POSSIBLE REMEDIES—PROFIT SHARING
Domestic service, as has been seen, is accompanied by certain social
conditions that prevent many from entering the occupation. The present
unclassified state of household employments operates in the same way. But
in addition to this lack of organization, other industrial disadvantages
are found. These are the lack of all opportunity for promotion within
the service, the lack of kindred occupations opening out from it, the
irregularity of working hours, and confinement evenings and Sundays, the
necessary competition between those of American birth and foreign born
and colored employees, and the lack of personal independence. These, in
addition to the unorganized condition of the work, are the industrial
disadvantages that tell most strongly against the occupation; they are
the economic maladies that can be alleviated only by the application of
economic remedies.
The attempt has been made to show how the lack of organization in
household employments can be partially met by taking out of the house
a large part of the work now performed there, and having much of what
must necessarily remain done by the piece, hour, day, or season, thus
securing better specialization of work and directing it into the current
of industrial progress. The second group of industrial difficulties
enumerated must in a similar way be met by measures that have proved
successful in similar fields.
The vexed questions of wages and hours of labor in the industrial world
are still unsettled, but in certain industries some little progress
towards a solution of those difficulties has been made through the
introduction of the profit-sharing system. In order to answer the
question whether profit sharing could be introduced with advantage into
domestic service, it is necessary to consider somewhat in detail the
question, What is profit sharing, and also the question, What have been
its advantages in general economic society?
Profit sharing, as defined by Mr. Carroll D. Wright, is the term that
“may be applied to any arrangement whereby labor is rewarded in addition
to its wages, or in lieu of wages, by participation in the profits of the
business in which it is employed. Benefits of various kinds—as insurance,
schools, libraries, and beautiful surroundings, so far as maintained by
employers out of their profits and enjoyed by employees as an addition to
what their wages would purchase—would have to be regarded, in a strict
analysis, as an indirect form of profit sharing.”[311] Mr. Nicholas Payne
Gilman defines it as “the method of rewarding labor by assigning it a
share in the realized profits of business in addition to wages.”[312] Mr.
D. F. Schloss considers it “an arrangement under which an employer agrees
with his employees that they shall receive, in partial remuneration of
their labor, and in addition to their ordinary wages, a share, fixed
beforehand, in the profits of his business.”[313] The International
Congress on Profit Sharing, held in Paris, in 1889, declared it to be “a
voluntary agreement, by virtue of which an employee receives a share,
fixed beforehand, in the profits of an undertaking.”
The history of profit sharing is short, and can easily be recalled.
It began in 1842 with the _Maison Leclaire_ in Paris, and has been
subsequently introduced into many business houses in France and
Switzerland, countries where the economic conditions lend themselves
readily to its progress. Its adoption in Germany has been less extensive,
while the English industrial system has hitherto seemed hostile to it,
although Mr. D. F. Schloss in his recent Report claims that a larger
number of experiments in profit sharing have been made in England
than in any other country. Probably about one fourth of the business
establishments conducted on this principle are found in the United States.
What are the advantages that have resulted from this fifty years of more
or less extensive experience with the system? There is first the fact
that it results in the development of what Mr. Carroll D. Wright has
called “the group of industrial virtues.” This group includes diligence,
zeal, caretaking, vigilance, punctuality, fidelity, continuity of
effort, willingness to learn, a spirit of co-operation, and a personal
interest in all business affairs. In addition to these virtues, other
positive advantages have been noted by those who have tried the system.
“An appreciable percentage of the occasions of worry, which all large
employers experience, have disappeared,” writes Mr. T. W. Bushill, of
Coventry, England.[314] M. Billon, of Geneva, states as one result of
his experiment, “Superintendence became easy for us, and _from that time
we could, without fear of offending any one, show ourselves exacting in
details to which previously we were obliged to close our eyes_.”[315] The
Peace Dale Manufacturing Company began profit sharing “not to make money
in the positive sense, but to save waste.”[316] This saving of waste is
seen in the efforts to economize time and materials and in the additional
care with which machinery and all appliances for work are used. Various
English firms have been most successful in attaining this end, stating
that they find “increasing care to avoid spoilt work and waste both
of time and material”; that “waste is guarded against”; that there is
care in handling materials, and that “especially waste of raw material
is avoided.”[317] Another gain is found in the identification of the
interests of employer and employees and the consequent harmony between
capital and labor; “the occurrence of a strike in a profit-sharing
establishment is believed to have been a rare event,” says Mr.
