantee with employees or 

union representatives. They did this as a matter 

of good labor relations policy, to draw out employee ideas, or to develop cooperative labormanagement efforts directed at increasing and 

leveling out production. Even in such cases, 

however, virtually all of the actual employment 

stabilization planning was done by management.

The cases in which the guarantees were preceded by employment regularization were, with 

two exceptions, cases in which management later 

bore the responsibility for initiating the plan. 

Little pre-plan employment stabilization was 

reported in the cases in which union action initiated 

the idea of a guarantee. Most of the unioninitiated plans were in small establishments, 

where the opportunity of an individual employer 

to regularize was extremely limited, and where the 

achievement of uniform working conditions, including a guarantee, under a master labor agreement was in itself a stabilization measure in the 

industry.

The specific stabilization measures taken, 

whether or not they were designed to lay the

foundation for a guarantee, cover a wide variety 

of business actions in the fields of production 

and distribution. Some, like production for 

stock, deferring of maintenance activity until 

slack periods, and control of distribution channels, 

are frequently cited in the literature on management regularization. All were to some degree 

hand-tailored to meet the needs of individual circumstances. A picture of these activities can be 

given best through a series of individual descriptions:

A Minnesota manufacturer of window and 

door frames had for years, prior to the introduction of a wage advance plan in 1939, spread 

production of windows and doors throughbut 

the year, primarily by the use of long-term 

building industry forecasts and production of 

standard items for stock during the winter 

months when demand was low. Much of the 

production for stock involved the manufacture 

of unassembled parts, a procedure that minimized the amount of capital tied up in 

inventory. Improvements and maintenance 

repair work had regularly been timed to coincide with the winter production slump.

Industry forecasts were also used by Geo.

A. Hormel & Co., meat packers of Austin, 

Minn., in stabilization studies which were 

conducted for 4 years prior to the inauguration of their guarantee plan. Week-to-week 

receipts of livestock, which determined the 

level of plant operations, were found to be 

unpredictable, and little actual regularization of employment resulted prior to institution of the guarantee. Officials found, 

however, that it was possible to forecast 

total annual receipts with a high degree of 

accuracy, by the use of long-range crop, 

weather, and market reports. It was, therefore, determined to base a worker’s annual 

wages on his estimated output, such wages 

to be received in regular weekly payments 

while his working hours continued to 

fluctuate.

Employment practice prior to 1932 at 

McCormick & Co., Baltimore, Md., manufacturers of spices and food specialties, involved three annual seasonal lay-off periods.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
24 GUARANTEED WAGE PLANS IN THE UNITED STATES

Beginning in that year, and continuing until 

1936 when its plan of assuring 48 weeks of 

work a year was inaugurated, the company 

undertook a program of employment regularization which is reported to have eliminated 

all three slack periods. The specific stabilization steps included {a) analysis of seasonal 

sales periods, and persuasion of customers, 

wherever possible, to level out purchasing 

peaks; (b) improvement of sales forecasts, and 

planning of production in accordance with 

these forecasts; (c) establishment of a floating 

crew of workers who could be readily shifted 

from one department to another, to supplement the work of regular departmental staffs 

during peak load periods; (d) flexible transfer 

of labor among departments resulting in 

special attention to training employees for a 

variety of jobs, and hiring on the basis of 

general skill level rather than for specific assignment; (e) improvement and decentralization of warehouse facilities, to accommodate 

production for stock; (f) market research designed to have on hand new products that 

could be put into production in the event of 

declines in demand for established lines; (g)

advance agreement between company management and stockholders to forego profits 

during individual months or quarters, if 

necessary to keep employees on the job, 

rather than the discharge of employees to be 

sure that profit records would appear uniformly good.

Employment planning at the Namm Store, 

a popular-price department store in Brooklyn, N. Y., began during the depression of the 

early 1930's. Supported largely by workingmen's trade, the store's sales were hard hit by 

the depression, and management took a 

series of economy steps. Whereas unplanned 

staffing of departmental operations, coupled 

with erratic hirings and lay-offs of varied size 

had been the store's prior practice, the attention of planning officials was now concentrated 

upon job classification, rate evaluation, and 

personnel budgeting. Budgeting was worked 

out in detail, particular attention being given 

to allocation of staff on the basis of past 

records of departmental transactions and 

floor space utilized. As a result of this planning, employment of year-round personnel 

was substantially stabilized, and the management of the store became convinced that it 

could add a guarantee to its employment 

policies. In fact, management felt that its 

employment base was established soundly , 

enough to enable the store to continue a 

guarantee through another depression, with 

normal labor turn-over serving as a cushion 

of safety.

The Nunn-Bush Shoe Co.'s stabilization 

program started with the regularization of 

distribution. As early as 1918, the company 

joined with others in the manufacturing industry to change existing sales policies. At 

that time, factory salesmen were writing 

orders sufficiently large to load retail customers with stocks that would last throughout 

entire seasons, partly to prevent the purchase 

of competing merchandise. Under the new 

sales policy, customers were sold small initial 

orders, with prompt service on re-orders. 

Warehousing facilities were developed and 

stocks were built up to ensure prompt deliveries. Shortly after World War I the NunnBush Shoe Co. itself entered the retail business, and at the time of this study was selling 

about 30 percent of its production through 

about 100 retail outlets. Concurrently, the 

company developed a complex inventory control system, partially as an aid to successful 

planning of its production and inventory policies. Records of past sales, as well as information on consumer preferences supplied by the 

retail outlets, have helped it to adjust total 

and individual model inventory levels with 

the aim of leveling production. By 1935, when 

the guarantee was introduced, the company 

had substantially minimized seasonal variations in production.

Additional actions reported were the offering of 

special terms to out-of-season buyers in the case 

of companies manufacturing men's apparel, rubber 

products, and baby swings and carriages; block 

selling of a combination of women's coat and suit 

styles in advance of seasonal operations by a 

women's apparel manufacturer; development of 

cold cereal lines to be produced during spring and 

summer seasons, when production of hot cereals

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 25

was at a low point, by a midwestern cereal company. The descriptions given above are necessarily 

incomplete, because most firms probably did not 

report fully the employment stabilization activities 

which they regarded as a regular part of their 

business policies.

The measures taken prior to the inauguration 

of the plans—even those taken to effectuate the 

meeting of the guarantees after the plans were put 

into operation—never eliminated completely the 

variations in employment and man-hours that 

existed to a greater or less degree in all of the firms 

under study. As has already been pointed out, 

most of the plans were based on management and 

labor acceptance of substantial variations in employment and mali-hours. Furthermore, in many 

instances there was admittedly no expectation that 

introduction of a guarantee plan would contribute 

to stabilization of income or would extend the area 

of stable employment opportunities.

4, Responsibility for Initiating Guarantee

Three-fifths of the 62 plans studied were introduced on management initiative; one-third were 

introduced as a result of union requests in collective bargaining, and unions and management 

shared responsibility for their introduction in 

three cases. The history of guaranteed wage and 

employment plans is to a considerable degree the 

history of the pioneering of individual men. In 

at least three-fifths of the cases in which management was the initiator, the plan resulted from 

personal action by one or two individuals in the 

company— the owner, president, vice-president, or 

other important management official— who regularly gave personal attention to employee welfare 

and labor relations. In most of these cases, the 

official bearing responsibility for introduction of 

the plan had a controlling ownership connection 

with the enterprise.

Predominant management responsibility for 

initiation of the plans resulted in part from the 

fact that in about one-third of the cases, there were 

no unions representing the employees at the time 

the plans were introduced. Where unions represented, the employees at the plan’s inception, 

union initiation of the idea of a plan occurred in 

slightly more cases than employer initiation: 

unions proposed 21, employers initiated 18, joint 

responsibility was involved in three. Union initiative seems to have been largely a matter of 

local bargaining. Policy or special attention of 

the international union was involved in only a 

limited number of cases.

Union-iifitiated plans occurred for the most 

part in the smaller establishments, or in departments of medium-sized establishments where the 

unions sought guarantees for small groups of 

workers. Exceptions to this observation were a 

system-wide plan covering about 2,300 AFL railway shop workers on the Seaboard Air Line Railway and a plan covering about 500 workers, embodied in a contract between the Int’l. Ladies’ 

Garment Workers’ Union and a women’s apparel 

manufacturer in Milwaukee, Wis. Even where 

the establishments were small, or the coverage 

limited, however, the total significance of the 

union-initiated plans was greater than appears, 

because most of them were in firms that were 

party to master contracts covering substantial 

groups of similar concerns in the same metropolitan area. Such was the case with wholesale button and jewelry establishments, fur merchants, 

textile converters, shoe and apparel retailers, and 

breweries in New York City, and with fur repair 

establishments in Cleveland. Others were not 

master contracts, but were typical of similar 

agreements that had been achieved by the union, 

as in the case of contracts between maritime 

unions and the Detroit & Cleveland Navigation 

Co., which typified a group of similar plans on 

the Great Lakes, and contracts of the Machine 

Printers Beneficial Ass’n. with two textile printing firms, typical of a larger number covering 

small groups of printers in textile dyeing and 

finishing establishments.

5. Objectives of the Plans

The purpose most frequently reported for the 

introduction of the plans was a desire to add to 

employee security or sense of security by guaranteeing regularity of employment or income. A 

great variety of additional considerations were 

cited, in many cases as important as the desire to 

provide security. For example, the desire generally to improve labor relations; to stabilize employee income; to use a guarantee as a device for 

further stabilization of employment; to keep 

trained employees in order to reduce turn-over and 

training costs; to increase worker efficiency; to

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
26 GUARANTEED WAGE PLANS IN THE UNITED STATES

prevent reduction of productivity on the eve of 

slack periods; to establish a fixed employment 

policy at top management level that would remove control over employment from the hands of 

plant or departmental supervision; maintenance 

of a certain number of positions not subject to 

lay-off; reward for length of service; spreading of 

work among union members with the greatest 

seniority; forestalling of unionization; and the introduction of a wage advance system to enable 

employees to avoid the red tape of the usual loan 

arrangements. Although the desire to avoid the 

overtime payment provisions of the Fair Labor 

Standards Act was reported to be a consideration 

in some cases, the total effect of inducements provided by legislation— unemployment compensation merit rating provisions and Section 7 (b) (2) 

of the Fair Labor Standards Act—was minor.

Within individual establishments, the motives 

cited above appeared in a great variety of combinations too numerous to list. It is significant, 

however, to note that the desire to stabilize employee income was reported as a major consideration in only about half of the cases studied. Included in this group were the wage advance plans, 

and a number of other plans in which the employers had consciously undertaken to pay skilled 

workers for time not worked during slack seasons 

in order to retain their services for periods of peak 

operations, and thus avoid much of the expense 

involved in hiring and training new workers.

In the case of the Detroit & Cleveland 

Navigation Co., for instance, agreements 

were made to carry marine personnel on the 

pay roll during the freeze-over season on the 

Great Lakes— dating as far back as 1919 in 

the case of licensed officers. The initial agreements of this type were proposed by the unions 

with the intent of stabilizing the income of 

their members, and management readily 

agreed that income stabilization would assist 

them in avoiding turn-over.

In the case of a small roadbuilding company in Washington, D. C., a group of regular 

employees were guaranteed earnings and

kept on the pay roll the year round in order 

to ensure presence on the job at the start of 

major projects in the spring.

In slightly fewer than one-quarter of the 62 

cases studied, the plans' initiators intended at the 

time the plans were undertaken (in addition to the 

stabilization of income, of course) to embark upon 

or broaden employment stabilization efforts with 

a view to widening the area of stable employment 

opportunities and laying a solid foundation for the 

guarantee.

This was the case in the Hormel Co., for 

instance, whose plan was designed in large 

part to even out income during the year, but 

had as an equally important purpose the retention on the pay roll of departmental crews 

of balanced composition and size, to whom 

work would be provided by every employment regularization effort that management 

could employ.

In the case of the Seaboard Air Line Railway, both company and union intended, at 

the initiation of the plan, to eliminate the 

variations in employment that had been 

caused by relatively unplanned budgeting of 

maintenance and repair work.

In the case of the master agreement of the 

Cleveland Fur Workers' Union with fur repair 

shops, the union's intention in obtaining a 38- 

week guarantee was to force several employers to level out work peaks during the year.

Differences in Union and Management Objectives. 

In three-quarters of the cases where the initiative 

for the plans had come from union representatives 

(or about one-quarter of all the cases), employers 

reported an initial indifference to the guarantee. 

This attitude arose chiefly from management's 

belief that the union-proposed plans did nothing 

more than write existing practices into contracts, 

and that they could be undertaken with little or 

no financial risk. This was the case, for example, 

in basic crew contracts negotiated in New York 

City covering wholesale and retail establishments, 

and in a case involving a large automobile sales 

and service company whose owners, in negotiations with the United Automobile Workers (CIO),

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 27

agreed to a guarantee covering automobile mechanics, although they had refused to grant the 

union’s full wage request. Management’s attitude was lukewarm at best in the case of a Cleveland fur repair shop, where inauguration of the 

plan meant that shop activities would have to 

be spread more evenly throughout the year. In 

two other cases, however, where effectuation of the 

plan required further leveling of activity during 

the year, management took up union proposals 

and translated them into further stabilization 

activities.

Where the initiative for the plan came from 

management in unionized establishments (which 

was the situation in about a third of all the cases), 

union and management were usually in agreement 

on basic objectives. These were, for the most 

part, cases in which the companies had wellestablished programs of employment regularization. In the Hormel, Nunn-Bush, Wisconsin 

Public Service, and National Oats cases, for 

example, management and labor were in complete 

agreement on the basic objective of furnishing 

security to the workers. In each of these cases, of 

course, management also hoped to gain from the 

plan some form of contribution to productivity 

that would improve the general business situation 

of the company.

In several cases, where plans were instituted 

through collective bargaining, management objectives were substantially different from union 

objectives. Union aims were generally continuity 

of income, employment, and security for the 

workers to be covered. Management sought to 

avoid requested wage increases, to take advantage 

of the overtime exemption afforded by Section 7 

(b) (2) of the Fair Labor Standards Act, to increase productivity during slack periods, and to 

keep a supply of skilled workers on hand during 

slack periods or seasonal shut-downs.

In the case of a small manufacturer of 

custom furniture in New York City, the 

company gave a 3-day-a-week guarantee, 

which it believed could be done with no risk 

whatever, for the stated purpose of preventing a wage increase. The union’s interest in 

the plan was security of income for its 

members.

The Barlow & Seelig Manufacturing Co., 

when it granted a minimum annual wage 

guarantee to employees represented by the 

United Steelworkers of America, was interested largely in the overtime exemption 

afforded by Section 7 (b) (2) of the Fair Labor 

Standards Act, while the union, which had 

initiated the idea for the plan, was interested 

in security of income.

A New England utility company, in instituting its guarantee by agreement with an 

independent union, was exclusively concerned 

about the possibility of continuing the regular 

salary payments it had theretofore been 

making, and the avoidance of penalty overtime payments under Section 7 (b) (2) of the 

Fair Labor Standards Act. Employees and 

union were interested in the possible security 

the plan might afford.

Where there was no collective bargaining agency 

at the time of initiation, desire to give security 

was the most frequently reported motive, and 

desire to provide conditions that would retain or 

attract skilled workers was the next most frequently reported, as in the following cases:

A Baltimore silver firm guaranteed employment to skilled silversmiths to induce them 

to come from New England, and paid their 

transportation expenses as well.

An ice-cream company guaranteed employment over the slack winter months to a 

selected group of key workers whose presence 

when production resumed the following spring 

would minimize the starting-up and training 

problems that the firm had faced in past 

seasons.

An automobile repair company instituted 

a guarantee during the war to keep its 

mechanics from going off to war plants.

Objectives of guarantee plans have occasionally 

been expressed to be the eventual recognition 

of labor cost as a fixed cost of operation, comparable to overhead cost and not varying directly 

with production volume. Many managementv 

officials who have guaranteed employment have

772334°—48------5

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
28 GUARANTEED WAGE PLANS IN THE UNITED STATES

consciously refused to accept this approach. One 

official in a company which has carried on an 

extensive employment stabilization program, for 

example, has stated repeatedly that employers 

should try to do everything practicable to “ assure” 

employment, but that they should not think in 

terms of “ guarantees.” A majority of the 

management representatives interviewed voiced 

no theoretical convictions on the question, regarding their own guarantees of employment or wages 

as practical business investments to obtain improved morale, lowered turn-over, a better work 

force, and greater production. Several officials 

were reluctant to classify their plans as “ employment guarantees,” or as “ annual wage plans” 

at all; they looked upon them as good employment 

policies and sound business procedures or, in a 

few cases, merely as contract provisions prohibiting lay-off, to which they disliked to apply 

such designations.

Influence oj Legislation. Although eight of the 

companies at some time during the existence 

of their plans took advantage of the provisions 

of Section 7 (b) (2) of the Fair Labor Standards 

Act, the overtime exemption afforded by section 

7 (b) (2) was a motive influencing only five plans, 

and the primary motive in only one.

At least 8 of the 15 plans introduced prior to 

1935 were designed in part to provide unemployment compensation benefits in the absence of 

governmental legislation. After the passage of 

State laws, the possibility of tax reductions under 

merit rating provisions served as an attraction in 

one case. A plan introduced in 1939 was intended 

in part to supplement the protection of the unemployment compensation laws. In one case, management's belief that the Government might eventually impose an obligation to guarantee employment was cited as a contributory reason for the 

introduction of a plan.

6. Extent of Planning at Time of Introduction

Analysis of employment fluctuations, sales, production policies, or distribution methods at the 

time of adopting a guarantee plan was in most 

instances closely related to pre-plan employment 

regularization experience. Normally such planning was done by established technical divisions 

of management, although there was substantial 

labor participation in the Hormel, Nunn-Bush, 

and Seaboard cases. Personnel offices supplied

records of employment fluctuations; sales offices 

supplied data on fluctuations resulting from variations in demand and on the development of new 

products and distribution channels; production 

officials developed specific programs connected 

with maintenance activities, storage of finished 

products, and the reservation of certain work 

assignments for slack periods. In only one case 

was the employment of outside engineering help 

reported to the Bureau. The planning and even 

the analysis of detail was handled personally by 

the owner or a top management official in several 

of the cases. The most extensive planning was 

done by those companies whose guarantees assured the most in terms of duration of employment 

or coverage of workers.

The planning referred to above does not include 

cases which involved only a calculation of probable cost made immediately prior to the introduction of a guarantee. These calculations were 

quick cost estimates made to ascertain the risk 

involved in meeting a guarantee or to set a limit 

to the company's financial obligation. Typically, 

they consisted of a review of pay roll for the last 

several years, to determine what the cost of a 

guarantee would be to certain individuals or to a 

certain class of employees if they were paid for 

time which they had not worked during the previous period. In most of the cases, management 

relied only upon the accumulated business and 

industrial relations experience of its officials.

A handful of the more recent plans were introduced after their originators' study of the betterknown plans previously in existence. In a number of cases, management officials reported that 

they had studied the characteristics of the Hormel, 

or Nunn-Bush, or Procter & Gamble plans. No 

recognizable carry-over could be seen in any of 

the cases studied, however, leading to the conclusion that most of the guarantees were basically 

developed in independent fashion to reflect the 

particular objective or to take account of the 

particular stabilization problem confronting the 

individual firm. Similarities among plans seem 

to have been due chiefly to union extension of the 

principle of stabilized wages or employment to 

other firms under contract.

7. Effect on Wages and Working Conditions

An overwhelming majority of the plans were 

introduced into an atmosphere of good labor relaDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES * 29

tions, and in most cases where collective bargaining had a history of many years. In 42 of the 

cases studied, employees were organized in unions 

at the time of the plan's introduction, and, in 

an additional 4, unions came to represent employees during the existence of the plan. In 

two-thirds of the cases where unions represented 

employees, the unions were affiliated with one of 

the two major federations; one-third were independents. In several cases, as has already been 

noted, desire to promote sound labor relations 

was advanced as an important specific reason for 

the introduction of a guarantee. In one such case, 

where past labor relations had been bad, the plan 

was regarded by both company and union as an 

indicator of future smooth labor relations, and as 

evidence of management's intention to maintain 

a labor force of designated size in the community.

Whether plans introduced in the absence of 

union bargaining rights were designed in part to 

head off or combat union activity is not ascertainable except in a very few cases. From the 

demonstrated interest of management in the 

problem of employment security, it appears that 

this could not have been an important motivation. It was reported to be a factor in four cases, 

three not involving an immediate organizational 

campaign and one involving a serious labor dispute.

The last case concerned the Crocker-McElwain 

Co., whose plan was introduced in 1921 during the 

Nation-wide “ open shop" drive. Management 

officials were interested in providing employment 

security, but also believed that it was equally 

important to advance the principle of the open 

shop. Accordingly, they proposed both a yearround wage guarantee and a system of individual 

employee contracts. The union which represented 

the company's employees objected to the individual contracts as well as to certain features of 

the guarantee and went on strike. The company's 

plan went into effect after the union lost both the 

strike and its bargaining rights.

The introduction of guarantee plans did not 

generally result in changes in wage or working 

conditions beyond the achievement of greater 

employment security, or in failure to make changes 

that would have taken place had the guarantees 

not been introduced. Generally, the introduction 

of a guarantee plan meant the achievement of a 

new* employment condition over and above other

existing worker benefits. An examination of union 

contract provisions in plants which had guarantees 

does not reveal significant deviation from the 

kinds of contract provisions relating to union 

security, seniority, work transfers, and other 

conditions of work usually negotiated in the 

absence of guarantees, except in the case of the 

contract between the Nunn-Bush Shoe Co. and 

the Industrial Union of Master Craftsmen. This 

contract, in addition to defining a radically 

different method of wage payment, gave union 

officials the right to approve or reject the employment of new workers or the addition of new 

manufacturing operations, and provided that the 

cost of teaching an employee a new operation be 

deducted from his compensation.

Changes in existing conditions did take place in 

five cases at the time the guarantees were introduced; in three of them, the arrangement was 

made by agreement with the union representing 

the employees. In two cases, overtime pay was 

given up in return for the guarantee; in one of 

these, involving a textile finishing company, the 

union also relaxed its restrictions against thirdshift employment; in the other, involving a daily 

newspaper, the union waived its usual contract 

requirement for employment of extra workers for 

overtime hours. The Int'l Ladies' Garment 

Workers' Union agreed to a wage reduction in the 

case of a New York apparel manufacturer, and also 

consented to reduce the number of workers theretofore required by custom in the shop, in return 

for a guarantee bolstered by company deposit of 

a bond and a commitment to restore the original 

wage level in the event the company ended the 

guarantee. The introduction of a guarantee in the 

Crocker-McElwain Co., previously cited, resulted 

in loss of bargaining status by Eagle Lodge No. 1 

of the Int'l Bro. of Paper Makers. (AFL). In 

the case of Berkshire Knitting Mills, a group of 

skilled production employees in 1936 proposed to 

accept somewhat lower piece rates, at levels 

below established local hosiery industry standards, 

in return for a guarantee of longer hours and a 

resultant higher annual income than during the 

immediately preceding depression years. This 

plan was approved by the employees and their 

employees' association, but the union that was 

attempting to organize the plant at that time 

opposed it as a lowering of industry standards.

In five additional cases, guarantee plans were

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
30 GUARANTEED WAGE PLANS IN THE UNITED STATES

introduced as complete or partial substitutes for 

requested wage increases that employers had 

refused to grant in collective bargaining negotiations. No loss in wage levels or changes in other 

working conditions occurred in these cases.

In two cases, radical changes in method of wage 

payment were instituted at the time of the plan’s 

introduction. In the case of the Nunn-Bush Shoe 

Co., the introduction of an employment guarantee 

was designed to shift the basis of compensation 

from a system of payment by the hour to a system 

of guaranteed employment with pay determined 

by the course of major production trends. Under 

the new system, hourly wage rates were abolished 

and a system of evaluated base rates established, 

not for the purpose of determining actual pay 

levels, but to establish sharing ratios for workers 

of different skills. The Columbia Conserve Co., 

when establishing its plan in 1917, placed employees to be covered by the guarantee on a weekly 

salary basis, with salaries determined by marital 

status and family size rather than by job, introduced a profit-sharing plan, and gave employees 

a voice in management of the business.

The firms involved in the 62 cases have, with 

very few exceptions, provided as liberal or more 

liberal employee benefits and maintained as high 

or higher wage levels than comparable firms in 

the same industry and area. As far as hourly 

wage level is concerned, there was general agreement on the part of company and union officials, 

supported in many instances by the statements 

of local United States Employment Service officials responsible for plant recruitment and by 

comparisons with wage data available in Bureau 

of Labor Statistics files, that wage rates were in 

line with prevailing levels; in a few cases, the 

firms occupied positions of wage leadership.

Vacation pay was almost universal in these 

companies, and several firms gave more than the 

typical industry practice of 1 week for 1 year and 

2 weeks for 5 years of service. Pay for holidays 

not worked, usually covering 6 or more holidays 

during the calendar year, was granted in twothirds of the cases. Company-financed sick 

leave and insurance plans, or time-off provisions 

for sick leave, were common. One-third of the 

firms had pension plans, and slightly more than 

one-fifth had profit-sharing schemes. The variety of plans and the multiplicity of combinations 

makes it difficult to state with exactness the relationship of the companies under study to industry in general, but it is clear from the widespread existence of “ fringe” or collateral practices 

that firms which have guaranteed employment 

or wages are also in the forefront of American 

management practice with respect to other 

conditions of employment.

B. Outstanding Features of the Guarantees

Under the plans the employers generally 

agreed to provide work equal to the extent of 

their guarantees, or equivalent pay when there 

was no work, but did not agree to pay without 

regard to attendance or work performance. 

The guarantees were based on the concept that 

a worker must be available to work when work 

is provided, and were usually inapplicable if the 

worker was absent or if he was incapacitated as 

a result of accident or sickness. In other respects, 

as in the case of rules governing transfers and discharges, the plans operated within the framework 

of established or negotiated plant policies that 

were not appreciably different from practices in 

companies which did not guarantee wages or 

employment.

1, Character of the Obligations Assumed

The basic features of the plans have already 

been described in part III, and are set forth in 

detail in the appendixes to this report. A variety 

of eligibility and benefit provisions, in a variety 

of combinations, were the plans’ chief characteristics. The combined effect of these provisions, 

in most of the cases, was to provide something 

less than a full year’s guarantee to substantially 

less than the entire work force.

The nature of the plan was in some cases 

dictated by the employment stabilization problem 

which the firm faced. In the Hormel case, for 

example, the payment of a guaranteed wage 

each week was based upon a finding that fluctuations in weekly working hours could not be 

reduced to manageable proportions, but that 

the annual volume of work was predictable; 

the same considerations gave rise to the continuation of a fluctuating workweek, with weekly 

overtime pay for the most part on a straight-time 

basis; the unlimited coverage feature of the plan 

was based upon careful advance personnel budgeting of the number of jobs estimated to be 

required for a reasonably predictable annual

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 31

work load. Use was similarly made of the partial 

overtime pay exemption afforded by Section 7 

(b) (2) of the Fair Labor Standards Act by several 

other firms whose annual volume was more 

stable than their volume from week-to-week or 

from month-to-month.

For the most part, however, the variety of 

provisions relating to length of employment 

guaranteed and eligibility were reflections of 

management decisions concerning the extent of 

their commitments, of compromises made in 

collective bargaining, of the installation of guarantees into establishments with varying union 

security and seniority provisions, and of the 

individualistic drafting of the plans. Length-ofservice eligibility provisions were also in many 

cases reflections of broader personnel policy which 

emphasized length of service, or of management's 

specific desire to provide a larger degree of 

security for those workers whom management 

regarded as the most essential.

The guarantee in most cases was based upon the 

employer's assumption of an obligation to provide 

fulLtime work throughout the year or, in the case 

of limited guarantees, work for a fraction of the 

year. There was no obligation to pay on a fixed 

annual monetary basis except in two cases, 

although the obligation to provide a certain 

amount of work at the employee's regular rate of 

pay was tantamount to a fixed wage guarantee if 

the employee worked throughout the guarantee 

period. In 40 percent of the cases, the plans 

contained no specific language obligating the 

employers to make up the full guarantee by paying 

for time not worked if sufficient work was not 

provided. The assumption usually appeared to 

be that sufficient work would be available, and 

in most of the cases, this has been true. It also 

appeared to be assumed or implied, although not 

stated explicitly, that the employer's obligation 

to provide work required that he pay at regular 

rates when he did not provide work. In almost 

all of the cases in which such employers were not 

able to provide work, payment was made. Employers occasionally referred to such occasions, 

however, as crises whose prolongation might have 

led to revision or abandonment of the plans, 

rather than as part of normal operation. In four 

of the cases, however, (two of which involved 

union agreements), the employer specifically reserved the right not to pay in the event that lack

of work forced the company to lay workers off. 

These four firms “ assured" rather than guaranteed 

employment and committed themselves in writing 

to do what they could to provide it.

In slightly more than half the cases, including 

the Hormel, Wisconsin Public Service, and other 

important guarantees, the plans clearly provided 

that management had assumed an obligation to 

meet the full amount of the guarantee even 

though this required payment for time not worked. 

This group also included six cases in which the 

guarantee was expressed as a prohibition against 

lay-off rather than as a positive guarantee and 

several of those in which employers consciously 

subsidized skilled workers for time not worked 

during slack periods.

The four wage advance plans, uniformly introduced to provide greater stability of income rather 

than a specific guarantee against lay-off, obligated 

the employers to advance wages during times of 

slack work, while the employee was still on the 

pay roll, and provided that the wages thus advanced be repaid during weeks when hours of 

work increased. Each of the four cases provided 

a different rule to govern the extent to which 

wages could be advanced. In one case, employees 

could receive the difference between actual earnings and 60 percent of regular weekly earnings 

(computed on the basis of a 40-hour week); in 

another, the difference between actual earnings 

and 40 hours' pay a week; in the third, the difference between actual earnings and 30 hours' pay 

a week; and in the fourth the difference.between 

actual earnings and varying amounts, depending 

upon length of service and number of dependents, 

ranging from 40 hours' pay over a half-month pay 

period to an unlimited amount. Minimum eligibility requirements were 6 months, 2 years, 3 

years, and 5 years of service. Repayments of 

wage advances were made by deductions from 

future earnings: in one case by automatic deduction of one-half pf earnings during weeks in which 

the worker was employed for more than 24 hours; 

in another by deduction when working hours were 

above 40 per week; in the third by repayment of 

half the employee's earnings for hours over 30 a 

week; in the fourth by repayment of all hours in 

excess of 60 hours' work in any semimonthly pay 

period.

The financial obligations involved in guaranteeing wages or employment were completely asDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
32 GUARANTEED WAGE PLANS IN THE UNITED STATES

sumed by the employers in every case. One 

company, which guaranteed 1,800 hours’ pay to 

employees with 5 years of continuous service, 

reported having inquired about the possibility of 

insuring its obligation with Lloyd’s of London, 

and of having received a cablegram in reply reading ‘1 proposition quite impracticable. ’ ’ Under another plan, the company’s obligation to pay the 

guarantee ceased in the event of destruction of 

the plant; and an insurance contract provided 

that the insurer would thereafter assume the wage 

payments for a period up to 6 months. In two 

companies, specific monetary limitations were set 

on the company’s financial obligation. Specific 

arrangements to set aside funds to cover the 

possible costs of a guarantee were reported in 

two cases. In two others, the employer’s obligation was covered by a contract requiring the 

posting of a bond.

2. Duration of the Guarantee

With very few clear-cut exceptions, the plans 

were basically designed to provide security within 

the year, for the indefinite future or for as many 

years as was possible, rather than to provide 

security against cyclical fluctuations over a longer 

period of time. Almost two-thirds of the 62 plans 

ran for a term of 1 year. In a majority of these 

cases, they took their terms from the terms of 

union contracts; in some, the 1-year term had 

been set outside the provisions of a union agreement. It should be borne clearly in mind, in 

weighing the significance of the 1-year terms, however, that most of the 1-year union contracts 

provided for automatic renewal at the end of the 

year unless one of the parties to the contract gave 

notice of termination or intention to seek modification. It was clearly the general intent to keep 

their guarantee plans in existence as long as the 

parties found it feasible and desirable to do so. 

