Profit Sharing
a feature of the general efforts being made to reconcile the interests of capital and labor, whereby the employees of a factory, or any commercial establishment, are given a share of the net profits produced by the business. Profit sharing was first advocated by a small group of English social reformers, in the middle of last century, most conspicuous of which were Thomas Hughes, author of "Tom Brown's School Days," and the famous novelist, Charles Kingsley. They believed that the workers in factories and other productive manufacturing plants should not only receive a share of the net profits of the business, but should also have a voice in conducting it. This latter feature has very seldom been attempted by private business establishments, but it is commonly practiced in the so-called "self-governing workshops," co-operative groups of workingmen who also furnish the capital with which the business is run.
Profit sharing was extensively tried out by corporations in England, a generation ago, but is less commonly practiced now than then. In this country the practice has been more widely adopted, and is now being advocated as a solution of the conflicting interests between employers and employees.
Many corporations see in it, if not such a solution, at least a preventative against strikes and general social unrest. Most conspicuous have been the examples of the United States Steel Corporation and the Ford Motor Works, in Detroit, Mich.
PROGRESSIVE PARTY In the steel plants a finance committee, composed of officials of the corporation and its employees, allocate a certain percentage of the net profits of the year's business to a fund which is divided among a certain class of the employees as a bonus on wages. The employees are encouraged to allow this money to serve as payments toward the purchase of stock in the corporation, the object being to make them part owners in the business, therefore to arouse in them a sense of common interest.
Profit sharing in the Ford Motor Works was first instituted in 1914, when $20,000,000 was equally divided between the dividends to invested capital and the employees, the latter, numbering 15,000, sharing in the $10,000,000 in proportion to the amount of their wages.
Organized labor, as a whole, has taken a very strong stand against profit sharing as an institution. The contention of the representatives of the labor organizations is that, while profit sharing gives the workers no control in the management of the business, it creates in them a sense of dependence on their employers which militates against the interests of labor organization. The corporation which can afford to share profits, labor men contend, can afford to pay better wages. The tendency is, they say, to decrease wages where profit sharing is in practice and then, when once established, the workers may be cheated of their bonus by dishonest bookkeeping.