1st Session.

No. 1053.

PREMIUM PAYMENTS IN GOVERNMENT EMPLOYMENT.

LETTER

FROM

THE SECRETARY OF WAR,

SUBMITTING INFORMATION RELATIVE TO TIME STUDIES AND PREMIUM PAYMENTS IN GOVERNMENT EMPLOYMENT.

APRIL 22, 1916.-Referred to the Committee on Military Affairs and ordered to be

printed.

WAR DEPARTMENT,

Washington, April 20, 1916.

The SPEAKER OF THE HOUSE OF REPRESENTATIVES.

DEAR MR. SPEAKER: There is pending in the House of Representatives a bill (H. R. 8665) introduced January 11, 1916, to regulate the method of directing the work of Government employees, the object of which is to prohibit at the Government arsenals what are known as time studies and premium payments. Similar legislation to that which is carried in the bill was enacted on the Army appropriation bill which was passed at the last session of Congress, in the form of a prohibition of the payment from funds appropriated in the act of the salary of any person engaged in making or directing time studies or of any premium. There is therefore apparent the possibility of similar legislation at the present session, either in the form of a separate act or in the form of a restrictive prohibition upon an appropriation act. I think that such legislation would be unwise.

The time study referred to may be defined as a method of ascertaining by careful observation and study in connection with a timing process the most advantageous manner in which a given piece of work can be done, and also the time in which it can reasonably be expected to be done by following this best manner. The premium is an extra cash compensation which is paid to a workman for accomplishing the work in this reasonable time, or for approaching the time within certain rather liberal limits, the compensation being in addition to the regular wages of the workman, which are not disturbed, and depending in amount upon the degree to which he approaches the reasonable time which has been ascertained. The timepiece is used only in the study of a new job, for the purpose of working it out

properly and for assigning the proper time for its performance. It is not held over a man for the purpose of ascertaining whether he is working industriously, and its employment is of less and less frequency as information is accumulated which makes special study unnecessary. The premium is the workman's share of the economy which is effected by the system.

This system has now been in practice in the Ordnance Department for something like five years. At the place at which it has been most fully put into effect, the Watertown Arsenal, Mass., it has resulted in very substantial economy of production and in a material increase of the earnings of the employees. The last monthly report from the arsenal indicates that the total amount paid in premiums during that month was $3,315.61, which was earned by 311 employees, an average of about $10.66 each. The total number of mechanics and workmen at the arsenal was 554, of which approximately 56 per cent worked during the month on premium jobs. The total pay roll of the arsenal for the month was $45,250.85, of which amount it therefore appears that slightly over 7.32 per cent was paid in premiums. The premiums are in addition to the day wages of the employees, which are regulated in accordance with those of the vicinity for work of similar character to that done at the arsenal. During the five years that the system has been in operation at the arsenal neither the day wage nor the number of employees has diminished, but the amount of work done and the average earnings have increased in an important degree.

The legislation which is being urged upon Congress is advocated by organized labor, which is opposed to the system intended to be prohibited for the essential reason which is embodied in the charge that it is a speeding-up system. I can not understand this charge as having any other meaning than that the work required of the employees by the system is unduly severe. Of the truth of this charge in the practice of the system at the Watertown Arsenal there is no evidence whatever, but there is a good deal of evidence the other way. There is no complaint of overwork at the arsenal, and no workman has been discharged because of failure to meet the requirements of the system. To prohibit the system of which the records show undoubted advantages both to the Government and to the employees because of a charge unsupported by evidence, or even by any attempt at evidence-for there has been no effort to prove overwork at the Watertown Arsenal- seems to me to be most unwise.

There has been no investigation at the Watertown Arsenal which has resulted in a report condemnatory of the practice at that establishment. This department has endeavored to secure an investigation and report from the Federal Commission on Industrial Relations, created by the act of August 23, 1912, and that commission employed a committee which did make a very thorough investigation. Neither the commission nor its committee, however, made any mention of the Watertown Arsenal in its report, but both of these bodies confined themselves to a general discussion of the relations of scientific management and labor largely as a social question. The commission was not able to agree, and conflicting reports were made by groups of its membership. The report of the special investigation committee has not been made public, but the substance of it is understood to

be contained in a book entitled "Scientific Management and Labor," by the chairman of the committee, which leaves the subject of scientific management in its general practice in shops which have introduced it still open to discussion. The only investigation at the - Watertown Arsenal of which the result has been published in a report is that which a special committee of the House of Representatives made some four years ago, and as a result of which the committee recommended that there should be no legislation upon the subject. There have been expressions from the employees at the Watertown Arsenal both for and against the system. There are evidences that at least some of the expressions against it have come from representatives of organized labor, but I am persuaded that this opposition proceeds from a mistaken theory; for while it is obviously true that a piecework system in which the pay of the employees is based solely on a piece price, and high-speed machinery is used to drive operatives harder than is consistent with their physical and nervous welfare, is objectionable, it is equally true, in my judgment, that the system above described as operative in the Watertown Arsenal is not open to either of these objections. The Government surely should not be denied the opportunity of securing efficient work from its employees without an investigation of the facts which would justify the action proposed to be taken.

A

All of my predecessors in the office of the Secretary of War who have held that office since the introduction of the system at the Watertown Arsenal have been in favor of its retention and have opposed efforts to abolish it. I have been in this office too short a time to have had an opportunity to visit the arsenal or to familiarize myself thoroughly with the details of the practice at that establishment, but I have long been interested in both aspects of the problem presented and do not feel that I am an entire stranger to the controversy merely because of the recentness of my contact with this particular application of it.

The relation between fatigue and efficiency is being widely studied, and in some of the European countries astonishing statistical demonstrations of the effect of speeding-up processes have already been obtained. There can be no question that the whole nervous and physical system of the operative is imperiled, and his strength, as a part of the national strength, decreased, if he is either urged or induced to work beyond a sound physiological maximum. On the other hand, inefficient production is bad for the operative. It is always bad for a man not to do his best, not to make the most of his opportunities and of his labor, and to produce less than he can under a system of proper inducements and compensations. It is bad for the national life, for its industrial efficiency, and for its squareness to have its component parts, whether they be operatives in an industrial plant, professional men, or public officers, turning into the aggregate either a product so excessive that it represents a deterioration in their physical and nervous strength, or a product so insufficient as to represent less than their honest and safe best. To strike the happy mean involved in these statements is, of course, difficult, but at the Watertown Arsenal we seem to have made a fair approach to it. The wages paid to our operatives as a flat rate, irrespective of their response to the time system, is the current rate of the community for similar work, and in addition to that, premiums are offered, not