Formal extension of the duration of a guarantee 

was illustrated by the case of the Wisconsin Public 

Service Corp., and the Int’l Union of Operating 

Engineers (AFL), who expanded their guarantee 

from a 1-year term to 2 years when they entered 

into a 2-year contract after their first post VJ-day 

negotiations. In the meantime, the extended 

term did not freeze other wage and working conditions. The current contract provided a 1-year 

wage reopening clause.

In one-fifth of all the cases studied the plans 

ran for an indefinite period of time; in none of 

these was there a union agreement involved, and 

the plans in every case but one were at any time 

subject to cancellation on management’s initiative. 

In only eight cases did the plan run for a definite 

term of more than 1 year: 5 years in one instance, 

3 years in another, and 2 years by contract in six 

cases.

In one case the guarantee ran only for the duration of the slack season. Workers covered in 

slack months were guaranteed nothing during the 

remainder of the year, when they could reasonably 

expect full employment.

3. Firmness of the Guarantee

In one-third of the cases, no provision was made 

for modification or abrogation of the guarantee 

within the term of the plan. All but two of these 

involved specific contract language in union 

agreements. In an additional five cases, modification or termination was permitted only under “ act 

of God” clauses, or in the event of catastrophe, 

riot, strike, insurrection, or similar situation.

Management had an absolute right to abrogate 

the guarantee at any time in another third of the 

cases, very few of which were embodied in union 

contracts. In an additional 15 cases, management 

could abrogate or modify the guarantee if certain 

conditions occurred: if sales fell below 80 percent 

of the previous year’s level; if events occurred 

beyond management’s control, explained in one 

case to mean the possibility of Government order 

or lack of materials; in the event of adverse business conditions (the fact of which was subject 

finally to arbitration); in the event of discontinuance of the firm (the legitimacy of which was 

in one case subject to arbitration); in the event of 

inability to obtain supplies and materials because 

of acts and restrictions of the Government; in 

the event of passage of an unemployment compensation statute (removed from the plan at a 

later date, when the plan was continued beyond 

the passage of the law). In two cases involving 

agreements with the Int’l Ladies Garment Workers’ Union, the plans could be discontinued by 

management upon the granting of increases in 

wage rates.

All but eight of the plans were in written form. 

In 36 cases, the guarantees were reduced to writing in union contracts or were incorporated into

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 33

contracts by reference; 4 involved individual 

employee contracts; and 14 were in the form of 

written pamphlets or bulletin board statements.

4. Computation of the Guarantee

Virtually all of the plans embodied the concept 

that an employee must be willing to work when 

work is available in order to qualify for his full 

guarantee. Days of unexcused absence were 

almost uniformly deducted from workdays for 

which the employee was guaranteed pay; in the 

two cases in which the employee was guaranteed 

an annual salary and in a few others the rules 

governing this matter were not clear. In 'the 

case of the Columbia Conserve Co., where salary 

scales were based upon marital status and family 

size, the problem of absences was handled by 

individual disciplinary measures where necessary, 

rather than by automatic deduction from regular 

wage payment.

Most of the plans pursued further the concept 

that an employee must be willing to work, and 

required that he actually be available for work. 

Thus, in two-thirds of the cases, workers were 

ineligible for guarantee payments when incapacitated as a result of accident or sickness. In an 

additional one-fifth of the cases, the worker was 

eligible for the guarantee when he received workmen’s compensation payments, but such payments 

were offset against the guarantee, generally to 

prevent pyramiding of total wages above regular 

earnings. In three of these cases, the employee 

turned his compensation check over to the employer and continued to receive the guarantee.

Less than 15 percent of the companies reported 

the offsetting of unemployment compensation payments against the employer’s guarantee obligation. One company reported that employees were 

disqualified from guarantee benefits when they 

received unemployment benefits. The small percentage of firms reporting offsets, however, largely 

reflected the fact that no experience had developed 

in most of the cases, because the employees involved were given year-round employment and 

normally had no occasion to apply for unemployment benefits.

Vacation, holiday, and sick-leave payments 

generally were not permitted to pyramid above 

guarantee payments covering the same period of 

time, especially where the guarantee comprised 

a full j^ear’s work or wages. In cases where the

guarantee was for less than a year’s duration, 

practice varied, vacation payments being added 

to the guarantee in some cases and counted toward the guarantee in others. In a few cases, 

employees guaranteed wages or employment during slack seasons were required to take their vacations during off-season periods. Ten percent 

of the plans provided for deduction of outside 

earnings from the guarantee, and in 2 cases 

receipt of outside earnings was cause for disqualification from guarantee benefits.

Under virtually all of the plans, the worker’s 

guarantee was computed on the basis of his regular 

hourly or weekly rate, and the rate of pay was not 

affected by the existence of the plan. The employee’s guarantee was computed on the basis of his 

hourly rate, excluding incentive bonus payments 

in the Hormel case. In two cases the guarantees 

were stated in terms of specific annual monetary 

payments. In the Nunn-Bush case, the employee’s rate of compensation varied in relation to 

production trends, his base or job rate being 

designed as a sharing ratio rather than as a rate of 

pay.

Workers uniformly lost coverage upon discharge 

for cause.

£• Transfers

In four-fifths of the cases the employer had the 

right to transfer workers, where such transfers 

were practicable, to utilize their time on jobs other 

than the one to which they were regularly assigned, 

in the event of a* slack period. This right was 

almost always, in the case of firms under contract 

with labor unions, subject to contract provisions 

governing transfers, including seniority rules. 

In the remainder of the cases, transfers out of 

classification were prohibited by union contract, or 

limited to individual situations where the union 

gave advance consent. Negotiated limitations on 

the employer’s right to transfer were usually 

reported in the cases of specialized workers organized on a craft basis, where transfer would 

mean work outside the union’s jurisdiction, perhaps involving the coverage of another labor 

organization. This was the case in plans involving 

textile printers, licensed marine personnel, mechanical trades workers on a newspaper, brewery 

workers, transit-mix drivers, and railroad shop 

workers. In one important case—that of the 

Nunn-Bush Shoe Co.—union consent to transfers

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
34 GUARANTEED WAGE PLANS IN THE UNITED STATES

had to be obtained in advance although the union’s 

jurisdiction included all plant workers. In the 

Hormel case, where transfers were initially an 

integral part of the plan, the system provided that 

the worker remain at his station and that work be 

brought to him. Shifts of assignment were confined to low-seniority employees who made up an 

“ extra gang.”

In virtually all of the cases where job shifts 

occurred, the worker was protected against rate 

reduction during temporary transfers, although 

definitions of “ temporary” varied. Permanent 

transfers of assignment, when they occurred, 

usually meant changes in rate, even during the 

guarantee period.

6. Administration

The basic responsibility for administration following the establishment of the guarantee obligation—for planning work assignments to meet the 

guarantee, for keeping records of working hours 

and their relation to maximum hours provisions, 

for determining eligibility, deductions, and payments due—rested in management hands. Executives or company owners took personal responsibility for administration in the greatest number of 

cases, personnel or labor relations directors had 

responsibility in less than 20 percent of the plans, 

and administration was handled by minor office 

personnel in several. Where the guarantee reflected no greater employment opportunity than 

management and labor expected as a normal 

occurrence, administrative problems were reported 

to be nonexistent or to require little attention.

Direct labor participation in administration 

existed in only a few cases, including two in which, 

as a result of specific management policy, labor’s 

role in all aspects of company administration had 

substantially greater scope than in most business 

enterprises. In the Columbia Conserve Co., the 

guarantee plan was described as one part of a 

broad experiment in economic democracy; workers 

were at first given a direct voice in management of 

company affairs through an employee council and 

were later given ownership rights. The NunnBush Shoe Co. regarded its plan as a cooperative 

venture on the part of labor and management, and 

union functions included participation in employment stabilization planning, periodic review of 

production and sales for joint determination of the 

level of guarantee payments, equal participation

with management in determining transfers, and full 

participation in discipline proceedings prior to the 

taking of disciplinary action.

The chief form of union participation was 

through the grievance machinery, which in almost 

every case provided for arbitration as the terminal step in the settlement of disputes arising 

under the contract. In several cases labormanagement committees met regularly to discuss 

operation of the guarantee; their responsibility 

was generally an advisory one. Unions usually 

exercised a watchful role in plan operations, to 

ensure that obligations would be met, and in a 

few cases, that they actually could be met. In a 

number of cases where there were contractual 

union shop provisions, determination of eligibility 

was a matter under complete union control. In 

several others, such matters as changes in the 

size of the work force or the establishment of 

piece rates were subject to joint decision of labor 

and management.

C. Experiences of Operation

The obligations of the plans have been met— 

generally under favorable, but in some cases under 

difficult, circumstances. The safeguard provisions and escape clauses have rarely had to be invoked. Most of the plans that went through 

depression periods weathered them successfully; 

abandonment of plans has been the result of 

special individual circumstances. The plans that 

operated under Section 7(b) (2) of the Fair Labor 

Standards Act experienced somewhat greater 

difficulty than those which did not take advantage 

of its provisions, largely because of the inflexible

2,080-hour limit on annual working hours.

2. Meeting of Guarantee Obligations

The employers’ obligations to pay guaranteed 

wages were met in every case studied, although in 

three cases the wage rates guaranteed were reduced under depression conditions. In almost 

half of the cases, this meant that the employers 

actually had to pay out or advance money for 

time not worked. In the remainder of the cases, 

the employers were able to provide work for all 

covered employees to the extent of the guarantee 

during all of the years in which the plans had been 

in existence. In no case did the employer fail 

to live up to the guarantee.

In providing sufficient employment to meet their

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 35

commitments, of course, some employers who 

made no payments for time not worked did pay 

for time worked on maintenance, odd jobs, or 

other work at the rate of the employee’s regular 

classification. The extent to which employers 

provided special work to keep their employees on 

the pay roll is not adequately known, but the 

total amount of such work is believed to have 

been very small except in a few cases and was 

confined largely to the companies who also paid 

for time not worked. The most extensive programs of this type were reported in the Hormel 

and Procter & Gamble cases. During 1932 and 

1933 the Proctor & Gamble Co. at its Cincinnati 

plant placed workers not needed in their regular 

jobs in a labor pool. Employees in the pool 

did general maintenance work on buildings, equipment, and grounds and dug holes for proposed 

construction. At the Hormel packing house in 

Austin, Minn., a livestock shortage occurred in 

the drought year of 1935. Employees for whom 

no work was available in the plant were selected 

on a seniority basis and put to work building 

houses, 34 of which the firm erected on a contract 

basis before the shortage abated.

In most of the cases in which payment was made 

for time not worked, it was expected by the employer that he would have to make such payments 

under the normal operation of his plan. In a few 

cases payment for time not worked was made only 

in situations that approached crisis proportions. 

In two such cases— Crocker-McElwain, and 

Seaboard Air Line Railway—payment for time not 

worked during the depression of the early 1930’s 

resulted in modification of the plan after the guarantee period had passed.

None of the plans had to be modified during the 

guarantee period to enable the employers to meet 

the obligations which they had assumed. In the 

case of the Procter & Gamble Co., modifications 

were prepared by the board of directors for possible use during the depression of the early 1930’s 

but never had to be used.

Somewhat less than half the plans were modified 

in some fashion during their existence at the time 

plans were renewed; the remainder continued as 

they had first been adopted. Several of the 

changes were very minor, having to do with adjustments to a new workweek or vacation allowance, provision for temporary exclusion of wartime 

recruits to preserve jobs for veterans, and removal

772334°— 48----------6

of a contract requirement for collateral. Other 

modifications dealt with the “ safeguard” or 

“ escape” provisions of the plans: in one case inauguration of a union contract eliminated a company’s 

right to abrogate the guarantee at will, in another a 

5-year guarantee with an escape clause was changed 

by negotiation to a 1-year guarantee with no escape provision, and in a third a company eliminated its own previously announced right to abandon its plan if an unemployment compensation 

law were passed.

Duration of the guarantee or coverage of workers 

was expanded in a few cases following favorable 

experience with limited plans, notably in the case 

of the Hormel Co., where the plan had started 

initially in a department of 19 workers and was 

gradually expanded to cover more than 4,000. 

In a few instances, coverage was contracted; 

the most important case of this group was the 

Procter & Gamble Co., which changed the eligibility requirement from 6 months to 2 years between 1933 and 1936, because of rapid expansion 

of the company and the hiring of many new 

employees.

Regularly planned revision of the guarantee was 

a feature of four cases—Hormel, Nunn-Bush, 

Seaboard, and Columbia Conserve. In the Hormel case, forecast of the demand for meat products, 

along with departmental review of the number of 

positions required to turn out a given volume of 

work, was made annually, and resulted in changes 

in departmental crew size and guaranteed hours of 

work. In the Nunn-Bush case, whose basic feature was the adjustment of payments to long-term 

fluctuations in production rather than a fixed 

guarantee, sharing ratios of covered workers were 

modified periodically, to reflect long-range changes 

in production volume; and over the years of the 

plan’s operation employees were classified into 

several groups with respect to the degree of their 

sharing. In the Columbia Conserve case, periodic 

revisions in guaranteed salaries were made, usually 

in the light of long-range market trends. In the 

Seaboard case, the minimum-crew provision of the 

contract was reviewed each year by management 

and labor to redetermine the size of the minimum 

crew.

2. Effects of Business Depression

Eight of the plans went through the depression 

of the early 1930’s; six of them are still in existence,

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
36 GUARANTEED WAGE PLANS IN THE UNITED STATES

although one has been substantially modified. Of 

the remaining two, one was discontinued as a 

consequence of the depression, and one was discontinued in 1942 following a labor dispute. The 

experiences of each of the eight cases are presented 

in summary fashion:

A small roadbuilding company has had an 

informal, unwritten guarantee in effect since 

1926, providing a weekly salary for 52 weeks a 

year as long as the employee is available for 

work. The guarantee covers 8 employees, 

and the work force is increased by 5 to 15 persons during the peak summer season. The 

plan was designed to keep trained employees 

from leaving the company during the winter 

months, and represented a conscious subsidy 

for time not worked. During the depression, 

the company’s business boomed, its work in 

1931 being almost twice the 1929 volume.

An indefinite guarantee of regular earnings 

in each 4-week pay period, to all employees 

with 5 years’ service, introduced in the early 

1920’s by the Crocker-McElwain Co., of 

Holyoke, Mass., and its subsidiary, the Chemical Paper Manufacturing Co., resulted in substantial payment for time not worked in 1930, 

when company business declined and nonworking time amounted to 30 percent of avail- 

- able annual working time. At the end of the 

year the guarantee was reduced, and after a 

further decline in working time in 1931, the 

guarantee was again reduced in 1932, finally 

standing at less than 50 percent of the full 

yearly income originally granted. The guarantee was never revised upward after the depression, and the plan was abandoned in 1937.

An unwritten guarantee covering workers 

in a Michigan wholesale grocery company 

was maintained throughout the depression of 

the early 1930’s. Employees were given 

other duties around the warehouse or were 

allowed to go home when there was no work. 

The company absorbed the cost of the payments required (as to the size of which there 

are no available records) and the plan continued thereafter with no changes.

The first depression experience of the Columbia Conserve plan occurred in 1921. 

According to an account furnished by company officials, the company entered the year 

with a heavy inventory made up primarily of 

tomato products, a result of the previous 

year’s large contracted acreage. With a 

falling market for their products apparent, 

new commitments were avoided until inventory was depleted. Prices fell and goods 

had to be sold at a loss. All workers not 

covered by the guarantee were laid off, and 

production was confined to filling orders that 

had actually been received. During the 

remaining years of the 1920’s the plan operated successfully, with a gradual expansion 

in the number of workers covered. The 

company was not seriously affected by the 

depression of the early 1930’s until the latter 

part of 1932, after other failures had already 

occurred in the canning industry. Again, 

the company had built up a heavy inventory, 

and had volunteered to carry 23 wage workers 

on its rolls after the tomato season, in addition to an unsually large number of covered 

workers—the number having risen during the 

preceding years of prosperity—in order to 

help alleviate the unemployment situation. 

During 1933 all of the workers were continued 

on the rolls, despite the company’s policy of 

cutting production. In 1933 the council, 

consisting of covered workers who determined 

the policy of the enterprise, voted to cut 

base salaries by 50 percent, the remainder to 

be paid back in more prosperous years. 

(Repayments were made in 1935 and 1937.) 

Toward the end of 1933, however, more 

drastic measures were necessary and the 

workers again cut their salaries by 50 percent, 

this time agreeing not to require reimbursement. The second 50 percent cut was restored in 1934, and thereafter wages were 

gradually raised until they reached 80 percent 

of the 1932 level in 1942, the year of the plan’s 

abandonment.

Licensed marine personnel on a number of 

Great Lakes vessels have been under guarantee contracts at various times. The Masters, 

Mates and Pilots of America have had a contract with the Detroit & Cleveland Navigation Co. since 1919, providing for continuing 

payment during the season when ice closes the 

Lakes to navigation. The guarantee was 

retained throughout the depression despite a

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 37

two-thirds drop in the number of passengers 

carried and a one-third drop in freight tonnage between 1929 and 1932. Employees are 

reported to have taken a voluntary cut in 

wages, of unknown amount, at the time, which 

did not show up in contract provisions regarding the guarantee.

Informal guaranteed employment plans for 

skilled dry cleaning workers in a Middle 

Atlantic area go back at least to 1903. A 

more formal arrangement, set out in a union 

contract, began in 1918 in the firm studied. 

At the time of the study, the plan, which 

guaranteed 52 weeks of employment at 40 

hours a week, covered about one-third of the 

employees and was reported to have experienced no difficulties whatever during the 

entire period of its existence.

The Seaboard Air Line Railway and System 

Federation No. 39, affiliated with the Railway Employee’s Department (AFL), inaugurated a minimum work force guarantee in 

1928. The plan was proposed by union 

officials when their request for a wage increase 

was refused by the company and was designed 

to spread shop maintenance work and employment more evenly throughout the year. The 

agreement at first specified the number of 

employees to be maintained at each terminal 

point, but was changed in 1930 to specify a 

system-wide number, with transfers of positions permitted from shop to shop and from 

city to city. Following a fall in operating 

revenues during 1930, management, in negotiations for a 1931 agreement, refused to conclude a minimum-force contract unless modification by either party was permitted during 

the year. Agreement was finally reached and 

provided for a specified minimum force as of 

January in each year. The contract provided 

further that if “ any situation arises during the 

life of this agreement which would seriously 

affect either party, a conference will be held 

between the management and the general committee for the purpose of reaching an agreement. In event of failure to do so, it is understood and agreed that either party may terminate this agreement by serving 10 days’ 

notice in writing upon the other of intention to

do so.” Both sides recognized that the effect 

of this modification was to change the guarantee to a plan that spelled out intent and 

provided 10 days’ dismissal notice. The union 

pointed out, however, that the requirement for 

action by top management and the union’s 

general committee still curbed what had been 

the chief source of employment instability, 

eliminated through the employment stabilization program that started with the plan—the 

work planning, hiring, and firing done by shop 

supervision as a result of irregular work budget 

appropriations. Under the new agreement, 

the size of the guaranteed work force fell during the depression years as follows:

1928______

G u a ra n teed .

workforce

________2, 170 1934______

Guaranteed

work force

_______ 1,725

1929______ ________2,235 1935______ ________1,725

1930______ ________2,2 22 1938______ _______ 1,777

1931______ ________ 1,967 1945______ _______ 2,3 00

1932______ ________ 1,800 1946______ _______ 2 ,3 0 0

1933______ ________1,735

The Procter & Gamble plan was inaugurated in 1923 after more than 2 years of work 

by management on the problem of employment stabilization. The plan originally provided, in brief, for a 48-weeks-a-year guarantee 

at standard weekly hours to all employees 

with six months of service. The general business slump of the early 1930’s is reported by 

management not to have affected the company 

until the fall of 1931. By that time, it is reported, demand had fallen to a considerably 

greater degree than was anticipated, warehouse stocks rose, and production was curtailed. In order to provide the employment 

which it had guaranteed, the company set up a 

labor pool, to which workers not needed on 

their regular assignments were sent. From 

the pool, workers were assigned to a variety of 

maintenance and construction jobs. At times 

the percentage of workers in the pool ran as 

high as 10 percent of total employment, and 

most of the employees are said to have been 

involved in pool operations at some time during 1932 or 1933. Despite a sizable increase 

in maintenance and construction activity, 

company officials in 1932 grew increasingly 

doubtful of the ability of their company to 

meet its commitments toward its employees,

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
38 GUARANTEED WAGE PLANS IN THE UNITED STATES

and the framework of the plan was modified 

to permit the company a greater degree of 

flexibility. In August 1932, the guarantee 

was revised to reserve to the company the 

right to limit hours of work to 75 percent of 

the established workweek whenever in the 

opinion of the board of directors such action 

seemed to be justified. Under this provision, 

the board of directors, in January 1933, authorized such reduction in five of the company's 

plants. Only two of these plants were actually notified of the board's action, however, and 

even in these the guarantee was met without 

the necessity of taking advantage of the relaxation. In January 1933, the eligibility requirement was increased from 6 to 12 months 

of continuous service. The plan was also 

amended at that time to reserve the company's right to withdraw the guarantee at 

any plant or to terminate it or modify it at 

any time.

All 26 of the 62 plans that went through the 

business recession of 1937-38 weathered its effects 

successfully. All but three of the 26 are still in 

existence; discontinuance of these three was in 

each case unrelated to the effects of the recession. 

In 22 of the 26 cases, the company was able to 

meet its obligation under the guarantee without 

the necessity of taking special action. The other 

four cases involved the McCormick, National 

Oats, Seaboard, and Nunn-Bush plans. In the 

case of the McCormick Co., whose sales fell off 

during 1938, the company produced to the extent 

of its storage capacity, and increased the volume 

of its maintenance and remodeling work. Employees voted to reduce the hours in the workweek if necessary in order to work throughout the 

year; but this was not necessary.

In the National Oats case, sales fell off during 

1937, and the expected fall peak failed to materialize. Only workers covered by the guarantee 

were kept on during the summer slack period and 

up to the early fall. They performed maintenance 

work, blew down dust, scraped off machinery, dug 

a ditch for a new water line, and cleaned up the 

plant in general. The guarantee was met with 

very little payment for time not actually worked, f 

and no workers suffered rate reductions during 

their temporary transfers to other jobs.

Under the Seaboard plan, the size of the minimum work force was reduced by agreement during 

1938 from 1,850 to 1,725, because of a decline in 

business.

The Nunn-Bush plan was probably the most 

seriously affected by the events of 1937-38. 

Demand fell off and prices slumped in the late 

summer of 1937, causing management and labor 

to agree upon the cancellation of a recently given 

advance in base sharing rates, and a return to a 

lower base-rate multiplier (37, instead of the 

existing 40) that*had been used in 1935. Production was continued for stock; temporary 

workers, who then constituted about 11 percent 

of the total working force, were kept on by agreement. The group fund began to run a deficit, 

but production was continued, dropping only as 

normal turn-over reduced the labor force, and wage 

payments were maintained. The large inventory 

of shoes accumulated during the depression is reported to have given the company some competitive advantage when production resumed in the 

industry after the depression, and the group fund 

deficit was liquidated in 1941.

3. Discontinued Plans

Of the 46 discontinued plans about which the 

Bureau had information, detailed studies were 

made in 15. The discontinued plans demonstrated no characteristics essentially different 

from those that were still in operation at the time 

of the survey, in terms of basic employment stability of the enterprise, duration or coverage of 

the guarantee, or experience under the plan. 

Discontinuance appears to have been almost 

wholly the result of individual circumstances.

All of the discontinued plans studied in detail 

went out of existence after the depression of the 

early 1930's.4 Business conditions or the ability 

of the employer to meet the guarantee seems to 

have been an important contributory cause of 

abandonment only in the case of the CrockerMcElwain Co. and the Chemical Paper Manufacturing Co., previously cited. In 1937, when 

the plan was abandoned, the guarantee stood at 

less than 50 percent of full weekly wages. Man4 See Unemployment Benefits in the United States, by Bryce M . Stewart

(New York, J. J. Little & Ives Co., 1930), pp. 363-371, 374-386, and 463 ff.;

and Operation of Unemployment-Benefit Plans in the United States Up to

1934, in Monthly Labor Review, June 1934 (pp. 1288-1324), for discussion of

plans discontinued during and prior to the depression of the early 1930’s.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 39

agement had come to regard the plan as ineffective, 

and discontinued it upon the passage of unemployment compensation legislation.

In dealing with the question of discontinuance 

resulting from business depression, the case of the 

Seaboard Air line Railway should, of course, be 

noted. Technically, what was formerly a guarantee is now a statement of intent to employ a 

minimum force coupled with a 10-day dismissal 

clause. The union regards the minimum force 

agreement as of continuing value, however, and 

emphasizes the fact that the contract expresses the 

firm intent of the company and can be abrogated 

only by top management. In its present form, the 

plan has approximately the same degree of firmness 

that exists in a number of other plans, such as 

those which can be withdrawn at any time, and 

such as the McCormick plan, under which the 

company has announecd its intention of doing 

everything it can to provide a stipulated 

amount of work, but without a formal “ guarantee” 

of a definite number of hours per week or per year.

Four plans were discontinued during World War 

II, largely as a result of wartime conditions. At the 

time they ceased, they had been in operation 2, 4, 

5, and 6 years, respectively. In one case, the plan 

had operated by agreement between the company 

and an independent union under the 2,000-hour 

ceiling provided by Section 7 (b) (2) of the Fair 

Labor Standards Act. Manpower shortage and 

wartime manpower regulations made the continued operation of the annual hours ceiling impracticable. In addition, employees desired to 

work overtime at premium rates to increase their 

total earnings. The plan was abandoned by agreement and has not been revived. Management 

looks with favor upon its revival sometime during 

the postwar period, but employees are reluctant to 

give up overtime pay during a period in which the 

company’s products—construction materials—are 

in heavy.demand.

The second case of wartime abandonment also 

involved a 7 (b) (2) plan, negotiated between the 

Barlow & Seelig Co., a washing machine manufacturer, and the Steel Workers’ Organizing Committee. It was abandoned in 1942 because of the 

company’s uncertain business future during the 

war period. Union officials expressed interest in 

revival of a guarantee but were cool toward the 

possibility of its taking the form of a 7 (b) (2) plan 

again. Management was favorably inclined

toward the possible revival of some kind of 

guarantee.

The plan of a midwestern baby carriage manufacturer was entirely the product of the owners’ industrial relations philosophy and the desire to assure 

employees an annual income. The guarantee, 

embodied in a bulletin board statement, provided 

for 1,760 hours’ work a year, plus vacation, to all 

employees with 1 year’s service. The uncertainty 

of production under war conditions made management reluctant to continue its formal guarantee. 

The bulletin board statement was removed and 

new employees were no longer told that the company guaranteed employment. Old employees 

who remained with the company were not told 

that the formal plan was abandoned and actually 

received more work than the guarantee had called 

for. The owners stated that they intended to 

restore a formal guarantee plan at an early date.

A Baltimore silverware manufacturer guaranteed its journeymen and apprentice silversmiths 

52 weeks of 48 hours (including 8 hours pay at 

time and a half) per year. In 1942, wartime conditions made it difficult for the firm to secure raw 

materials and it was forced to discontinue manufacture of silverware and to cancel the guarantee. 

As soon as normal operations are resumed, management reported, it intends to revive the plans.

Four plans, including two wage advance plans, 

were abandoned after management had come to 

the conclusion that the plans were not needed, 

because the employer was able to provide substantially more work than the guarantee provided. 

All but one of these plans had been in existence 

for 3 years or less. All were abandoned between 

the years 1939 and 1942.

Three plans were abandoned as a result of 

employee and union dissatisfaction. Two of these 

were cases in which the plans had been introduced 

to avoid overtime payments under the Fair Labor 

Standards Act, in one case by a 7 (b) (2) contract 

with an independent union and in the other case 

by a scheme for advancing credit hours at the 

beginning of the year and offsetting overtime hours 

on a straight-time basis. In the first case, employee opposition to the plan arose over a provision for compensatory time off rather than overtime pay for hours over 40 a week, and over the 

practice of laying employees off—in some cases as 

early as November—when they reached their 

2,000-hour limit. The employees switched union

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
40 GUARANTEED WAGE PLANS IN THE UNITED STATES

affiliation, and negotiations with the new union 

resulted in elimination of the plan. In the second 

case, employees covered under the plan became 

dissatisfied with the fact that they received only 

straight-time credit for overtime hours, while 

employees not covered received premium overtime rates. This plan, too, was abandoned as a 

result of union action. In the third case, a guarantee of 3 days’ work a week for 52 weeks a year 

had been granted by agreement in a small furniture manufacturing shop as a condition of the 

union’s withdrawal of its demand for a wage increase. The guarantee proved to yield less employment than the employees could normally 

count upon, and other firms in the industry granted 

the wage increase which the union had given up 

for the guarantee. At the end of 1 year of operation, the guarantee was abandoned and employees 

received the industry-wide wage adjustment.

The three remaining cases of discontinuance involved a manufacturer of electrical apparatus, the 

Columbia Conserve, and the Namm Store plans. 

Passage of unemployment compensation legislation 

was reported as the reason for discontinuance of the 

1,500-hours-a-year guarantee in the first of these 

three cases. The guarantee in this case had lasted 

from 1931 to 1938, covering in 1933 approximately

7,000 plant workers in a number of plants—a larger 

number than was covered by any other guarantee 

studied except the General Motors w^ge advance 

plan. The Columbia Conserve plan was abandoned as the aftermath of a labor dispute. Wages 

and union organization had arisen as issues among 

the employee-owners, resulting in a War Labor 

Board dispute case and a court suit. The 

employee-ownership feature of the plan was ended 

by court order as a result of the suit, and the 

management of the company simultaneously ended 

the guarantee. Mr. William P. Hapgood, president of the company and founder of its experiment 

in industrial democracy, stated to a Bureau 

representative at the time of the study that a 

guarantee might some day be attempted again. 

The Namm Store plan operated between 1939 and 

1943 and guaranteed from 40 to 52 weeks of work a 

year, depending on length of service, to all wage 

earners with at least 1 year’s employment status. 

Management officials had regarded the plan as a 

significant addition to working conditions, but 

during the early years of World WTar II they 

became worried about possible conflict between

their obligations under the plan and their obligations to returning veterans. Because of wartime 

turn-over the proportion of new employees was 

considerably greater than previously. To these 

new employees, union organization appeared more 

important during this period of high employment 

than the guarantee plan. When the employees 

organized, no request was made for continuance of 

the plan in the initial contract negotiations, and 

management dropped the guarantee.

Guarantee plans covering certain groups of 

employees were dropped in two additional cases, 

although similar or identical plans covering other 

employees in the same establishment were continued. One of these involved the composingroom employees of a midwestern newspaper, who 

were guaranteed 52 weeks of work during the 

calendar year under a 7 (b) (2) contract. The 

agreement provided further, in contrast to standard contract language in printing trades agreements, that regular employees would work on the 

sixth day, at straight-time rates, where necessary. 

This agreement had been entered into because of 

the difficulty of obtaining printing help for the sixth 

day of work, and because of the parties’ desire to 

avoid declines in productivity that usually preceded seasonal slack periods. The plan was 

discontinued at the end of 1941 because of the 

refusal of the international union to sanction its 

renewal. The international objected to the elimination of time-and-a-half pay for overtime work 

and to the reduction of employment opportunities 

for transient printers. The second case involved 

longshore employees of a Great Lakes transportation company, whose guarantee was discontinued 

when the company subcontracted its longshore 

work.

4. Operation Under Section 7 (6) (2)

The plans which operated under Section 7 (b) (2) 

of the Fair Labor Standards Act merit special 

consideration as a group, since their experience 

constitutes the only experience to date of the 

operation of plans under a Federal statutory 

provision designed in part to encourage guaranteed wage or employment plans. Twenty companies reported the operation of guaranteed wage 

or employment plans (8 of which are still in operation, the remainder having been discontinued, 

largely during the war years) under Section

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE WITH GUARANTEE PLANS IN SELECTED CASES 41

7 (b) (2) of the Fair Labor Standards Act.5 *7 The 

number of plans that have fully met the requirements of the law is unknown; none has been the 

subject of final court determination. In some 

of the 20 cases, however, there was some question whether the full requirements of the law or 

regulations had actually been met, (a) because 

of apparent failure to meet the requirement that 

the union representing the employees be certified as bona fide by the National Labor Relations 

Board, (b) because of contract provisions that 

may not have met the full requirements of the 

law (a matter which could not be finally determined because the plans had not been officially 

commented upon by the Wage and Hour and 

Public Contracts Divisions or ruled upon by the 

courts), or (c) because of failure (in 5 cases) to file 

contracts as required by regulation.