Schloss.[318] The advantage to the employer of this identification of
interest is seen in the ability to obtain “a steadier and superior class
of workers”; in the fact that “the knowledge that there is such a scheme
brings all the best workmen” to the firm employing it; that “workers
remain year after year”; and that “it tends to secure and retain the best
workers.” Its good effects on the character of the work are seen when “an
efficient man is very soon pricked up to greater diligence by his fellow
workers”; in securing through it “the maximum of effort”; “in a steady
pulling up all around”; when it “makes the men keener after business and
sharper in keeping down expenses.”[319]
It would seem difficult to introduce the scheme into a business like
that of tea-blending, but a London firm that has practised it thirteen
years states that the effect is “to make the clerks willing to exert
themselves in an especial manner, when the occasion arises, because they
know that if they show themselves unable to cope with the mass of work
to be done, then the staff must be increased; and they do not care to
see their bonus diminished by an augmentation of the numbers entitled to
participation.”[320]
The question naturally arises as to how far these gains reimburse the
employer for the financial cost of profit sharing. The chairman of the
South Metropolitan Gas Company of London writes, “I state unhesitatingly
that the Company is recouped the whole of the amounts—some £40,000—paid
as a bonus since the system was started.”[321] The managing director of
the New Welsh Slate Quarry Company gives it as his personal belief “that
we are recouping every penny of bonus and more;” and similar testimony
comes from others.
Yet this is putting the matter on the lowest plane. The system “converts
the industrial association of employer and employees into a moral
organism, in which all the various talents, services, and desires of
the component individuals are fused into a community of purpose and
endeavor.”[322] A natural result, moreover, is a general elevation in the
standards of morals. Most of all, in an individual way it is of help to
the employee; “to assist a person in improving his condition by his own
efforts is to make a man of him.”[323]
What can be learned from these successful experiences in profit sharing
that will be of value in domestic service? The usual difficulties that
beset the employer of domestic labor are lack of interest, desire
for change, negligence, waste of time, extravagance in the use of
materials, in a word, the absence of the industrial virtues. If these
very difficulties—all of which exist elsewhere—are partially or entirely
obviated by the employer of other forms of labor through the system of
profit sharing, may it not reasonably be expected that they could be met
in domestic service by the employment of similar means?
Domestic service, it is true, is not a wealth-producing occupation,
but it is wealth-consuming probably beyond any other employment. The
profit, therefore, must be negative, that is, economy in the use of
time, materials, and appliances for work. It is in precisely these ways
that profit sharing has been most successful, and the wage system most
unsatisfactory. Under the wage system the employer of domestic labor pays
for time rather than for quality of service, and employers therefore
constantly complain that employees do not accomplish one half as much
as they should, and employees that employers exact twice as much as can
be done. Neither party to the contract under the wage system can have a
true notion of the working value or the money value of time; thus it is
not strange that the one requires more than can be performed, and the
other does less than might be reasonably demanded. The same ignorance and
carelessness prevails in the use of materials. The employer may provide
the best the markets afford, but if the cook has never had brought home
to her a realizing sense of the money value of these materials, she is
not altogether to blame if she fries doughnuts in butter costing fifty
cents a pound, and makes angel food daily when eggs are forty cents
a dozen. The employer may also provide the finest of furnishings for
the dining-room and china closet, but if the maid-of-all-work does not
associate a money value with these furnishings, she uses table napkins
for holders, and carelessly drops fine china into an iron sink. From the
selfish point of view the chief interest of the employer is to keep the
bills down and to get the greatest possible amount of service even at
the cost of the greatest expenditure of human strength; among employees,
it is to do sufficient work to retain a good place, and to use whatever
materials are most convenient.
Mr. Nicholas Payne Gilman has well said, “The deficiency in the daily
wage system as a motive power to procure the desirable maximum of effort
and performance is extreme.” Precisely the same objections that hold
in all other employments to the wage system hold as well in domestic
service. In other occupations it has been seen that the almost universal
testimony of those who have tried profit sharing is that the system
results in economy in the use of materials, care in the handling of
machinery and implements of work, and a feeling of partnership, the
spur of which as a motive “is only excelled in sharpness by complete
proprietorship.” Mr. Gilman sums up the advantages of the system when
he says, “Profit sharing advances the prosperity of an establishment by
increasing the quantity of the product, by improving the quality, by
promoting care of implements and economy of materials, and by diminishing
labor difficulties and the cost of superintendence.” In a word, whatever
arguments can be advanced in favor of profit sharing in productive
industries can be used with equal force in its favor in domestic service.
