The worker in General Motors

20 Pages·1937·2.631 MB·English

by  Alfred P. Sloan

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December 31, 1937.
THE WORKER IN GENERAL MOTORS
To Our Stockholders:
There is no more important problem before business today than
that of the "worker in industry." It occurred to me, therefore, that it
would be of interest to our stockholders to outline, in the form of a
special message, a few basic facts as to the position of the "worker
in General Motors" and the relationship of that particular worker to
the workers in other industries, not only from the standpoint of today,
but as to the trend over the past few years.
This subject is of special interest at this time, in view of recent—
although it is hoped, temporary—changes in the economic situation
which, through shortened hours and reduced production schedules,
are necessarily affecting workers' earning power. In this connection
it is important to observe, in the charts and tables which follow, that
over the years, whether in times of great industrial activity or in times
of recession, the high relative position of the General Motors worker
has been well maintained.
Nothing is more vital in promoting prosperity, and in advancing
the standard of living of all the people, than an economically sound
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distribution of the productivity of industry—stability is a by-product
of the same objective. This particularly applies to the three groups
directly involved: the workers, including management, who together
supply the human effort needed; the stockholders who supply the
capital; and the public who consume the goods and services produced,
at a price. The worker receives his participation in wages; the stock-
holder in dividends; and the public in the goods and services needed.
It can be said, in a general way, that everybody must work—equally
so, everybody must consume. Many believe that high wages mean pros-
perity. That may or may not be so. High wages, as a matter of fact,
are a result—not a cause, and that fact is too frequently lost sight of.
Our country has always been, relatively speaking, one of high wages.
As such it has attracted the attention of the world. We have been able
to reach a standard of living never before attained by any people in
history. But high wages and a high standard of living have only been
possible, and can only continue to exist—let alone advance—to the
extent that we are able to promote and capitalize technological progress.
By this is meant nothing more or less than the application of science to
industry's problems—new things to make, and better ways of making
present things.
On the other hand, if to increase wages means to increase selling
prices, little is gained, and perhaps much is lost. To increase wages,
at the same time to maintain, or still better, reduce selling prices, is
the true road to more things for more people—to a higher standard of
living. The point to be learned is that still higher wages and further
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shortening of hours must be by-products of better technology and
increased efficiency, otherwise the standard of living will be reduced—
all will have less. It is obviously true that only as these relationships
between wages, hours of employment and prices become better and
better understood and reconciled will we be able to make still further
advances in our national well-being.
WAGES HAVE GONE UP—PRICES HAVE COME DOWN
The automotive industry has been an outstanding, if not the most
outstanding, exponent of this principle of capitalizing technological
advances, thus permitting a continuous advance in wages, and at the
same time a reduction in real prices of its manufactured products.
Volume is thus stimulated, resulting in the employment of more
workers. And it is interesting to observe further that in accomplishing
this result the number of man hours per unit has been well maintained
because of the additional labor provided by the many improvements
that are added from time to time.
To make this possible, General Motors, for example, invests each
year tens of millions of dollars in better methods and new equipment,
thus maintaining efficiency in harmony with an ever improving tech-
nology. Otherwise it would be impossible to continue to increase wages
or even to maintain the wages now existing. It must always be kept
in mind that there is no other way toward constantly higher standards.
All this is strikingly illustrated on the chart, on the following page.
The black line shows the hourly wage trend over the years, on the basis
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FROM 1925 TO 1937 AUTOMOTIVE HOURLY WAGES WENT UP 18%
AUTOMOTIVE PRICES CAME DOWN 45%
% OF
YEAR
1925
,«-'38 MODELS
6055
1925 26 27 28 29 30 31 32 33 3>f 35 36 «l«B.
YEARS 1937
Automotive hourly wages from U. S. Bureau of Labor Statistic!.
Automotive prices from Automobile Manufacturers Association. Computed prices per pound
based on the average list prices of the lowest priced j passenger closed model of each make
weighted by the relative new car registrations of each make.
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of 1925 being 100%. The dotted line shows the average selling prices
of the products of the automotive industry on a per pound basis.
In considering this relationship of wages and prices over a period
of years, it is important to keep in mind that the lowest priced car of
today is equal in size and horsepower to the high priced car of ten years
ago. And in addition to this, the car of today represents a much higher
standard of quality—better materials and better workmanship. In order
to reflect this added value, prices have been expressed on a per pound
basis.
It will be noted from the chart that automotive prices, so expressed,
have been falling most of the time since 1925—the reduction in this
period having amounted to 45% through 1936. This price reduction
followed a previous downward trend between the years 1920 and
1925—not shown on this particular chart. In the years prior to the
depression the wages of workers were continually rising while prices
were declining. During the depression, wage rates, of necessity, were
reduced, but even so prices continued their downward trend at a much
faster rate than wages. Since 1933 prices have been held at substantially
the same low levels, while wage rates have mounted sharply to the
highest point in the history of the industry. This was due to improved
methods as well as to the economic influence of increased volume.
It is particularly interesting to note the trend of prices, as indicated
by the 1938 models—the downward trend has been reversed. This is
due partly to the fact that the general price level has increased, by which
is meant that all prices have risen. But superimposed on that is the fact
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that the sharp increase in the wage rate in 1937 was not reflected in the
price trend until late in the year and with the introduction of the 1938
models. And there was also added to that influence the higher cost of
materials, reflecting increased wages paid by suppliers. Thus we see
that wages have increased faster than costs could be offset by techno-
logical improvement. When real wages are advanced too rapidly, prices
must rise because technological improvement as affecting costs and
hence selling prices is an evolutionary—it can not be a revolutionary—
process. The result is, of course, to reduce volume and employment.
HOURLY WAGE POSITION FAVORABLE TO GENERAL MOTORS WORKERS
General Motors believes in high wages—it always has. Over the
years, whether in times of great prosperity or in periods of temporary
recession, its workers have enjoyed rates which have placed them among
the top wage earners of American industry. Even in 1932—probably
the worst year of the depression — the hourly earnings of General
Motors workers were from 20% to approximately 30% above industrial
averages, and less than 14% below the previous maximum reached in
1929.
The chart on the opposite page shows the relationship between
hourly wages of General Motors workers and average hourly wages of
the workers in other industries, beginning with the year 1932 and
continuing through the first eight months of 1937—the latest period
for which figures are available. It will be seen that during these years
the advantage to a worker in General Motors has been increasing, and
at an accelerated rate. It is also of interest to note that as early as
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1934 hourly earnings of a General Motors worker passed those in effect
during the boom year of 1929.
In general it may be said that, regardless of the economic influences
temporarily in the ascendency, the favorable relative position of the
General Motors worker as regards hourly wages has been well main
tained.
GENERAL MOTORS WORKERS RANK HIGH IN WEEKLY EARNINGS
As to weekly earnings, also, the General Motors worker has been in
an advantageous position. During the low period of the depression
individual weekly earnings were reduced somewhat by the "share-the-
work" activity, but in return substantial benefits to local communities re-
sulted from maintaining larger working forces than would otherwise
have been possible.
Beginning with 1933 the earnings per week of the General Motors
factory employe advanced steadily in relation to those in other indus-
tries. In 1936, for example, they were from 25% to 35% above general
industrial averages. Approximately the same advantage was maintained
during the first eight months of 1937 (the latest period for which
figures are available) as shown graphically in the chart on the follow-
ing page. More recently, reduced sales volume has resulted in some
reduction in hours which, of course, will react to some extent on weekly
averages for the year 1937. It may properly be assumed, however, that
the high relative standing of the General Motors worker will remain
unaffected.
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