Incentive Wage Payments

May 17, 1943

Report Outline
Incentive Wages to Increase War Production
Development of Incentive Wage Systems
Trade Union Attitude Toward Incentive Plans
Special Focus

Incentive Wages to Increase War Production

Possible Savings of Manpower and Plant Capacity

Wide introduction of incentive wage systems, as a means of expanding war production, is at present being urged by industrial managers, by officials of the War Production Board, and by certain minority factions within the trade union movement. Under incentive wage systems, of which there are numerous types, the worker's earnings rise or fall in accordance with actual output; an immediate financial incentive is given the employee to increase his effort and expand the volume of his production.

Wartime advantages claimed for the incentive wage plan go beyond the increase to be gained in output of goods. It is asserted that the added production could be achieved without increasing the size of either the labor force or plant and machine capacity. In cases where increased output was not needed, current rates of production could be maintained with a reduced labor force.

Industrial Managers and the Incentive Wage Plan

Management interest in incentive wage systems is not wholly a result of the wartime need for expanded production, for even in peacetime many industrial spokesmen were critical of the “time wage” system under which the majority of workers in manufacturing are employed. During the decade of the thirties it was contended that payment of a fixed hourly or daily wage did nothing to stimulate the individual worker to his maximum effort, with the result that lagging output kept production costs high. Under an incentive wage system, on the other hand, total costs of factory operation and the cost per unit of product could be reduced, and profits increased, despite larger gross payments for wages, because the increased wages would be given in return for increased production, while overhead costs remained substantially constant.

ISSUE TRACKER for Related Reports
Cost of Living and Wages
Apr. 17, 2020  Inequality in America
Sep. 08, 2017  Universal Basic Income
Apr. 08, 2016  Future of the Middle Class
Apr. 18, 2014  Wealth and Inequality
Jan. 24, 2014  Minimum Wage
Jun. 19, 2009  Rethinking Retirement
Mar. 06, 2009  Middle-Class Squeeze
Mar. 14, 2008  Gender Pay Gap
Dec. 16, 2005  Minimum Wage
Sep. 27, 2002  Living-Wage Movement
Apr. 17, 1998  Income Inequality
Oct. 27, 1978  Wage-Price Controls
Jun. 16, 1978  Military Pay and Benefits
Mar. 23, 1966  Rising Cost of Living
Oct. 25, 1961  Price-Wage Restraints in National Emergencies
Jun. 21, 1961  Wage Policy in Recovery
Jun. 11, 1958  Prices and Wages in the Recession
Sep. 18, 1957  Control of Living Costs
Nov. 02, 1955  Wages, Prices, Profits
Jan. 26, 1954  Minimum Wage Raise
Jan. 02, 1954  Cost of Living
Jan. 21, 1953  Guaranteed Annual Wage
Dec. 17, 1952  Future of Price and Wage Controls
Nov. 19, 1951  Fringe Benefits and Wage Stabilization
Dec. 06, 1950  Wage Control
Jun. 13, 1949  Wages in Deflation
Jun. 04, 1947  Guarantees of Wages and Employment
Oct. 29, 1946  Decontrol of Wages
Dec. 01, 1945  Minimum Wages
Sep. 29, 1945  Wage Policy
Oct. 27, 1944  Wage Security
May 17, 1943  Incentive Wage Payments
Aug. 25, 1941  Prices, Profits, and Wage Control
Apr. 28, 1941  Wartime Changes in the Cost of Living
Sep. 21, 1940  Two Years of the Wage-Hour Law
Nov. 01, 1938  Industry and Labor Under the Wage-Hour Act
Jan. 20, 1938  Wage Rates and Workers' Incomes
Apr. 11, 1935  The Cost of Living in the United States
Sep. 01, 1930  Wages and the Cost of Living
May 24, 1930  The Anthracite Wage Agreement
Feb. 20, 1925  Measure of Recovery in Profits and Wages Since 1920–21 Depression