prevalent device of cutting piece rates when an increase of production. takes place. If the worker is satisfied that a proper share of the increased output will come his way, there is something to fire his imagination. The integrity of the employer is of itself a genuine non-financial incentive.

4. Stability of employment is a loyalty incentive when the worker sees that the employer is concerned with his interest to the extent of making every effort to eliminate seasonal shut-downs, and to keep going, even if only on part time, when business is slow. The worker has a reason for a responsive attitude toward the employer. Loyalty to the worker in the form of maintaining a steady job begets loyalty to the employer in the form of interest in the job. To secure this incentive, management must convince the worker that it is doing its best to give him an uninterrupted chance to earn a living.

5. Rivalry is stimulated by posting the records of production for individuals and for groups. When men can see their efficiency rated side by side with that of their fellow workers, it becomes a matter of pride to come near the head of the list. Moreover, records which indicate the quality of the finished product and the amount of spoiled goods tend to foster a real pride of craftsmanship. Another form of record gives the worker his comparative efficiency today and a year ago today, with the result that he tends to take pride in progress in his skill.

6. Fitting the worker to the job by intelligence tests, ability tests, job specifications studies, and efficiency ratings, makes possible a harmony between the human factor and the machine factor, which tends to heighten interest in the job. In the first flush of enthusiasm for psychological tests, experts overestimated their value considerably. Their usefulness is thus far confined to certain highly specialized tasks, such as clerical work, inspection tasks, salesmanship, and tasks where acuteness of hearing or vision are of vital importance. The tests themselves, such as the Binet, the army, and special industrial forms, are in a far from completed form for full industrial applications. The correlation between tests and subsequent performance records indicates that the tests are not a sure indication of ability, but at most point to a probable efficiency or inefficiency. Hence they have to be used with a wide scope for judgment and common sense on the part of the employer. Their effective use requires administrators who have had special psychological training.13 Purely psychological tests need to be supplemented by physical, medical and physiological tests to discover the endurance of the worker under the working conditions of the occupation in which he is to be placed.14

7. Transfer and promotion are practicable aids to sound labor incentives. Henry Ford states that the repetitive machinery of automobile manufacturing would drive the workers crazy unless they were given variety at right intervals by transfer from one type of machine to 13 H. D. Kitson, School Review, Volume XXIV, No. 3, March, 1916. 14 R. W. Kelley, Hiring the Worker, pp. 91-97.

another, or from one department to another. Transfer thus serves to alleviate monotony. Again, if a worker is found inefficient at one type of work, the scientific solution is proving to be to try the man out at other types until he gets the right sort of task for his peculiar nature. If he is at odds with the foreman of one department he may be transferred to another foreman. These policies secure the confidence of the worker and are a substitute for a former policy of discharge the instant the man proved incompetent. At each job held, efficiency reports may be made, based on piece-rate records, quality of work, judgment of foremen and superintendents, character traits, attitude toward work, etc. These ratings can be used from time to time as the basis of promotions.15 "Many organizations lose a considerable degree of the enthusiasm and zeal they might command by failing to make it apparent that they will recognize merit and advance the ambitious. . . . Any transfer or promotion plan which is to be permanently sound should, therefore, meet this test: Does the plan stimulate and draw out the desire of people to be creative, to be interested in their own activity, to excel, to win approval, to develop in power of self-expression?'' 16

...

8. A great number of employers have set up organization machinery which invites and encourages the suggestions, viewpoints, and opinions of workers. The devices of labor representation are various in kind, but in all their variety, are based upon the value of evoking the mental activity of the workers. Joint conference, consultation, discussion, all serve to clear up misunderstandings, to create a new feeling of dignity and self-respect on the part of the worker, to develop a sense of responsibility and self-control, and most important of all, to build up a feeling that the interests of the worker are one with the interests of the employer.

9. The morale of the workers has been elevated by the improvement of their environment. Attractive homes, hospital care, recreational facilities, pleasant factory conditions, all have their effect on the psychological reactions of the worker. By encouraging a psychologically abundant life, the worker develops a richer personality and exhibits a steadier and higher material efficiency.

