This system is characterized by the majority’s ignorance which prevents production from improving its efficiency by denying any chance of developing new technologies and improving business organization. But besides that this macroeconomic factor curtails the options for encouraging conscientious labor in a collective (i.e. on the microeconomic level). Let us explain how this happens. The ratio of «income of highest-paid group of employees» / «minimum or average income» is large due to some groups of professionals being paid exclusively high salaries which results both from macroeconomic and non-economic factors. Also the income of the highest-paid part of the collective exceeds the level sufficient for an employee and his family to live a morally healthy life in the opinion of those whose income is about average (especially if average or below the average income is barely enough for satisfying the needs of a man and his family). Then the members of collective who have the highest income are regarded by the rest of staff as parasites who live on unearned income, i.e. from somebody else’s labor, reaping the fruits of work done by the rest of the collective.
This is just the same attitude that employees normally have towards capitalists (the owners of the enterprise) if they take no real part in the collective’s work. If they are merely parasites receiving their share of the enterprise’s income, and often a considerable one. And legislature of most countries permits it by tolerating private property of collectively used means of production and not obliging the proprietor to work by himself.
Therefore assigning levels of income among staff, i.e. arranging the wage rates scale, is a task having no single solution effective for any circumstances. Under normal macroeconomic conditions any salary should guarantee that a person’s needs can be provided for, including the ability to start a family life and use one’s income to take part in the family’s further development. This circumstance determines the minimum, which it is practically necessary to pay.
The issue of maximum remuneration is a more complicated one as on the one hand the chance to reach a higher level on the wage rates scale must be an incentive to work in the collective efficiently, and on the other hand the income of highest-paid staff members (as well as the owners of the enterprise) should not be regarded as unearned income by the collective.
In other words the optimum ratio of high-paid and lower-paid workers’ income at any enterprise is determined by the level of technology and organization that it has reached, its future progress, equivalent indices of competitors, as well as by moral and ethic qualities of the collective and the society on the whole.
The role of an efficient incentive, which the salary-bonus system of labor remuneration plays, can be undermined or even totally invalidated by the three following circumstances. First, exclusively high salaries and bonuses. They are regarded by the collective as parasitism on the labor of others, which a certain “elite” of the enterprise indulges in. Second, when payment of bonuses does not result from conscientious labor actually making them a guaranteed part of income. Third, paying bonuses for labor achievement of some people to other people, chiefly to their superiors and their hangers-on.
The problem of distributing staff within the wage rates scale should be regularly given a new solution depending on the enterprise’s technical and technological development, the relationship between employees of different categories and the attitude that the «gold fund» workers of the enterprise (managers, specialists and workers important in the future perspective) have towards the business. These issues belong to coordinating the enterprise’s financial and personnel policy and lie beyond the scope of this work.
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Having made this digression let us go back to the book by H. Ford:
«For the day’s work is a great thing — a very great thing! It is at the very foundation of the world; it is the basis of our self-respect. And the employer ought constantly to put in a harder day’s work than any of his men (put in bold type by the authors)[98]. The employer who is seriously trying to do his duty in the world must be a hard worker (put in bold type by the authors). He cannot say, “I have so many thousand men working for me.” <only a slave-owner dares to say so> The fact of the matter is that so many thousand men have him working for them — and the better they work the busier they keep him disposing of their products. (Separate paragraph is provided by the authors)[99]
Wages and salaries are in fixed amounts, and this must be so, in order to have a basis to figure on. Wages and salaries are a sort of profit-sharing fixed in advance, but it often happens that when the business of the year is closed, it is discovered that more can be paid. And then more ought to be paid. When we are all in the business working together, we all ought to have some share in the profits — by way of a good wage, or salary, or added compensation (put in bold type by the authors). And that is beginning now quite generally to be recognized.
There is now a definite demand that the human side of business be elevated to a position of equal importance with the material side. And that is going to come about (put in bold type by the authors). It is just a question whether it is going to be brought about wisely — in a way that will conserve the material side which now sustains us, or unwisely and in such a way as shall take from us all the benefit of the work of the past years. Business represents our national livelihood, it reflects our economic progress[100], and gives us our place among other nations. We do not want to jeopardize that. What we want is a better recognition of the human element in business. And surely it can be achieved without dislocation, without loss to any one, indeed with an increase of benefit to every human being. And the secret of it all is in recognition of human partnership (put in bold type by the authors). Until each man is absolutely sufficient unto himself, needing the services of no oilier human being in any capacity whatever, we shall never get beyond the need of partnership.
Such arc the fundamental truths of wages. They are partnership distributions <and the second aspect of this issue consists in the price level on products directly consumed by people that have formed in the macroeconomic system>.
The wage carries all the worker’s obligations outside the shop; it carries all that is necessary in the way of service and management inside the shop. The day’s productive work is the most valuable mine of wealth that has ever been opened. Certainly it ought to bear not less than all the worker’s outside obligations. And certainly it ought to be made to take care of the worker’s sunset days when labor is no longer possible to him — and should be no longer necessary. And if it is made to do even these, industry will have to be adjusted to a schedule of production, distribution, and reward, which will stop the leaks into the pockets of men who do not assist in production. In order to create a system which shall be as independent of the good-will of benevolent employers as of the ill-will of selfish ones (put in bold type by the authors)[101], we shall have to find a basis in the actual facts of life itself.