Eight of the companies which took advantage 

of the provisions of Section 7 (b) (2) were studied 

in detail by the Bureau. In one case the inducement of the overtime exemption was reported to 

have been responsible for initiation of the plan, 

sponsored by management. In two, the overtime exemption was reported to have been important in determining management’s acceptance of union proposals for guarantee plans. In 

another, management’s desire for overtime exemption and labor’s desire for security were reported 

as equally important motives. In the remaining 

four cases, guarantee plans were already in operation or about to be put into operation in October 

1938, the effective date of the Fair Labor Standards Act, and were modified to conform to its 

provisions.

Of the eight guarantees studied, five are still 

in operation (in only four cases under 7 (b) (2), 

however). One of the former 7 (b) (2) plans was 

abandoned because of employee dissatisfaction 

following a drop in annual earnings during the 

2 years after the plan’s inauguration. The earnings decline had resulted from operation of the 

annual-hours ceiling, some employees having to be

5 Employers who had filed contracts with the Wage and Hour and Public

Contracts Divisions under the provisions of Section 7 (b) (2) were included

in the Bureau’s canvass; the Administrator’s regulations under the Fair

Labor Standards Act require that contracts under Section 7 (b) (2) be filed

with the Wage and Hour and Public Contracts Divisions.

Twenty of the 347 companies studied reported operation under Section

7 (b) (2). Five of these firms, however, were not included in the list of

companies that had filed with the Wage and Hour and Public Contracts

Divisions.

laid off as early as the first week in November. 

The second was abandoned because of the difficulty 

of adhering to the annual-hours limit under wartime conditions. The third was abandoned because of the general uncertainty of operating 

any guarantee under wartime conditions. In the 

latter two cases, some sentiment was reported for 

eventual reinstatement of a guarantee, although 

in both cases union representatives vwere lukewarm about the possibility of the plans again 

taking the shape of 7 (b) (2) arrangements because 

of the elimination of premium overtime pay and 

the absolute ceiling on annual hours of work. 

In an additional case, where a guarantee is still 

in operation, 7 (b) (2) provisions were eliminated 

in 1942 because of longer wartime working hours.

The best-known of the guarantee plans which 

operated under Section 7 (b) (2), and the one 

which covered more wage-earners than any other 

7 (b) (2) plan, has been that of Geo. A. Hormel & 

Co., whose plan antedated the Fair Labor Standards Act. At the Congressional hearings on that 

act, representatives of the firm urged the inclusion 

of a provision which would enable it to preserve 

its established guarantee; Section 7 (b) (2) was 

framed to encourage and to allow the continuation 

of arrangements of this kind. Consequently, passage of the act caused only slight technical changes 

in the Hormel plan as it then existed. The plan 

provided that covered workers were to receive, 

weekly, 52 equal parts of estimated annual 

wages—based on estimated annual production— 

with additional pay on an incentive basis. Weekly 

hours were not fixed, the only restriction on them 

being that a worker’s annual hours must not 

exceed 2,080; on a weekly basis, hours were not 

limited, but overtime payment was stipulated after 

53 hours a week. The firm continued to operate 

under 7 (b) (2) without difficulty until 1944, when 

volume of work and the wartime manpower shortage made it impossible to observe the stipulated

2,080-hour limitation on employment for 374 of the 

workers. Their earnings were recomputed on a 

weekly basis without the advantage of the overtime exemption. The plan continued to operate 

under 7 (b) (2) for the remaining workers in the 

plant.

Six of the 8 firms which operated under Section 

7 (b) (2) reported some difficulty during their 

experience with the plan in balancing man-hours 

so that the annual limitation stipulated in the law

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
42 GUARANTEED WAGE PLANS IN THE UNITED STATES

would not be exceeded. In two of the cases it was 

necessary to lay off workers before the end of the 

year.

One-third of the 54 employers (of the entire 

group of 62 studied) did not invoke the provisions 

of 7 (b) (2) in connection with their guarantees 

because they were unable to meet requirements of 

the section (the guarantee provided either more 

or less employment than the stipulated 2,080 

hours, or no bargaining unit existed in the plant) 

or because by the nature of its business the firm 

was not subject to the Fair Labor Standards Act. 

Other reasons for failure to take advantage of the 

provisions of 7 (b) (2) reported less frequently 

were union opposition to elimination of premium 

overtime payments and the impossibility of controlling employees* annual hours to conform to the

2,080-hour limitation. Management officials at 

Procter & Gamble and Nunn-Bush stated that 

they had no desire to receive exemption from paying overtime premiums. A large proportion of 

employers who did not invoke Section 7 (b) (2) 

were not acquainted with its provisions.6

Chiefly because of unfamiliarity with its provisions, very few of the employer or union officials 

interviewed had suggestions to make for improvement in the provisions or administrative interpretation of Section 7 (b) (2). Three employers suggested the removal of the 2,080-hour ceiling on 

hours, and the substitution of an annual overtime 

penalty provision for hours beyond this point. 

Four suggested that the provisions of 7 (b) (2) 

be made applicable to nonunion as well as to 

union employees. It was also suggested that the 

securing of interpretations or rulings on the legality of guaranteed wage proposals from the Wage 

and Hour and Public Contracts Divisions be 

facilitated and that such action be taken before 

contracts were signed or went into effect. Two 

employers and one union official suggested that, 

in addition to an annual guarantee, the section 

provide for a guarantee of minimum hours per 

week. In general, union officials were reluctant 

to consider giving up premium overtime rates for 

a guaranteed wage.

0 No special reasons for not utilizing 7 (b) (2) were reported by the employers who had filed contracts with the Wage and Hour ahd Public Contracts

Divisions but had not, in fact, operated under guaranteed wage or employment plans.

5, Costs

A full accounting of the costs of the guarantee 

plans that have operated in the United States was 

unavailable. To a very large extent this resulted 

from the difficulty of isolating the effects of the 

guarantees from the effects of other business and 

employment conditions. To an equal extent, it 

resulted from the absence of adequate cost accounting systems for tracing the specific effects of 

the plans. The inadequacy of records resulted 

in large part from the fact that the employers who 

introduced the plans believed themselves able to 

evaluate their own experiences without special 

record keeping.

The kinds of expenditures actually experienced, 

both direct and indirect, were as follows:

Direct Expenditures

Payment for time not worked.

Payment at the worker’s regular rate of pay for fill-in 

jobs which normally carry a lower rate.

Payment for make-work.

Losses on wage advances.

Indirect Expenditures

Time of personnel, labor relations, and sales offices 

devoted to planning and laying the foundation for the 

plan.

Outside engineering service.

Provision of extra storage space for production in excess 

of pre-plan storage capacity.

Cost of maintaining wage reserve.

Tie-up of capital in inventory caused by production for 

stock.

In the plants studied, records were generally kept 

only on the direct expenditure items of payment 

for time not worked and losses on wage advances. 

It was therefore necessary to rely almost wholly 

on management statements concerning their total 

cost experience.

One-half of the firms reported no expenditures 

whatever. Three-quarters of the remainder (about 

35 percent of all the firms) had paid for time not 

worked, and the remaining companies had incurred 

payment for some of the other items listed above, 

but not for unworked time.

Keports on savings traceable to the operations 

of the plans were even more difficult to obtain 

than reports on expenditures. Savings of various 

types were reported to have been experienced, 

although records were not ordinarily kept on most 

of these items:

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 43

Direct Savings

Reduction of unemployment compensation taxes under 

merit-rating plans.

Elimination of overtime payments required after 40 

hours a week by the Fair Labor Standards Act.

Lower wage rates than those of competitors.

Indirect Savings

Reduction in cost of training new workers.

Reduction in turn-over costs.

Increased productivity.

Savings in overhead costs through constant use of 

equipment.

Recruitment of more efficient employees.

Competitive advantage resulting from presence of 

accumulated stocks.

The only savings that were reported to the Bureau 

in specific terms were those affecting unemployment compensation taxes and the elimination of 

overtime payments at time and a half required by 

the Fair Labor Standards Act.

It seems clear that there was no net expense at 

all to the companies involved in half the cases. 

In the remaining half, there was not an adequate 

record of expenditures and offsetting savings to 

warrant conclusions concerning net costs of plan 

operation. Employers who incurred some expenditures reported almost uniformly that their 

outlays had been offset by compensating savings, 

or benefits such as increased morale and productivity which resulted in compensating savings. 

Although the employers’ own observations in 

these cases could not generally be substantiated 

by data, the expenditures in most of the cases were 

so small that they were reasonably certain to have 

been offset.

D. Management and Labor Evaluation of Results

The results of the plans can be assessed on the 

basis of two types of information: (1) Data on 

business operations, employment, and earnings of 

employees; and (2) the observations and conclusions of management and union officials who 

have had constant contact with the plans’ operations. The latter has turned out to be a much 

more fruitful source, because comprehensive and 

valid statistics on the effects of the plans are 

extremely difficult to obtain. Record systems 

have not been set up to trace the specific effects 

of the guarantees, and it is generally difficult, if 

not impossible, to isolate the effects of the guarantee plan from the effects of other aspects of

business operation and factors beyond the control 

of management or labor in an individual concern.

The accomplishments of the plans have to be 

viewed in the light of their objectives. As has 

already been pointed out, in half of the cases 

introduction of the plans was not expected to 

contribute toward enlargement of the area of 

stable employment opportunities or to stabilization of income. The guarantees in these cases 

reflected the degree of stable employment that 

management and labor believed was already in 

existence, or, in a number of other cases, the 

degree of employment regularity that was achieved 

after efforts to stabilize had laid the ground work 

for an expanded area of stable employment. In 

the great majority of the cases, the achievements 

realized were substantially the results that had 

been expected at the time the plans were introduced.

1. Accomplishments of the Plans in the Field of

Employment Security

The basic accomplishment of the plans was a 

greater sense of security for the wage earners 

covered. Management, labor, and employees interviewed emphasized the beneficial effect of the 

plans upon employee morale and the individual’s 

sense of security, even in those cases in which 

management’s guarantee represented little or no 

more than the employees could normally expect as 

a regular condition of employment without a 

guarantee :

In the case of a public utility which guaranteed employment to employees with 5 years 

of service only, and in which the plan was 

introduced after several years of employment 

stabilization efforts, both management and 

labor agreed that the guarantee represented 

substantially what company policy had been 

prior to the plan. The employees and thenunion nevertheless considered the benefits 

of the plan sufficiently great, from the point 

of view of the security it granted, to warrant 

their having given up overtime pay at time 

and a half for a period prior to World War

II. Union representatives asserted that they 

would seriously consider strike action, despite a long no-strike record, if management 

attempted to abandon the plan. Labor and 

management have now turned their attenDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
44 GUARANTEED WAGE PLANS IN THE UNITED STATES

tion to the problem of lengthening the plan’s 

term, and have, under their current contract, 

extended the guarantee to provide 2 years, 

or 104 weeks, of work.

A union representative who had negotiated 

a large number of basic crew* contracts covering employees whose services would normally 

be required throughout the year reported 

that a guarantee clause was a basic feature of 

all contracts negotiated by his union. While 

the issue has never arisen, he reported, it 

would clearly be union policy to insist upon 

a guarantee at the cost of other improvements 

in wages or working conditions, if the choice 

had to be made.

In a number of cases, management officials who 

were interviewed reported that the plans had 

no special effects on employee morale or attitude, 

largely because the plans were extensions of what 

management was already doing. In contrast, a 

positive advantage pointed out by several labor 

representatives was the fact that spelling out the 

plan, even though it represented nothing more 

than past company policy, improved labor relations and employee attitudes by demonstrating 

firm company intention to continue that policy. 

The establishment of a guarantee under circumstances of stable employment has involved the 

same considerations that have led management 

and labor in thousands of contracts to reduce 

to writing, working conditions and rules that are 

accepted and completely taken for granted by 

both parties.

In about 40 percent of the cases, added security 

or a sense of security was reported to have been 

the most significant achievement of the guarantee. Experience under these plans was generally 

inconclusive, however; almost three-quarters of 

them could be said to have undergone no real test, 

because they had operated in fairly prosperous 

years and available work had equaled or exceeded 

management’s obligations. The guarantee level 

in most of these instances might be of much more 

immediate significance to covered employees during periods of business depression. In several, 

however, coverage was so limited that a sense of 

security would undoubtedly be their sole contribution at any time.

Where payments were made for time not 

worked, the plans also contributed to income

stabilization. As has already been pointed out, 

such payments were made in 40 percent of the 62 

cases studied, in amounts ranging from a few 

dollars a year for all of the covered workers as a 

group to several months’ pay for each worker 

involved. In addition, income regularization resulted from the spreading of work even in situations where no payment was made for time not 

worked. In all, some degree of income stabilization can be said to have resulted from the operation of the plans in 33 of the 62 cases. In 9 of 

these, stabilized income resulted from payments 

to skilled or key workers during slack periods, 

largely for the purpose of retaining their services; 

in 21, from payments to larger groups of workers, 

generally in small amounts; in 3 cases, from wage 

advances.

The widest effects of the plans occurred in 12 

cases where, according to labor and management 

reports, the area of stabilized employment opportunities appears to have been widened as a 

result of employment regularization activities 

undertaken concurrently with the plan.7 These 

activities enabled the employers to guarantee employment to workers who had not previously had 

stable employment or a reasonable probability of 

it. They did not result in general extensions of 

the guarantees to other workers, beyond the extent 

of the obligations that the employers had already 

assumed, however. Where such broad extensions 

did occur, as in the case of the Hormel plan, they 

resulted from the same impetus to regularize employment and provide security that had established the plan on a limited basis in the first instance. The character of the accomplishments 

achieved in this group of 12 cases can be obtained 

best by a summary of the individual situations:

(1) In the case of the Berkshire Knitting Mills, 

of Reading, Pa., a guarantee of 50 weeks’ work 

was granted in 1936 to skilled hosiery knitters, 

in the form of individual contracts providing 

minimum weekly payment at levels below prevailing industry code minimums, and transfer to 

other types of knitting in the event that there 

was insufficient work on their own machines. 

From the workers’ point of view, the plan was 

intended to grant security to knitters who worked

7 Some additional effects of this type may have resulted, though not reported by either management or labor representatives. In very few cases,

the plans may also have had some effect beyond the establishments in which

the guarantees operated. Inquiry along this line was outside the scope of

this study.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 45

on hosiery that was not selling well; the intention 

of the company was to reduce labor costs on 51- 

gauge hosiery and thereby enable the company 

to promote the sale of this product. This program was successful, and over the 10-year period 

following the plan’s inception, hosiery sales increased, wage rates were raised to a point which 

more than compensated for the decrease initially 

taken by the employees, and the plan was extended 

to knitters of non-run hosiery. At the peak of 

its coverage, however, the plan included only 

about 15 percent of the company’s employees.

(2) Employment stabilization measures in the 

Columbia Conserve Co. were part of the broad 

general experiment of which the guarantee plan 

was a part. These measures included the employment of workers during the slack season upon 

the company’s 420-acre farm; production of 

nonseasonal soups and other products, such as 

chili con carne, chicken a la king, and bean sprouts; 

utilization of some of the workers as salesmen; 

and production for stock to a limited extent. 

The company’s business methods and the prosperity of the 1920’s resulted in a gradual increase 

in the number of covered workers, but substantial 

groups of employees recruited for the fall canning 

season always remained outside the coverage of 

the plan. In 1937, for instance, covered workers 

numbered 76 in June, and total employment in 

the plant was 102. During the September peak 

of that year, employment rose to 254, of whom 

only 74 were covered by the plan.

(3) The Cleveland Fur Workers’ Union, Local 

No. 86 (CIO), has had contracts embodying 

employment guarantees with 19 local furriers 

since 1940. Prior to the introduction of the 

38-weeks-a-year guarantees, most of these companies tried in some manner to spread fur coat 

repair and restyling operations over the entire 

8 or 9 month storage period; but a few firms, including one of the largest and best known in the 

community, had taken no voluntary measures to 

stabilize employment and was able to provide 

only 3 or 4 months’ work a year. This company 

had engaged in extensive advertising campaigns 

to get furs into storage during April and May, 

a practice which resulted in intensive work during 

the months following, but in little work thereafter. 

The union determined to seek an employment 

guarantee in its contracts, in order to force the 

companies to provide steadier employment, and

for the sake of greater security the guarantee was 

also sought in contracts with the firms that were 

already providing stable employment. Under the 

contracts, the responsibility for spreading production to stabilize employment was left entirely 

to management, the union believing that contract 

provisions would provide sufficient incentive to 

regularize. Management and union officials 

reported that employment had in fact been stabilized under the plan.

(4) A Wisconsin firm engaged in feed and flour 

milling inaugurated a guarantee of 52 weeks of 

employment in 1940. Management efforts were 

thereafter directed toward leveling out a seasonal 

slump in summer and early fall. Maintenance 

work was postponed until slack periods, and vacations granted at this time. New product lines 

were developed, such as turkey feed, peak demand 

for which occurs during the summer. At times 

during slack periods special sales measures were 

adopted to insure a steady flow of business: goods 

were shipped on consignment, prices were lowered, 

advertising was increased, and promotional programs developed. In fact, management reported 

that the chief benefit received from the guarantee 

had been the incentive to seek and accept new 

business during slack periods.

(5) The basic features of the employment guarantee at Geo. A. Hormel & Co. were developed 

prior to its inauguration. However, measures to 

extend employment stability were devised as 

union and management became more familiar 

with the plan’s operation. Production quotas, of 

course, were subject to annual revision, reflecting 

changing conditions. It was found, for instance, 

that crews required to handle the peak work load 

in some departments could not be furnished sufficient work to keep them busy 2,080 hours a year. 

Consequently, their annual hours were established 

at lower levels in the interest of providing steady 

employment. Careful determination of the crew 

sizes still did not entirely eliminate slack periods 

when there was insufficient work. Transfers were 

made to departments where peak work loads existed, but production in these departments did 

not increase in proportion to the number of men 

added. To avoid this practice, the firm made 

slight changes in equipment so that work could 

be transferred into slack departments. This 

proved to be a more efficient arrangement. A 

related measure was the establishment of an extra

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
46 GUARANTEED WAGE PLANS IN THE UNITED STATES

gang as a reservoir of workers from which departments in need of extra help could draw. This 

extra gang constituted approximately 7 percent 

of total employment.

Among other changes to improve productivity 

made during the operation of the guarantee was 

the establishment of a single rate in a department 

where the skills required for the various jobs were 

almost equal, but where a series of rates had previously existed. Under the former rate schedule, 

employees with greater seniority were able to 

claim higher-paying positions for which other 

workers were better fitted. Since the leveling of 

rates, the union has waived job selection rights 

based on seniority in this department and productivity has improved.

The aggressive, enterprising actions of management, reflected particularly in the introduction of 

many new products and the steady expansion of 

the company during the operation of the guarantee, should not be overlooked as a factor contributing to the creation of more opportunities for 

stable employment.

The guarantee of 52 equal pay checks per year 

stabilized not only workers’ income but also 

contributed to stabilizing the number of employees on the pay roll. Prior to installation of 

the guarantee, employment at the firm was 

marked by a high rate of labor turn-over, as 

workers drifted to other jobs during slack periods. 

The promise of steady income under the plan 

checked this practice; in 1939, 98 percent of all 

workers on the pay roll were continuously employed throughout the year.

(6) The assured employment plan of the 

McCormick Co. has been in continuous operation 

since 1936. The company program to stabilize 

employment started in 1932 and has already 

been described. Following these measures, management in 1936 announced that 48 weeks of work 

would henceforth always be available to its employees. All competent and efficient employees 

with more than 6 months’ service were protected. 

No assurance was given those with less than 6 

months’ service, and incompetence and inefficiency could still bring dismissal of any employee 

after a series of warnings. Neither wages nor 

hours of work were to be guaranteed. The 

company simply described its plan as one of 

intent to provide 52 weeks of work if at all possible, 

and if necessary to reduce the number of hours

worked weekly in preference to reducing the employee’s weeks of work below 48 in the year. In 

actual practice, to fulfill the stated policy of the 

company, the management has produced for 

stock to the maximum capacity of storage facilities, has transferred workers (at regular rates 

of pay) to maintenance and repair jobs, and has 

laid off temporary workers with less than 6 

months’ service. At the same time management 

has been on the alert for new production possibilities and has conducted further market research.

(7) The basic regularization program of the 

National Battery Co. had already been developed 

in 1939 and 1940 when the company, at union 

request, introduced a program of stabilization 

of employment for workers with the greatest 

seniority status in its main and branch plants. 

The stabilization program was based chiefly 

upon the forecasting of demand and the maintenance of large inventory stocks of replacement 

batteries. The advent of the plan accelerated 

this program and effectively stabilized employment during the winter months, when demand for 

batteries was normally low. To an increasing 

degree, under the plan, production of batteries 

was consciously undertaken during the slack 

season with the objective of placing the company 

at all times in the position of being able to supply 

demand. This policy is reported to have resulted 

in substantial improvement in the company’s 

competitive and profit positions, as well as in the 

stabilization of employment.

(8) The National Oats Co., one of the smaller of 

the Nation’s oatmeal processors, introduced a 

guarantee of 1,664 hours a year plus vacation to 

3-year employees in 1936, together with a wage 

advance plan. Prior to inauguration of the plan 

no special efforts had been made to regularize 

production, and company officials felt that no 

particular risks were involved in guaranteeing the 

amounts of annual employment that they proposed. Under the plan seasonal declines during the 

summer and at the end of the year continued, but 

the company had to pay for time not worked only 

in 2 years—in 1937 during the business recession, 

and in 1940. In neither year was the cost of such 

payment substantial. One step that the company 

did take under the plan’s operation to regularize 

production further was to start fall operation 

earlier than it had begun in the past, in an effort 

to level out the usual October peak. Another

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 47

was an effort to alleviate the secondary slack period 

in December, caused by wholesalers’ inventory 

reduction, by producing at this time orders which 

had to be shipped long distances, such as 2 to 3 

weeks in the case of products shipped to California. During year-end periods the plant has 

sometimes been run exclusively on export business.

(9) When the Nunn-Bush plan was introduced 

the company had already stabilized month-tomonth employment variations to a substantial 

degree. The plan was expected to contribute to 

the stabilization of income rather than to the 

regularization of employment. During the recession of 1938, however, sales were not sufficient to 

warrant continuing the existing level of payments, 

and under the plan’s flexible arrangement wage or 

“ sharing” payments should have been reduced. 

Desiring to maintain employee income, however, 

management and labor agreed to produce for 

stock and to continue the existing level of payments. A sizable deficit was accumulated during 

this period, which was wiped out during the immediately succeeding years.

(10) In the Procter & Gamble Co., the major 

employment stabilization program undertaken also 

occurred prior to the initiation of the plan, in 1923. 

The chief instance of further employment regularization under the guarantee occurred during the 

depression of the 1930’s. The company was able 

to continue its guarantee by production for stock, 

and by the transfer of workers to a labor pool from 

which they were assigned to a variety of maintenance and construction jobs. The company 

reports that it would be impossible to determine 

the costs of this program which could be specifically attributed to the guarantee, because much of 

the work would have been necessary in subsequent 

years, and the company would probably have 

undertaken some of the program as part of its 

general feeling of responsibility towards its employees in time of depression without the existence 

of a formal guarantee.

(11) The minimum force agreement on the Seaboard Air Line Railway inaugurated a new program for spreading shop work throughout the 

year and for eliminating seasonal and irregular 

fluctuations in employment. This program successfully eliminated much of the variation in 

operations. Whenever insufficient work threatened the full-time employment of workers in 

minimum maintenance force positions, workers

not occupying minimum force positions were laid 

off, or the workweek was reduced. In cases involving temporary or permanent close-downs of 

shop or terminal points, the total number of minimum force positions for the year was maintained 

by transferring employees from one shop or point 

to another shop or point, at company expense if the 

transfer involved moving the worker and his 

family to another city. Work planning and 

budgeting under the plan eliminated completely 

sporadic shut-downs of individual shops that had 

previously characterized the company’s operations.

(12) The guarantee of a small building materials 

manufacturing company, which operated under 

the provisions of Section 7 (b) (2) of the Fair 

Labor Standards Act from 1938 to 1943, stabilized 

employment opportunities for approximately 30 

workers to a limited degree by giving them yearround jobs when they had in previous years been 

employed intermittently during slack winter 

months. Since the employees worked longer hours 

during the peak summer season under the plan to 

make up for time paid for but not worked during 

winter months, the principal effect of the plan was 

to average hours on an annual basis and to stabilize 

employee income throughout the year.

The chief effects of the plans appear to have 

been adverse in three special situations: Where the 

employer introduced a guarantee to avoid overtime premium payments, and the result was a cut 

in employees’ annual earnings; where the employer 

bargained away a wage increase with an offer of a 

guarantee of 24 hours’ work, and the employees 

found (a) that it gave them no increase in income 

and (b) that competing employers uniformly gave 

wage increases; and where the employer introduced 

a plan to avoid overtime payments, and employees 

who were paid at straight-time rates for overtime 

hours came to resent the scheme in contrast to 

payment of premium overtime rates to employees 

not covered by the guarantee. All three of these 

plans were discontinued.

The plans were reported to have had little 

direct effect on volume of employment. Expansion in business activity as a consequence of the 

incentive provided by a guarantee was reported in 

a few cases. These situations involved cases in 

which management generally followed an aggressive policy, and the information obtained was inadequate to determine whether the plan or 

management initiative was the causal factor.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
48 GUARANTEED WAGE PLANS IN THE UNITED STATES

In a few cases, the plans were reported to have 

had the effect of curtailing temporary employment during peak seasons, giving the work instead 

to regular employees:

This was the intention, for example, of a 

guarantee which operated from 1938 to 1943 

in the plant of a small building materials manufacturing company. Regular workers worked 

longer hours during peak summer months at 

straight-time pay in return for steady employment during the slack winter season.

The two brewery plans studied guaranteed 

employment to “ regular card” employees of 

the company, while other employees bore the 

brunt of slack periods. Since this arrangement had been a matter of union contract for 

over 40 years, the extent of its effect on the 

volume of temporary help previously employed cannot be estimated.

Since many plans, especially those applying only 

to key workers, were reflections of past practice, 

temporary workers continued to be laid off. In a 

number of cases, expanding employment opportunities during the last decade have resulted in the 

absorption of former temporary workers and their 

coverage under the guarantees.

In most of the cases, annual earnings of individual employees increased while the plans were in 

operation. In several of these cases, management 

or union officials attributed increased earnings of 

workers with low seniority status, previously subject to periodic or intermittent lay-off, to the 

operation of the plans. The fact that payments 

of varying magnitude were made for time not 

worked in almost 40 percent of the cases supports 

these conclusions. It has been generally impracticable, however, to isolate the effects of the plans 

from the effects of improved business conditions, 

general wage increases, promotions, merit raises, 

and other factors, to obtain a more exact picture 

of the plans’ effects on earnings.

2. Other Accomplishments

The conclusions of management and labor officials who had operated with guarantee plans, 

including some of those whose plans had been discontinued, were decidedly favorable. The major 

advantage reported— achievement of a sense of 

security—has already been cited. This meant, in 

terms of additional advantages cited by both

management and union officials, better labor relations, increased productivity in varying degrees, 

and improved union security. From management’s point of view, the aid of the plans in retaining key employees or attracting the services 

of skilled workers constituted an important advantage in several cases. Related benefits were 

the frequently reported but difficult-to-demonstrate reduction in training costs, a reduction in 

turn-over, and the use of the guarantee as an attraction in the recruitment of employees. The 

achievements of several of the major plans have 

been cited in glowing terms by management 

officials involved:

When questioned by a Bureau representative concerning the benefits of the plan in 

operation at the Nunn-Bush Shoe Co.’s 

Milwaukee plant, Henry L. Nunn replied* 

“ Any plan that will accomplish stabilized 

production means a saving in equipment and 

in overhead costs; and any plan that makes 

for better jobs and better-satisfied workers 

reduces the training costs. Our unemployment tax has been very small since under our 

system we do not have any unemployment. 

No worker has been laid off due to slack work 

since the plan started in 1935. Our labor 

turn-over in comparison with like industries 

in this vicinity has been exceedingly low. 

The type of employee in our factory is high 

class— above the average. The fact that the 

worker in this plant immediately profits 

through improved equipment and processes 

makes such improvements very acceptable. 

There is a consciousness of mutual profit in 

efficient production that makes for good 

morale. The employee not under the plan 

also enjoys the regularity of employment that 

the plan has given the business.”

Richard R. Dupree, president of the 

Procter & Gamble Co., when describing his 

firm’s employment guarantee in a speech at 

the Conference on General Management of 

the American Management Association’ in 

October 1945, stated: “ * * * ffi our business great strides have been made in ability 

to produce more units per man in the past 20 

years. In fact, there has been a tremendous 

development along these lines that has been 

responsible for keeping costs down. We

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
EXPERIENCE W ITH GUARANTEE PLANS IN SELECTED CASES 49

found that once the plan was in effect, we 

had no trouble getting our people to experiment and cooperate with us in working out 

important procedures of production—such as 

having, say four people on a line doing what 

five used to do—because each man knew 

that he was not going to lose his job if the 

experiment were successful.” He went on to 

stress another benefit accruing from operation of the plan: “ I would say that the steady 

employment plan is probably the greatest 

thing in our company, the greatest single 

factor—even greater than profit-sharing—in 

producing good relationships.”

The effects of a guarantee upon hiring 

practices were mentioned by Fayette Sherman, employment manager at Geo. A. Hormell & Co. He said: “ There is the advantage 

of having a skilled crew on the job at all 

times. Customarily, when a gang is reduced 

the good men find other jobs and do not return, but the less desirable are back waiting to 

be hired. The guarantee eliminates the time, 

effort, and confusion, first, in deciding whether 

it is the proper time to reduce the gang, and, 

second, the confusion resulting from reducing 

the gang. Employment needs for the future 

can be estimated ahead of time and the personnel department given an opportunity to 

select new employees rather than ‘ hire at the 

gate’ when the production in some departments is to be increased.”

Few employers reported disadvantages resulting 

from the plans. Costs were not regarded as disadvantages, but as necessary features of the 

guarantee, offset by compensating benefits. In 

the few cases where employers pointed out specific 

disadvantages, such as the heavy cost of warehousing incurred by the McCormick Co. and reluctance to accept new business which might 

prove to be temporary in the case of the NunnBush Co., they nevertheless considered the net 

value of the plan to be positive.

In one-fourth of all the cases, the plans had been 

introduced at union behest, employers taking very 

little interest in them. In two-thirds of these 

cases, however, management reported that their 

experiences under the plans had been favorable, 

and that the plans had had a good effect on morale, 

turn-over, or efficiency.

In a number of the cases where management 

reported favorably upon experience under a guaranteed wage plan, the guarantee features of the 

plans had been very limited, either as to amount 

of the guarantee or as- to the proportions of plant 

workers covered. Management’s favorable reaction in these cases was a reaction to the limited 

kinds of guarantee with which they had experience, and which they in many cases refused to 

characterize as “ guarantees” at all. In several 

cases, their reaction to what they considered to be 

a “ guaranteed wage plan” —formal guarantee of 

a full year’s employment or wages to all or virtually all of' their employees—was negative, hostile 

or skeptical.

Union representatives and employees were, on 

the whole, greatly impressed with the security 

benefits which the plans had conferred, although 

many of them stated that the plans would prove to 

be more valuable during periods of depression than 

they had been thus far. About 40 percent of the 

union representatives interviewed indicated an intention or desire to press for amendment of the 

plan to give more security—lowering of eligibility 

requirements, extension of coverage to other employees, increase in the amount of wages guaranteed, or an increase in the number of years’ employment covered by the guarantee. Their approach to the problem of improvement was a 

gradual one, but virtually all of them felt that the 

plans could be improved or extended without 

substantial risk.

Management officials in several cases believed that the measures they had taken were 

capable of adoption by industry in general. A 

typical example of such opinion follows:

William Cooper Procter, who introduced 

the guarantee of the Procter & Gamble Co., 

said in a statement shortly after the inauguration of the plan: “ I do not think there is anything peculiar to the soap business that makes 

such a plan more adaptable to it than to any 

other industries. I believe that in the very 

great majority of industries the average 

annual consumption is approximately the 

same, without much fluctuation from year to 

year, and that the problem of providing for 

■ the distribution and warehousing is not a 

difficult one to work out if study is centered 

upon the special industry.”

