If all the workers in New Zealand could get their wages raised simultaneously, without increasing their output for it, what would be the result?

Nothing. Because commodity prices would rise too, and the purchasing power of our money would be proportionately decreased. There is no theory about this—it is plain fact. One has only to think of the purchasing power of the wages of twenty years ago to realise this. In other words if the cost of your product goes up with the wages, the cost to the buyer goes up, and since we are the principal buyers ourselves, we pay.

Now, if we get an increase in wages, and lower the cost of our product, or at least keep it the same, then our money will buy more, and we will have gained something.

Lastly, if we can by any means reduce the cost of our products, so that the selling price can be reduced, then more people can afford to buy them, and the demand for our products will increase.

This is elementary economics, and we are selling transportation.

“The true solution of the labour problem” says a world authority, “is to make it possible for workers to get more money by earning more.”

The Premium Bonus System has been succssful because it secures when properly run, increase pay to the worker and decreased cost to the page 37 manufacturer. I have been too long associated with piecework systems, not to realise the heritage left us by our forefathers through the operation of the straight piecework system, the results of which have set all unions against its principles. For that reason, under the Premium Bonus System rate cutting, debts and penalties are no part of the scheme, hourly wages being always guaranteed.

Under the old piecework system, rates or prices were set by past records or guess estimates, that often proved very inaccurate. The result was sometimes excessive earnings that tempted the owners to cut prices. The entire excess earnings going to the worker made the employers want a share, especially when they realised that these earnings were due to poor rate setting and not entirely to increased efficiency.

Under modern systems the rates are set on more exact knowledge of times taken. Rate setters in the Department will require to be selected from the different crafts and trained in operation analysis. This is not a stop watch process, although in my own early days of rate setting the stop-watch was a handy tool. With experience, a rate setter will calculate in detail the operations upon which each rate is to be computed. Such rates will be approved by the foreman of the Department and also by the Departmental head.

The form printed on page 36 shows what a detailed analysis is. With such information available a fair deal can always be assured.

The next instalment on this subject will explain how the Premium rate is set, and its effect on wages and costs as compared with piecework methods.

The Manager's Handicap.

The Manager sits on the office stool
And yearns and yearns and yearns
For a chance to buy a modern tool
That earns and earns and earns.
He's sick of fussing with old-time stuff
And slow production has called his bluff.
He knows there are profits he's sure to muff
When the trend of business turns.
While the orders come at a generous price
He drives and drives and drives,
So the books will show just a little slice
He plans and schemes and strives.
He's got to earn while the price is right
When everyone's pushed with the work in sight,
But when competition brings on a fight
He'll be lucky if he survives.
His boys will do what he wants them to do
And they work and work and work,
But they're penalised by his old machines
For the damn things only shirk.
So do what he will, production's low,
He hasn't a chance till his old tools go
To that far-off land of lost limbo
Where only phantoms lurk.

—E. P. Blanchard, in “The American Machinist.”