3. Daywork.—The daywork method of rewarding labor is the older method, and the reason for its origi nal use is not difficult to discover. In the beginning of any industry the duties of the laborer are general, and not special. In former days and under simpler methods, where the attitude of the employer was es sentially paternal, the daywork system was the most convenient and the most natural one. The rela tion of the employer and the employe was quite per sonal and the employer depended on the loyalty of his workmen to obtain value received for the wages paid. Where the number of men is small and the work will allow of close personal supervision this sys tem is still effective. It is even now in general use and will no doubt continue in use even where other sys tems would be better, simply because it is less involved than the piecework system. In large organizations the higher officials are still paid on a time basis, tho other methods may have been adopted in the factory. Where close supervision is not possible, as in outside erection work, day pay is usually the only workable method, but care must be exercised in selecting re liable men.
The unit of time for which pay is rendered varies with the grade of the employe; the higher the grade, the longer, as a rule, is this unit. Thus managers, treasurers and other high officials are usually hired by the year, or for a term of years, and are paid by the month. Foremen, engineers, and the like, are hired and paid by the month. Other classes of labor are usually paid by the hour, usually no fraction less than one-half hour being considered. The philosophy of the system is well illustrated in the foregoing classi fication. The method cannot be depended upon to insure value received unless the employe is loyal 'and free to put forth his best efforts. Evidently, the only factors needed in recording labor costs under this sys tem are the hours of work and the rate agreed upon.
It should be noted, however, that in general, under this method of pay, cost finding is entirely a matter of recording costs after they have been incurred. Every employe is expected to do his best, and it is the duty of foremen and others to see that he does so. But there is no guarantee that each man will do his best, and it is not logical to expect that under this system, labor costs on the same article made at different times, even by the same men, would be the same. Labor costs, under the daywork system of pay, may there fore be expected to vary widely.
4. Piecework.—As factories became larger and the personal relations between employer and employe be gan to vanish, the defects of the daywork method be came more and more apparent, especially when con ditions were complicated by the growing influence of labor organizations. Workmen, feeling intuitively that they could influence the law of supply and de mand by limiting production, did not work up to their capacity. The amount of output tended constantly
toward a minimum, the old conditions under which men could be driven to produce a greater output having already passed away. The employer, fur thermore, did not, and for that matter does not as yet, really know what constitutes a fair day's work, and in his dilemma naturally looked around for some other method of insuring returns. Thus the piece-rate method came into prominence.
This system, while not new, has not been much used until comparatively recent times. Under this method the employer pays for work by the piece, irre spective of the time expended. If the employe makes more pieces his total wage rises in proportion. If he makes fewer, his wages decrease in like proportion. If the piece rate is a fair one to both parties, this method would seem to be ideal for all concerned, pro vided the work is of such a character that piece rates can be set intelligently.
Under this system of pay, the labor cost may be predicted and cost finding under this method would seem to be simpler than under the daywork plan. Furthermore, the cost of the same article should be the same, no matter what man did the work, and any variation from time to time would be known and would not be merely a matter of conjecture. This feature of piecework, no doubt, appeals strongly to the manufacturer.
5. Disadvantages of pieeework.—The difficulty with piecework arose, however, from the lack of knowledge of just what a fair piece rate should be. No systematic study had been made of this matter, and when men were transferred from daywork to piecework, they easily made very large earnings. This, in turn, tempted the employer, either from cu pidity or because he really believed the employe was getting more than a fair share of returns, to re duce the rate, the cut in rate being repeated, perhaps, several times until the discouraged worker found him self working much harder than formerly for only a small advance in income. Piecework has, as a con sequence, come into bad repute in many places.
In the recording of piecework costs it would seem that all that is needed is the number of pieces made and the rates per piece. But even when the actual time consumed is not a factor in the cost, it is an essential requirement in factory management that all men work regularly and turn out a sufficient quantity per day. Profits depend not only on the gain per piece, but also on the number of pieces made. A low nom inal piece rate may result in a high actual cost if the quantity produced is too small. Provision must therefore be made for checking up the regularity with which pieceworkers come and go in the factory.