Appendix
A Floating Wage Rate
The following suggestion for a floating wage rate would prove a perpetual automatic incentive to continuously high efficiency.
It consists of a variation of, say, 6s. per week in the wage rate of every class of worker, the lowest wages in the class being the trade-union rate, and the highest wages being 6s. above the trade-union rate.
Every quarter-day each worker who reaches an average efficiency of, say, 95 per cent. or over during the previous three months for a minimum number of reward hours worked, say 500, will receive automatically an increase of 1s. per week in his wages for the next three months. If he keeps up this efficiency for eighteen months he will reach the highest wage rate.
The wages of every worker who fails to reach an average efficiency of, say, 85 per cent. during the previous three months will automatically drop 1s. per week until he is on the lowest rate.
Under these conditions a worker on the lowest rate will try to reach a higher one, and if he is on a higher rate he will always try to maintain his efficiency. A drop in efficiency means a direct loss to the worker, and the worker would probably complain of the conditions of his work. If other workers can keep up their efficiencies on the same jobs, the complaint is groundless; while if other workers cannot keep their efficiencies, it is obvious that something is wrong, and the conditions will be investigated.
The variation of the wages being automatic, no one can complain of unfairness.
The advantage of making the change every three months instead of a longer period would mean that every worker would take a live interest in his continuous efficiency, and would not be content with a good week one week and a medium week the next. And, again, a good man who dropped down owing to unforeseen circumstances would only be down for three months, while a medium worker would always respond to the incentive, and when he reached another step up he would make great efforts not to go down again.
There would be an automatic selection of the best men, and favouritism would be reduced to almost nothing. A foreman could not prevent a man getting the increase when his efficiency proved that he had earned it, and he could not push on an inferior man because of personal friendship.
Should a high wage man leave, then he would have to come back on the lowest wage rate if he wanted to come back. This would induce men to keep their situations. Should a man be discharged, the same thing would happen. But a high wage man is of far more value to a firm than a low wage man, and he would not be discharged unless discharged permanently for some fault.
If a firm thought to lower wages by discharging all the high efficiency men, and then take them on again at a lower wage, that firm would immediately lose caste, and no high efficiency man would work there. A high efficiency man can get a job anywhere.
This floating wage rate would be quite apart from the question of reward, and the job rates for reward work would be the same for all workers no matter what their wage rate was.
Footnotes
1 What is necessary in the way of food, clothes, fuel, household articles, rent, etc., in order to keep an average family in reasonable comfort can easily be determined. I have worked this out in detail, but it is hardly a subject for these notes.
2 Since writing this paragraph I have found the following statement in Mr. Graham Wallas’s book, “The Great Society” (p. 347): “It is true that Morris, for all his greatness, never faced the fact that we cannot both eat our cake and have it; cannot use slow methods of production, and also turn out without overwork large quantities of consumable wealth. Once, while I listened to him lecturing, I made a rough calculation that the citizens of his commonwealth, in order to produce by the methods he advocated the quantity of beautiful and delicious things which they were to enjoy, would have to work about two hundred hours a week. It was only the same fact looked at from another point of view which made it impossible for any of Morris’s workmen, or, indeed, for anyone at all whose income was near the present English average, to buy the products either of Morris’s workshop at Merton or of his Kelmscott Press. There is no more pitiful tragedy than that of the many followers of Tolstoy, who, without Tolstoy’s genius or inherited wealth, were slowly worn down by sheer want in the struggle to live the peasant life which he preached.”