Evening star., 1946-04-21
Trend to Profit-Sharing
Stirs Interest in Congress
Legislation Seeks to Stimulate Plan to Develop
More Harmonious Relations Between
Labor and Capital
By Joseph Hanlon

commodity, as a hand to be used, as
an extension of the machine. Some
times here is shortage of hands. and
the labor leader tries to get high price
for what he has to SELL Sometimes there
is surplus of hands, and business tries
to pay less for what it has to buy.
"a man with any moral sense must
know that labor is not a commodity,
it's service to be bought and sold on
f1uctuating market. I accept as moral
law that the service of a willing man
should bring him enough to feed, clothe
and house his family at level above
subsistence, regardless of the profits"
Senator Knowland and Mrs. Luce
touched on some of the advantages and
disadvantages of profit sharing, as they
are seen, diversely, by representatives
Of labor and management.
There is good reason to believe that
labor union members are more recep-
tive to such plans than labor leaders.
When there is a profit to be shared,
for instance. it results from the cooper
dllfe tI1OlG VI WOlkeIS anu lIldlldSe-
ment, and the labor leader, who likes to
be credited with all the gains made by
his followers, has little Or nothing to
do with it. There is, too, the fear that
shared profits may be substituted for
adequate basic wages, and that stimulus
of a share III the profits may encourage
speedup systems. Another factor may
be that an organization whose employees
share the profits and are contended
with working conditions is not a ripe
field for organization of new unions.
Employees who have successful profit
sharing plans are enthusiastic about
them. Others, dissatisfied with results,
have abandoned them. Still others,
with no experience one way or the other,
raise objections.
Ends Feather Bedding
Cited in favor of profit sharing by
some managements is that it has elm
mated Feather bedding" devices which
restrict the efforts Of their workers, that
it has increased productivity, and on an
absolute basis increased the profits which
flow to the owners.
Some employers who view profit shar-
ing with disfavor take the view that
labor is, as Mrs. Luce put it, COM
modify" to be bought at the market
place when there is need for it, and to
be turned out when there is none.
Deeply rooted is an objection, cited by
Senator KnoWland, to disclosure of
profits, which, of course, is a prerequisite
to operation of any genuine profit-shar-
ing plan for how is the worker to know
whether he is getting his fair share un-
less he knows what the total profit is?
There is some evidence that profit
sharing works better in smaller estab-
lishments, where the relationship be-
tween the worker the management and
the final product is more intimate than
it is in large-scale mass production in
dustries. But there are many and nota-
bic exceptions, such as Proctor & Gam
bic Co., Eastman Kodak, Sears, Roe
buck Co., and General Electric Co.
The most recent basic study of profit
sharing in this country remains the re-
port OF the 1889 Senate investigation
by a subcommittee named under a
resolution introduced by Senator Arthur
H. Vandenberg. In reporting to the
Senate the result of that inquiry VAN
denberg said it had shown that profit
sharing has been and can be "eminently
successful in creating employer -employe
relationships that make for peace,
equity, efficiency and contentment."
Two Years Without Profits.
Members of the technical staff which
assisted the Senate committee in its in
Vestigation estimated that several thou
sand proft-sharing plans were in oper-
alton at the time the inquiry was made,
but they obtained adequate data on only
728. Of these only 1876 were true" profit
sharing plans, in that employees received,
in addition to their wages, fixed per-
centage Of the profits.
Under the broad definition of profit
sharing adopted by the committee, there
were, in addition to the 1876 true" profit
sharing arrangements, various forms of
flexible bonus plans, stock distribution,
pensions, annuities and many types of
welfare services.
What happens when there are no
profits to share? The most encouraging
response the Senate committee received
to that inquiry came from the general
manager of the S. c. johnson & Son,
Inc, Racine, Wis. wax manufacturers,
who said the best thing that ever
happened was that for two years his
firm had no profits to share.
Employees had fallen into the habit of
counting on a profit-sharing disburse-
ment each year, he explained, and the
omission, in those two years, forcibly
brought home to them that they were
operating unoer proft-sharing system.
Fewer Labor Disputes.
On the whole, the committee found,
companies which have profit-sharing
plans are less likely to have labor dis
puteS than those which do not share
profits. One conclusion of the technical
staff was that the introduction of profit
sharing as differential establishing
two sources of income caused the en-
ploye to look in two directions for
| financial betterment-toward increased
profits for the company as well as
! toward larger wages for himself
The leadership of organized labor has
traditionally been hostile to profit shar-
ing. John L. Lewis, president of the
United Mine Workers. told the Senate
committee labor had been disillusioned
| becauSe orof1t sharing in tho nost bod