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946

Name of company and location Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

Adelphi Paint & Color

Works, Ozone Park,

N . Y .

(2) ......................................

(2)

(2)

(2)

M a n u fa c tu r in g

paints and varnishes.

Paper converters___

Selling buttons and

buckles (wholesale) .

Manufacturing window and door

frames.

Converters of textile

fabrics.

United Gas, Coke &

C hemical Workers

of America, Local

121 (CIO).

Paper Printing Specialties and Paper

Converters (independent.) (Not

party to plan.)

United Retail, Wholesale & Department

Store Employees of

America (CIO).

None________________

United Retail, Wholesale and Department Store Employees of America

(CIO).

1939. 48 hours per week, 48 weeks

per year.

1937. 40 hours per week, 50 weeks

per year.

1942. 40 hours’ employment per

week, 52 weeks per year.

First plan, 1931-32.

Second plan, 1939.

1940.

Wage advance obtained on

request. Advance to equal

difference between hours

earned and hours assigned

to class of workers as follows: Class I—40 hours;

Class 11—50 hours; Class

III—60 hours. No limit to

wage advance for employees with 5 years of service.

52 weeks’ employment per

year, based on 8-hour day

and 40-hour week, at not

less than negotiated weekly minimum wage.

Production, shipping, and

maintenance department

workers with 6 months’

service.

All plant employees with

1 year of service.

Basic crew size determined

by negotiation; coverage of

individuals by seniority.

All employees. Employees

must have 2 years, 3

months of service in order

to qualify. Class I—Employee with no dependents;

Class II—Employee with

1 dependent; Class III—

Employee with more than

1 dependent.

Basic crew consisting of average number of nonexecutive employees preceding

union organization or renegotiation of agreement.

Barlow & Seelig Manufacturing Co., Ripon,

Wis.

M a n u fa ctu rin g

washing machines.

United Steelworkers

of America, Local

1327 (CIO).

1940-42. $1,260 guaranteed for not

more than 2,000 hours’

work. Operated under

Section 7 (b) (2).

Hourly paid employees.

Service requirement: First

contract, 1 year; Second

contract, 5 years.

( 2).

Berkshire Knitting

Mills, Reading, Pa.

(2)

(2)

Cincinnati Gas & Electric Co., Cincinnati,

Ohio.

Clark Sand & Gravel

Co., Baltimore, Md.

Columbia Conserve

Co., Inc., Indianapolis, Ind.

Finishing cotton

textiles.

Manufacturing hosiery.

Surfacing roads and

driveways on a

contract basis.

Manufacturing distilled liquor.

P ro d u cin g and

transmitting electric power and gas.

O perating gravel-pit

and ready-mixedconcrete trucks.

Canning food products.

Machine Printers’

Beneficial Assn.

(Independent).

None.

do.

Locals of 8 AFL

unions.

Int’l. Bro. of Electrical

Workers of America,

Local B-1347 (AFL);

Independent Utilities Union, Cincinnati, Ohio, United

Mine Workers, District 50, Local 12049.

None________________

1939.

1936.

1926....

1939-45.

1941.

Full pay for any period in

year prior to July 15 and

half pay for any period

after July 15, during which

time worker is not employed. Operated under

Section 7 (b) (2).

36 hours per week, 48 weeks

per year.

Full pay, 52 weeks per year.

Weekly average of 40 hours’

employment per year.

Hours not worked in short

weeks debited against

overtime.

40 hours’ employment per

week, 52 weeks per year.

Journeymen, printers, and

apprentices.

Knitters on 51-gauge hose;

toppers on 51-gauge hose;

knitters (leggers) on 45-

gauge nonrun hose. No

length-of-service requirement.

Regular employees selected

by company.

Warehouse and powerhouse

employees; service requirement 6 months.

All regular full-time employees; service requirement, 6 months.

First plan, 1938-43.

Second plan, 1945—.

1917-42.

First plan—minimum weekly pay varying according

to length of service for 52

weeks per year. Second

lan—Minimum of 40

ours’ pay per week for

52 weeks per year. Hours

paid for but not worked

debited against overtime

hours in excess ol 45 hours

and less than 50 hours per

week.

Annual salary paid weekly

with base rates adjusted

according to marital status and number of children.

Transit-mix drivers, bulldozer and crane operators,

maintenance mechanics,

office and supervisory

staff. No length of service

requirement.

All departments covered.

Employees, to be eligible,

must (1) have a year of

service, i2) have an expectancy of 10 years of

service, (3) be approved

by vote of the employees’

council.

See footnotes at end of table, p. 60.

50

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
A

by the Bureau of Labor Statistics

Changes which may have occurred since that time have not been incorporated]

Safeguards and escape clauses

Employer’s obligation ceases

if sales drop below 80 percent of previous year.

Termination at discretion of

management. Firm specifically reserves right to lay

off for lack of work.

Size of basic crew may be reduced by negotiation with

union upon permanent curtailment of the business.

Termination at discretion of

management.

Reduction in size of basic crew

subject to union negotiation

upon presentation of evidence

showing need for crew of

lesser size. If no agreement,

may go to arbitration.

Plan may be suspended by

strikes, disasters, act of God.

None.

Plan may be suspended by

causes beyond company control, Government order, or

lack of raw materials.

Termination at discretion of

management.

None_________________________

Company guarantee subject to

its right to lay off for “ lack

of work or for other proper

and legitimate reason.”

Plan is terminated upon discontinuation of business.

Plan may be modified by employees’ council action.

Approximate number of workers covered

Approximate percent of total workers covered Basic reasons for introduction Initiated b y - Has company paid for time not worked?

40.

35.

90 percent.

85 percent.

To obtain security after experience of depression. To

offer more than unemployment compensation.

To provide security and

thereby avoid slow-downs

before seasonal lay-offs.

Joint initiation by No.

union and management.

Management_______ No.

30. 70 percent. To obtain security for basic

crew.

Union. No.

350. 90 percent. To assure employees greater

stability of income.

Management. Wages advanced

under original

plan.

650 in 1945; 1,300 in

1941.

Not available. To obtain security for basic

crew.

Union. No.

247.

11.

85 percent.

3 percent.

To assure stability of employment and earnings. To obtain exemption from overtime payments under Section 7 (b) (2) of Fair Labor

Standards Act.

Desire to increase job security.

Joint initiation by

union and management.

No.

Union. Yes.

Number of workers in

covered occupations

has grown steadily

from 85 to 420 during life of guarantee.

Currently, 15 percent To obtain security; to reduce

cost of 51-gage hose; to reduce turn-over of knitters.

Employee proposaL. No.

8__.

300.

100 percent in slack

season; about 30 percent in peak season.

35 percent-.....................

To hold trained employees. Management.

To save overtime pay and to ____ do_______

give additional security.

Yes.

Yes.

2,500.. 100 percent. Stabilization program of company had been successful

and plan was offered to promote security and industrial

relations.

do. No.

44. 100 percent in slack,

60 percent in peak.

To hold trained personnel. do. Yes.

Coverage varied from

year to year—76 in

June 1937,49 in June

1942.

Proportion varied seasonally—75 percent

in June 1937, 30

percent in September 1937.

Guarantee integral part of

plan for cooperatively managed establishment.

do. Yes.

51

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
52 GUARANTEED WAGE PLANS IN THE UNITED STATES

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946

Name of company and location Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

Crocker-McElwain Co.

and affiliated Chemical Paper Manufacturing Co., Holyoke,

Mass.

Cromwell Silver Manufacturing Co., Long

Island City, N . Y .

(3) -------------------------

Decatur Newspapers,

Inc., Decatur, 111.

Detroit & Cleveland

Navigation Co., Detroit, Mich.

(2).

Manufacturing paper.

Manufacturing silverware.

M a n u fa c tu r in g

chemicals and fertilizers.

Publishing newspapers.

Operating Great

Lakes passenger

and freight steamers.

Milling feed and

flour.

Int’l Bro. of Paper

M a k e r s , E a g le

Lodge 1 (AFL).

United Electrical, Radio & Machine

Workers of America,

Local 1225 (CIO).

Int’l Chemical Workers Union (AFL).

(Not party to plan.)

Int’l Typographical

Union, Decatur Typographical Union

N o .15 (AFL), Int’l.

Printing Pressmen

& Assistants’ Union

of North America,

and Decatur Printing Pressmen and

Assistants’ Union

No. 161 (AFL).

Masters, Mates &

Pilots of America,

Locals 47 and 5

(AFL), Nat’l Marine Engineers’ Beneficial Ass’n Local 3

(CIO); Int’l Longshoremen’s Ass’n,

Locals 1324, 1654,

and 1326 (AFL).

Cereal W orkers’ Union

(AFL).

1921-36.

January 1939-December 1939.

1939-40-

Printers, 1939-41.

Pressmen, 1938—.

Masters and mates,

1919—; pursers,

1941—; stewards,

1941—; engineers,

1937—; checkers, Detroit, 1941-46; checkers, Buffalo, 1938-46;

dock foremen and

clerks, Buffalo 1941-

46.

1940.

52 full weeks’ pay per year,

originally; in 1931, reduced

to 80 percent of full pay

for 44 weeks per year; in

1932, further reduced to 50

percent of full pay for 44

weeks.

40 hours for 45 weeks, and 3

days per week for 6 weeks.

Wage advance when weekly

wage fell below 30 hours

per week, equal to the difference between earnings

and 30 hours’ pay, up to a

maximum of 175 hours’

pay.

The printers’ plan operated

under section 7 (b) (2)

from 1939-41. Printers

received 40 hours’ pay per

week with overtime offset

by short weeks. Pressmens’ plan has operated

under Section 7 (b) (2)

since 1946. Pressmen received 40 hours’ work per

week.

Masters, 12 calendar months3,

mates, 10 calendar months;3

purser, from 3 to 8 months,3

varying according to ship

or home port; engineers, 10

calendar months; 3 checkers, 9 months’ continuous

work, 8 hours per day, 6

days per week; foremen

and clerks in Buffalo, fixed

monthly salary 12 months

per year; seasonal workers

in Buffalo, fixed monthly

salary during “season of

navigation.”

48 hours’ employment per

week, 52 weeks per year.

I. J. Fox, Inc., Cleveland, Ohio

Fur Merchants Employers Council, New

York, N. Y.

Storing and repairing furs

Fur dealers________

Cleveland Fur Work- ___ d0.

ers Union, Local 86

(CIO).

Int’l Fur & Leather 1938...

W orkers’ Union,

Local 64 (CIO).

35 hours per week, 38 weeks

per year.

40 hours’ pay per week. No

covered worker may be

laid off.

Production, shipping and

maintenance employees.

5 years’ service requirement. Must be recommended by 2 covered employees and by supervisors

and accepted by company.

61 listed employees in production department.

All hourly rated employees.

Service requirem ent,

3 years.

Printers, pressmen, and

stereotypeis. No lengthof-service requirement.

Must be union members.

Masters, mates, pursers,

stew ards, engineers,

checkers, and other specified occupations.

The 75 percent of hourly

employees who have the

greatest seniority are covered.

Fur machine operators, cutters, fur nailers, and hand

sewers.

All employees other than

scrapers, temporary workers, and those employees

earning over $51.50 per

week. Service requirement, 6 months.

The Furniture Specialties Corp., New York,

N. Y.

Manufacturing upholstered fu r n iture.

Gates Rubber Co., Den- M a n u fa c tu r in g

ver, Colo. mechanical rubber goods.

Upholsterers In t’l 1938-40.

U nion of N orth

America, Local 44

(AFL).

U n it e d R u b b e r 1938-39.

Workers of America, Local 54 (CIO).

(Not party to plan.)

Minimum of 24 hours of

work per week, 52 weeks

per year.

Upholsterers.

After 1 year of service, 1,600

hours per year; after 2

years of service, 1,700

hours; after 3 years of

service, 1,800 hours.

All production and service

occupations. Service requirement, 1 year.

(2) M a n u fa c tu r in g

electrical apparatus.

None. 1931-38. 1,500 hours per year. Production, shipping, and

maintenance employees.

Service requirement, 1

year.

See footnotes at end of table, p. 60.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX A.----BASIC DATA ON PLANS STUDIED BY BLS 53

by the Bureau of Labor Statistics—Continued

Changes which may have occurred since that time have not been incorporated]

Safeguards and escape clauses Approximate number

of workers covered

Approximate percent

of total workers

covered

Basic reasons for introduction Initiated by—

Has company paid

for time not

worked?

Company reserves right to

terminate agreement under

conditions which in opinion

of company make it powerless to continue it, upon giving 4 weeks’ notice.

1921—80; 1931—120;

1932—125; 1937—165.

1921—50 percent; 1931

—65 percent; 1932—

75 percent; 1937—85

precent.

To provide stability of earnings; to help maintain an

open shop.

Management______ Yes.

None___________________ _____ 60 _________________ Served as a compromise in lieu

of wage increase during

contract negotiations.

Joint initiation by

union and management.

No.

Plan may be modified at discretion of management.

400________________ . . . 88 percent___________ Suggested by union as means

of providing increased stability of employee income.

Union ________ Wages advanced.

Plan may be discontinued if Total number of printers and pressmen—

46, in 1941; 13, in

1946.

26 percent, in 1941; 7

percent, in 1946.

To keep qualified workers for

peak requirements; to increase productivity.

M anagement_____ Yes.

publication is suspended by

act of God, strike, riot, civil

commotion, acts of civil or

military authorities, or other

causes beyond the control of

union or publisher.

Company may discontinue

services of masters, mates,

stewards, and engineers in

the event of a major marine

disaster, condemnation of a

ship, or commandeering by

governmental authority.

Total covered employees fluctuate throughout year, owing to

varying lengths of

different guarantees.

Average figure is

about 100.

Percentage covered

varies from about

40 percent in slack

period to 7 percent

in peak.

To obtain income stability;

on company’s part, to retain

licensed and trained employees.

Union____________ Yes.

None__________________________ Not available _ __ 75 percent ______ To improve labor relations

and employee morale.

Management_______ Yes.

____ do. _______________________ 13 . ____ 20 percent___ ___ To increase stability of employment.

Union. _____ _______ Yes.

Status of regular employee may 165___________________ 50 percent____________ To improve morale and labor ____ do....... .................. No.

be changed in the event of

the merger or liquidation of

business, subject, however,

to decision of arbitrator. In

case of seriously adverse business conditions requiring reduction in personnel, union

agrees it would not unreasonably withhold consent to reduction. Employee may be

replaced by another on July 1

of each year.

None _____________________ 12____ _______________ 80 percent......................

relations.

Compromise offer during contract negotiations.

Management_______ No.

Company reserves right of layoff in event of curtailed operation caused by war, act of

God, casualty, labor troubles, expropriation of plant or

part thereof, lack of materials, delay in transportation, or any other like cause

beyond company’s control.

Company reserved right to

modify, revise, or extend

plan.

1,375 ................. 75 percent To improve employer-employee relations; to provide

greater security.

To provide stability of earnings. Stabilized operations

made plan feasible.

........do___ ______ __ No.

7,000 _______ ____ 65 percent _ ........ ____ do......................... Yes.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
54 GUARANTEED WAGE PLANS IN THE UNITED STATES

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946.

Name of company and location Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

General Motors Corp.,

Detroit, Mich.

Manufacturing automobiles.

United Automobile

Workers of America

(CIO). (Not party

to plan.)

1939-41.

<2) .......................................................................................—

Good Humor Ice Cream

Co., Baltimore, Md.

M a n u fa c tu r in g

men’s and boys’

apparel.

Manufacturing ice

cream.

Amalgamated Cloth- 1937.

ing Workers of

Am erica (C IO ).

(Not party to plan.)

None.............................. 1939.

Income security plan—

Wage advance to employee earning less than

60 percent of standard

weekly earnings, equal to

the difference between his

earnings and 60 percent

of the standard week, up

to a limit of 360 hours’ pay.

Lay-off benefit plan—Wage

advance to employee earning less than 40 percent of

standard weekly earnings,

equal to the difference between earnings and 40

percent of the standard

week, up to a maximum

of 72 hours’ pay.

52 weeks’ salary, number of

hours varying according

to job classification.

48 hours per week from

October to March (slack

period).

Grand Rapids Wholesale Grocery Co.,

Grand Rapids, Mich.

Greenville Finishing

Co., Greenville, R. I.

Geo. A. Hormel & Co.,

Austin, Minn.

Selling groceries

(wholesale).

Dyeing, printing,

and finishing textiles.

Meat packing..

Int’l Bro. of Teamsters, Chauffeurs,

Warehousemen &

Helpers of America,

Local 406 (AFL).

(Not party to plan.)

Machine printers’

Beneficial Ass’n.

(Independent).

United Packinghouse

Workers of America,

Local 9 (CIO}.

1919__________________

1 9 40. — L a p s e d 8

months in 1942, 13

months 1943-44, during which periods

guarantee of half pay

for any 13 weeks

during the year in

which workers were

idle was in effect.

1931____ _____________

47 hours’ employment per

week, 52 weeks per year.

Annual wage, payable in

52 weekly installments;

fluctuating work week.

Under Section 7 (b) (2).

52 weeks’ employment per

year. Average workweek

varies from 34 to 40 hours.

Under Section 7 (b) (2).

(2) Automobile srles

and service.

United Automobile

Workers of America

(CIO).

1940.

The George A. Lewis

Co., Danbury, Conn.

do None. 1942.

52 full weeks’ work per

year. Workweek for mechanics is 40 hours; for porters, 44.

52 weeks’ minimum wage

per year.

(2) -----------------------------------------

( 2) -----------------------------------------

McCormick & Co., Inc.,

Baltimore, Md.

Selling costume jewelry (wholesale).

Manufacturing soap.

Manufacturing food

specialties.

United Retail, Wholesale & Department

Store Employees of

America (CIO).

United Soap Workers,

Local 366 (CIO).

None.______ _________

1940—

1942— .

1936....

(2)

The N am m Store,

Brooklyn, N. Y.

Generating and

transmitting electric power.

Department store.

Brotherhood of Utility Workers of New

England (Independent).

None__................... ......

1940-41.

1939-43.

No lay-off for 52 weeks.

W orkweek is 40 hours.

52 full weeks’ employment

per year.

Assurance of 48 weeks’ employment per year with

intent but no guarantee

to provide 40 hours’ work

per week. 2,000 hours’ employment

per year. Under Section

7 (b) (2).

52 weeks’ employment for

those with more than 5

years’ service; 48 weeks, 3

to less that 5 years; 44

weeks, 1 % to less than 3

years; 40 weeks, 1 to less

than l ] 4 years. Employees may be transferred

to part time (28 hours per

week) on seniority basis.

Income security plan—

Hourly rated employees

under 64 years who had

completed 5 years of service and had worked for

the company during a

given month designated

by the president.

Lay-off benefit plan—

Hourly employees under

64 years not eligible under

income security plan with 2 years’ service and who

had worked during designated month. Employees failing to work because of sickness are

eligible.

Specified job classification

and selected key employKey employees of all departments, including sales

and office, selected in

October of each year.

Warehousemen, dockmen,

and drivers.

Journeymen printers, upon

hiring.

All employees exclusive of

part-timers, extras, or employees hired for a specific

temporary period are covered as soon as hired.

Mechanics and porters listed

by name.

Mechanics and body repairmen covered upon being

hired.

Basic crew covered. Vacancies in crew filled on basis

of seniority.

Firemen and watchmen after

30 days’ service.

All efficient and competent

plant and office workers

after 6 months’ service.

All employees except office

workers, upon hiring.

All regular nonexecutive

workers on pay roll after 1 year’s service.

See footnotes at end of tabic, p. 60*.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX A.----BASIC DATA ON PLANS STUDIED BY BLS 55

by the Bureau of Labor Statistics— Continued

Changes which may have occurred since that time have not been incorporated]

Safeguards and escape clauses Approximate number of workers covered

Approximate percent of total workers covered Basic reasons for introduction Initiated b y - Has company paid for time not worked?

Corporation may modify or

suspend plans in event of

fire, floods, wars, riots, or

labor disputes in any plant

of corporation or suppliers,

or for circumstances beyond

control of management, or in

case of change through legislation or otherwise in standard workweek.

156,000. 60 percent. To assist employees during

periods of short employment or no employment,

and to avoid difficulties involved in cash loans.

-Management. Wages advanced.

Plan may be canceled, revised, 10.

or extended at will of employer.

Company may terminate plan 40.

at time it desires.

Company may revise or terminate at any time.

32.

50 percent. To hold trained employees. do. No.

100 percent in slack

period, 35 percent in

peak.

To hold key employees.

67 percent. To attract steady, reliable

workers.

do.

do.

Yes.

Yes.

None. 3 percent. Union desired security; management accepted plan to

receive benefits of Section

7 (b) (2).

Union. Yes.

.do. 3,900. 80 percent. Management wished to stabilize workers’ income and

reduce turn-over.

Management. Yes.

do. 13.

Management may modify, re- 11.

vise, or cancel plan at any

time.

Employees may be laid off 1 55.

week if business drops 10 percent below stipulated level.

None. 12.

Senior board of directors may

modify, revise, or cancel plan

at any time.

575.

60 percent.

39 percent.

Union demand substituted in Union_______

lieu of a denied wage increase.

To retain trained workers. Management.

No.

No.

73 percent . To assure security for basic

crew.

Union No.

3 percent-..

100 percent.

Demonstration of union ____ do_______

strength.

To increase stability of income Management

and employment.

No.

No.

None. 125. 91 percent. To secure overtime exemptions of Section 7 (b) (2).

do: No.

.do. 920. 67 percent. To provide additional employment security.

.do. No.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
56 GUARANTEED WAGE PLANS IN THE UNITED STATES

Name of company and location

National Battery Co.,

St. Paul, Minn.

National Oats Co.,

Cedar Rapids, Iowa.

(2)

Nunn-Bush Shoe Co.,

Milwaukee, Wis.

(2)

Parker Manufacturing

Co., Worcester 1,

Mass.

(2) -------------------------------------

Procter & Gamble Co.,

Cincinnati, Ohio.

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946.

Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

Manufacturing batteries.

Employees in firm’s

plants covered by

various locals of

Int’l Bro. of Electric a l W ork ers

(AFL); Int’l Bro.

of Teamsters (AFL);

Int’l Ass’n of Machinists (AFL); and

United Automobile,

Aircraft & Agricultural Implement

Workers of America

(CIO): Federal Labor Union 23619

1940. 40 hours’ work each week

except those during which

inventory is taken or an

unworked holiday occurs, at which times the

workweek is 32 hours.

All plant workers. Lengthof-service requirement

varies in the different

plants from 49 to 90 days’

service.

M anufacturing cereals.

(AFL).

American Federation

of Grain Processors

Council (AFL).

1,664 hours of employment All plant employees with 3

per year, plus paid vaca- years’ service,

tion.

Limited price variety store chain.

M a n u fa c tu r in g

men’s shoes.

United Retail, Whole- 1938.

sale & Department

Store Employees of

America (CIO) covers 30 Detroit stores.

Int’l Protective

Ass’n (AFL) covers 1 Racine, Wis., store.

Remainder of chain

is nonunion.

Industrial Union of 1935.

Master Craftsmen;

Nunn-Bush Office

Employees Union;

Nunn-Bush Shipping Department

Union.

Brewing and distributing beer.Int’l Union of United

Brewery, Flour,'Cereal, and Soft Drink

Workers of America.

About 1890.

42 full-time weeks (not to

exceed 48 hours per week)

and 10 36-hour weeks of

employment per year.

Management sets aside an

agreed percentage of the

value of production as

labor’s share. There is

established for each covered employee a drawing

account based on his estimated annual income,

H 2 of which is to be withdrawn weekly from the

fund representing labor’s

share of the production.

Adjustment with actual

earnings is made periodically. The 595 workers in

the production departments with greatest seniority and the 70 percent of

office and shipping department workers with greatest seniority are not subject to lay-off.

Employees are not to be

laid-off more than 20 days

per year.

Sales and office employees

with 1 year’s service.

Wagesofall workersnot subject to lay-off and all other

employees with 2 years’

service are determined on

the basis of their participation in the Share-the-Production Fund.

All nonexecutive employees,

except office workers and

drivers, who have received “regular card”

from union.

M anufacturing

hand tools.

None. 1938. 1,800 hours’ pay annually__ All plant and office employees with 5 years’ service.

Brewing and distributing beer.

Int’l Union of United

Brewery, Flour, Cereal, and Soft Drink

Workers of America.

About 1890-

Manufacturing soap. Ivory dale and St.

Bernard Employees’

Representation

Ass’n (independent) in the Cincinnati area. Various

unions are involved

at the other plants.

(Not party to plan.)

1923.

5 days of 8 hours’ work per

week during busy season

(Apr. 15-Oct. 15) and 4

days of 8 hours work per

week during the other 6

months’ (dull season).

Employment for 48 full

weeks (or time equivalent)

per year.

All workers except office

and maintenance employees who have been designated as “ bookmen” by

union.

All hourly employees with 2 years’ service.

See footnotes at end of table, p. 60.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX A.----BASIC DATA ON PLANS STUDIED BY BLS 57

by th e Bureau o f Labor Statistics— Continued

Changes which may have occurred, since that time have not been incorporated]

Safeguards and escape clauses Approximate number of workers covered

Approximate percent of total workers covered Basic reasons for introduction Initiated by—

Management may lay off 1,450 (on seniority

employees according to sen- list),

iority at any time, upon

giving 5 days’ notice.

75 percent To provide employment security.

Union.

Has company paid for time not worked?

No.

Time lost because of shut-down 50___

of mill caused by fires, strikes,

riots, tornadoes, cyclones, explosions, floods, military or

civil commotion, or other

causes beyond control is deducted from guarantee period.

None.............................................. 2,385.

35 percent. .do. Management.. Yes.

44 percent. To attract employees and improve labor relations.

.do. No.

do. 615. 66 percent.. To provide income security. ____ do____ During 1937-38 recession, the firm

produced in excess of demand

in order to maintain the level of

employee earnnings, thus, in

effect, advancing

employment

rather than

Covered workers’ employment may be terminated,

other than for cause, only if

plant shuts down or output

is affected by act of God, fire,

explosion, or other cause beyond firm’s control.

Management may modify, revise, or cancel plan at any

time.

In severe slack period, management may reduce workweek

to 3 days per week by agreement with union. If business

ceases, plan is terminated.

100.

75..

210.

Workweek may be reduced to

75 percent of normal at management option, or firm may

withdraw guarantee at any

time.

3,800.

59 percent. To provide security for top

seniority workers.

Union. Yes.

33 percent.

57 percent.

Granted primarily as a reward Management,

for long service.

To provide security for top Union_______

seniority workers.

No.

Yes.

49 percent. To provide security. Management. No.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
58 GUARANTEED WAGE PLANS IN THE UNITED STATES

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946.

Name of company and location Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

(2) Manufacturing cereals.

Food, Tobacco, Agricultural & Allied

Workers Union of

America (CIO).

1934.

(2) Women’s apparel

retail store (chain).

United Retail, Wholesale & Department

Store Employees of

America (CIO).

1936.

Retail and Wholesale Retail and wholeShoe Stores, New sale shoe stores.

York, N. Y .

United Retail, Wholesale & Department

Store Employees of

America, Locals 1268

and 287 (CIO).

1936.

(2) Manufacturing

women’s and

misses’ dresses.

International Ladies’

Garment Workers’

Union (AFL).

1937.

140 hours of employment

per month while on pay

roll. If laid off, em ployees

receive 70 hours’ pay per

month for periods varying

according to length of

service: 6 months to less

than 1 year’s service—2

months per year; 1 year to

less than 2 years’ service—

3 months per year; 2 years

to less than 3 years’ service—4 months per year; 3

years and over—6 months

per year.

11 months’ employment per

year for “ steady employees,” 35 weeks’ employment per year for “steady

extra employees.”

Full-time workers guaranteed 52 44-hour weeks’

employment per year,

part-time workers guaranteed employment for 3 full

days or 3 nights and Saturday each week, 52 weeks

per year.

1,800 hours of employment,

exclusive of overtime, per

year.

All plant employees with 6

months’ service.

All members of the union

upon hiring. The union

covers only sales clerks.

All nonexecutive store employees after 2 weeks’ probationary period.

All members of the base

crew, in which vacancies

are filled by election of

union and management

from plant work force.

Richmond Piece Dye

Works, Inc., Richmond Va.

Dyeing and finishing textiles.

Textile Workers

Union of America,

Local 27 (CIO).

1940.

(2) Manufacturing silverware.

None. 1936-42.

Seaboard Air Line Railway Co.4. Norfolk,

Va.

Railroad Railway Employes’

Department, System Federation No.

39 (AFL).

1928.

Minimum of $18 per week

guaranteed to males and

minimum of $15 per week

guaranteed to females, for

duration of union contract.

Full week’s pay guaranteed

for 52 48-hour weeks per

year.

Employment for 52 48-hour

weeks per year.

All union employees with at

least 1 year’s service

Journeyman and apprentice

silversmiths, upon hiring.

Maintenance workers included on basis of seniority in “ minimum

force.” size of which is negotiated each year by

company and union.

(2) Mail order retail

store.

None. 1936. Wage advance—employees

receive 40 hours’ pay

52 weeks per year.

All mail order employees

with 24 weeks’ service who

have worked 480 hours.

(2) Manufacturing Int’l. Ladies’ Garwomen’s coats. ment Workers’

Union (AFL).

1939.

Spiegel, Inc., Chicago, 111.

Mail order retail

store.

None. 1939.

35 hours’ employment guaranteed for 50 weeks per

year.

Males guaranteed 40 hours’

employment 52 weeks per

year; females, 36 hours’

employment 52 weeks per

year.

All cutters, sewing machine

operators, finishers, and

pressers after 1-week

probationary period.

All employees except upholsterers, finishers, and

cabinet makers, after 1 A

years’ service and 3,000

hours’ actual work.

The Tremco Manufacturing Co., Cleveland, Ohio.

Uneeda Cleaning &

Dyeing Co., Inc.,

Hillside, N . J.

M anufacturing

paints, varnishes,

and lacquers.

Cleaning and dyeing apparel.

Tremco Employees’

Association (Independent) .

1938-43.

1918___

(2) M anufacturing

baby carriages.

None 1938-42.

40 hours’ pay for 52 weeks

per year. Operates under

Section 7 (b) (2).

40 hours’ pay for 52 weeks

per year.

1,760 hours’ employment per

year, plus paid vacation.

All production employees,

upon hiring.

Spotters, washers, dry

cleaners, examiners, solicitors, drivers, cleaners,

steamers, skilled tumbler

men, upon hiring.

All employees (except salesmen) with 1 year’s service.

See footnotes at end of table, p. 60.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX A.— BASIC DATA ON PLANS STUDIED BY BLS 59

by th e Bureau o f Labor S tatistics— Continued

Changes which may have occurred since that time have not been incorporated]

Safeguards and escape clauses Approximate number

of workers covered

Approximate percent

of total workers

covered

Basic reasons for introduction Initiated by—

Has company paid

for time not

worked?

None____ _____________________ 945 78 percent-___ ______ To insure income during layoffs.

To provide security for basic

crew.

To provide security.

Proposed by union when wage

demand was only partially

met.

To grant income stability and

Management _ _ _ Yes.

Liquidation of firm or department cancels obligation to

affected workers.

None. _____________________

22 34 percent________ ____ Union________ _ _ No.

2,500 Not available. _____ ____ do______________ Yes.

Management may withdraw

guarantee upon granting 5

percent general increase.

Time lost during shut-down

due to fire, tornado, explosion, or other cause beyond

control deducted from guarantee. Plan is terminated if

business is discontinued.

None__________________________

500 51 percent______ _____ ____ do ___________ No.

180 84 per cent-__ ________ Management and Yes.

Management may modify, revise, or cancel plan at any

time.

Each party has right to initiate

review of number in minimum work force any time

after Jan. 31. If situation arises which would seriously affect either party, a conference

must be held between management and union committee. If agreement is not

reached, either party may

cancel contract by giving 10

days’ written notice.

Management may modify, revise, or cancel plan at any

time or may terminate any

individual’s employment at

any time.

None - ___________________

22 100 percent— ________

reduce turn-over.

To attracted skilled workers.

union.

Management_______ Yes.

