PROFIT-SHARING AS A COMPROMISE BETWEEN CAPITAL AND LABOR

New Zealand Tablet, 8 April 1920, Page 43

PROFIT-SHARING AS A COMPROMISE BETWEEN CAPITAL AND LABOR

Col. P. H. Callahan, in a recent address to the Louisville Welfare Association, endorsed a statement made by Charles f M. Schwab, that "labor has never had its just share of profits and will not be "satisfied in the future with its former compensation, and especially its status." r, ;n ,- r Colonel Callahan is one of the more progressive employers who have taken time by the forelock. He installed profit-sharing in the Louisville Varnish Co., of which he is president, seven years ago, on the basis of the plan suggested by Rev. Dr. John A. Ryan in his books, A Living Wage, and Distributive Justice. This plan "may be briefly described as follows: —■ First.—-Every business must first of all earn its operating expenses and depreciation, which- of course include a living wage to its workers, sufficient to enable them to live in a becoming manner. Second.—The workers having received their compensation, or rather their living wage, Capital should now receive ; its, compensation or wage; six per cent, heretofore on the actual investment being a fair return, although at the ' present time long-time securities produce a better return, so that this rate should not be fixed arbitrarily, but to meet existing conditions, subject to the approval of ithe workers properly represented. Third. Any profits over and above these compensations to workers and capital should be divided on a fair percentage basis between the capital used in the business and the'workers engaged. Fourth. —In neither case should all of these profits be immediately withdrawn from the business, but left there for' a reasonable length of time, so as to increase the financial strength and safety of the company, and in the case of the employees, this additional compensation should be distributed in some form of a security representing an interest in the business, and each employee should be required to hold such security for a reasonable length of time, with first preference to "own-your-own home."

Col. Callahan described how the Louisville Varnish Co. divides its profits on a "fifty-fifty" basis with its employees, the share of the workers being pro-rated according to the wages of each. He said that the plan has interested the employees in their work, thereby increasing production and improving quality, and redounded to the prosperity of the company. A very close relationship has been established between all the employees, who are given information every day as to daily sales, with comparisons of the corresponding days and periods, as well as information regarding the finances of the company. There was no "benevolence" attached to this plan, Mr. Callahan said, for since the introduction of this system the stockholders had received a larger profit than-under the old wage system. Col. Callahan quoted at length from 'a paper by George W. Perkins, as follows: "Bonus systems do more harm than good and stir up trouble rather than alleviate it. The giving of bonuses, he claimed, caused employees to feel that the employers were making vast sums of money out of which a sop was thrown to them to bribe them into feeling kindly disposed or to ward off '■ a demand for a general increase in wages." The employer who objects to profit-sharing because he is making so much money that he is afraid to let even his own employees know how much he is making, was declared by the speaker to be "more than any other responsible for the serious differences to-day existing between Capital and Labor," for, "with the growing intelligence of the masses, how can we expect such a situation to continue ? Every year, yes, every day, it becomes clearer and clearer that such a condition will no longer be tolerated and must speedily pass away. Would it' not be better to use some intelligent foresight and meet what clearly are to be the immediate future demands of public opinion?"