The application of the principle to the household is simple. It is
possible to allow a fixed sum, as $50, $100, or $500 per month for living
expenses, which shall include the purchase of all food for the table,
fuel, lights, ice, breakages, and the replacement of worn-out kitchen
utensils, and to allow a pro rata amount for guests during the month. If
by care in the use of food materials, fuel, and kitchen and dining-room
furniture, the expenses amount to $45, $90, or $450 per month, the $5,
$10, or $50 saved can be divided according to a ratio previously agreed
upon between the employer and the one or more employees. The cook is
in the position to save the most, and therefore ought to receive the
greatest percentage of the amount saved; but it is a part of the work
of the waitress to be careful of glass and china, of the laundress not
to waste fuel, soap, and starch, and of all, including parlor maid,
seamstress, and nursery maid, not to waste gas, fuel, or food at the
table, and therefore each employee is entitled to a share in the profits.
Thus each keeps watch over the others to prevent undue waste, and the
employees are given a personal interest in the establishment now so
often lacking. In addition to this, it is possible to allow a gardener
and a coachman who have taken special care in the improvement of lawns,
gardens, and stables a small percentage on the annual appreciation of
property. “Comprehension is wonderfully quickened by the payment of a
bonus or two in cash, and there is no more efficient instructor than
self-interest.”
Moreover, it is possible to allow a fixed sum for service, as $18 per
month, out of which the employee may choose to have a small sum spent in
hiring by the day some one to wash windows and clean verandas, or she
may choose to economize her time and strength and do this work herself.
In either case the financial outcome to the employer is the same, while
either arrangement makes the employee a partner in the domestic company
and gives her an active interest in its welfare.
It is possible to apply the principle in still other ways. If the general
servant likes to cook but dislikes other parts of housework, she may
contribute to the Woman’s Exchange and with part of the money received
hire with her employer an assistant to come in a certain number of hours
each day to care for the rooms, the silver and brass, and wait on the
table. It is possible also to give the cook a certain amount of time
for making articles to be sold at the Woman’s Exchange, the employer
furnishing capital and implements of work and receiving a certain share
in the profits. In employment bureaus it would be possible to give a
certain percentage of the profits of the bureau to all employees who have
kept their names on the books of the bureau and remained at least one
year in the place found by them through its agency.
The ways indeed are numberless in which the principle of profit sharing
can be applied; and if the ingenuity and fertility of resource possessed
by so many employers were once turned in this direction, the good
resulting would be incalculable.
Great as would be the gain for domestic service if this principle could
be adopted in private families, the advantage would be if possible
even greater could it be introduced into hotels, boarding houses, and
restaurants, and also the dining-car, parlor-car, and sleeping-car
service. In all hotels, restaurants, and public institutions the waste
is enormous—perhaps proportionately greater than in private families,
largely because as a rule the superintendents of such establishments are
also employees on wages. Ignorance is often the chief cause of waste, and
the best corrective of this ignorance is the experience gained through
profit sharing.
But the greatest advantage of profit sharing in restaurants and hotels,
dining-cars and sleeping-cars, is that through it the feeing system could
be abolished. In all such business enterprises where the feeing system is
established there is in effect a combination of the general public and
the employees of the establishments against the proprietors of them.
Such is the case because the feeing system prevents the proprietors
from receiving a fair amount of patronage unless each employee is feed
for performing the service he ought freely to give and for which he
will presumably be paid by his employer. The money profit in all these
establishments depends largely on the good service rendered by the
employees, and thus it would be possible to divide a positive profit
as well as a negative saving. The feeing system, if it prevails in
any branch of personal service, drags down with it in the social and
industrial scale every other branch of the service. The substitution
of profit sharing in hotels and restaurants and in the dining-car and
sleeping-car service for the system of fees so increasingly prevalent
would do more than any other one thing to remove the social stigma from
domestic service and make of all such employees self-respecting men and
women.
It may be urged against the proposition to introduce profit sharing into
domestic service that few employees are of such stability of character
as to warrant making the experiment. But the great desideratum is to
introduce into the service some principle that will develop the best
qualities of those already in it, that will sift out the worthless and
compel them to undertake unskilled labor, that will draw from other
occupations, where they are less needed, able persons whose natural
tastes and abilities would attract them to this. M. Levasseur is quoted
as saying that of one hundred firms that begin business, ten per
cent succeed, fifty per cent “vegetate,” and forty per cent go into
bankruptcy. The statement characterizes with possibly sufficient accuracy
the result in the case of the establishment of a corresponding number of
households. Could an industrial partnership be formed between employer
and employee, with the agreement to divide, not positive profits, but
negative savings, something might be done to save the forty per cent
who now give up housekeeping and go into the bankruptcy of hotels and
boarding houses, and also to lessen the fifty per cent who “vegetate”
through the employment in the household of obsolete industrial methods.
It may also be said that profit sharing appeals to a selfish motive and
therefore is objectionable. But much of the waste and extravagance in the
household comes from ignorance; profit sharing is one way of teaching the
value of raw materials. The comfortable theory is often entertained that
to be born poor is to be born with a knowledge of all household affairs.