2 300 11 percent,______ _ - To increase security; to eliminate extreme fluctuations in

employment.

To provide stable income.

To stabilize employment; to

secure wage reduction.

To improve employee relations; to stabilize employment.

To provide security.

Union______________ No.

lf> 000 38 percent- _ ________ Management___ W a ges advanced.

45 63 percent. __________ ____ do______________ No.

Management may withdraw

the guarantee in the event

of a garnishment, wage assignment, or other legal

process. Plan may be terminated by decision of the

board of directors.

None _______________

3,400 65 percent.................. . ____ do____________ 1- Yes.

30 ____ 25 percent____________ ____ do______________ No.

d o 32 32 percent___________ ____ do________________________ Union--.._________ No.

Management may cancel guarantee if act of God or other

condition beyond firm’s control makes it necessary. 1

150 62 percent. ................ _ To reduce absenteeism and Management_______ No.

large volume of wage garnishments.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
60 GUARANTEED WAGE PLANS IN THE UNITED STATES

Basic data on 62 plans studied

[The data in this table relate to the status of the plans early in 1946.

Name of company and location Business activity Union representation at any time during life of guarantee 1

Year of origin and discontinuation Basic provisions of guarantee Coverage and eligibility re­ quirements

Western States Envelope Co., Milwaukee

4, Wis. (?)-------------------

Wisconsin Public Service Corp„ Milwaukee,

Wis.

Wm. Wrigley, Jr.,

Co., Chicago, 111.

Manufacturing

envelopes.

Men's retail clothing store.

Producing and

transmitting electric power and

gas; operating motor and bus carriers.

Manufacturing chewing gum.

Employees’ Representative Committee (Independent).

None________________

1937_.

1938..

Int’l Union of Operating Engineers, Local

310 (AFL).

None..

1937. .

1934.

35 hours’ employment for 52

weeks per year.

40 hours’ employment, 52

weeks per year.

40 hours’ employment, 52

weeks per year, for a 2-

year period.

Unemployment benefits

paid during lay-offs for

periods varying, according to length of service,

from 1 to 7 months per

year for monthly employees and from 4 to 30 weeks

per year for hourly employees. Payments are

made on the following

basis:

Monthly employees receiving $100 or less per month

—80 percent of base rate;

receiving more than $100

and not more than $200—

$80 plus 60 percent of difference between base rate

and $100; receiving more

than $200 and not more

than $300—$140 plus 40

percent of difference between base rate and $200;

receiving more than $300

and not more than $400—

$180 plus 20 percent of difference between base rate

and $300; receiving more

than $400 and not more

than $500—$200 plus 10

percent of difference between base rate and $400.

Hourly employees receiving

58 cents or less per hour—

80 percent of base pay; receiving more than 58 cents

and not more than $1.16

per hour—$18.56 plus 60

percent of difference between base rate and $1.16;

receiving more than $1.16

per hour—$32.48 plus 40

percent of difference between $1.16 and base rate.

All employees with 5 years'

service.

All employees (except parttime workers) with 6

months’ service.

All employees with 5 years’

service prior to Dec. 15 of

the year preceding date

contract takes effect.

All employees with 6 months’

service.

1 In cases where representation of the workers changed during the life of the guarantee, only the most recent situation is reported. In the following cases,

representation changed during the life of the plan: Employees of the Cincinnati Gas & Electric Co. were represented only by the independent utilities union

at the time the plan was inaugurated; the AFL and CIO locals were organized later. The union representing Crocker-McElwain employees at the time a

guarantee was proposed lost its bargaining rights shortly thereafter.

The union at Gates Rubber Co. was organized after the establishment of the guarantee, which is not a part of the union agreement. Workers of Grand

Rapids Wholesale Grocery were organized after the guarantee was begun. At the time the Hormel plan was started, workers were represented by an independent union which later affiliated with the United Packinghouse Workers of America (CIO).

2 Identification withheld at request of company or union.

3 Calendar month—30 workdays per month, 8 hours per day.

* Seaboard Air Line Railroad Co. since Aug. 1, 1946.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX A.----BASIC DATA ON PLANS STUDIED BY BLS 61

by the Bureau o f Labor Statistics— Continued

Changes which may have occurred since that time have not been incorporated]

Safeguards and escape clauses Approximate number

of workers covered

Approximate percent

of total workers

covered

Basic reasons for introduction Initiated b y -

Has company paid

for time not

worked?

Management may withdraw 40.

guarantee if raw materials

are unavailable.

May be canceled at manage- 25.

ment’s option.

60 percent.

77 percent .

To provide security.

To improve relations.

Management.

____do_______

No.

No.

Workers may be transferred

from departments where operations have been curtailed

or discontinued, to other departments at a reduced wage

to work out balance of 2-year

period. Employee is paid

difference between his new

wage and his previously

established wage for a period

of 6 months.

In the event conditions of business or acts beyond management’s control do not permit

restoration of laid-off employees to work, management

may terminate the guarantee for such employees.

700. do.

2,000. 100 percent.

To provide security. do.

To provide income security. do.

No.

Yes.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Appendix B.—Clauses Used in Guarantee Plans and Contracts

Sample Guarantee Provisions

The following compilation of guarantee clauses 

found in union agreements or written descriptions 

of guarantee plans is intended for the guidance 

of management and union officials who may wish 

to draw upon the experience of others in framing 

the language of a guaranteed wage or employment plan, or incorporating a guarantee provision 

in a collective bargaining contract. The clauses 

cover a wide variety of examples and are classified 

in categories which are descriptive of the basic 

features of the plans analyzed in the Bureau of 

Labor Statistics survey. A cross-reference index, 

of the plan clauses, by industry, will be found at 

the end of this appendix (p. 89).

Included in these classifications are clauses 

illustrative of guarantees for periods ranging 

from 3 months to a full year and varying in coverage from a specified number of workers or occupations to all (nonexecutive) employees.

The clauses have also been selected to exemplify variations in employee eligibility requirements (where they exist) and the range of conditions (if any) which permit modification or 

suspension of the guarantee.

CATEGORIES INTO W HICH GUARANTEE PROVISIONS HAVE

B EEN CLASSIFIED

I. A full year’s guarantee to all (nonexecutive) employees.

A. Plans with employee eligibility requirement:

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

B. Plans without employee eligibility requirement:

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

II. Less than a year’s guarantee to all (nonexecutive) 

employees.

A. Plans with employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or 

abrogation of plan.

B. Plans without employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

III. A full year’s guarantee to part of the working force.

A. Plans with employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

B. Plans without employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

IV. Less than a year’s guarantee to part of the working

force.

A. Plans with employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

B. Plans without employee eligibility requirement.

1. With provision for modification or abrogation of plan.

2. Without provision for modification or

abrogation of plan.

V. Wage advance plans.

VI. Declaration of intention to inaugurate a guarantee.

IDENTIFICATION

Each clause, paragraph, or series of paragraphs 

from a separate contract or written description 

of plan is designated by a serial number. The 

industry, labor organization involved (if quoted 

from an agreement), and affiliation of the labor 

organization are indicated immediately following 

the serial number in order to give the reader an 

idea of the industry into which the plan has been 

introduced and the representaion of the workers. 

The labor organizations are indicated by initials 

only. The following is a list of the full names of 

the organizations and the initials used:

62

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 63

Initials Labor organization

ACW (CIO)__________ Amalgamated Clothing Workers

of America.

AFM (AFL)__________ American Federation of Musicians.

BCJ (AFL)___________United Bro. of Carpenters &

Joiners of America.

BFC (CIO)___________Inti. Union of United Brewery,

Flour, Cereal & Soft Drink 

Workers of America.

BPM (AFL)__________ Inti. Bro. of Paper Makers.

CTU (AFL)__________ Commercial Telegraphers Union

of North America.

CW (AFL)___________ Cereal Worker’s Union (Federal

Labor Union).

EA (Ind.) ___________ Employees’ Association.

ERM W (CIO)________United Electrical, Radio & Machine Workers of America.

FSC (AFL)___________Federated Shop Crafts (Railway

Employees’ Department).

FSES (Ind.)__________ Friendly Society of Engravers &

Sketchmakers, Inc.

FTA (CIO)___________Food, Tobacco, Agricultural &

Allied Workers Union of 

America.

FW (CIO)____________Inti. Fur & Leather Workers’

Union.

GP (AFL)____________ American Federation of Grain

Processors Council.

HLU (Ind.)__________ Harlem Labor Unions.

HR (AFL)____________Hotel & Restaurant Employees’

Inti. Alliance & Bartenders’ 

Inti. League of America.

ILA (AFL)___________ Inti. Longshoremen’s Assn.

ILG (AFL)___________ International Ladies’ Garment

Workers’ Union.

ME (CIO)____________Natl. Marine Engineers’ Beneficial Assn.

M M P (AFL)_________ Masters, Mates, & Pilots of

America.

MP (Ind.)____________ Machine Printers Beneficial

Assn.

NEUA (Ind.)_________ New England Utilities Alliance.

OE (AFL)____________ Inti. Union of Operating Engineers.

OPW (CIO)__________ United Office & Professional

Workers of America.

PDP (AFL)__________ Bro. of Painters, Decorators &

Paperhangers of America.

PPA (AFL)___________Inti. Printing Pressmen’s &

Assistants’ Union of North 

America.

RC (AFL)____________Retail Clerks Inti. Protective

Ass’n.

RW D (CIO)__________Retail, Wholesale & Department

Store Union.

SW (CIO)____________ United Soap Workers (Local

Industrial Union).

TC (AFL)____________ Inti. Bro. of Teamsters, Chauffeurs, Warehousemen & Helpers of America.

Initials Labor organization

TWU (CIO)__________ Textile Workers’ Union of America.

UAW (CIO)__________ United Automobile, Aircraft &

Agricultural Implement Workers of America.

UIU (AFL)___________Upholsterers’ Inti. Union of

North America.

UMW (AFL)_________ United Mine Workers of America

UPW (CIO)__________ United Packinghouse Workers

of America.

USW (CIO)__________ United Steelworkers of America.

I. A Full Year’s Guarantee to all Employees

A guarantee may consist of an assurance of either 

income or employment. A full year’s guarantee is 

generally expressed in terms of (1) a specified amount of 

wages per week (at stipulated hourly rates) for 52 weeks, 

(2) a total sum of wages for the year, (3) employment for 

52 weeks per year (at a specified number of hours per week 

and rate per hour), or (4) employment or wages for 2,080 

hours (regardless of weekly fluctuations). A guarantee to 

all employees generally applies to all nonexecutive employees and excludes all above the level of working foremen. 

“ All employees” may include only factory workers; the 

office force may be excluded. Casual, temporary, or extrashift workers may also be excluded from coverage, either 

by explicit statement or without formal provision.

In some cases the guarantee appears as a prohibition 

against lay-offs for the duration of the agreement (usually 

1 year), rather than as a positive guarantee.

A. PLANS WITH EMPLOYEE ELIGIBILITY REQUIREMENT

Coverage in some plans is restricted to employees who 

have been in the company’s employ for a specified period, 

ranging anywhere from a 1- or 2-weeks’ probationary 

period to a 5-years’ service record. Where eligibility 

applies to those who have qualified as “ permanent,” 

“ regular,” “ qualified,” or “ eligible” employees, these 

terms are generally defined in another section of the 

agreement or written description of the plan as requiring 

a probationary period of service.

1. P lan s W it h E l ig ib il it y R e q u ir e m e n t a n d W ith

P r o v isio n fo r M o d if ic a tio n or A b r o g a tio n of

P la n

Some guarantees include a provision placing certain 

limitations on the employer’s financial responsibility, 

either (1) specifying the amount to be expended for the 

purpose of the guarantee, (2) permitting the employer to 

modify the plan in the event of a serious decline in business, 

or (3) reserving to him the right to suspend or terminate 

the guarantee in case of strike, flood, fire, war, or other 

contingencies beyond his control.

1. Flour mill— G P (AFL)

G u a ra n teed W o r k w e e k : (A) During the term of this 

agreement the “ company” agrees to guarantee to all

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
64 GUARANTEED WAGE PLANS IN THE UNITED STATES

regular employees (all employees are considered regular 

employees except those as defined in paragraph (c) of this 

section) at least forty (40) working hours each week; 

provided, however, due to variation in weekly operations 

the employee may not work his full forty (40) hours or 

he may work over the guaranteed forty (40) hours per 

week, therefore, the company at the end of each thirteen

(13) week period from the effective date o f-------will total

the hours worked by each employee for said period and 

pay him at his regular rate per hour any deficiency in 

hours worked for said thirteen (13) week period up to 

(520) hours.

(B) If due to conditions beyond the company’s control 

or by an act of God, which would cause the company to 

cease operations for more than one (1) week the above 

guaranteed workweek shall not apply during such period of 

emergencies. In case of such emergencies as described 

the company and the union shall meet to work out an 

equitable agreement during such period.

(C) The above guarantee does not apply to third trick 

employees if business conditions necessitate adding third 

(3d) trick. Providing, however, (3d) trick does not continue more than ninety (90) days, in any quarterly 13- 

week period, but if more than ninety (90) days, all third 

(3d) trick employees will be covered by guaranteed workweek, it being the practice to lay the youngest employees 

off first when reduction becomes necessary.

2. Flour mill— G P (AFL)

Section X V I. Eight hours shall constitute a day’s 

work. Forty hours shall constitute a week’s work. Time 

and one-half shall be paid for all work in excess of eight 

hours per day or forty hours per week. The company 

guarantees all regular employees forty hours work each 

week, except that millers, machine tenders, and one millwright are guaranteed forty-eight hours’ work each week 

during the life of this agreement, unless a prolonged shutdown is caused by an act of God, lightning, fire, or explosion.

3. T extile dyeing and finishing— T W U (CIO )

Guarantee Wage Plan: (d) AH male employees, who 

have a service record of 1 year or more shall as of the

first of January-------and during thfeir continuance on the

pay roll receive a minimum pay on a weekly basis of not 

less than $18.00 per week throughout the period of this 

agreement, and also all female employees, who have a 

service record of 1 year or more shall as of the first of

January ------- and during their continuance on the pay

roll receive a minimum pay on a weekly basis of not less 

than $15.00 per week throughout the period of this agreement; provided however, that in the application of the 

annual minimum, the cost to the employer shall not exceed 

$8,000.00 per year. This $8,000.00 shall be applied during the period when the workers ordinarily earn less than 

$18.00 and $15.00 per week, respectively. On such occasions, the employer shall add to the worker’s actual weekly 

earnings, the difference between the amount earned and 

the weekly minimum as hereinabove set forth. The 

above method shall be continued until the entire $8,000.00

has 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 

minimum is made.

4. Textile dyeing and finishing— T W U (CIO )

Section IV. 3. Guarantee of Wages and Severance

Pay: (a) All skilled employees covered by this agreement 

who have passed their probationary period as hereinbefore 

set forth, shall be paid on the basis of fifty-two (52) weeks 

per year. This provision shall not apply, however, if the 

employee’s relations with the company are severed voluntarily or involuntarily.

(b) Any new employee hired to replace an employee 

whose relations with the company are severed voluntarily 

or involuntarily shall be paid on the fifty-two (52) weeks 

per year basis.

(c) In the event that an employee’s relations are severed 

because of the elimination of a job or department such 

employee shall receive as severance pay an amount equivalent to two percent (2% ) of his total earnings during his 

period of service with the employer up to a maximum of 

5 years’ earnings.

(d) All assistant foremen and assistant colorists heretofore paid on a fifty-two (52) weeks per year basis shall 

continue to be paid on that basis.

(e) All assistant foremen and assistant colorists not 

heretofore paid on the fifty-two (52) weeks per year basis 

shall be subject to the following provision: In the event 

any plant or department closes because of lack of work for 

a period of longer than six (6) weeks, such employees shall 

receive one-half of their weekly rate of pay for each week 

during which the plant or department remains closed up 

to and including fourteen (14) weeks. Wages shall continue to be paid on each regular pay day.

(f) Any discharged employee shall receive a severance 

payment of not less than two (2) weeks’ wages upon receiving notice of his discharge.

5. Soap m anufacturing— N o union

Guarantee of Regular Employment to Employees: 3. 

T o 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 application 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, floods, strikes, 

or other emergency whether like the foregoing or not, and 

subject to the following provisions:

a. 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.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 65

b. When an employee first comes under this guarantee 

after January 1 of any calendar year, the company guarantees to him under the terms and provisions outlined 

herein that he shall not be unemployed 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.

d. 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 percent 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.

e. Any individual hired to replace an employee leaving 

for military service or training, or for other services made 

necessary by a national emergency, shall be considered a 

temporary employee and he shall be so informed at the 

time of his employment. 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 company, he 

may be informed that he is then eligible for this guarantee 

in accordance with the terms of this plan.

f. The right to discharge any employee at any time is 

reserved to the company employing such employee.

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.

6. T ool and casting m anufacturing— U SW (CIO)

a. The corporation guarantees to every employee who

has completed five years continuous service in the employ 

of the corporation at ------- a minimum employment of

2.080 hours for each yearly period beginning-------and continuing each year thereafter during the life of this contract. 

All hours worked by said employee, both straight time and 

overtime, shall be credited against the 2,080 hours. If the 

corporation does not provide work for any part of the

2.080 hours the employee shall be paid for the unworked 

hours at his straight time hourly rate.

b. An employee failing to accept other work assigned by 

the corporation when his own job is not working, or discontinued because 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 2,080 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.

7. W ashing m achine production— U SW (CIO )

It is the intent and purpose of the parties hereto that this 

agreement will promote and improve industrial and 

economic relationships between the employees and the 

company and to set forth herein the basic agreement 

governing rates of pay, hours of work, and conditions of 

employment to be observed between the parties hereto.

The term employee as used in this agreement shall include only factory employees but shall not include foremen, 

assistant foremen, and supervisors in charge of any classes 

of labor.

Section 2. Wages: I. Rates and conditions of pay 

under this contract shall be as follows:

A. Effective [date] exclusive of those 60 years of age 

and over, all employees with five (5) or more years of 

accumulated seniority as of [date] will receive a guaranteed 

annual wage of $1,260 for not more than 2,000 hours of 

any work which at prevailing rates of pay may be available 

provided that this guarantee will be automatically canceled upon termination of employment either by quitting 

or by lawful dismissal and also provided that all absent 

time for any cause when work is available shall be deducted from the annual guarantee and credit given when 

allowed to be made up.

B. Effective [date] those employees on the seniority 

list who are 60 to 64 years of age, inclusive, will receive a 

guaranteed annual wage of $1,100 for not more than 2,000 

hours of any work at the prevailing rates of pay, under the 

same circumstances as outlined in paragraph A of this 

section. Except as otherwise provided in paragraphs C 

and D, employees who become 65 years of age within six 

(6) months from the date of execution of this contract 

shall continue within the guarantee during the life of this 

contract.

8. W holesale hardware— U SW (CIO)

Section 12. Guaranteed Weekly Wage: The company 

guarantees to each employee, whose employment has 

been continuous for six (6) months, and whose services 

are available to the company, a minimum weekly wage 

during the period of his employment within the life of this 

contract, this to be computed by multiplying the employee’s 

hourly rate of pay by forty, providing nothing herein shall 

impair the right of the employer to terminate employment 

of any employee because of change of business conditions 

or for cause.

9. W holesale furs— F W (CIO)

T w e l f t h . Tenure and Exchange: The tenure of employment of permanent employees shall be fifty-two 

(52) weeks in each year without any lay-offs whatsoever. 

The employer may desire to exchange the services of not 

more than three (3) of its permanent employees for another 

or other employees in the same number to be furnished by 

the union. In such case, should the union not consent

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6 6 GUARANTEED WAGE PLANS IN THE UNITED STATES

thereto, the question as to whether such employee or 

employees shall be exchanged, shall be submitted to the 

impartial arbitrator hereinafter named. If replaced, such 

employee or employees shall receive a minimum of two 

(2) weeks’ severance pay, plus any additional award that 

the arbitrator may make. Such request for exchange 

shall not be made before the expiration of nine (9) months 

from the commencement date of this agreement and shall 

not be used to penalize the employee’s union activities. 

In the event of such substitution, the new employee or 

employees shall receive the same wages as the former 

employee or employees.

10. Retail confectionery— H LU (Ind.)

4. New employees shall be considered employed on trial 

for a period of two weeks. Thereafter the new employee 

automatically shall become and remain a permanent and 

regular employee of the employer, in which event such 

employee may not be discharged excepting pursuant to the 

terms of this agreement. The employer shall only be 

required to pay the employee during such trial period for 

such tim e’as said employee has been actually employed 

and such employee may be discharged at any time during 

the said trial period. The employer during such trial 

period, shall have the right to determine the qualifications 

of the employee.

7. Subject to the provisions herein, all present employees 

of the employer who are or who shall become members of 

the union as herein provided, shall be continued in their 

employment during the life of this agreement.

9. The employer may not discharge any employee except 

for cause upon one week’s prior notice given to the union 

in writing of his intention to discharge. The union during 

said period of one week may dispute the cause of discharge 

or the validity of the intention to discharge, and in the 

event the parties affected are unable to agree with respect 

to the same, then, and in that event, the justification for 

the discharge shall be submitted to arbitration as hereinafter provided.

10. The employer shall give to each permanent employee 

fifty-two (52) consecutive weeks of employment during 

each year of this agreement.

11. The union shall be the sole judge of the good standing of its members and upon notice by the union to the 

employer in writing that any employee is not a member in 

good standing in the union, such employee shall forthwith 

be discharged.

11. D epartm ent store— N o union

Annual Employment Guarantee: This guarantee is given 

to all members, except those covered by other contracts, 

according to length of service on an annual basis, dating 

from February 1st of each year to February 1st of the following year. It is subject to renewal each year, and an 

announcement regarding same is made during the latter 

part of the year preceding the period covered. It is based 

on the following service record:

Members with over 6 years of continuous service are 

guaranteed 52 weeks.

Members with 3 to 5 years of continuous service are 

guaranteed 48 weeks.

Members with 1% to 3 years of continuous service are 

guaranteed 44 weeks.

Members with 1 to 1)4 years of continuous service are 

guaranteed 40 weeks.

This guarantee applies only to members on our regular 

pay roll on a full-time or daily part-time basis and not to 

contingents or per diem members. Under this guarantee, 

the right is reserved to transfer from full time to part time 

where necessary in order to maintain proper relations 

between business and expenses. This would be done on 

a fair seniority basis with proper notice.

12. M ail order house— N o union

How the Annual Wage Plan Works: We know that if we 

could guarantee a full week’s pay every week in the year, 

it would mean not only greater security for our employees 

but a sounder foundation for the future growth of our 

business.

All male employees are guaranteed 40 hours’ pay per 

week. All female employees are guaranteed 36 hours’ pay 

per week. This differential was based on the fact that 

women, under the Illinois laws, are not permitted to 

work as long hours as men. The same principle was 

followed in establishing guaranteed hours.

When the company is not successful in providing a whole 

week’s work for any employee, the company gives that 

employee a cash advance, making up the difference between what he actually worked and his guaranteed pay. 

This advance bears no interest and is canceled in the event 

of an employee’s death or in the event that the employee 

leaves the company’s service. The advance can only be 

repaid in work. At the end of any year, all outstanding 

advances are canceled.

No Pay is Held Back: No pay is held back against possible 

future advances. The employee is always paid the guaranteed wage in full after past advances have been canceled.

Who is Eligible: After an employee has held a job 

[with company] for a year and a half, and worked 3,000 

hours during that period, the employee is classified as a 

“ permanent” employee. All permanent employees are 

eligible for the annual wage plan.

The Plan in Operation: As an example of how the plan 

works, suppose a man works 37 hours during the week. 

He receives a check for 40 hours’ pay with a notice that 

he has been given a cash advance of 3 hours. The next 

week he works 43 hours and receives a check for 41)4 hours’ 

pay, the 3 hours over 40 being paid for at the rate of time 

and one-half for overtime or the equivalent of 4)4 hours’ 

pay which cancels the previous 3 hours’ advance. Overtime after 40 hours a week is paid for and is used to cancel 

cash advances at the rate of time and one-half.

In the event of fires, floods, wars, riots, revolutions, 

general strikes, and other situations beyond the control of 

[company], the management reserves the right to rescind 

the annual wage plan.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 67

The management reserves the right to discharge permanent employees, regardless of their permanent rating, 

for causes of inefficiency, insubordination, thievery, misdemeanor, or incapacity because of health.

13. P u blic utility— EA (Ind.)

A rticle X II: Section 1. It is agreed that the present 

establishment of forty (40) hours per week of the company 

will remain in effect, except in those divisions where longer 

or shorter hours are now being worked, and the company 

guarantees employment of not less than forty (40) hours 

per week for 52 weeks of each year to all employees represented by the union as bargaining agent, who are available 

and ready and able to work, and who are regular full-time 

employees of the company, except those on a less than 

forty (40) hour basis now. No such employees shall be 

required to work more than forty (40) hours in any one 

week, consisting of seven (7) days, nor more than eight 

(8) hours in any one day except as hereinafter provided.

The union and the company agree to abide by any 

changes made in the Wagner Labor Act and Wage aad 

Hour Law.

Nothing in this section will affect in any manner the right 

of the company to make temporary or permanent reduction 

in forces when considered necessary by the company.

14. Social service agency— O P W (CIO )

N. Guarantee: The ------- guarantees an annual wage

to certain classifications of housekeepers for the year

from ------- to -------, inclusive, according to the following

schedule:

(1) Housekeepers who have completed one and a

half years o f service -------, and who are available

for full-time employment as of that date, shall be

guaranteed for the period from ------- through -------,

an amount equal to the wages of the housekeepers 

regular rate for 52 weeks.

(2) Housekeepers with less than one and one-half

years of service as of -------, and those who remained on a part-time basis, have no annual guarantee but are given work as available.

(3) No additions to the guarantee list shall be

made during the period from -------, through -------.

All monies paid by the association, including wages paid 

during vacation and sick leave, part time, full time, 24-hour 

service, overtime, or any combination of these shall be 

credited toward fulfillment of the guarantee. Each job 

shall be paid for at the time it is performed and in accordance with the rates listed in clause I. Any balance due 

on the annual guarantee shall be paid in a lump sum on or 

b efore -------.

In the event of dismissal or resignation, the housekeeper 

forfeits all claims for payment of a guaranteed wage, 

except that in the event of dismissal for retrenchment or 

reorganization, the housekeeper shall be entitled to the 

payment of the proportionate part of the guaranteed wage

from -------to date of dismissal, in addition to her separation

allowance. In the event of absences other than for sick 

leave allowed with pay, the guarantee shall be reduced by

the exact amount of the time of the absence, unless it is 

less than one-half day in any one day or an aggregate of 

two days in any one year.

2. P lans W ith E l ig ib il it y R eq u ir e m e n t bu t W ith ou t

P rovision for M odificatio n or A b r o g atio n of

P lan

15. Distillery— BCJ (AFL)

It is agreed, and it shall be understood that for regular 

employees an average of 40 hours shall constitute a week's 

work. Fifty-two weeks of an average of 40 hours per week 

shall constitute a year’s work, for which work the employee 

will receive 40 times the hourly rate per week for 52 weeks. 

If at the end of a year, or any period after which the 

employee leaves the company or is discharged or furloughed, the total number of hours of work exceeds the 

number of weeks employed times 40, such excess hours 

shall be paid for at the rate of one and one-half times the 

scale.

16. Paper m anufacturing— EA (Ind.)

This agreement between the employees of the -------

company and the management is effective during the

period o f -------a n d -------- , inclusive, and covers conditions

and terms to obtain during said period. These terms as 

agreed upon resulted from meetings of the employees 

beginning-------.

1. For all Class “ A ” employees we will arrange 1,820 

hours of employment for ensuing period which is equivalent to 35 hours of work per week for 52 weeks on the 

average.

A. Class “ A ” employee working less than 35 hours 

in any one week when work is not available, will be 

paid for a full 35 hours of work that week, but the 

difference between the actual number of hours 

worked and the number of hours paid for will be 

charged against that employee. Then that number 

of hours will be credited or “ worked off” the first time 

that employee works more than 35 hours in one week 

and will continue until the number of hours due the 

company has been balanced after which the employee 

will then receive pay for the regular number of hours 

worked.

B. Class “ B” employees do not enjoy this benefit.

Classification of Employees: 1. A Class “ A” employee is 

one that has been in the continuous employ of the company for a period of five years; said employee to be notified 

upon attaining this seniority by the management.

2. A Class “ B ” employee is one that has been in the 

continuous employ of the company for a period of more 

than one year and less than five years, said employee upon 

attaining Class “ B” seniority to be notified by the 

management.

17. Paint and varnish m anufacturing— EA (In d.)

The company guarantees all regularly employed workers, 

who have been employed a full period of twelve consecuDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
6 8 GUARANTEED WAGE PLANS IN THE UNITED STATES

tive months, 52 weeks’ pay a year at rates which will be 

determined by mutual agreement, such weekly pay checks 

being estimated at %2 of the annual pay. Actual working time will be limited to a total of 2,080 hours in any 

one year, in accordance with the provisions of the Fair 

Labor Standards Act of 1938.

It is our intention to employ in t h e -------factory regularly only the number of workers required to operate on 

the basis of a 40-hour week during the period of normal 

business volume, i. e., April, M ay, October, and N ovember. During the four months (17 weeks) of peak production, i. e., June, July, August, and September, and at 

such other times as may be deemed necessary, the regular 

workweek may be increased to 56 hours. During this 

period, however, each worker would receive his regular 

rate of pay for 40 hours, the pay for the extra hours being 

placed to his individual credit in the Employees Pay 

Reserve Fund.

18. Steel mill— U SW (C IO )

A rticle X IV . Annual Wage: Section 1. Each regular 

employee shall be guaranteed no less than forty (40) 

hours’ pay each week at his or her regular rate for each 

week during the life of this agreement.

19. R etail and w holesale food — R W D (C IO )

F o u rth . All members 6f the union now or hereafter 

employed by the employer are to be continued in such 

employ during the life of this agreement and subject to 

its conditions, and no member of the union employed by 

the employer continuously for a period of one week or 

longer shall be discharged except with the written consent 

of the executive board of the union. Unless, in a particular case, the union shall agree in writing to the contrary, upon the termination of employment, for any reason whatever, of any employee who is a member of the 

union, the employer shall replace such employee forthwith 

with a new employee supplied by the Union, in accordance 

with this agreement, at no less a wage than that received 

by the employee he replaces.

20. R etail dry goods— R W D (CIO )

2. The employer does hereby agree to employ all permanent employees who shall be declared by the union to 

be its members in good standing, and who are now in 

their employ, as permanent employees for the duration, 

and subject to the terms of this agreement.

21. R etail m en ’ s clothing— A C W (CIO )

F o u r t h : (a) All steady employees who come under the 

scope of this agreement shall be guaranteed steady employment throughout the life of this contract.

22. R etail sh oes— R W D (CIO )

A rticle VI. Classification and Tenure of Employment:

(a) Regular “ certified” full-time workers shall be guaranteed a regular week’s work for fifty-two consecutive weeks 

per year. This provision shall not be subject to arbitration.

(b) Regular “ certified” part-time workers shall be

guaranteed employment for at least three full days 

weekly or for at least three nights and a Saturday weekly 

for fifty-two consecutive weeks per year. This provision 

shall not be subject to arbitration.

(c) The employer may employ extra workers for Saturdays only or for a period in advance of holidays only or 

for an emergency only. Such workers shall not be deemed 

to be permanent or regular workers but merely extras, and, 

at the termination of the particular period for which they 

may be employed, they need not be reemployed.

23. Cem etery— F TA (CIO )

7. Hours and Working Conditions: (c) No regular 

[5(a) Regular employees are those workers employed all 

year round irrespective of weather or other conditions.] 

employee shall be laid off during the continuance of this 

agreement. It is understood, of course, that the employer 

shall not be obligated to compensate the employees during 

their absence from the cemetery, excepting on the designated holidays and during the vacation period of such 

employees as hereinafter provided.

24. P u b lic utility— NEUA (Ind.)

III. Hours of Labor: It is hereby agreed that 40 hours 

shall constitute one normal workweek of 8 hours per workday for 5 days per week for the period of 50 weeks during 

each calendar year, and no permanent employees shall be 

employed more than 2,000 hours during said calendar year. 