10. "Men must get the feel that they are working for efficient managers if they are going to be interested in increasing production."' 17

Especially must the workers feel that the management is intelligently and scientifically handling the personnel side of the organization. To quote Meyer Bloomfield, "When everything that present-day science can suggest in the way of improving technical efficiency in systems of cost keeping, equipment, machinery, and material has been adopted, the biggest of all industrial problems remains to be faced.

"As we have seen, this is the problem of handling men. Every awakened employer knows that managing employees, selecting, assigning, 15 R. W. Kelley, Hiring the Worker, Chapter VIII.

16 Tead and Metcalf, Personnel Administration, pp. 228-235. See also, R. A. Spaeth, Industrial Management, March, 1920, pp. 213-217. 17 Survey, March 5, 1921, p. 817.

directing, supervising and developing them, is the one phase of management which is most difficult and complicated.'

18

To perform this important function, a new profession has come into being within the last few years, that of employment management or personnel administration. The manager of this department of the business conceives of the human factor as a problem calling for scientific analysis of every phase of the employment relationship. The consequent good-will and mutual understanding are the results of the incentives aroused in the laborer's mind.

This list does not in any sense exhaust the non-pecuniary incentives possible in the processes of production. They illustrate a number of the possibilities. There are so many things which count in the worker's life besides the amount of his income that economic principles based upon the assumption that the laborer is a one-motive being-and that motive purely mercenary,-have gone far astray. The non-possessive impulses, when properly stimulated, build up a better balanced life for the worker and supply the employer with a producer whose heart is in his work.

Bargaining Power and Wages.-The individual laborer is at a disadvantage in dealing with the corporation. He has less skill and sagacity as a bargainer than his employer. He has less knowledge of the labor market than his employer. He has less ability to hold out for his terms than the employer. The last difference is perhaps most crucial of all. If the laborer does not take a job at the wage offered, he may not be able to get any job at all. The employer will scarcely be affected by his refusal, because the employer can readily hire some one else. Individual bargaining means that the worker must match his feeble bargaining strength against the immense power of the corporation. Individually he is no match for the employer.

The gospel of unionism is collective bargaining. The union aims to strike a superior wage bargain by virtue of its leadership, its knowledge of the market, and its ability to strike in case of necessity. The experts who year after year represent the unions in negotiations with employers become highly skilled in exacting the last farthing from the employers.

The unions consider the abstract law of supply and demand an obsolete shibboleth. They refuse to be bound down by its implications. By organizing their membership, they revolutionize the supply factor, and bring it under their own control. Some of them limit their membership as a means of limiting supply. But perhaps their greatest supply factor is their monopoly threat to cut off supply altogether by going on strike, if their demands are not met. The arbitrary law of supply and demand is thus annulled, and a new strategy is introduced whereby the laborers emancipate themselves from iron clad laws. The wages of collective bargaining are pressed upward through manipulation of the supply factor. In marginal terms, unionism defies any fixed and constant unit of marginal productivity. It acts upon the assumption that 18 Kelley, Hiring the Worker, p. 9.

marginal productivity is a highly flexible quantity, and can be altered by deliberate effort. One central intent of their effort is to raise the marginal productivity of labor by the arts and devices of collective bargaining.

