Sharing Profits in Industry

February 23, 1946

Report Outline
Labor's Claim to Share in Industrial Profits
Cycles in Development of Profit Sharing
Profit Sharing in the Postwar Period

Labor's Claim to Share in Industrial Profits

Demand for Wages Based on Company Earnings

GENERAL industrial prosperity—past and prospective—has been one of the chief bases of organized labor's postwar demands for wage increases that will maintain the levels of take-home pay enjoyed by wage-earners during the war. In some of the major wage disputes, profits made by particular industries during the war, and expected to continue after reconversion, have figured prominently in union arguments that the companies have the ability to pay higher wage rates with little or no increase in the prices of their goods.

Past experience has shown that in periods of good business and of strained employer-employee relations interest tends to grow in methods of sharing profits with workers in order to give them at once a greater portion of the income from production and a greater stake in the success of the enterprise of which they are a part. Prior to World War II, however, profit sharing schemes were promoted mostly by employers and the payments to workers were over and above their compensation at existing rates of wages. Claims by trade unions to basic hourly rates that will include a share in past or prospective earnings of the employer are a new development.

Demand for Wages Based on Company Earnings

The most vigorously pressed demand by a labor union for higher wages based on the ability of the company to pay out of profits has been that of the General Motors Division of the United Automobile Workers of America led by Walter P. Reuther. When Reuther first presented the U. A. W. demand for a 30 per cent increase to General Motors last Aug. 18, he asserted that “The profit and reserve position of General Motors Corporation provides ample margin for absorption of this adjustment without necessitating any price increase.” In its economic brief presented to the corporation in October, the union set out to show that the company would make enough profits out of increased postwar production to permit it to pay higher dividends as well as higher wages while charging less for its cars.

ISSUE TRACKER for Related Reports
Profit Sharing
Dec. 12, 1962  Profit Sharing in Industry
Mar. 12, 1958  Profit Sharing and Union Strategy
Feb. 23, 1946  Sharing Profits in Industry
Sep. 09, 1938  Profit Sharing for Wage Workers