The company will make 2,000 hours’ work during said 

calendar year available to each competent, permanent 

employee. In the event that overtime work is necessary 

as a result of an emergency or other cause, the company 

may work employees overtime; provided that such employees receive compensation for employment in excess of 

12 hours in any workday or for employment in excess of 

56 hours in any workweek, as the case may be, at the rate 

of 1)4 times the regular rate at which they are employed; 

and provided that such employees shall not be compensated 

for overtime work not specified above, namely, employment in excess of 12 hours in any workday, or employment 

in excess of j56 hours in any workweek, but that such employees shall be given time off, with compensation at 

regular rates, equal to the number of hours such employees 

engage in overtime work for which they receive no compensation. Such time off shall be granted to such employees, so far as practicable, and at the request of such 

employees, at a time or times most convenient to such 

employees.

It is further agreed that any employee who is called 

upon for overtime work between his regular hours and 

after he has left the company’s premises, shall receive 

a minimum time credit of four hours for such overtime 

work, even though such employee may not have worked 

four hours.

It is further agreed that, in the event any permanent 

employee shall be absent from work through bona fide 

sickness or injury for which no compensation is received 

under sections (a), (b), and (c) below, or through emergency causes, or with the company’s permission, such 

employee shall be entitled to have any overtime credits

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.— CLAUSES IN GUARANTEE PLANS AND CONTRACTS 69

earned by him as aforesaid credited to such time as he 

may have been absent; and that such employee may, 

in the absence of earned overtime credits, at the discretion 

of the company, make up such absent time by overtime 

work.

It is further agreed that such permanent employee who 

has been in the employ of the company for one year or 

more shall receive two weeks’ vacation each year with 

full pay at regular rates, the vacation period to be set 

by the company.

B. PLANS W ITH O U T EM PLO YE E E L IG IB IL IT Y 

R E Q U IR E M E N T

Some plans covering all of the working force have no 

service or other requirement for eligibility.

1. P lans W ith o u t E lig ib ilit y R eq u ir e m e n t bu t W ith

P ro visio n fo r M odification or A bro g atio n of

P lan

25. Flour mill— TC (AFL)

A r ticle VI. During the term of this agreement, all 

employees shall receive a minimum of seventy cents (700) 

per hour and any employee receiving more than sixty-two 

and one-half cents (62^0) per hour at the time of the signing of this agreement shall receive seven and one-half cents 

(7^0) per hour increase. All employees shall be paid at 

the rate of time and one-half of the regular rate of pay for 

all time worked in excess of forty (40) hours per week.

The employer agrees to guarantee all employees now in 

its employ and covered by this agreement a minimum 

weekly wage of twenty-eight dollars ($28.00) per week, and 

to all employees now in its employ and receiving pay at a 

rate of more than seventy cents (700) per hour under the 

terms of the agreement a minimum weekly wage equivalent 

to forty (40) times the hourly rate of pay received by such 

employee under the terms of this agreement. Such 

guarantee of weekly wages shall be effective for 52 consecutive weeks beginning -------. The above mentioned

guarantee shall be null and void if and when the -------

company is sold out to another and entirely different 

company or is liquidated by the stock holders.

Should it become necessary to lay off more than the 

youngest two employees on the seniority list in order to 

maintain the 52-week guarantee to the senior employees, 

the matter shall be discussed between the employer and 

the union shop committee; failure of these two parties to 

agree, the dispute shall then be discussed by the employer 

and the union executive board; failure of these two parties 

to agree, the dispute shall then be submitted to arbitration 

as provided for in article 10 of this agreement.

All employees who have been in the employ of the 

employer for one year or more shall receive one week’s 

vacation with full pay.

26. Jewelry m anufacturing— R W D (CIO )

W it n e sse t h : 4. The employer shall not discharge any 

employee except for just cause. Any dispute relating to 

any discharge shall be handled as provided in article X II, 

subdivision B, of this agreement. In the event the employee is found by the arbitrator to have been unjustly 

discharged, he shall immediately be reinstated to his 

former employment and shall receive back pay from the 

date of discharge, or otherwise at the discretion of the 

arbitrator.

27. W holesale groceries— TC (AFL)

A rticle iv . Seniority; Security: Section 7. The employer shall not discharge any employee without just 

cause and shall give at least one written warning notice 

of the complaint against such employee, a copy of which 

shall be sent to the union; except that no warning notice 

need be given to any employee before he is discharged if 

the cause of such discharge is dishonesty, drunkenness on 

the job, recklessness, or gross negligence. Appeal from 

discharge must be taken within five (5) days by written 

notice to the employer and a decision reached within ten 

days from the date of discharge.

28. W holesale furs— F W (CIO )

F irst . Any employee or employees presently employed 

shall be retained by the employer.

T e n th . Discharge. There shall be no discharge of 

employees belonging to the union, except for the following 

reasons: (1) Dishonesty, (2) Repeated negligence, (3) 

Willful insubordination, (4) Leaving job without permission during working hours, and (5) Intoxication during 

business hours.

In the event the employer wishes to discharge any employee for any other reason than heretofore set forth, the 

employer shall notify the union through the council by 

registered mail of the name of the employee whom he 

wishes to discharge, and the reason for such discharge.

29. Retail m en ’ s clothing— R W D (CIO )

T h ir d . Notice. The employer agrees that each employee in his or its employ shall have fifty-two consecutive 

weeks of employment during each year.

(a) An employee may be discharged upon two weeks’ 

written notice by the employer to the union, sent by registered mail, and with the written consent of the union. 

Such notice by the employer to the union, requesting such 

discharge, shall set forth the details impelling the request 

for the discharge. (Slack season, however, shall not be 

deemed a cause or a reason for the discharge of a regular 

employee). Upon the consent, in writing, by registered 

mail, given by the union, such employee affected by the 

notice shall be discharged at the end of such two weeks’ 

period of notice. Upon the refusal, failure or neglect of 

the union to consent to such discharge, such employee, 

nevertheless, shall be continued in the employ of the employer until the matter shall have been determined by 

arbitration as hereinafter provided.

30. Retail clothing, drugs, radio, and lum ber (form agreem ent)— R W D (CIO )

Discharge and Lay-Offs: Fourth. No employee shall 

be discharged, laid off, or suffer a reduction in working 

hours except for good and just cause. No proposed discharge, lay-off or reduction in working hours shall beDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
70 GUARANTEED WAGE PLANS IN THE UNITED STATES

come effective until the union has been notified thereof 

in writing, with the reasons therefore, and the union, after 

an investigation, shall have given its consent thereto in 

writing. Should the union deny the firm’s request, the 

firm may either accept the union’s decision or in the 

alternative proceed to arbitration. No employee shall be 

discharged, suspended, suffer reduction in working hours, 

or be laid off until after a decision in the firm’s favor, 

except that an employee charged with criminal negligence 

or dishonesty may be summarily discharged. Should the 

union deem itself aggrieved in the case of a summary discharge as aforementioned, the union shall, without delay,, 

submit the matter to arbitration. Should the arbitrator 

decide in favor of the employee, he shall be reinstated to 

his former position and be compensated for loss of time.

No lay-off shall be granted by the arbitrator except in 

the case of a substantial, permanent decline in the business 

which shall necessitate the relief requested. Seasonal 

declines shall not be deemed cause for lay-off.

31. Cleaning and dyeing— A C W (CIO)

28. No employee shall be discharged without just cause. 

Any and all complaints, grievances or disputes that may 

arise between the parties hereto shall be taken up for 

adjustment between the representatives of the parties in 

the first instance. In the event they are unable to adjust 

the same promptly it shall be referred for arbitration and 

final determination to an impartial chairman and arbitrator to be mutually agreed upon by both parties. Any 

and all decisions, directions or orders of the impartial 

chairman shall be final and binding upon all parties and 

shall be fully enforceable in an appropriate court of law 

or equity. The impartial chairman, however, shall have 

no authority to enlarge, alter, or modify this agreement. 

The fees of the impartial chairman and the expense of 

arbitration shall be shared equally between the parties to 

this agreement.

2. P lans W ith o u t E l ig ib ilit y R e q u ir e m e n t and

W ith o u t P ro visio n for M odification or A brogation of P lan

32. Dairy farm — FTA (CIO )

A rticle III. The company further agrees to maintain 

such weekly hours as will best serve its regular personnel 

maximum and continuous employment; such hours to 

average fifty (50) per week over a one-year period beginning with-------.

The company agrees to pay time and one-half for all 

hours over forty (40) hours worked in any one week.

33. Painting and decorating— P D P (AFL)

1. The employer during the existence of this contract, 

agrees to hire and maintain for its painting, decorating, and 

paperhanging, plaster patching, cleaning, washing, any and 

all work preparatory to painting in its buildings, qualified 

and competent men, who are members of the union in good

standing.

2. The employer agrees to provide for its maintenance 

men, within the description thereof herein contained, not

less than 42 weeks’ work each working year; a working 

week to consist of a maximum o f -------in every week.

2a. An annual wage o f -------shall be paid for a maximum

of 52 weeks. All overtime work shall be paid for as provided in paragraph 5. -------days’ annual sick leave and

------- days’ vacation with full pay for all employees.

34. M eat packing— U P W (CIO )

Straight-Time Arrangement: Each employee regularly 

assigned to a straight-time department will receive the 

weekly rate of pay provided for him in the latest approval 

of the straight-time plan for his department. This rate 

of pay will be subject to any increases or decreases affecting the plant as a whole. Each employee will receive his 

regular pay check every week except when absent beyond 

regularly provided sick leave or vacation. * * *

The straight-time arrangement with respect to any department may be canceled at any time that department 

fails to abide by all working agreements, or at any time the 

discontinuance of the straight-time arrangement in some 

other department directly affecting it requires the cancellation.

If other hour limitations become established by law, this 

plan will be changed to conform to such law, or if the 

company considers the straight-time plan unworkable 

because of the passage of any such law, the whole straighttime arrangement, or any part of it, may be canceled as of 

the effective date of any such law.

Any time any department becomes dissatisfied with the 

straight-time arrangement and wishes to cancel it, such 

cancellation may be effected in the usual manner of 

handling grievances.

Otherwise straight-time arrangement may be discontinued only by thirty days’ advance notice of desire to 

make such discontinuance at the end of the company’s 

fiscal year. * * *

If there is any increase or decrease in the amount of work 

required to produce the budgeted volume, a corresponding 

adjustment will be made in the department volume 

budget or in the number of people in the department. 

The choice as to which adjustment shall be made will be 

left to a decision by a majority in the department in case 

the change is an increase.

In case the required amount of work is reduced sufficiently to permit the removal of one or more employees, 

such employees will be transferred from the department on 

a seniority basis. When the manufacture of some item 

is discontinued, or when, because of a change in method of 

operation, certain job or jobs are discontinued, it is understood that it will be necessary to reduce the straight-time 

gang correspondingly. Such reductions will be made on 

the basis of seniority.

Except as provided in the 2 preceding paragraphs * * * 

there will be no reduction in the number of employees in 

any straight-time department within a period of one year 

from the latest approval of the straight-time arrangement 

for that department. Any employee who is laid off from 

a straight-time department may find employment elseDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 71

where on the basis of his regular seniority rights, or, on 

application, may be transferred, at his regular rate of 

pay, to the “ extra gang” which will be maintained to handle 

extra work, temporary replacements, and other business 

requirements which cannot be handled by the regular 

straight-time departments. During the period of any 

one fiscal year, this extra gang will not be reduced below 

the number who have been transferred to it from regular 

straight-time employment, thus maintaining employment with full pay for at least one year for the number 

of individuals originally assigned to the straight-time 

schedule for any year.

Any employee laid off from the extra gang may find 

other employment on the basis of his seniority rights.

For each department for which it is possible to establish some measure of the work to be done, the budgeted 

annual volume will be stated. (See Schedule B attached.)

In any year in which the department produces less than 

the budgeted annual volume, the members of the department, individually and collectively, become indebted to 

the company for producing that much work at the first 

opportunity.

At the end of any year in which the cumulated production of the department is in excess of the cumulated budgeted annual volume, bonuses will be paid the members 

of the department. These bonuses will be calculated on 

the basis of what the cost of the extra production would be 

by adding more employees to the department, and the 

specific method of calculating it with respect to the department will be found in Schedule B attached.

At the end of any year in which the cumulated production of the department is in excess of the cumulated 

budgeted annual volume, and during which regular members of the department have been absent without pay and 

without being replaced, the cost of such replacements 

will be put in a “ kitty” to be distributed among the members of the department in whatever manner the majority 

of the department may agree.

For each department there will be maintained what will 

be known as a “ kitty.” Schedule B attached will show 

the department work budget, if any. Unless otherwise 

provided in schedule B for those departments having work 

budgets, employees docked for absence, and employees 

absent on vacations granted on the basis of 5, 15, or 20 

years’ service, will be replaced.

Replacements will be made in either men or money. 

That is to say, if the department does not require a replacement man, the money for the replacement will go to 

the department kitty.

The management will have the right to insist on replacements if the tonnage produced falls below the daily or 

weekly volume which the company’s business requires, or 

if the average actual hours worked is or threatens to be 

in excess of 40 hours per week.

The department committee will direct whether replacement money will be paid to individuals in the gang or 

whether it will remain in the department “ kitty.” The 

money in the department “ kitty” will be distributed 

among the members of the department at the end of each 

fiscal year, and in whatever manner the majority of the 

department may agree.

35. M eat packing— U P W (CIO)

Section 4. Hours of 1fork and Overtime: Each * * *

employee of the company, unless specifically excepted by 

notice in writing by the company to the union, will be 

employed on an annual basis and shall receive the regular 

weekly rate of pay provided for him in a work schedule 

established for his department as it may be amended 

from time to time in pursuance to the procedures established in this agreement. In no case shall any such employee be employed more than two thousand eighty 

(2,080) hours within the applicable fifty-two (52) week 

period, and each regular employee shall receive compensation for employment in excess of ten (10) hours in any 

workday, or fifty-three (53) hours in any work week, as 

the case may be at the rate of one and one-half (1^) 

times the regular hourly scale rate of the job at which he 

is employed.

36. T extile dyeing and finishing— M P (Ind.)

Section 1. Salary and Hours: The company agrees to 

continue to employ the members of the association now 

presently in the employ of the company during the period 

covered by this agreement, and guarantees to pay for said 

period to each journeyman printer an annual wage of not 

less than thirty-nine hundred dollars ($3,900.00), payable 

weekly at the rate of seventy-five dollars ($75.00) per 

week. * * *

The company agrees that each of the said members of 

the said association in the employ of the company throughout the period covered by this contract shall, subject to 

and in accordance with the provisions of this contract, 

work not more than two thousand (2,000) hours during 

fifty (50) calendar weeks of the period covered by this 

contract. It is the intent of the parties hereto that the 

members of the association shall have two (2) weeks’ 

vacation with full pay.

37. W holesale hardware— U SW (CIO )

Section II. Weekly Guaranteed Rate: Each employee of 

the company is guaranteed a minimum weekly wage for 

each week during the life of this contract. 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 

multiplied by 40 hours.

The guaranteed minimum weekly wage for any employee who may be employed after the effective date of 

this agreement will be determined by multiplying his 

straight-time average hourly rate of earnings for the first 

three months of employment by 40 hours.

For each week during the life of this agreement that the 

employee who is continuously employed and whose services are available to the company does not receive a sum

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
72 GUARANTEED WAGE PLANS IN THE UNITED STATES

equal to the minimum as outlined above, the company 

shall make up the difference.

38. Retail confectionery— R W D (CIO)

Fir s t. Employment of Union Workers: (f) Employees 

who are members of the union now in the employ of the 

employer shall be continued in their employment during 

the life of this agreement, subject to all terms and provisions thereof.

39. Retail dry goods— R W D (CIO)

T h ird. All employees shall receive twelve (12) months 

of uninterrupted employment.

40. Retail m en ’ s clothing— A C W (CIO)

It is further agreed that regular employees [all workers 

other than “ extras” ], be employed fifty-two (52) weeks 

per year.

41. Retail furs— F W (CIO )

We further agree that these wages shall become effective 

as of March 15th, and shall remain in effect for a period 

of one year, and that during this time the workers shall be 

fully employed with the exception of one week to be taken 

as vacation with pay.

42. Cem etery— U M W (AFL)

A rticle V. All men in our employ February 1st shall 

be guaranteed work in accordance with Article II, Section 

A, during the year in which this agreement is in force.

II. Less Than a Year’s Guarantee to all Employees

Guarantees of wages or employment to all nonexecutive 

employees for less than a year apply to periods ranging 

from 3 months to 50 weeks. Such plans generally specify 

either (1) total amount of earnings per year at established 

rates of pay or (2) employment for designated number of 

hours per week and weeks per year, or hours per year 

(regardless of fluctuation of hours).

A. PLANS W ITH EM PLO YE E E L IG IB IL IT Y 

R E Q U IR E M E N T 1

1. Plans w ith E l ig ib il it y R e q u irem en t and W ith

P ro visio n for M od ificatio n or A brogation of

Plan

43. Sausage casing m anufacturing— N o union

Covenant: The company hereby agrees (subject to the 

limitations and conditions herein contained) that each 

eligible employee shall in case of a complete lack-of-work 

lay-off be indemnified for the difference between his 

weekly wages or salary (if any) earned elsewhere and his 

straight-time weekly wages or salary from this company 

for a period of not less than two months, or an aggregate 

of not less than 346% hours of make-up straight-time pay 

in the case of partial lack-of-work lay-off, or such combinations of the two as conditions may create. For each full 

year of service after the first year, two months of indemnity 

in case of complete lack-of-work lay-off, or 346% hours of 

straight-time pay in case of partial lack-of-work lay-off, 

will be added to the indemnity or guarantee until, after six 

full years of service, a maximum of one year or 2,080 hours’ 

indemnity or guarantee is provided. All subject to the 

following:

1. Definitions: All present full-time employees of the 

company are regarded as permanent employees hereunder.

All former employees now in the armed forces who 

return to this company within the period prescribed by 

law or within the period prescribed by our regulations 

(whichever is longer) shall thereafter immediately be 

regarded as permanent employees.

For persons engaged hereafter, a permanent employee 

shall be one who was notified in writing at the time of his 

employment that he was engaged as a permanent employee. 

All others hereafter engaged, except as hereinafter provided, will be temporary employees.

A full-time temporary employee becomes a permanent 

employee after one or more years of service unless, prior 

to each anniversary date of his employment, he has been 

notified in writing that his status will continue to be that 

of a temporary employee.

A voluntary part-time employee remains a temporary 

employee as long as he is on part time and thereafter until 

he has had one or more years of full-time employment.

One year of service is one* year of continuous service in 

accordance with the company’s service regulations.

2. Eligibility: Only permanent employees i n ------- area

(which for the purpose of this plan includes all places

within 50 miles of t h e ------- City Hall) with one or more

years of service, who are wholly or partially laid off when 

there is a lack of work are eligible to receive the guaranteed pay. The company will require a receipt signed in 

person by the wholly or partially laid off employee for 

each payment made and until such receipt, properly filled 

out, has been received, interim payments will be forfeited. 

Each receipt so signed by the employee must state, among 

other things (a) whether or not be has worked for pay for 

any other employer, (b) whether or not he has been in 

business for himself, (c) whether or not he has applied for 

or received unemployment compensation in any form from 

any source whatever, (d) whether or not he is in a position to report for and resume work upon reasonable notice, 

and (e) his present address, all since signing the last 

previous receipt.

In case (a) he has worked for any other employer for 

pay, he shall state the amount of his then salary, or pay, 

on the receipt, which amount will be deducted from each 

subsequent payment as long as the laid off employee is 

receiving such salary, or pay from other sources. In case

(b) he goes into business for himself, his benefits under 

this plan will cease. Should he discontinue his business, 

guaranteed payments will be resumed for the remaining 

portion of the time during which he was originally eligible. 

In case (c) he applies for or receives unemployment compensation from any source during his eligibility period 

hereunder, his benefits hereunder shall cease, future payments shall be forfeited, and he shall thereafter be classiDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 73

fied as an employee who has quit. In case (d) he is not 

in a position to report for and resume work upon reasonable notice, his benefits under this plan shall cease. Should 

he later notify the company that he is then in a position 

to report for and resume work upon reasonable notice, 

guaranteed payments will be resumed for the remaining 

portion of the time during which he was originally eligible.

The company shall have the right, under this plan, to 

refer each wholly laid off employee to other suitable, available employment elsewhere within 15 miles of his home, 

and should the employee refuse such employment, he 

shall no longer be eligible under this plan. A wholly 

laid off employee notified by the company to return to 

work, which he is capable of doing, at any of the company’s 

plants or offices within 50 miles of his last employment 

with the company, shall do so within three days of the 

date specified in the notice, whereupon payments under 

this plan shall be discontinued. An employee who fails 

without good cause, to report within the three days referred to will forfeit all rights under this plan. In the 

case of any fraudulent statement made on any receipt, 

all subsequent payments will cease and the company 

reserves the right to sue for the recovery of amounts 

paid since the fraud began. The following persons are 

among those who are not eligible, nor shall they have any 

claim hereunder:

(a) Employees who quit.

(b) Temporary employees.

(c) Employees discharged for gross incompetence

or other cause.

(d) Employees who are unable to continue or to

resume work.

An employee discharged for gross incompetence or for 

cause who does not admit the incompetence or cause, 

shall have his present right unabridged to present his 

case in person to the executives of the company, and he 

may, if he desires, enlist the aid of the head of the personnel 

department in so presenting his case.

44. Cereal preparations— BFC (CIO )

1. Qualified Employees: (A) All present employees, 

men and women, working on an hourly or piecework basis 

who have service credit of not ]ess than six months accumulated within a continuous twelve months’ period shall 

be entitled to the benefits of the plan.

(B) New employees shall become entitled to the benefits 

of the plan after completion of six months’ service in a 

continuous twelve months’ period upon approval of the 

plant management.

N o te: Employees having less than six months of service 

who are laid off, absent account of sickness or by permission will receive credit for only the time actually worked, 

this to be cumulative and 70 hours of work done in a 

calendar month for which wages are paid shall be considered as one month of service credit.

2. Hours Guaranteed While on Pay Roll: The company 

guarantees qualified employees while they are on the pay 

roll 140 hours of work in each month, for which they will 

be paid their full hourly or base rate.

3. Hours Guaranteed While on Lay-Off: In case qualified 

employees are laid off, that is removed from the pay roll, 

they will be paid for one-half the guaranteed time or 70 

hours per month at their full hourly or base rate for such 

total period of lay-off within any continuous twelve 

months’ period, as specified below:

P erio d , o f l a y -o f f i n

a n y c o n tin u o u s 1 2

L e n g th o f cu m u la tiv e se r v ice m o n t h s ’ p e r io d

6 months’ service and less than 1 year___________ 2 months

1 year’s service and less than 2 years_______3 months

2 years’ service and less than 3 years_______4 months

3 years’ service and over________________________6 months

7. Discontinuance of Payments: No further payments 

will be made to any employee under this plan if he is not 

recalled for work within 6 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.

13. 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 modification or termination of the plan. If for any reason the present base 

week of 40 hours is changed, an adjustment of the plan 

will be necessary.

45. Cereal preparations— G P (AFL)

A rticle IV. Guaranteed Hours Bonus: Sec. 1. 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 

accident (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 

beyond our control.

Sec. 2. 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 request to 

the auditor, a sum sufficient to make up a total payment 

for thirty (30) hours, 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 terminated, for any reason, all 

excess payments become immediately due and payable 

in full.

Sec. 3. The company agrees not to reduce rates of pay 

during the life of this agreement and further declares its 

intention as follows:

After paying the existing rate of wages to mill employees, 

and a fair return to its stockholders, which shall be $2.00 

per share, the company will then divide twenty percent 

(20% ) of the remaining net profits as a bonus among its 

mill employees and office employees, strictly on the basis

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
74 GUARANTEED WAGE PLANS IN THE UNITED STATES

of seniority. The distribution of the bonus is to be made 

early in the month of December after the result of the 

first eleven (11) months’ operation is known.

46. Chewing gum m anufacturing— N o union

Your company will pay you a large percentage of your 

base pay for from four to thirty weeks, according to your 

length of service, if it has to lay you off for any reason.

(c) You are employed by us and agree to give us 

services which are faithful, efficient, and satisfactory to 

us, during the period of this agreement, in such capacity 

as we may reasonably require; but we shall have the right 

to suspend your employment, if conditions of our business 

or acts beyond our control require that we lay you off. 

During such periods of suspension of your employment, 

to be known as “ lay-off periods,” we will pay you unemployment compensation for such portion of any lay-off 

period and in such amounts and upon such conditions as 

are prescribed in the schedule of unemployment benefits 

on the reverse side hereof. During any lay-off period, if 

the company so requests, you shall hold yourself ready to 

return to work.

47. Brew ery— BFC (CIO )

Sectio n 7. Lay-Offs and Rehiring: As to regular card 

employees, the employer shall have the right of laying off 

one or more employees in any department for a period of 

not less than one day nor more than one week at a time, 

provided, however, that all employees in a department 

be treated equally and impartially and that no employee 

shall be laid off for more than twenty (20) days during the 

year. The lay-off period shall be between November 1 

and April 1. Lay-offs shall not apply to engineers, firemen, 

firemen’s helpers, oilers, and maintenance men.

The employer shall have the right to lay off any or all 

of its employees in any department where the plant closes 

down or its output is affected by an act of God, fire, 

explosion, or other calamity beyond the employer’s 

control.

48. Casket m anufacturing— UIU (AFL)

A rticle 18. (a) The company agrees to guarantee 1,800 

hours of work and wages per year, including vacation with 

pay, to employees covered by this agreement who have 

been in the employ of the company for five (5) years or 

more, and who still maintain production standards.

(b) The guarantee described in the foregoing paragraph 

shall not be applicable to any employee who quits or is 

discharged for any cause during the contract year. Whenever employees absent themselves for any reason, their 

period of absence shall be deducted from the guaranteed 

workweek herein described.

This article shall apply only in the event that the com ­

pany is able to secure materials to enable it to maintain 

this number of hours, without operating at a loss, and 

further exceptions as stated in Article 6 of this agreement.

49. W om en ’ s clothing m anufacturing— IL G (AFL)

10. (b) The temporary workers, whose efficiency averages 87% percent of the base rate for three previous pay

periods, shall automatically be added to the permanent 

list when there is an opening.

27. Guarantee: The employer agrees to a guarantee of 

the equivalent of forty-five (45) weeks or eighteen hundred 

(1,800) hours of employment, exclusive of overtime, for 

each of the permanent employees, the number of which 

has been hereinbefore established at 500, for the period of

------- to -------, and similarly for each succeeding contract

year. It is understood that the forty (40) hour vacation 

becomes a part of the eighteen hundred (1,800) hours.

28. In the event wages, base rates, and hour rates are

increased by the employer to the amount of five percent 

(5% ) above present wages, base rates, and hour rates, the 

employer shall have the right and option at any time thereafter to cancel the guarantee of forty-five (45) weeks or 

eighteen hundred (1,800) hours. Provided, however, that 

in the event at the time of such cancellation by the employer any permanent employee or employees have not 

been employed the proportionate number of hours based 

upon the pro rata of eighteen hundred (1,800) hours, as 

hereinbefore set forth, the employer shall pay to such 

permanent employee or employees five per cent (5% ) 

of their earnings fro m ------- o r -------- of any succeeding contract year, or in the alternative, shall pay to such employee 

or employees the minimum wage for piece workers or the 

hourly wage for time workers, as the case may be, for such 

hour deficit * * * .

50. Paper manufacturing— B P M (AFL)

At our recent conferences I believe the necessity foi 

modifying our present five-year plan and service differential was made clear to you. After studying the matter 

from every angle the following plan has been selected.

All people working under the present five-year plan will 

be guaranteed employment sufficient to amount to eighty 

percent of their normal full-time earnings each period foi 

eleven periods or forty-four weeks in each working year 

No guarantee is made for periods 8 and 9, normally eight 

weeks which come in the middle of the summer. Every 

fifth or sixth year the eighth period is a five-week period 

instead of a four-week period. Holidays on which the 

mills do not operate are not covered by this plan.

51. T ool and wire m anufacturing— N o union

Our guaranteed annual wage policy: Our employees have 

a right to be proud of their company’s guaranteed annual 

wage policy which was adopted by the directors to offer 

our workers the most progressive type of security any 

company can give to its employees. Recognizing that the 

loyalty, cooperation, and ability of our employees are 

part and parcel of our past and future success as a company,

for the past five y ea rs,-------Company has put into effect

an annual wage policy guaranteeing a minimum of 1,800 

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 [five years of service] who fails to receive at least 

1,800 hours of work in any calendar year, will be paid by 

the company, at the end of each such year, an amount 

equal to cover the balance of the hours not worked up to

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 75

1,800 hours, less any amounts received in unemployment 

insurance benefits, workmen’s compensation 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.

The following rules will govern the guaranteed annual 

wage policy of your company:

1. The term “ continuous employment” shall include any 

period during which an employee is serving with the 

armed services, provided that such employee returns to 

the employment of the company within 90 days of the 

date of honorable discharge from the armed service.

2. The minimum of 1,800 hours of guaranteed work 

shall include all vacation allowances.

3. This guarantee applies only to wage earners and shall 

immediately cease should the employee resign, is discharged for cause, or should he attain the age of 65, or 

for any reason whatsoever should he fail to work at least 

320 hours in any calendar year.

4. Because of recent unusual turn-over among our employees, the benefits of this guarantee are limited to those 

who were employees of the company o n -------. This limitation will be temporary and will be removed as soon as 

conditions permit a return to normal times.

5. The judgment of the company shall be final on all 

questions arising under or by reason of the guarantee and 

the company may at any time modify or alter the rules 

or may at any time terminate the guarantee, although 

the company fully expects to continue it permanently.

6. 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.

52. K nitting m achinery production— U S W (CIO)

A r tic le II. (d) The company guarantees to every 

employee, who has completed five years continuous 

service in the employ of the company at the time of the 

execution of this agreement a minimum employment of

1.200 hours for the year covered by this contract. All 

hours worked by said employee, both straight time and 

overtime, shall be credited against the 1,200 hours. If 

the company does not provide work for any part of the

1.200 hours the employee shall be paid for the unworked 

hours at his straight-time hourly rate.

An employee who voluntarily leaves the employ of the 

company 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 1,200 hours. 

In the event of a strike the company shall be relieved of 

its guarantee as to the employees striking.

2. P lans W ith E l ig ib il it y R eq u ir e m e n t bu t W ith o u t

P ro v isio n for M o d ificatio n or A bro g atio n of P lan

53. F ood canning and preserving— N o union

Minimum Workweek Plan: 1. This plan makes available 

to all qualified employees forty-eight forty-hour weeks of 

work in each calendar year. In other words, a qualified

employee will not be given more than four weeks per year 

of less than forty hours.

4. To be qualified, an employee must have been on our 

pay roll continuously for twelve months. It is not necessary that he have received pay during every week of that 

twelve months, but he must not have been laid off or 

discharged, and he must not have quit during that period.

54. R u bber good s m anufacturing— N o union

(b) To maintain as near as deemed practicable by the 

company a workweek of forty (40) hours, and guarantees 

the undersigned opportunity to work at least sixteen 

hundred [1,600] hours for the first twelve months this 

contract remains in force.

(c) To pay the undersigned, for such operation on the 

basis of the rates established by the base rates schedule 

in effect from time to time.

55. Shipyard— U SW (CIO )

A rticle VII. Vacations and Guaranteed Annual Employment Section A— An employee who establishes one 

year’s continuous employment as hereinafter defined, 

shall be entitled to one week’s vacation with forty (40) 

hours’ pay in advance.

Section B— An employee who establishes two (2) years’ 

continuous employment as hereinafter defined, shall be 

entitled to two (2) weeks’ vacation with eighty (80) hours’ 

pay in advance.

Section C— An employee who establishes three (3) years’ 

or more continuous 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 force and effect and this provision • remains without 

modification.

56. Lim ited price variety store— R W D (CIO )

A rticle I: Section 2. All union members with twelve 

(12) months’ seniority are hereby guaranteed an opportunity to work for the company for forty-two (42) weeks at 

full time during the calendar year, and as many other 

regular girls who are union members are entitled to the 

same guarantee as business conditions warrant, store by 

store. Regular salesgirls who are guaranteed under this 

section an opportunity for forty-two (42) weeks’ fulltime work during the calendar year shall be assured an 

opportunity to work at least thirty-six (36) hours per 

week during the remaining weeks of the year.