Although the collective bargain promises advantages over the individual bargain, nevertheless either form is dependent upon an outside factor, namely, the law and the courts. Bargaining power is, in essential respects, a creature of law. It is created through the liberties guaranteed to workmen and unions by law, and the restrictions imposed by law. The employer may fire a laborer for belonging to a union, but a state or federal law forbidding the employer to fire a man for this reason is unconstitutional, on the ground that it encroaches upon freedom of contract and deprives the employer of liberty or property without due process of law.19 At one time, a union was illegal in its very nature. Later, its existence was legalized, but many of its practices were made illegal. Strikes are legal under some conditions and illegal in others. Injunctions against union policies may be used as a means of preventing unions from conducting strikes or carrying out other objectionable policies. If a strike is called, picketing is thought by labor to be essential to winning a victory, but picketing must be peaceful to be lawful, yet. picketing is an activity which in its very nature invites friction rather than peace. A labor agreement by an individual is a contract, but is not enforceable. It is terminable at the will of either party. A collective bargain is a wage contract, but the exact status of its enforceability is not certain. Labor itself has been held to be a form of property but different in nature and rights from some other forms of property. The area within which the unions may swing the power of collective bargaining is now narrowed and now expanded by the law and the courts. Bargaining power is not a fixed and eternal thing written in the laws of nature, but a passing and ephemeral thing written in constitutions, legislative enactments, and judges' decisions. Bargaining power is whatever the legal and judicial thought of the times makes it.20

Habit and Custom in Wage Determination.-Much that we tend to glorify as inevitable under the head of supply and demand, or of marginal productivity, is none other than the force of wont and tradition. Habit and custom constitute a potent group of wage-fixing influences.

Lines of work which custom accepts as carrying prestige and social esteem often command a relatively low wage. Examples would be found in the "white-collared" clerical workers, or in the teaching profession. Again, the customary standards of one locality often keep wages higher (or lower, as the case may be) than those of a neighboring locality. Variations of wages as between different trades and occupations are in a large number of cases explainable by the custom and tradition of the 19 See 236 U.S. 1, 11. Also see W. W. Cook, Yale Law Journal, Volume 27, p. 779, 1918, and T. R. Powell, "Collective Bargaining Before the Supreme Court,” Political Science Quarterly, Volume 33, p. 396, 1918.

20 See J. R. Commons, The Legal Foundations of Capitalism, Chapter VIII.

lines of work involved. A Massachusetts Wage Commission has asserted that "wages among the unorganized and lower grades of labor are mainly the result of tradition and of slight competition." 21 Employers who were habituated to the under-payment of sweated trades were sure that wages could not possibly be increased above the customary scale until the minimum wage laws came into play, defying custom, yet not ruining the business. Habit and custom operate in and through all other wage influences. Orthodox ideas of wage figures "which the business will bear," established notions of what constitutes "a fair day's pay for a full day's work," and current attempts to "adjust wages to pre-war levels" all illustrate the scope and force of custom in the setting up of the wage scale.

Standardization of Wage Rates.—In many lines of industry, wage rates for each occupation and class of labor have been standardized. Work is classified, and uniformity of rates prevails within each classification. Inequalities in rates of pay for men doing the same kind of work are eliminated. The same pay for the same work becomes the criterion of wage determination within the given group of workers. The standardization of rates eliminates the feeling of injustice which arises when one laborer receiving $25 per week finds that another laborer doing exactly the same work is receiving $30 per week. The laborers, through their trade unions, have commonly demanded standard wages, since these are adaptable to the purposes of collective bargaining. Personnel management has often classified the wage rates in standard grades in the interest of giving equal reward for equal work in the same line of occupation.

Much objection has been raised to standard rates on the ground that equal rates make no allowance for unequal abilities. It is claimed that the minimum rate taken as a standard tends to become the maximum rate for all members of the given group. The best workmen receive no more pay than the poorest. This criticism is doubtless grounded to a degree on fact. Standard wages, as applied, have undoubtedly been guilty of the evil charged. But the guilt in some cases does not at all imply that such a fault is inherent in standardization. In the best experiments with standardization, the standard rates are taken as minimum rates. Proficiency above the average is rewarded by a differential addition to the minimum. Flexibility of rates for extra merit above the standard has proved thoroughly practical. The standard rate, with individual differentials based upon individual achievement, is the principle in its most acceptable form. In the modern machine régime, when everything else is standardized, it is not at all unreasonable to suppose that standardization can be advantageously applied to the wage element.

Wages and the Ability of the Individual.-In industrial circles, one frequently hears the assertion that a worker is paid in exact proportion to his ability and his efficiency. If the worker wants to earn more, he is

21 Report of the Commission of the Minimum Wage Boards, January, 1912, p. 18.