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Furthermore, it is quite apparent that unless labor does act upon this theory it is in no position to protest if "locked out," or if employers discharge high-priced help and substitute low-priced. If labor has no interest it has no voice.

II

But if it has an interest, what then?

The question is crucial, for the answer is fraught with consequences.

If the men employed in a particular factory have an interest therein, their share of the returns from the business should vary with the prosperity of the business.

They may be guaranteed-as many salesmen are-a minimum salary or wage, but over and above this minimum they should take some chances on fluctuations in the re

turns.

As a matter of fact, they do take those chances now; when business is dull, their wages are reduced or they are worked half time; if the business fails, their losses may be greater than the owner's, they may lose all they have saved. In truth, no class in the community assumes the risks labor assumes, since it stakes its all on every venture.

To a certain extent the interest of the employee is being recognized in profit-sharing arrangements, and he takes his profits and his losses pro rata with owners, but, generally speaking, labor occupies this inconsistent position:

It claims an interest in the enterprises for which it works, denying to the employer absolute control, but refuses to take the chances incidental to such interest.

It not only refuses to take any chances, but it demands. a flat rate of compensation far above a minimum wage, a rate of compensation that may have no relation whatsoever

to the particular industry, but one that is often based upon returns in other and wholly unrelated enterprises.

III

In the labor world wage scales are fixed by conferences and councils of men who make no pretense to investigate the ability of an individual enterprise to pay the rate.

Whether an employer is making money or not, he must pay the union scale. A railroad may be in the hands of a receiver; it matters not, it must meet the demands of the unions or they will order strikes.

Labor as now organized cannot do otherwise; it cannot advance wages on A and lower them to B; it cannot fix the wages of firemen on the New York Central lines at so much and a lower scale on the Pennsylvania, the Erie, the Wabash, although the earnings of these roads and the work on each differ so much that men may prefer to work on one for less than they get from another.

Unions are in a difficult and ultimately untenable position; they are obliged to treat with employers on the theory they have labor to sell, not on the theory that each employee has an interest in the business.

Collective bargaining is the only form of contract feasible; the unions cannot deal with individuals; they must lay down rules and make wage scales for classes; if they attempt to do otherwise the fabric of unionism as now built up falls to the ground.

The attitude of employers is quite as inconsistent. They deny their employees have any interest-much less any voice-in the business, and in the same breath refuse to meet and treat with the heads of employees' unions.

If labor is a commodity, like coal, to be bought by each employer as cheaply as he can, employees not only have

the right to, but should organize to get the best wages they can; their union leader is their representative to make a bargain.

The employer who refuses to treat with a union and at the same time denies any interest in the business to his employees has impaled himself on both horns of the dilemma.

But the employer who recognizes the broad economic proposition that all who work to build up a business have an interest therein, not only is in a position to, but necessarily must say to all outsiders, "You cannot interfere between this business and the men who are working to make it a success and say what any man or set of men shall receive, because you do not know anything about the business or the profits we may make this year.'

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Under such circumstances the men themselves would be the first to resent any attempt by outsiders-especially outsiders in the employ of competitors-to say they must take a fixed sum per day in lieu of a share in the profits at the end of the year.

Employers deny the interest of employees in the business, but as against unions act as if the employees had such an interest.

Unions assert the interest of employees in the business, but as against employers act as if employees had no such interest.

The trouble lies in an imperfect recognition on both sides of a fundamentally sound theory of labor organization, a theory based upon the economic proposition that all who help to build up and maintain a business have an interest therein.

If that proposition is sound, organization of labor must be on lines radically different from existing.

For purpose of illustration we give here the labor scheme of a given industry. To include all classes of em

Union of all employees along vertical line,
INTEGRATION.

ployees would make the scheme needlessly complicated for the purposes of the argument.

The same scheme in outline applies to any enterprise.

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It is plain at a glance that two fundamentally different modes of combination are possible:

Combination in the vertical line-integration.

Combination in the horizontal line-aggregation.

The lines of cleavage depend upon the lines of organization.

All labor unions are organized along horizontal lines, each is an aggregate of individuals who follow the same occupation, and their power depends upon numbers-the underlying theory is combative, not coöperative. The lines of cleavage are horizontal, destructive to coöperation and harmony within the industry.

'Compare this with scheme of industrial coöperation on page 264.

The firemen of all the railroads in the country are banded together, and the engineers of all the roads are in a brotherhood, but the fireman and the engineer who ride in the same cab are not united; in fact, their unions are necessarily more or less antagonistic; one may support the other in a demand for higher wages and a threat to strike, but only as a matter of policy.

Ask a brakeman or a switchman what he thinks of the demand of the engineers for increased pay,1 and he will give you his opinion in language hardly fit for publication, but his union will keep silent, because it expects to put in its own demand later on, when, in turn, the engineers will be expected to lend their support.

It is needless to say a fireman on a road in California has nothing in common with a fireman on a road in Maine; the work is not the same, the fuel is not the same, the cost of living is not the same, yet the two are linked together each as against not only the company that employs him, but against the engineer and conductor who run the train on which he fires. His wages and conditions of employment are fixed by men he never sees, who live in States thousands of miles from where he lives; he works when they tell him to, strikes when they tell him to, and accordingly as he is told he will or will not take his engineer's place if the latter strikes for better wages.

V

The condition is fundamentally unsound, and the stronger the unions become the more clearly do they demonstrate the weakness of the theory of combination by aggregation.

Just as was found in discussing industrial combina'Formulated, April, 1912.

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