57. Retail w om en ’ s clothing— R W D (CIO)

F ir s t , (b) Whenever the term “ steady sales clerk,” or 

“ steady sales clerks,” shall be used in this agreement, it 

shall refer to such sales employees of the employers who are 

guaranteed under this agreement a minimum of ten and 

one-half (IOJ/2) months or ten (10) months work in each 

year, as hereinafter provided.

(c) Whenever the term, “ steady-extra sales clerk” or

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
76 GUARANTEED WAGE PLANS IN THE UNITED STATES

“ steady-extra sales clerks,” shall be used in this agreement, 

it shall refer to such sales employees of the employers who 

are guaranteed under this agreement a minimum of thirtyone (31) weeks or twenty-nine (29) weeks of employment 

in each year, as hereinafter provided.

T h ir d . (a) “ Steady employees” shall be employed for 

a minimum period of ten and one-half (10%) months in 

each year by the employer.

(b) “ Steady-extra employees” shall be employed in 

each year for a minimum period of twenty-one (21) consecutive weeks in the fall season, to commence October 

1st, and fourteen (14) consecutive weeks in the spring 

season, to commence on March 15th.

B. PLANS W IT H O U T E M PLO Y E E E L IG IB IL IT Y 

R E Q U IR E M E N T

1. P lans W ith o u t E l ig ib ilit y R e q u irem en t bu t w ith

P ro visio n for M odificatio n or A brogation of

P lan

58. Retail furs— F W (CIO )

N in t h . The employer guarantees full employment for 

a period of ten (10) months in each year of this agreement, 

except as herein specifically provided. During the months 

of July and August in each year, the work shall be divided 

equally among all of the union employees * * *.

During the guaranteed period of employment, if and when 

a member of the association finds himself overmanned 

with employees, it is agreed that he may and shall submit 

his situation and difficulties for arbitration in the manner 

hereinafter provided.

The employer is to supply all necessary records required 

by the arbitrators. If the arbitrators shall reduce the 

guaranteed period of employment, the additional lay-off 

period shall be on the basis of equal division of work 

among all union employees.

In the event that at any time during the period of this 

agreement there shall be declared a general strike or a 

general lock-out among the wholesale fur manufacturers 

in New York City, the union and the association will 

immediately submit to arbitration as provided hereunder 

the question of whether there shall be instituted a division of work among all of the union employees hereunder, 

and the decision of the arbitrators shall be final and binding on all parties hereto.

59. Retail furs— F W (CIO )

Supplementary Agreement. A. The employer guarantees to all permanent [after a trial period of 2 weeks] employees one thousand seven hundred and fifty (1,750) 

hours of work during each year of the contract.

The aforesaid provision shall not apply in only the 

following two instances:

1. An unforeseen catastrophe which makes it physically 

impossible for the employer to furnish one thousand seven 

hundred and fifty (1,750) hours of work.

2. Where the employer actually does not have 1,750 

hours of work for the particular year except that an 

employer who violates this agreement by sending work to

outside contractors shall be deemed to guarantee 1,750 

hours of work in any event.

2. P lans W ith o u t E l ig ib il it y R eq u ir e m e n t and

W ith o u t P ro visio n fo r M o dification or A bro g atio n of P lan

60. Retail m en ’s clothing— A C W (CIO )

B. The association and each association member agree to 

supply to the employees employed by the association 

member a minimum period of employment of ten months 

in each year, and to agree to pay all such employees for at 

least ten months in such year. Said ten months’ employment shall be distributed as follows: September, October, 

November, December— full time; January, February— 

part time; March, April, May, June— full time; July, 

August— part time.

61. Retail furs— F W (CIO )

4. The firm agrees to guarantee a minimum of thirtyeight (38) full workweeks per year to all workers as o f -------.

15. There shall be no dismissal from employment 

without just cause during the entire life of this agreement.

15A. During the height of the season the firm has a 

right to hire additional workers on a temporary basis, 

providing that such worker is guaranteed at least 20 weeks 

of employment or otherwise agreed upon at the time of 

hiring.

62. Fur designing and patternm aking— F W (C IO )

A r ticle T w e lv e . The firm agrees that each employee 

shall be guaranteed a minimum of the following number of 

full weeks of work: (a) Fitters— 47 weeks each year, (b) 

Balance of shop— 46 weeks each year.

III. A Full Year’s Guarantee to Part of the Work­ ing Force

Plans that are limited to a part of the working force may 

restrict coverage to selected occupations or departments, 

classes of employees, designated individuals, basic work 

force, key employees, or basic crew.

A. PLANS W IT H E M PL O Y E E E L IG IB IL IT Y R E ­

Q U IR E M E N T

1. P lan s W ith E l ig ib il it y R e q u ir e m e n t an d W ith

P ro v isio n for M o d ificatio n or A b r o g atio n of

P lan

63. Textile mill— R W D (CIO)

F if t h , (a) All persons employed for a period exceeding 

six weeks shall be considered permanent employees and 

shall be entitled to seniority rights. All rehirings and 

lay-offs shall be done in accordance with seniority, that is, 

the last person hired shall be the first person laid off and 

vice versa. Each employer agrees to employ a basic crew 

which shall not be subject to lay-off at any time except as 

hereinafter provided. Each employer agrees to continue 

on his basic crew for the period of this agreement, except

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 77

as hereinafter provided, the number of employees that he 

has at the present time on the basic crew. Where an 

employer has not previously had an agreement with the 

union, then the number of the basic crew of such employer 

shall be the number of employees in the category comprehended by this agreement which the employer has continuously employed all year round for the twelve months 

previous to the signing of this agreement.

(b) It is clearly understood and agreed that if at any 

time during the period of this agreement conditions should 

arise which the employer believes make it necessary for 

him to obtain a reduction in his staff, the employer may 

request from the union permission to reduce his basic crew. 

The employer agrees to show the necessary records with 

respect to the amount of business done by him, etc., to the 

proper union authorities to enable them to determine 

whether the request for a reduction in the basic crew is 

proper. The union shall make a decision within one week 

after request is made for a reduction in the basic crew as to 

whether or not the said request will be granted. If the 

employer is not satisfied with the decision of the union in 

this connection, then the matter shall immediately be submitted to arbitration as provided for herein.

64. W holesale textiles— R W D (CIO )

4. Permanent Employees and Lay-Offs: A. All persons 

employed for a period exceeding four weeks shall be 

considered permanent employees. Permanent employees 

shall be entitled to seniority rights.

B. The employer shall have the right to lay off permanent 

employees and all lay-offs and all rehiring shall at all 

times be done in accordance with seniority, that is, the 

last person hired shall be the first person laid off and the 

last person laid off shall be the first person rehired. During 

the period of lay-offs there shall be no overtime.

C. Each employer agrees to employ continuously a 

basic crew of union employees in his employ. This ba^c 

crew shall not be subject to lay-offs during the terms of 

this agreement. Each employer shall establish a basic 

crew in his respective establishment by agreement with 

the union and the number of such minimum basic crew 

shall be inserted in each individual agreement with the 

respective employer. The number in the basic crew 

shall not be reduced unless there has been an appreciable 

reduction in business for other than seasonal reasons, or a 

permanent withdrawal of capital or some unavoidable 

cause which will make it impossible for the employer to 

continue employing all the workers of the basic crew. 

Thp employer shall make such request from the union in 

writing. Should the union fail to agree to said reduction 

within 72 hours after such request the matter may be 

submitted to arbitration pursuant to the terms of this 

agreement.

65. W holesale dry goods— R W D (CIO )

5. All persons employed for a period exceeding two (2) 

weeks, shall be considered permanent employees. Permanent employees shall be entitled to seniority rights. 

All rehirings and lay-offs shall be done in accordance with 

seniority, that is, the last person hired shall be the first 

person laid off, and the last person laid off shall be the first

to be rehired. The employer agrees to continuously employ 

[number] union persons in his employ. These shall 

constitute the basic staff, and shall not be subject to layoffs at any time.

66. W holesale dry goods— R W D (CIO )

E igh th . A. All persons employed for a period of four 

weeks (which shall be extended to six weeks upon written 

notification by any member of the association to the union 

with respect to any particular employee) shall be considered 

permanent employees, and shall be entitled to seniority 

rights, by department, wherever practicable. Wherever 

it is practicable an old employee (in point of service) may 

be transferred from one department to another. The 

oldest man shall have the job wherever he can do the work. 

All rehirings and lay-offs shall be conducted in accordance 

with seniority rights, that is, the last person hired shall be 

the first person laid off and vice-versa. Each employer 

agrees to continue on his basic crew for the period of this 

agreement, except as hereafter provided, the number of 

employees who are at present time on the basic crew. The 

members of the basic crew shall not be subject to lay-offs 

at any time except as herein provided. Should the aforementioned basic crew work a hardship on any member of 

the association at the inception of this agreement, the 

union agrees to submit the question of a fair basic crew 

to arbitration, unless the matter shall be adjusted satisfactorily between the member and/or the association and 

the union. In those establishments where prior to this 

agreement there was no basic crew established, the number 

of employees to be included in the basic crew shall be 

adjusted in accordance with the procedure for adjustment 

of disputes and/or arbitration as hereinafter provided.

B. It is clearly understood and agreed that during the 

period of this agreement, should conditions arise which 

necessitate a reduction in staff of any member of the association, such member may request from the union permission to reduce his basic crew to the extent deemed necessary. Should the union question the need for, or amount of, 

such reduction, the matter shall then be submitted to arbitration in accordance with the provisions of paragraph 

Sixteen of this agreement. The union shall be required 

to answer the request for reduction of basic crew within 

one week.

67. P ublic utility— OE (AFL)

Guaranteed Annual Income: Employees who during 

the past year were included in Schedule A will be retained 

on schedule A, attached hereto and made a part hereof. 

Employees on this schedule who are paid on a monthly 

basis will be guaranteed that there will be no deductions 

from their regular monthly wage during the period of this 

contract because of lack of work or inability on the part of 

the company to supply work. Employees on the A 

Schedule who are paid on an hourly basis will be given the 

opportunity to work 2,080 hours during the year, less 

vacations and holidays.

If in any location the company is required to go to a 

workweek exceeding 40 hours, the men released as a result 

of the Government edict will be considered to have their 

guarantee terminated.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
GUARANTEED WAGE PLANS IN THE UNITED STATES

2. P lan s W ith E l ig ib il it y R eq u ir e m e n t bu t W ith ou t

P ro visio n for M o d ificatio n or A bro g atio n of

P lan

68. N ewspaper publishing— P P A (AFL)

Section 11. 1. In compliance with Section 7 (b) (2) of 

the Fair Labor Standards Act no individual shall work 

more than 2,000 hours in any calendar year.

2. Each regular employee of the company will be 

scheduled for five shifts a week for each of the 52 weeks 

in the calendar year in accordance with section 9. New 

employees may be included as regular employees by 

written notice from the company to the union.

69. Shoe m anufacturing— EA (Ind.)

A. Definition, Gross Amount, Determination Thereof: The 

parties hereto agree that the capital, management and

labor interests in the business of t h e ------- Company shall

constitute a true partnership. The parties hereto agree 

that the drawing accounts as referred to herein * * *

shall not be less than * * * per week unless prescribed by law and/or the labor market warrants a higher 

or lower rate. Individual drawing account adjustments 

may be made by agreement between the management and 

the executive committee of the union.

The parties agree that — percent of the wholesale value 

of the shoes packed during the term of this agreement 

shall be a fair reward for the labor interest as hereinafter 

limited, proper adjustment being made for reduced value 

for shoes classed as “ damaged’7 and exceptions as noted 

herein under title “ Payment of Government Contracts.”

Management agrees that the salary of individuals 

named on Schedule “ A ” hereto attached shall not be 

included in this percentage fund. At the end of each 

fiscal year of the company, adjustments on the number 

of shoes packed are to be made, using the same formula 

in order that the Net Shoes Packed figure of the entire 

business will be the same as the Net Number of Shoes

Packed figure shown on the report o f ------- or any other

competent auditors’ report for the same fiscal year, with 

exceptions noted herein, under title “ Payment of Government Contracts” .

Management agrees to give free access to the necessary, 

books and records of the company and full cooperation 

once during each calendar year to an auditor or auditors 

selected by the union to check the records which pertain 

to the percentage fund. Management agrees to publish 

on the several bulletin boards within the shipping department periodically at least once each month an estimate 

of the earnings, drawing account, and reserve account paid. 

Management will, on due notice and at time convenient to 

it during regular business hours, permit any qualified agent 

of the union to audit such complete accounts as related 

to the calculation and computation of the percentage fund 

and reserve accounts.

B. Payment of Government Contracts: Both parties to 

this contract agree that the sale of shoes made and packed 

under the United States Government contracts and any 

shoes packed or sales of such shoes of a similar and unusual 

nature shall be treated separately at an agreed rate of 

percentage different from the rate herein set forth as appli78

cable to other sales and shoes packed and management 

agrees that it shall pay to the “ labor interest” its pro rata 

share of any increase in the price of shoes derived from 

governmental contracts; provided, however, such increase 

in the price of shoes derived from governmental contracts 

shall not include any increase in the price of shoes where 

governmental specifications warrant such •increase by 

reason of increase in the price of materials.

C. Drawing Accounts and Classification of Membership:

In order to effect an orderly distribution of the union 

members’ share of the receipts of the company, the parties 

agree that a drawing account system, as hereinafter more 

fully set forth, shall be employed. — percent of the wholesale value of the shoes packed during the term of this agree-' 

ment shall be credited to the aforementioned drawing 

account by management.

That furthermore, all drawing accounts had, except as 

provided in the section of this contract designated “ Overtime” , shall be charged to the aforenamed drawing account, which said payments have been classified under the 

heading of “ Shipping Department Labor” on the books of 

the company. Different groups of employees shall, as 

hereinafter more fully set forth, constitute the “ labor 

interest” hereinabove referred to. Each worker in the 

jurisdiction of the union shall be given a weekly basis 

which shall be at a rate considered by the management and 

the union equal to the worker’s worth to the organization. 

The union agrees, for the purpose of calculating the weekly 

drawing account of each member of the union during the 

term of this agreement, the rate effective on the date this 

contract is executed shall be taken, especially that due 

credit or allowance shall be granted for any change made 

by virtue of provisions herein set forth.

All account drawings shall be based on a differential rate 

as herein agreed upon.

It is agreed that during the period of this contract, 

changes may be made in the drawing account rates or wages 

but shall not become effective or paid except upon mutual 

agreement by and between management and the president of the union. Such drawing account rates and wages 

and changes in the drawing account rates and wages shall 

be held in strict confidence between said management and 

the president of the union except, however, wherever said 

parties shall deem it necessary to obtain the necessary 

information for an equitable and just change in the drawing account rates and wages.

The drawing account rates of the president of the union 

and of the executive committee shall not be reduced‘during 

the time of office because of time spent in the discharge of 

union business.

Management further agrees that the drawing account 

rates of the union members named in Schedule “ A ” shall 

be based upon the same earnings hereinbefore set forth 

and shall follow proportionately the drawing account rates 

of other members of the union, but such drawing accounts 

shall not be charged against the percentage fund.

Whenever matters pertaining to the drawing account 

shall not appear to be covered by this agreement, then such 

matters shall be settled and compromised by agreement 

between management and the union, by their respective 

representatives.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 79

If during the term of this agreement, the total drawing 

accounts paid shall exceed — percent of the wholesale 

value of shoes packed during the term of this agreement, 

with exceptions as noted for Government contracts, and 

the management is convinced that such excess will not be 

balanced automatically back to the agreed basis during 

the remaining period of the contract, then the weekly 

drawing account shall be revised downward to a base 

which, it is expected, will equal — percent of the wholesale 

value of the shoes packed during the term of this agreement 

(adjustment being made for the reduced value of shoes 

classed as “ damaged77 and shoes produced under governmental contracts).

The said “ labor interest77 as hereinbefore referred to, 

shall consist of the following classifications of membership 

and the rights, interests, and benefits of each of such 

classifications:

“ The Class A membership shall consist of — percent 

of the total number of shipping department workers, not 

including the direct agents of management as enumerated 

in Schedule B attached hereto as of March 4, 1946, and 

with the exception of those workers who, because of disqualifications as hereinafter more fully set forth, were 

unable to attain the said Class A membership. The Class 

A worker shall consitute a permanent labor force and shall 

not be subject to lay-offs. However, no employee shall 

become a Class A member until he or she has had at least 

two years of service in the shipping department of the

-------Company or at least two years of service in the office

or factory of the Milwaukee plant of t h e ------- Company.

“ As heretofore set forth, the total membership of Class 

A workers is limited to — percent of the total number of 

shipping department workers, and includes those Class A 

members and workers who attain a Class A membership 

while on leave of absence; it being understood and agreed 

that care must be taken that the rights of all workers who 

are on leave of absence are preserved when promotions to 

Class A membership are made.

“ The Class B membership shall consist of all those 

workers, except those hereinafter or hereinbefore classified

as otherwise, who have been employed at th e-------Company

(shipping department) for a period of at least two years. 

These said Class B members shall immediately begin to 

participate in the Share Production Plan at the commencement of the first four-week period after the second anniversary of their employment, and they shall be entitled 

to all the rights, interests, and benefits of the Class A 

membership, except that they may be subject to lay-off 

in accordance with the terms of this contract.

“ The Class C membership shall consist of all workers 

who had not reached the age of forty-five years at the

time of their commencement of employment at t h e -------

Company, Milwaukee plant, such members, of course,

being members in good standing in the Union of -------

Shipping Department Employees, but who have served 

less than two years.

“ The Class D membership shall consist of those workers 

who are forty-five years of age or more at the commencement of their employment with the company and who 

have not previously earned a higher classification hs

hereinbefore set forth.

“ The Class DB membership shall consist of those Class 

D members who have completed two years of employment 

with the company and who are eligible to the Share 

Production Plan. The same is hereinbefore explained in 

reference to Class B members. However, such Class DB 

members shall at no time be eligible for promotion to Class 

A membership.

“ The Class HA membership shall cpnsist of those 

workers who were previously classified as Class A members 

but, who, because of their physical or mental impediments, 

were unable to perform the minimum work provided in 

the various shipping department schedules and consequently were taken out of the Share Production Plan. 

Such members are to be paid on an hourly basis. Otherwise, they shall have the same rights and benefits of the 

Class A membership with respect to lay-offs.

“ The Class HB membership shall consist of those 

workers who were previously classified as Class B members 

but who possessed some physical or mental impediment 

and could not perform the minimum amount of work 

provided in the various shipping department schedules 

and consequently were taken out of the Share Production 

Plan. Such members shall be paid on an hourly basis.77

Class B members shall be promoted to Class A membership according to seniority upon vacancy occurring in the 

Class A membership hereinbefore set forth and agreed upon

as being limited to — percen t-------of the total number of

shipping department workers (including those Class A 

members on leave of absence) due to death, resignation, 

discharge, or permanent termination of employment. 

Provided, however, if there are no members in the Class A 

membership, then the Class C members shall be promoted 

to Class A membership according to seniority upon 

vacancy occurring in the class A membership hereinabove 

set forth and agreed upon as being limited to — percent

-------of the total number of shipping department workers

(including those Class A members on leave of absence) due 

to death, resignation, discharge, or permanent termination 

of employment; provided, further, however, that such 

Class C members shall have at least two years7 service 

record at the Milwaukee plant of t h e -------Company.

All Classes A, B, and DB members are to share in the 

percentage fund in accordance with their basic rate and the 

present existing agreement with management.

All Classes B and DB members may be laid off when 

production needs ara not sufficient to maintain Class A 

members working at least forty hours per week. In the 

event of necessity of lay-off, there shall be no discrimination between Class C and Class D members, except on the 

basis of seniority rights. And, furthermore, in the event of 

a further lay-off, there shall be no discrimination between 

Class B members and Class DB members, also, except on 

the basis of seniority rights.

Classes HA, HB, C, and D members are wage earners 

and work for a stipulated amount per hour, the total of 

their wages being paid out of the gross share before any 

balance is allocated to the accounts of Classes A, B, and 

DB.

Earnings of Classes A, B, and DB members are to be 

allocated to the individual account of each of said members, 

that member being paid in cash any balance to his or her

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
80 GUARANTEED WAGE PLANS IN THE UNITED STATES

credit after providing for a reserve fund of nineteen 

percent (19% ) of his or her annual estimated income, which 

said reserve includes provision for sick leave as hereinafter 

more fully set forth. The adjustments on said individual 

account shall be made at the end of each four-week period, 

and when the reserve in each individual account exceeds 

nineteen percent (19% ) of the annual estimated income, 

the excess shall be paid during the following four-week 

period, permission being granted to management to include 

said excess in the regular weekly drawing.

Management further agrees to pay interest on the 

balance in the individual reserve accounts of the said 

Classes A, B, and DB members at the same rate as is 

currently being paid by banks on savings deposit accounts 

(currently agreed at 1% per annum), except, however, such 

computations shall be made at the end of the four-week 

period in accordance with the adjustment made on the 

individual account of each member.

It is further agreed that jobs shall be made available to 

those members of the union who are on leave of absence 

because of their service in the armed forces of the United 

States or its auxiliaries; and provided that he or she is 

physically able to accept such employment, and provided 

further that such member of the armed forces of the 

United States or its auxiliaries gives the stipulated notice 

of his or her discharge from the said armed forces of the 

United States or its auxiliaries and his or her desire to 

return to employment in accordance with the Selective 

Training and Service Act of 1940 (Section 8), the Army 

Reserve and Retired Personnel Service Law of 1940 

(Section 3), the Service Extension Act of 1941 (Section 7), 

The Servicemen's Readjustment Act of 1944 (Section 

600-607), and the War Mobilization and Reconversion 

Act of 1944, and the amendments thereto. It being understood by the parties hereto that such members on leave 

of absence, upon reemployment, shall return to their 

respective positions or jobs which they had possessed at 

the time of their induction into the armed forces of the 

United States or its auxiliaries, taking into, consideration 

the fact that their seniority record continues while in the 

armed forces of the United States or its auxiliaries. In 

other words, the veteran is entitled to reinstatement in his 

former position (1) if the position was not a temporary 

one; (2) if the veteran left the position subsequent to 

M ay 1, 1940, to enter active military or naval service in 

the land or naval forces of the United States; (3) if he is 

still qualified to perform the duties of such position; (4) if 

he makes application within ninety days after he is relieved 

from training and service or from hospitalization continuing 

after discharge for a period of not more than one year; (5)

if the circumstances at the ------- Company are not so

changed as to make it impossible or unreasonable to 

reinstate a veteran to his former position or to a position 

of like seniority status, pay, or drawing. Provided further, 

however, that nothing herein contained shall affect those 

workers who shall enlist in the service of the Merchant 

Marine after August 14, 1945, it being understood that 

service in the Merchant Marine is of a private nature and 

compensable accordingly.

Management agrees that those employees within the 

jurisdiction of the union, whose payments have not been

classified under the heading of “ Shipping Department 

Labor" on the books of the company in the past such as 

the employees named in Schedule A, shall receive compensation in a method and at rates and adjustments parallel to the members working under the aforementioned 

drawing account system.

It is agreed that during the period of this contract, 

changes may be made in the differential base rate upon 

mutual agreement by and between management and the 

executive committee of the union.

It is further agreed, for the purpose of calculating the 

drawing account of each individual member of the union, 

the present differential rate shall be the basis of calculation. 

However, adjustments in individual differential rates may 

be changed during the period of this agreement, but such 

individual adjustments shall not be effective or paid until 

approved by the president of the union; provided, further, 

as hereinbefore set forth, the differential rates of the 

president of the union and the members of the executive 

committee shall not be reduced during the time of office 

because of time spent in the discharge of union business.

D. Stabilized Annual Income: For the purpose of stabilizing annual earnings of the workers of the company in 

the union's jurisdiction, it is agreed that each Class A, B, 

and D B member shall receive at least one drawing for 

each week that this agreement is effective, and that the 

amount of such drawing will be at least one fifty-second 

(%2) of the member's estimated yearly income, except 

as that estimated yearly income may be changed in accordance with the provision permitting adjustments of the 

individual rates. However, for the purpose of establishing in the shipping department uniformity of drawings 

for absence, due to illness, the union agrees that each 

Class A, B, and DB member shall be entitled during the 

term of this contract, to five (5) days of absence, with 

drawings, for recognized cause.

E. Reserve and Overdraft: The parties agree that it is 

highly advisable to establish a reserve in the workers’ 

fund of each individual Class A, B, and DB member, in 

such instances as hereinbefore set forth, in order to guard 

against the disruptance of drawing schedules due to adverse business conditions and both parties agree to promote the accumulation and maintenance of such reserve

accordingly. C om m encing-------this reserve shall consist

of nineteen percent (19% ) of the annual estimated income, 

the same being computed by multiplying the present 

average hourly drawings by 2,080. The said nineteen 

percent individual reserve account shall include drawings 

for five (5) sick days. However, management shall continue to pay the regular weekly drawings including weeks 

with holidays, vacation, and five (5) days' sick leave, if 

by so doing the individual reserve is not reduced below 

five percent (5% ) of the annual estimated income, but 

no monthly or adjusted compensation payments will be 

had if by so doing the said reserve is reduced to a sum less 

than nineteen percent (19% ) of the annual estimated 

income.

When it is apparent that due to adverse business conditions, the said reserve account shall be depleted if no 

change is made, the drawing account rate shall be revised 

by agreement between the management and the executive

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 81

committee of the union to a point where the reserve 

account will at no time be less than five percent (5% ) 

of the annual estimated income, except as hereinafter 

stated management shall pay a premium for vacation.

F. Payment of Wages and Drawing Account: The minimum drawing account rate to be paid during the life of 

this contract shall be set by mutual agreement between 

management and the executive committee of the union. 

Members recognized as substandard by the Fair Labor 

Standards Act authorities may be paid at a rate approved 

by said authorities.

In computing the fair rewards for labor and establishing 

a minimum payment of wages and/or drawing accounts, 

the present and existing Minimum Wage and Hour Law 

was taken as a basis and, therefore, provisions in this 

contract as therein stated shall be subject to change in 

the event the Government shall increase the minimum 

wage.

70. Cem ent m anufacturing— U SW (CIO )

X . (d) During the period-------t o --------, the company will

work 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.

71. Retail autom obiles— U A W (CIO)

4. All men listed on Exhibit “ A” are permanent employees under the 52-week work clause; all other employees 

hired shall be temporary employees and informed to that 

effect when they are hired.

72. Cleaning and dyeing— A C W (CIO )

The employer shall not at any time reduce the wages 

or earnings of any employee who earned or may hereafter 

earn more than the minimum scale provided for herein and 

all weekly employees shall receive their full pay each week 

in the year regardless of whether there has been sufficient 

work to keep them occupied full time during the week. 

This covers all inside cleaning and dyeing workers (about 

500 in number) in shops under contract w ith -------[union],

B. PLANS W IT H O U T E M PLO Y E E E L IG IB IL IT Y 

R E Q U IR E M E N T 1

1. P lans W ith o u t E l ig ib il it y R eq u ir e m e n t bu t W ith

P ro visio n for M o d ificatio n or A bro g atio n

of P lan

73. Knitting mill— N o union

It is hereby agreed (1) To operate under a guaranteed

work plan for a period of 52 weeks beginning ------- and

ending-------, during which annual period the said employees

shall be guaranteed work for fifty (50) weeks of forty 

(40) hours per week, or eight (8) hours per day, provided 

however, that the said [company] shall not be bound to the 

said fifty (50) weeks of forty (40) hours per week, or eight 

(8) hours per day for causes beyond its control.

(2) The parties hereto mutually agree that the rates of 

pay during the life of this agreement shall be in accordance 

with the wage schedules set forth in detail in Schedules A 

and B attached hereto and made a part hereof.

74. W holesale dry goods— R W D (CIO )

The employer agrees that his basic staff shall consist of 

-------union employees. Of these, the employer shall employ ------- persons as general help, ------ persons as office

h e lp ,-------persons as salesmen, buyers, or credit men.

The union shall not insist that the basic staff of the 

employer in each category be filled except that if, during 

the life of this contract, the union shall feel that one or 

more vacant positions on the said basic staff should be 

filled, that the request for same shall be made to the 

employer, and upon failure of the employer to agree to 

the union’s request, then the matter shall be considered a 

grievance and be subject to arbitration as provided for 

in the contract. The failure of the union to demand 

replacements of vacant basic staff positions, shall not be 

deemed a waiver of the union’s right to subsequently 

make such a demand. Upon the request of the union 

showing the necessity for filling one or more vacant staff 

positions, the employer shall be required to immediately 

fill same. The failure of the employer to fill a vacant 

basic staff position, when one has become or will become 

vacant, shall not be deemed a violation of the contract.

75. Retail m en ’ s clothing— R W D (CIO)

A salesman may be discharged upon two weeks’ written 

notice by the employer to the union, sent by registered 

mail, and with the written consent of the union. Such 

notice by the employer to the union, requesting such discharge, shall set forth the details impelling this request 

for the discharge. (Slack season, however, shall not be 

deemed a cause or a reason for the discharge of a regular 

salesman.) Upon the consent in writing, by registered 

mail, given by the union, such salesman affected by the 

notice shall be discharged at the end of such two weeks’ 

period of notice.

76. R ailroad repair and m aintenance— FSC (AFL)

Agreement With the Federated Shop Crafts Providing for

Minimum Force: (a) It is agreed between t h e ------- Railway and the Federated Shop Crafts that duripg the entire

month of January-------a minimum force of 2,300 positions

of mechanics, apprentices, helpers, and coach cleaners will 

be employed in the maintenance of equipment department; 

this number of positions to be distributed over the system 

of crafts and at points as shown on the attached statement 

and as hereinafter provided and will work six days a week. 

It is further agreed that this minimum force of 2,300 

positions will be continued from month to month during

the entire year ------- on the six-day-week basis, unless

changed in accordance with the provisions of section (e).

(e) It is further understood and agreed that in event 

any situation arises during the life of this agreement which 

would seriously affect either party, a conference will be 

held between the management and the general committee 

for the purpose of reaching an agreement. In event of 

failure to do so, it is understood and agreed that either 

party may terminate this agreement by serving ten (10) 

days’ notice in writing upon the other of intention to do so.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
GUARANTEED WAGE PLANS IN THE UNITED STATES

77. R efrigerator car servicing— U P W (CIO )

A rticle I. Working Hours: The basic gang employed 

by the employer hereunder shall consist of three mechanics, 

two helpers, and one car washer. Each of such men shall 

be employed by the employer for two thousand hours 

during the period of one year covered by this agreement, 

and shall receive weekly payment on the basis of forty 

hours per week irrespective of the number of hours worked 

by him in any such week at the regular scale of wages hereinafter provided; except that if the hours worked by any 

such employee under the jurisdiction of this contract are 

in excess of eight hours in any workday, or in excess of 

forty-eight hours in any workweek, as the case may be, 

such excess hours shall be paid for at the rate of time and 

one-half regular scale rate for which he is employed, provided, however, that in the event of storms, floods, acts of 

God, death, discharge, incapacity of employees, or conditions beyond the control of the employer, such aggregate 

number of two thousand work hours cannot be completed 

in the period covered by this agreement for any employee, 

there shall be a reduction of such total number of hours 

corresponding to the number of hours which by reason of 

said conditions, it was impossible to complete.

In the event the employer ceases the operation of 

refrigerator cars in the service o f -------Company, this contract will be void on 30 days’ written notice.

There will be no replacements of the basic gang by 

reason of temporary reduction caused by sickness or for 

vacations.

This agreement shall relate only to employees of the

employer a t -------and does not apply to superintendents,

foremen, and clerks.

78. P u blic utility— O E (AFL)

A rticle IX . Guaranteed Work: Section 1. Two Year 

Guarantee, (a) Class A employees as defined in Article 

V III, Classification of Employees, Section 1, are included 

in the Guaranteed W ork Plan as hereinafter provided for. 

Class B and Class C employees are not included in the 

Guaranteed W ork Plan.