As a matter of fact, there is doubtless far more waste and extravagance
in the households of the poor than in those of the rich. But extravagance
is in reality a relative term; “tenderloin steak for breakfast and rump
roast for dinner,” which may be simple fare in the household of the
employer, becomes an impossible luxury to the employee in such a family
when she goes to a home of her own. Profit sharing would be of value
in the household not because it would appeal to a selfish motive, but
because it would teach the value of materials used and incidentally do
something to prevent this prevalent waste and extravagance.
Neither of these objections to profit sharing holds in the face of all
that can be said in its favor. The general arguments for it are many.
It is usually assumed that the interests of the employer and those of
the employee are antagonistic. The introduction of profit sharing could
easily prove that this assumption in domestic service is wrong, as it
has already made similar proof in other occupations. If the employers
of other forms of labor find themselves relieved of much of the worry
and friction that have previously resulted from the mutual relation of
employer and employee, it would seem reasonable to expect a like result
in the household. If it has been found elsewhere that the extra services
called out, and the manner in which they are called out, constitute an
invaluable educational discipline, and promote zeal, efficiency, and
economy, a similar result might be looked for here. If other employees
have learned through it to be careful of their methods of work, punctual
in the performance of their duties, and economical in the use of
materials; if it has become “a moral educator, and substituted harmony
and mutual good-will for distrust and contention in the relations of
employer and employee,” then, indeed, may it not be considered, not as a
panacea, but as one measure among many that may be of help in lessening
some of the serious difficulties that now attend domestic service?
At the present time a public discussion of domestic service meets
with little else but jest and ridicule, while in private life the
social stigma is cast on all engaged in it, as is the case in no other
occupation. To attempt to dignify labor by saying, “we must dignify
labor,” savors of the old problem of trying to raise one’s self by the
boot-straps. No concrete method by which this is to be done is ever
suggested, and until some plan is adopted by which the personal dignity
and independence of the employee is recognized, and his industrial and
financial independence is secured, domestic service will continue to be
under the industrial and social ban. When this improved condition is
brought about, there will be established what Professor Jevons considers
the best of all trade-unions—that between the employer and employee.
It must be frankly said that the plan of adopting profit sharing in
the household is a theoretical one; and to say it is “mere theory” is
often considered an unanswerable argument with which to meet every
new proposition. But theory lies at the basis of all successful
action; difficulties have come in household service often because
it has been conducted without theory—in a short-sighted, haphazard,
hand-to-mouth fashion. It is known, however, that the experiment has
been tried successfully in a private family, and this perhaps saves the
proposition from the charge of being only theory. It has been tried by
Mrs. X, a university graduate, after one and a half years’ experience
in housekeeping. The experiment was made in a college town where the
cost of provisions was rather above than below the average. The family
comprised four adults, including the Irish maid rather above the average
in intelligence and ambition. The plan provided for an allowance of $40
a month for living expenses, including groceries, meats, fish, poultry,
butter, milk, cream, ice, candles, kerosene oil, and incidental expenses.
The last included breakage and the replacement of worn-out kitchen
utensils. The best materials of all kinds were purchased, and practically
nothing was ever thrown away. The food was simple but abundant. The
co-operation between employer and maid consisted on the part of the
employer in planning the menu, especially the making up of left-over
materials, the pricing of all articles in the market, and keeping the
accounts accurately; the maid gave all orders and carried them out. The
profit sharing consisted in dividing equally between employer and maid
whatever had been saved at the end of the month out of the $40 allowed
for running expenses. The results of four months’ experiment were as
follows:
Average monthly expenses before profit sharing began $41.25
Expenses first month after 36.74
” second ” 43.75[324]
” third ” 41.58[325]
” fourth ” 36.28
The plan for carrying on the dining association using the Memorial Hall
of Harvard University is essentially one of co-operation, and contains
some points that could be tried with advantage elsewhere. The steward
receives a fixed salary and in addition a small sum each week for every
person who boarded that week at the hall; but this “head money” is
proportionately diminished as the average weekly price of board exceeds
the amount agreed upon.
At Placid Club, a social club established in the Adirondacks, all fees
are prohibited, and the rule is strictly enforced; but the past season
(1896) a dividend of ten per cent on the wages received was declared out
of the profits of the club, and this was given to all house employees
who had remained throughout the season and whose services had been
satisfactory to the manager. The financial success of the club depended
largely on the efficiency, good-will, and ready co-operation of its
employees, and the dividend declared was in recognition of this fact.
Beginnings in a small way have been made elsewhere.[326] They are indeed
but beginnings, but they seem to indicate one direction in which progress
is possible.