(b) The company agrees to provide work at wage rates 

agreed upon by the company and the union, for a period of 

two (2) years from the effective date of this agreement, to 

all Class A employees as provided for in Article VIII, 

Classification of Employees, of this agreement. It is 

further agreed that should a decrease in work, due to 

changing conditions in any plant or department, require a 

reduction in personnel, employees not under the Guaranteed 

Work Plan will be laid off first. Should further reductions 

be necessary, it is agreed that employees with the least 

seniority under the Guaranteed W ork Plan may be transferred to other departments or plants where their services 

are required at existing rates for the job to which they are 

transferred. It is further agreed that should such transfers 

become necessary, such employees will be paid a relocation 

wage differential equivalent to the difference between their 

former rate and their new rate for a period of six (6) months 

following their transfer. In no case shall the wage differential payment exceed thirty percent (30% ) of the em82

ployee’s average monthly wage during the last twelve (12) 

months in his regular employment.

(c) Those employees who are guaranteed work under this 

article will be given an opportunity to work 2,080 hours 

during each of the guaranteed work years, less vacation and 

holidays.

(d) A schedule shall be submitted to the union listing 

the names of employees who are guaranteed work.

(e) The right by the company to suspend or discharge an 

employee for cause as provided for in this agreement shall 

in no way be infringed upon through the application or interpretation of this article.

2. P lan s W ith o u t E l ig ib il it y R eq u ir e m e n t and

W ith o u t P ro visio n fo r M o d ificatio n or A b ro g atio n of P lan

79. Flour mill— C W (AFL)

It is agreed upon by the union and the employer that the 

base crew of sixty-two (62) men in the mill, feed plant, 

elevator, mill engine room, and other miscellaneous activities will be guaranteed a minimum workweek of fortyeight (48) hours for the whole 12 months, the last 8 hours 

to be on time and one-half, and if there is not sufficient 

work to complete the 48 hours during any week with exceptions of those weeks that include holidays designated 

by the union contract, then [company] will pay each and 

every employee his wages for any hours not worked up to 

48 hours.

80. Textile dyeing and finishing— M P (Ind.)

Section I. Salary and Hours: The company agrees to 

continue to employ the members of the association now 

presently in the employ of the company throughout the

period beginning with t h e -------and ending with t h e -------- ,

and guarantees to pay to each journeyman printer operating from seven to eight color machines total wages for said 

period of not less than thirty-eight hundred fifty-eight 

dollars and forty cents ($3,858.40), and further guarantees 

to pay each journeyman printer operating from nine to 

twelve color machines total wages for said period of not 

less than four thousand forty-five dollars and sixty cents 

($4,045.60), payable weekly at the respective rates per 

week of seventy-four dollars and twenty cents ($74.20) 

and seventy-seven dollars and eighty cents ($77.80).

The company agrees that each of the said members of the 

association in the employ of the company throughout the 

period covered by this contract shall, subject to and in 

accordance with the provisions of this contract, work not 

more than two thousand (2,000) hours during the period of 

fifty-two (52) calendar weeks of the period covered by this 

contract.

81. Soap m anufacturing— S W (CIO )

A r ticle III. Section 2. All departments except 

watchmen and firemen will operate on the five (5) days 

basis Monday through Friday. Watchmen and firemen 

who must be in attendance at all times, will work on all 

days, M onday through Sunday, at regular time. W atchmen and firemen will be guaranteed fifty-two (52) weeks of 

work per year during the time this contract is in effect.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.— CLAUSES IN GUARANTEE PLANS AND CONTRACTS 83

82. Electroplating— E R M W (CIO ) 89. Retail ice and coal— O E (AFL)

X V III. The employer guarantees to the five maintenance men named in the contract between the parties,

d a te d -------, not less than forty-eight (48) hours of work,

or the monetary equivalent thereof, in every week during 

the fifty-two (52) week period which is the term of this 

contract. The employer also agrees 'to pay the abovementioned maintenance men for the holidays named in 

this contract, even though these maintenance men shall 

not be required to work on these holidays, and to continue 

to grant to the maintenance men all the benefits and 

privileges which they have heretofore enjoyed.

83. W holesale sirup distribution— R W D (CIO)

Every permanent routeman and cook working for the 

members of the association are hereby guaranteed fifty-two 

weeks of steady employment in each year at the scale of 

wages herein mentioned throughout the life of this agreement. Permanent helpers shall during the slack period 

share the work.

84. Retail m en ’ s clothing— A C W (CIO )

Six t e e n t h . Annexed hereto and made part hereof is a 

schedule of the names of the salesmen, stock clerks, and 

other employees and their salaries, employed by the employer who are protected under the terms of this agreement 

which shall be the minimum amount of salesmen, stock 

clerks, and other employees that the employer agrees to 

employ throughout the life of this agreement.

N in e t e e n t h . It is further agreed that in the event that 

a member or members of the union leave his or their employment with the employer, that the employer shall 

immediately fill such vacancy with another member or 

members of the union.

85. Retail m en ’s clothing— AC W (CIO )

2. The bushelman working for the members of th e -------

Society are guaranteed 40 hours of work per week, 52 

weeks per year.

86. Retail shoes— R W D (CIO )

6. During the period covered by this agreement, the 

employer agrees to give continuous employment to a 

minimum force of employees as hereinafter stated: 1

manager, 1 selling assistant manager, 2 salesmen, 1 

cashier, and 1 porter.

87. Retail furs— F W (CIO )

That the following employees [names of seven employees] are to be considered permanent employees and

will be guaranteed fifty-two (52) weeks fr o m -------t o --------

exclusive of overtime.

Wages, Hours, and Working Conditions: On and after

-------the following schedule of wages and hours shall be in

effect:

The engineer-in-charge shall receive two thousand seven 

hundred ($2,700.00) dollars per year.

Operating engineers shall receive two thousand 

($2,000.00) dollars per year.

Time in excess of fifty-six (56) hours per week, or over 

twelve (12) hours in any one day, shall be considered 

overtime and shall be paid for at the rate of time and 

one-half time. No employee working under this agreement may work over two thousand (2,000) hours per 

year. Employees working under this agreement work 

according to Section 7 (b) (2) of the Fair Labor Standards 

Act.

90. Retail dental supplies— N o union

W it n e s s e t h : Said employer agrees to employ said

employee a s -------for a term of one (1) year from the date

hereof, at a weekly salary o f -------.

In consideration of the foregoing on the part of said 

employer, said employee hereby accepts such employment 

at said salary and agrees that he will diligently and faithfully apply himself to and perform the work of said employer as he may be directed to do by its fully accredited 

representative; that he will not absent himself from the 

employment of said employer (except in case of illness), 

without the consent of said employer; that he will not 

during said term of employment, nor for one year thereafter, engage either directly or indirectly in any branch of 

business carried on by said employer, either as a party in 

interest or as the employee of another concern conducting 

a similar business anywhere in the cities of Providence, 

Rhode Island; or Bridgeport, Hartford, or New Haven, 

in the State of Connecticut; or Boston or Springfield in the 

State of Massachusetts.

91. W ater transportation— ILA (AFL)

F ourth . The company further agrees that the following 

positions shall be guaranteed twelve (12) months pay at 

rates of pay as shown and with not less than two (2) 

weeks vacation.

General foreman____

Assistant foremen___

Chief clerk__________

Rate clerk___________

Stenographer________

General cashier_____

Baggageman________

City passenger agent.

City freight agent___

Ticket agent________

$296. 12 monthly 

236. 72 monthly 

236. 72 monthly 

203. 72 monthly 

170. 72 monthly 

170. 72 monthly 

165. 22 monthly 

253. 22 monthly 

253. 22 monthly 

236. 72 monthly

88. R etail liquor— RC (AFL)

3. (B) The employer agrees that each sales clerk in

his or its employ shall have fifty-two consecutive weeks of 

employment during each year.

The company further agrees that seasonable workers 

shall be em ployed from the opening of navigation to the 

closing of navigation; the following positions classed as 

seasonable with monthly rates of pay as enumerated 

below.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
84 GUARANTEED WAGE PLANS IN THE UNITED STATES

Ticket sellers______________ $159. 72 monthly

Assistant cashiers________ 148. 72 monthly

Night clerks______________ 143. 22 monthly

Telephone operator______ 132. 22 monthly

Comptometer operator___ 132. 22 monthly

Assistant settlement clerk. 132. 22 monthly

Typists______________ 132. 22 monthly

Billing clerks_____________ 132. 22 monthly

Scale of wages shall be not less than as shown above. 

Also all employees shall have one (1) day per week off 

and in the event any employee may be requested to work 

the seventh (7th) day such duties will be performed at 

overtime rate.

In the event of a dispute arising between the company 

and the union or in the event of the employees or employer 

having a grievance they shall continue to work and all 

such questions in dispute controversies and grievances 

shall be settled if possible by the representatives of the 

company and the representatives of the union.

92. Cleaning and dyeing— N o union

Employment Contract: 1. The employee shall enter 

into service and commence his work hereunder on the

-------and the employment shall continue for the period of

one year, and for such further period as is provided for 

herein.

93. N ew s syndicate— CTU (AFL)

Six t h , (a) The employer guarantees to pay at least 

one-half pay of the full weekly wage to a total of fortythree (43) Morse operators in every week throughout the 

year. Seniority shall govern as usual in all cases, it being 

agreed that the senior men shall fill all jobs as available. 

Men on leave of absence among the 43 employees of 

highest seniority will have their places filled in the listed 

43 by substitution of the employees highest in the list of 

seniority under the top 43 employees during the time 

covered by the leave of absence only.

IV. Less Than a Year’s Guarantee to Part of the

Working Force

Plans in this group provide a guarantee of employment 

or income for some definite period (3 months to 50 weeks) 

to such employees or groups of employees as are specified.

A. PLANS W IT H E M PL O Y E E E L IG IB IL IT Y REQ U IR E M E N T

1. P lan s w it h E l ig ib il it y R e q u ir e m e n t and w ith

P ro v isio n for M odification or A b r o g atio n of Plan

94. W ater transportation— ILA (AFL)

R ule 21. It is agreed that eight (8) regular terminal 

employees who are paid on an hourly basis shall be guaranteed a minimum of fifteen dollars ($15.00) per week 

each, from beginning of the navigation season on the 

Upper Mississippi River to the end; provided, that in the 

event operations are suspended due to river conditions, or 

for any other cause beyond the control of the company,

the guarantee shall not apply during the period of suspension.

95. R adio broadcasting— A F M (AFL)

Quota: 1. The station agrees to spend each year during 

the term of this agreement not less than the total sum of 

twenty-one thousand five hundred twenty-eight dollars 

($21,528.00) for compensation for its staff musicians.

Personnel: 2. The station agrees to employ not less 

than eleven (11) staff musicians, including a leader, for 

thirty-nine (39) weeks of each year, except during the 

months of June, July, and August, when it will employ 

at least one (1) staff musician who shall be a leader, and 

as many more staff musicians as it may require. A staff 

musician is one who is paid at a weekly rate and not at a 

single performance rate. The station shall have the right 

to use all of its staff musicians in any way or combination 

desired on each broadcast, it shall have full control of the 

instrumentation desired and of the program and selection 

of music, and may use staff musicians on commercial and 

sustaining programs.

The local will’ furnish the station as required by it, competent and qualified musicians in good standing in the local.

Term: 5. * * * If during the term of this contract

the [union], or any local thereof takes any action resulting 

in the interruption of network service, or network musical 

programs, or the service of the local to the station, the 

station may suspend this contract as long as such interruption continues. It is further provided that should the 

station, during the term of this contract, lose its present 

network service, this contract shall terminate at the same 

time such network service terminates. It is further 

provided that this contract shall also be terminated should 

the operation of this station be discontinued because of 

the loss of proper license, war, act of God, or major 

catastrophe.

2. P lans W ith E l ig ib ilit y R e q u ir e m e n t bu t W ith o u t

P ro visio n fo r M o d ificatio n or A bro g a tio n of P lan

96. Lim ited price variety store— R W D (CIO )

Steady Employment: (a) ’ For Regular Salesladies. A 

regular saleslady with 12 months’ continuous experience, 

in charge of one or more departments, will be given an 

opportunity to work 42 weeks full time during the year 

and an opportunity to work at least 36 hours per week 

during the remaining 10 weeks.

It is understood that the vacation period is included in 

the 42 weeks full time. It is also understood that this is 

the minimum amount of work that will be given to any 

qualified saleslady, and that whenever possible these girls 

will be given more full-time work.

Regular girls with less than 12 months’ experience will 

be given preference at all times in the allotment of the 

remaining work.

97. R etail w om en ’ s clothing— R W D (CIO )

Minimum of Employment in Each Year: Third, 

(a) “ Steady sales clerks” shall be employed for a minimum 

period of eleven (11) months in each year by the employers,

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS 85

except those employers who maintain establishments on 

Division Street, in the Borough of Manhattan, City of 

New York. The “ steady sales clerks” employed in the 

establishments located on Division Street shall be employed for a minimum period of ten and one-half (10K) 

months in each year.

(b) “ Steady-extra sales clerks” shall be employed in 

each year for a minimum period of nineteen (19) consecutive weeks in the fall season, to commence October 

1st, and twelve (12) consecutive weeks in the spring 

season, to commence on March 15th, except in the establishments of employers located -----------. “ Steady-extra

sales clerks” employed in the establishments located -------

shall be employed in each year for a minimum period 

of eighteen (18) consecutive weeks, in the fall season, to 

commence on October 1st, and eleven (11) consecutive 

weeks in the spring season, to commence on March 15th.

98. Restaurant— H R (AFL)

A rticle V : Sec. 2. Steady bartenders shall receive a 

guarantee of employment at no less than minimum rate 

at least forty-eight (48) weeks out of the year; said year 

to commence on the date [when] this agreement shall go 

into effect.

99. Cem etery— FTA (CIO )

X I. (a) The regular employees, Class B, will be employed in the following manner: In each year between the 

first Monday in April and the first Monday in December 

the Cemetery shall provide each of said employees with a 

minimum period of thirty-three (33) weeks of employment during which period said employees shall work on 

all working (bell) days. Within such period the Cemetery 

shall have the right with respect to each employee to 

determine when his thirty-three (33) weeks’ employment 

shall commence. The Cemetery may also employ men 

in this classification prior to the first M onday in April in 

each year for such period and on such days as it may determine, but such employment shall be in addition to and not 

included in the thirty-three (33) weeks’ employment 

hereinbefore provided for. The employee may, however, 

at his discretion, refuse such additional employment.

(b) The Cemetery shall be under no obligation in maintaining the regular B basic crew figure (Article X II hereof) , or in voluntarily replacing a man when the number of 

regular B ’s exceed such figure, to guarantee the employee 

involved work after the first Monday in December of a 

current contract year; the purpose and intent hereof 

being that if a regular B is taken on for any reason after 

April 20th, such regular B shall not be entitled to employment, during a current contract year, after the first M onday in December.

100. W ater transportation— M M P (AFL)

R ule 4. (a) All regularly assigned masters and pilots 

shall be guaranteed ten (10) months employment during 

each calendar year. The list of regular employees shall 

be limited to the number required to operate the vessels 

regularly in service in each division. Other employees 

covered by this agreement who are called for relief or temporary duty shall be considered as extra employees

Only those employees who appear on the regularly assigned 

list at the beginning of the calendar year or at the beginning of the navigation season in the case of the Upper 

Mississippi Division, the Illinois Division, and the Missouri 

Division shall be considered as regular and included in the 

terms of this guarantee.

B. PLANS W ITH O U T EM PLO Y E E E L IG IB IL IT Y

R E Q U IR E M E N T

1. P lans W ith o u t E l ig ib il it y R e q u ir e m e n t B ut

W ith P ro visio n for M o d ificatio n or A bro g atio n of P lan

101. Textile dyeing and finishing— M P (Ind.)

Section 3. The company agrees to pay each journeyman printer and apprentice full pay for any period prior 

to July 15th during which the journeyman printer or 

apprentice is not employed.

The company further agrees to pay each journeyman 

printer or apprentice one-half pay for any period after 

July 15th to December 3 1 ,-------during which the journeyman printer or apprentice is not employed.

It is further understood and agreed that any member 

of the association who t reports for work or who works at 

any time during any three days of any calendar week, shall 

be paid wages for the full calendar week, regardless of 

whether or not said journeyman printer or apprentice 

works the full forty hours. Any journeyman printer or 

apprentice who works or reports for work on less than three 

days, shall be paid a full day’s pay for the day h$ works 

or reports for work and half pay for the days that he 

does not work.

It is further understood and agreed that during the 

period beginning with the date of July 15th and ending

December 31st, -------, the company will spread the work

among the members of the association to the end that, 

insofar as practical, employment will be shared equally 

by the members of the association.

It is further understood and agreed that during the 

period covered by this agreement the company will 

alternate the men weekly between the day and the night 

shifts.

If hostilities should terminate prior to July 1 5 ,-------, or

if orders or directives of the Government, issued prior 

thereto, confront the industry with a curtailment of 

business which reduces operations, the parties, on fifteen 

days’ notice, by either to the other, shall negotiate with 

respect to the advisability of maintaining or modifying 

the full work guarantee contained in this Section 3.

102. Textile dyeing and finishing— T W U (CIO )

21. The firm does hereby guarantee 48 weeks of work 

in each year for truck drivers and helpers but this guarantee 

shall be nevertheless subject to the following conditions:

(a) In the event of an unusual slack period or in a period 

of emergency where production materially decreases the 

firm shall have the right to lay off drivers notwithstanding 

the guarantee above-mentioned.

Truck drivers and helpers can be employed for a period 

of 50 hours in any one given week. Any excess of 42%

hours in one week (M onday to Friday, inclusive) or 8%

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
8 6 GUARANTEED WAGE PLANS IN THE UNITED STATES

hours in one day shall be paid for at the rate of time and 

one-half.

103. W ater transportation— M E (CIO )

A rticle V : Season of Employment. The season of 

employment for officers, boiler-room engineers, junior 

engineers, and handymen shall be for ten (10) calendar 

months, 306 days.

The season of employment for all officers to start as 

directed by the management and to be continuous, and to 

be completed within the calendar year.

If officers, boiler-room engineers, junior engineers, or 

handymen who are qualified, serve in a temporary capacity 

higher than appointed for, they will be paid the higher 

rate during such service, and if they serve in a lower capacity, they will be paid the rate applicable to the capacity 

appointed for.

The company reserves the right to transfer any officer 

from one vessel to another with the understanding that 

the wage scale for the individual is protected.

In the event that additional passenger or freight steamers

are purchased or chartered by the ------- Company, after

the start of the navigation season, it is understood that 

the season of employment for officers on such vessels shall 

commence when the steamer or steamers are placed in 

service and continue until the vessel is laid up or returned 

to the owner. This provision shall not apply should 

charter provisions require that officers then aboard said 

vessel continue in the service of the ship for the balance of 

the year during which the charter or purchase is effected, 

other than they be members of the association. In the 

event this paragraph shall apply, then it is understood 

that the rates of pay will not be less than provided for in 

Article IV hereof.

If the service of one or more vessels is discontinued at 

any time during the life of this agreement for one or more 

of the following reasons:

1. Marine disaster, total or constructive total loss, or 

marine disaster less than total or constructive total loss 

which nevertheless requires,,the vessel or vessels to be 

laid up for a considerable period on account of failure to 

get repair materials due to war priorities, or failure to 

get the ship into a repair yard by reason of war conditions 

beyond control of the company;

2. Condemnation by Bureau of Marine Inspection and 

Navigation;

3. Sale of vessel, commandeering or taking over by 

Governmental authority;

The company may discontinue the service of any or all 

of the officers covered by this agreement after a period of 

seven (7) days after the discontinuation of such service, as 

specified, and for reasons as provided above.

2. P lan s W ith o u t E l ig ib il it y R e q u irem en t and

W ith o u t P ro visio n fo r M odification or A brogation of P lan

104. Textile dyeing and finishing— M P (Ind.)

18. (a) The company agrees to pay each journeyman 

printer and apprentice full pay (40 hours’ straight-time 

pay) for any period prior to July 15th during which the 

journeyman printer or apprentice is not employed. The

company further agrees to pay each journeyman printer 

or apprentice one-half pay (20 hours’ straight-time pay)

for any period after July 15 to December 3 1 ,-------during

which the journeyman printer or apprentice is not employed.

105. Textile dyeing and finishing— M P (Ind.)

The company agrees that so long as it operates on a 

“ staggered shift” so-called, it will pay each printer or 

apprentice one-half pay for any 23 weeks during which, 

at any time throughout the terms of this contract, each 

printer or apprentice is not employed. If the company 

is operating on a basis other than a “ staggered shift” 

so-called, it will pay each printer or apprentice one-half 

pay for any 20 weeks during which at any time throughout the terms of the contract such printer or apprentice 

is not employed. The foregoing provision shall not apply, 

however, to a printer who is hired temporarily to replace a 

regular printer who is absent by reason of illness or who is 

on vacation.

106. Textile dyeing and finishing— FSES (Ind.)

During period of unemployment members of the society employed by employer shall be compensated at the 

rate of one-half their basic weekly wages for a period of 

12 weeks during the term of this agreement.

107. W om en ’ s coat m anufacturing— IL G (AFL)

Fir s t. The employer hereby agrees, covenants, and 

guarantees that it will give to each of the persons now in 

its employ in the cutting, operating, finishing, and pressing departments and to each of the persons now in its 

employ as basters and buttonhole makers, fifty full weeks 

of employment during the term beginning-------and terminating -------. The names of the said employees are contained on the list annexed hereto, made a part hereof, and 

marked schedule A.

Each of the workers on the annexed schedule agrees to 

work for the employer for the term of this agreement and 

in accordance with the terms thereof.

108. Silverw are m anufacturing— E R M W (CIO )

E ig h th . The employer guarantees that he shall employ 

the employees named in the schedule herewith attached 

and made part of this contract, for a period of forty-five 

(45) full weeks during the year o f -------, and that the remaining six (6) weeks he will employ them on a part-time 

basis (three (3) days a ^eek), and that one week, namely, 

between Christmas and New Year’s, he shall have the 

right to close the factory for the purpose of taking inventory. All weeks that have been worked prior to the 

signing of this agreement during this year shall be deducted from the guarantee of forty-five (45) weeks, and 

all part-time workweeks that have been worked this year 

shall be deducted from the six (6) part-time weeks. All 

other employees who are not listed in the attached schedule, 

or those in the wrapping and assembling departments who 

have or will join the union at the expiration of the old 

agreement, shall not be covered by said guarantee. Any 

employee who is listed on the attached schedule but who is 

discharged for cause, shall be automatically removed from

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX B.----CLAUSES IN GUARANTEE PLANS AND CONTRACTS

the operation of said guarantee. Any holiday listed in 

paragraph six which comes out during a working week, and 

in the event that the employees do not work on that day, 

that week shall nevertheless constitute a full working week 

for the purpose of defining a full week in the above mentioned guarantee.

109. R etail w om en ’ s accessories— F W (CIO )

* * * the union agrees to accept the same understanding that prevailed during t h e -------contract year—

that is, a guarantee of forty-two (42) weeks of work for the 

four (4) finishers and two (2) operator-nailers who are 

employed at present in the fur department.

110. W ater transportation— ILA (AFL)

F o u rth , (a) Wages of salaried checkers under this agreement shall be agreed upon between the company and said 

salaried checkers, but not less than two hundred and five 

dollars and twenty cents ($205.20) per month. Six (6) 

salaried checkers shall be given one (1) day per week off 

and a guarantee of nine (9) months’ pay.

111. W ater transportation— M E (CIO )

R u le 2. (a) The season of employment for chief engineers will be nine (9) months; the season of employment 

for first assistant engineers will be nine (9) months; and 

the season of employment for second assistant engineers 

will be seven (7) months. The season of employment, to 

start as directed by the management, is to be continuous 

and is to be completed within the calendar year.

112. W ater transportation— M M P (AFL)

A rticle V. The season of employment for pursers in

the ------- Division shall be for six (6) calendar months.

The season of employment for pursers in th e -------Division

shall be for eight (8) calendar months. The season of

employment for the purser of th e -------shall be for three (3)

calendar months.

The season of employment for assistant pursers on the

------- Division shall be four (4) months. The season of

employment for assistant pursers on t h e -------Division

shall be four (4) months.

113. W ater transportation— M M P (AFL)

A rticle V. The season of employment for all masters 

shall be eight (8) calendar months.

The season of employment for all first, second, and third 

officers shall be eight (8) months.

V. Wage-Advance Plans

In wage-advance plans the employer usually obligates 

himself to provide advances to loans of wages during 

slack seasons, with repayment required of the worker only 

if the employer thereafter furnishes sufficient employment 

to enable the advance to be repaid. The plans provide 

specific methods for repayment or working off the amount 

of the indebtedness.

87

114. W indow and door fram e m anufacturing— N o union

In the event of slack periods, the company will advance 

to its employees certain sums to be repaid with work when 

production increases.

The plan is only effective in the case of short hours 

caused by reduced production.

For the purposes of the plan, employees are divided into 

three different classes, as follows:

(1) Single men with no dependents.

(2) Single men or married men with one dependent.

(3) Single men or married men with more than one

dependent.

If, during any pay period (one-half month), the income 

of those in class 1 is not equivalent to 40 hours at the employee’s rate, he can draw the difference between 40 hours’ 

income and his actual earnings from our company. Those 

in class 2 are entitled to 50 hours and those in class 3 to 

60 hours.

Income is (a) wage drawn from our company, plus (b) 

pay for any other employment, plus (c) unemployment 

insurance benefits.

115. Chem ical and fertilizer m anufacturing— C W (AFL)

V. Whenever an eligible employee’s weekly wage from 

the company falls below 30 hours’ pay at his current classified rate, due to lack of work, the company will advance 

to the eligible employee, upon his written request on a 

form provided by the company, the difference between his 

actual gross earnings and the 30 hours’ pay, less earnings 

from other employment and less any unemployment compensation which the employee has received or to which he 

may be entitled.

116. Autom obile m anufacturing— U A W (CIO )

Income Security Plan: 1. Description of Plan. A 

credit will be established for each eligible employee equivalent to three hundred and sixty (360) hours’ pay at his 

latest earned hourly rate, less any advances paid to the 

employee under the 1939 and 1940 employee benefit plans, 

and not repaid or earned out. If, in any week while this 

plan is in operation, an eligible employee’s earnings from the 

corporation and/or other regular employment are less 

than 60 percent of his standard weekly earnings, as hereinafter defined, the corporation will advance at the option 

of the employee, the difference between his actual earnings 

from the corporation and/or other regular employment 

and 60 percent of his standard weekly earnings, until he 

has exhausted the credit established in his behalf, less 

any unemployment compensation to which the employee 

may be entitled for that week.

Lay-off Benefit Plan: 2. Description of Plan. A credit 

will be established for each eligible employee equivalent to 72 hours’ pay at his latest earned hourly rate 

less any advances paid to the employee under the 1939 

and 1940 employee benefit plans, and not repaid or earned 

out. If, in any week while this plan is in operation, 

an eligible employee’s weekly earnings from the corporation 

and/or other regular employment are less than 40 percent 

of his standard weekly earnings, the corporation will

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
8 8 GUARANTEED WAGE PLANS IN THE UNITED STATES

advance to such employee, at the option of the employee, 

the difference between his actual earnings from the corporation and/or other regular employment and 40 percent 

of his standard weekly earnings, until he has exhausted 

the credit established in his behalf, less the amount of 

unemployment compensation to which the employee may 

be entitled for that week.

117. M ail order house and retail stores— N o union

Constant Wage Income Plan: 11. If an employee works 

less than 40 hours in any workweek, che company will 

advance the difference between his income for the hours 

actually worked and 40 hours’ pay. When an employee 

works more than 40 hours, excess is used to cover his 

deficit. Please refer to attached plan.

The above plan applied to both retail and mail order 

establishments. The plan in retail stores was terminated -------.

The plan is still in effect in all [8 cities] mail order 

houses ex cep t-------where none is needed.

VI. Declaration of Intention to Inaugurate a

Guarantee

While not making a specific commitment to furnish work 

or income, if work is not available for any definite period,

some union-management agreements have recently incorporated one or more of the following provisions: (1) 

Recognizing the importance and desirability of stabilizing 

employment, (2) recognizing the value to be derived from 

a guarantee plan, (3) that it is the intention of the company to inaugurate a plan at some designated date, or (4) 

that the company or that both the company and the union 

agree to study the feasibility of its adoption.

118. M eat packing— U P W (C IO )

[Company] recognizes the importance and desirability 

of stabilizing employment on an annual basis, and to 

that end [the company] will * * * attempt to give

employees 52 weeks’ work per year.

119. Steel mill— U SW (C IO )

The company and the union agree as to the mutual 

benefits to be derived from a practical annual wage plan 

and both parties mutually recognize the uncertainties 

which must be eliminated before a practical annual wage 

plan can be perfected and installed. Therefore, both 

parties agree to undertake studies concerned with the 

possible ultimate establishment of some form of guaranteed 

annual wage plan.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Index to Appendix B

I n d u s tr y

Automobile manufacturing.__________

Automobiles, retail____________________

Brewery_______________________________

Casket manufacturing________________

Cement manufacturing________________

Cemetery______________________________

Cereal preparations___________________

Chemical and fertilizer manufacturing.

Chewing gum manufacturing_________

Cleaning and dyeing__________________

Clothing, retail____________ ____________

Confectionery, retail__________________

Dairy farm ____________________________

Dental supplies, retail_________________

Department store_____________________

Distillery______________________________

Drugs, retail__________________________

Dry goods, retail______________________

Dry goods, wholesale__________________

Electroplating_________________________

Flour m ill_____________________________

Food canning and preserving_________

Food, retail and wholesale____________

Fur designing and patternmaking_____

Furs, retail____________________________

Furs, wholesale________________________

Groceries, wholesale___________________

Hardware, wholesale__________________

Ice and coal, retail____________________

Jewelry manufacturing________________

Knitting machinery production_______

Knitting mill__________________________

Limited price variety store_______ ____

Liquor, retail__________________________

Lumber, retail_________________________

Mail order house______________________

Mail order house and retail stores____

Meat packing_________________________

Men’s clothing, retail_________________

News syndicate_______________________

Newspaper publishing________________

Paint and varnish manufacturing_____

Painting and decorating______________

Paper manufacturing_________________

Public utility__________________________

Radio broadcasting___________________

Radios, retail__________________________

Railroad repair and maintenance_____

Refrigerator car servicing_____________

Restaurant____________________________

Rubber goods manufacturing_________

Sausage casing manufacturing________

Shipyard______________________________

C l a u s e

se r ia l N o .

__ 116 

71

47

48 

70

23, 42, 99 

__ 44,45 

__ 115

46

31, 72, 92 

30

__ 10,38 

32 

90 

11

15 

30

__ 20, 39 

65, 66, 74 

82

___________ 1 ,2 ,2 5 ,7 9

________________ 53

________________ 19

________________ 62

______ 41, 58, 59, 61, 87

________________ 9, 28

________________ 27

________________ 8, 37

________________ 89

________________ 26

________________ 52

________________ 73

__________________56,96

________________ 88

________________ 30

________________ 12

________________ 117

____________ 34, 35, 118

21, 29, 40, 60, 75, 84, 85

________________ 93

________________ 68

________________ 17

________________ 33

________________ 16,50

_________ 13,24,67,78

________________ 95

________________ 30

________________ 76

________________ 77

________________ 98

________________ 54

________________ 43

________________ 55

89

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
90 GUARANTEED WAGE PLANS IN THE UNITED STATES

I n d u s t r y

Shoe manufacturing____________________

Shoes, retail____________________________

Silverware manufacturing______________

Soap manufacturing____________________

Social service agency___________________

Steel mill_______________________________

Syrup distribution, wholesale__________

Textile dyeing and finishing____________

Textile m ill_____________________________

Textiles, wholesale_____________________

Tool and casting manufacturing_______

Tool and wire manufacturing__________

Washing machine production__________

Water transportation___________________

W indow and door frame manufacturing

W omen’s accessories, retail____________

Women’s coat manufacturing__________

Women’s clothing manufacturing______

Women’s clothing, retail________________

C l a u s e

s e r ia l N o .

__________________________________ 69

___________________________________________________22, 86

___________________________ 108

___________________________ 5, 81

__________________________________ 14

_________________________ 18, 119

__________________________________ 83

3, 4, 36, 80, 101, 102, 104, 105, 106

__________________________________ 63

__________________________________ 64

___________________________ 6

__________________________________ 51

_____________________________________ 7

91, 94, 100, 103, 110, 111, 112, 113

__________________________________ 114

___________________________________ 109

.1________________________ 107

___________________________________ 49

_____________________________ 57,97

U. S. GOVERNMENT PRINTING OFFICE: 1948

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis