Effective Labor Arbitration: The Impartial Chairmanship of the Full-Fashioned Hosiery Industry [Reprint 2016 ed.] 9781512817287

Table of contents :
Acknowledgments
Table of Contents
Chapter I. Introduction
Chapter II. Distinguishing Characteristics of The Industry
Chapter III. Brief History of The Impartial Chairmanship
Chapter IV. Authority of The Impartial Chairman
Chapter V. Procedures
Chapter VI. Techniques
Chapter VII. The Common Law of The Industry – The Basic Rights of Management and Union
Chapter VIII. The Common Law of The Industry – other Non-Rate Principles
Chapter IX. The Common Law of The Industry – Rate-Determination Principles
Chapter X. Appraisal and Conclusions
Appendix A. Statistical Analysis of Grievances Presented to the Impartial Chairman of the Full-Fashioned Hosiery Industry
Appendix B. National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry
Bibliography
Index

Citation preview

INDUSTRIAL

RESEARCH

DEPARTMENT

W H A R T O N S C H O O L OF F I N A N C E A N D C O M M E R C E U N I V E R S I T Y OF P E N N S Y L V A N I A

RESEARCH STUDIES XXXIV

EFFECTIVE

LABOR

ARBITRATION

T h e Impartial Chairmanship of the Full-Fashioned Hosiery Industry

I N D U S T R I A L RESEARCH STUDIES I. Earnings and Working Opportunity in the Upholstery Weavers' Trade in 25 Plants in Philadelphia, by Anne Bezanson. 1928. $2.5 0. II. Collective Bargaining among Photo-Engravers in Philadelphia, by Charles Leese. 1929. $2.50. I I I . Trends in Foundry Production in the Philadelphia Area, by Bezanson and Robert D . Gray. 1929. $1.50. IV. Significant Post-War Changes in the Full-Fashioned Hosiery try, by George W . T a y l o r . 1929. $2.00. Out of print. V. Earnings in Certain Standard Machine-Tool Occupations in delphia, by H. L. Frain. 1929. $1.50. VI. Help-Wanted Advertising as an Indicator of the Demand for

Anne IndusPhilaLabor,

by Anne Bezanson. 1929. $2.00. Out of print. VII. An Analysis of Production of Worsted Sales Yarn, by A l f r e d H. Williams, Martin A. Brumbaugh, and Hiram S. Davis. 1929. $2.50. VIII. The Future Movement of Iron Ore and Coal in Relation to the St. La/wrence Waterway, by Fayette S. W a r n e r . 1930. $3.00. IX. Group Incentives—Some Variations in the Use of Group Bonus and Gang Piece Work, by C. Canby Balderston. 1930. $2.50. X. Wage Methods and Selling Costs, by Anne Bezanson and Miriam Hussey. 1930. $4.50. XI. Wages—A Means of Testing Their Adequacy, by Morris E . Leeds and C. Canby Balderston. 1931. $1.50. X I I . Case Studies of Unemployment—Compiled by the Unemployment Committee of the National Federation of Settlements, edited by Marion Elderton. 1931. $3.00. X I I I . The Full-Fashioned Hosiery Worker—His Changing Economic Status, by George W . Taylor. 1931. $3.00. XIV. Seasonal Variations in Employment in Manufacturing Industries, by J . Parker Bursk. 1931. $2.50. Out of print. XV. The Stabilization of Employment in Philadelphia through the LongRange Planning of Municipal Improvement Projects, by William N. Loucks. 1931. $3.50. XVI. How Workers Find Jobs—A Study of Four Thousand Hosiery Workers, by Dorothea de Schweinitz. 193 2. $2.50. XVII. Savings and Employee Savings Plans, by William J . Carson. 1932. $1.50. X V I I I . Workers' Emotions in Shop and Home, by R e x f o r d B. Hersey. 193 2. $3.00. Out of print. X I X . Union Tactics and Economic Change—A Case Study of Three Philadelphia Textile Unions, by Gladys L. Palmer. 1932. $2.00. X X . The Philadelphia Upholstery Weaving Industry, by C. Canby Balderston, Robert P. Brecht, Miriam Hussey, Gladys L. Palmer, and Edward N. W r i g h t . 1932. $2.50. X X I . Wage Rates and Working Time in the Bituminous Coal Industry> 1912-1922, by Waldo E. Fisher and Anne Bezanson. 1932. $3.50.

I N D U S T R I A L RESEARCH XXII. Ten Thousand Out of Work, 1933. $2.00. XXI It. A Statistical

Study

STUDIES

by Euan Clague and Webster Powell.

of Profits, by Raymond T . Bowman. 1934. $3.00.

XXI T . The Dollar, the Franc, and Inflation, by Eleanor Lansing Dulles. 1933. $1.25. ( T h e Macmillan Company.) XX V . Executive Guidance of Industrial Relations, by C. Canby Balderston. 1935. $3.75. XXVI. Prices in Colonial Pennsylvania, by Anne Bezanson, Robert D. Gray, and Miriam Hussey. 1935. $+.00. XXVI.. Earnings of Skilled Workers in a Manufacturing Enterprise, 18781930, by Evan Benner Alderfer. 1935. $1.50. XXVIIi. Depression and Reconstruction, by Eleanor Lansing Dulles. 1936. $3.00. XXII'. Wholesale Prices in Philadelphia—1784-1861, by Anne Bezanson, Robert D. Gray, and Miriam Hussey. 1936. $+.00. X X I . Wholesale Prices in Philadelphia—1784-1861, Part Π—Series of Relative Monthly Prices, by Anne Bezanson, Robert D. Gray, and Miriam Hussey. 1937. $+.00. XXX'.. Some International Aspects of the Business Cycle, by Hans Neisser. 1936. $2.50. Out of print. XXXI.. Economic Consequences of the Seven-Hour Day and Wage Changes in the Bituminous Coal Industry, by Waldo E. Fisher. 1939. $2.00. XXXII'.. The Industrial Study of Economic Progress, by Hiram S. Davis. 19+7. $2.75.

UNIVERSITY OF PENNSYLVANIA

EFFECTIVE LABOR ARBITRATION The Impartial Chairmanship of the Full-Fashioned Hosiery Industry

A DISSERTATION IN ECONOMICS PRESENTED TO T H E F A C U L T Y OF T H E GRADUATE SCHOOL IN P A R T I A L F U L F I L L M E N T OF T H E R E Q U I R E M E N T S FOR T H E DEGREE OF DOCTOR OF PHILOSOPHY

THOMAS

KENNEDY

PHILADELPHIA 19+8

Copyright UNIVERSITY

1948

OF P E N N S Y L V A N I A

Manufactured UNITED

S T A T E S OF

in

PRESS

the AMERICA

ACKNOWLEDGMENTS From the beginning, this book has had the wholehearted interest and support of the officials of the Full-Fashioned Hosiery Manufacturers of America, Inc., and the American Federation of Hosiery Workers. T h e records of both of these organizations were made available to the author. The late Mr. George F. Lang, and M r . Eugene S. Springer, Mr. Richard F. Peden, and M r . Charles Lehmuth of the Association and M r . Alexander McKeown, M r . William Smith, and Mr. Alfred Hoffman of the Federation gave freely of their time in conference to acquaint the author with many aspects of the Impartial Chairmanship not covered in the written records. In addition, Mr. Thomas Robson of Wayne Knitting Mills, Mr. Springer, and M r . Hoffman cach carcfully read the manuscript and offered many constructive criticisms. All of the men who have served as Impartial Chairmen in the industry contributed to the preparation of the book. Mr. G. Allan Dash, Jr., the present Impartial Chairman, made available the files of his office which contain among other data a complete record of all grievances presented since the beginning of the system in 1929. In addition Mr. Dash, Dr. Paul Abelson, Dr. George W . Taylor, M r . William E. Simkin, and Dr. William R. Buckwalter each read the manuscript and offered from their own experiences suggestions which enriched the study. Of special significance were the comments and criticisms of Dr. Taylor. Much of the book is an analysis of the philosophy of labor-management relations which he fostered during his ten years as Impartial Chairman. The value of his careful reading and searching criticisms of the early drafts of the manuscript, therefore, cannot be overemphasized. I am indebted also to a number of my colleagues on the faculty and staff of the Wharton School of Finance and Commerce. Space does not permit reference to all who have helped and encouraged this work. Especially important have been Dr. Robert P. Brecht, Dr. Waldo E. Fisher, D r . C. Arthur Kulp, Dr. S. Howard Patterson, and Dr. Joseph Rose, each of whom vii

viii

ACKNOWLEDGMENTS

read the manuscript and offered valuable suggestions; M r . Paul Vatter who gave generously of his time in preparing the statistical data; and Miss May Ford who typed the manuscript effi ciently and accurately. Finally I am greatly indebted to the staff of the Industrial Research Department of the Wharton School of Finance and Commerce. D r . Anne Bezanson, Dr. Gladys L . Palmer, Mr. Hiram S. Davis, and Miss Miriam Hussey each read the manuscript and made helpful analytical comments. Miss Hussey was especially helpful in checking the manuscript and preparing it for the printer. T o all who have taken part in the preparation of this book, I express my sincere gratitude with the hope that the final product will be worthy of the aid which each contributed. THOMAS KENNEDY.

Philadelfhta January, 1948

TABLE OF CONTENTS CHAPTER I

PAGE

INTRODUCTION

I

Λ Record of I n d u s t r i a l Peace

II

1

Purposes of S t u d y

2

M e t h o d of R e s e a r c h

3

DISTINGUISHING

C H A R A C T E R I S T I C S OF T H E

INDUSTRY

4

T h e Process o f M a n u f a c t u r i n g

4

T h e Hosiery W o r k e r

8

Capable Union Leadership

9

Association-Wide Bargaining

III

9

U n i f o r m Piece-Rate Structure

10

Protective T i m e - R a t e S t r u c t u r e

12

Reasonable a n d Responsible M a n a g e m e n t

IS

Closed Shop a n d Checkoff

16

T h e S t y l e Factor

16

Improving Technology

17

H i g h P e r c e n t a g e o f L a b o r Costs

17

Partial U n i o n i z a t i o n of I n d u s t r y

17

Severe C o m p e t i t i o n

18

BRIEF

H I S T O R Y OF T H E

IMPARTIAL CHAIRMANSHIP

20

A d o p t i o n of the I m p a r t i a l C h a i r m a n s h i p

20

D r . Abelson's C h a i r m a n s h i p , 1 9 2 9 - 1 9 3 1 Dr. Taylor's Chairmanship, 1 9 3 1 - 1 9 4 1

IV

V

VI

25 . .

.

.

27

Recent Impartial C h a i r m e n

29

T h e Impartial Chairmanship T o d a y

30

A U T H O R I T Y OF T H E

IMPARTIAL CHAIRMAN

34

Jurisdiction

34

Limited Function

41

PROCEDURES

43

Introduction

43

A T y p i c a l Case

44

P r o c e d u r e s in R a t e Cases

56

TFCHNIQUFS

57

Introduction

57

Mediation Techniques

57 ix

X

CONTENTS

CHAPTER

VII

THE

PACE

Techniques in Deciding Non-Rate Problems

61

Techniques in Rate Determination

68

Selling the Decision

86

C O M M O N LAW OF T H E I N D U S T R Y — T H E

BASIC

RIGHTS

O F M A N A G E M E N T AND U N I O N

90

T h e Nature of Industrial Common Law

90

Is Industrial Common-Law Development Desirable? T h e Hosiery Common Law

.

T h e Basic Rights of Management

95

T h e Basic Rights of the Union VIII

IX

THE

THE

COMMON

Ill

LAW OF T H E I N D U S T R Y — O T H E R

NON-RATE

PRINCIPLES

128

Efficient Workmanship

128

Promotions Disciplinary Measures

136 146

T h e Work Force and the Quantity of Work

159

COMMON

LAW

OF

THE

INDUSTRY—RATE-DETER-

MINATION P R I N C I P L E S

171

Introduction Principles of Secondary Wage-Rate Determination . . . General Conclusions Regarding Secondary Wage-Rate

171 171

Determination X

92 95

195

A P P R A I S A L AND C O N C L U S I O N S

. .

199

Disposition of Cases

199

Effects on Other Phases of Industrial Relations Economic Effects

201 207

Criticisms and Suggested Improvements Summary Conclusions

213 223

APPENDIX A

228

Statistical Analysis of Grievances Presented to the I m partial

Chairman

of

the

Full-Fashioned

Hosiery

Industry APPENDIX Β

228 244

National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry BIBLIOGRAPHY

244 263

CONTENTS

χι

TABLES TTABLE Λ

PACE Page 6 + o f

Earnings of

Full-Fashioned

Hosiery

Workers

in U n i o n Mills, 1945 Β

80

Cost of the Impartial C h a i r m a n s h i p C o m p a r e d w i t h

Total

Expenses of C o m p a n i e s C

208

P e r c e n t a g e of F u l l - F a s h i o n e d H o s i e r y P r o d u c e d in Southern Mills

212 APPENDIX

A

T/'ABLE 1

A u t h o r s a n d T i m e s of Issuance of Decisions and M e m o s

2

G r i e v a n c e s According to M a j o r T y p e s by Year

. .

230

3

P e r c e n t a g e Distribution of Grievances A c c o r d i n g to M a j o r

4

N o n - R a t e Grievances A c c o r d i n g to Cause

232

5

N o n - R a t e Grievances A c c o r d i n g to Cause by Year

23 3

6

Piece-Rate Grievances A c c o r d i n g to Cause

234

7

Piece-Rate Grievances A c c o r d i n g to Cause by Year

234

8

P e r c e n t a g e Distribution of Grievances by Party F i l i n g by

9

Percentage Distribution of Grievances According to Cause by

231

T y p e s by Year

231

Year

23 5

Party Filing

236

10

Disposition of Grievances by Party Filing

237

11

Disposition of Grievances by Year

238

12

Disposition o f N o n - R a t e Grievances According to Cause

13

Disposition of Rate Grievances According to Cause

241

14

Disposition of Grievances A c c o r d i n g to Impartial C h a i r m a n

242

15

T i m e C o n s u m e d by I m p a r t i a l C h a i r m a n s h i p Procedure by

16

T i m e C o n s u m e d bv Impartial C h a i r m a n s h i p Procedure Ac-

239-40

Year c o r d i n g to Cause of G r i e v a n c e

242 243

CHAPTER

I

INTRODUCTION A

RECORD OF INDUSTRIAL P E A C E

As AN E X A M P L E of industrial peace, the relationship since 1929 between the Full-Fashioned Hosiery Manufacturers of America, Inc., an association of hosiery manufacturers, and the American Federation of Hosiery Workers, an industrial union of hosiery employees, is an enviable record. D u r i n g this entire period, there have been no authorized strikes in association mills and wildcat stoppages have been reduced to insignificance. W h e n compared with the recent turbulent labor relations in many other industries and with the frequency of strikes in the hosier)' industry before 1929, the experience in hosiery since that date invites investigation. One of the major reasons for this improved relationship since 1929, according to officials of both the Association and the Federation, has been the Impartial Chairmanship which was established in that year. T h e Impartial Chairmanship is a mediation and arbitration system voluntarily established and maintained by the Association and the Federation as a part of their national uniform labor contract. U n d e r this system the parties agree to submit all problems 1 which arise during the life of the contract and which they cannot settle by negotiation to a permanent 2 impartial chairman for final and binding settlement. F r o m September 1929 to August 1945 inclusive, the period covered by the statistical survey of this study, 1566 problems were referred to the Impartial Chairman. Any one of these might have resulted in a resort to economic force if this alternative had not been available. W i t h the help of the Impartial Chairman, however, the parties were able to reach agreement on 27.3 per cent of these problems and where agreement was not ' Requests f o r changes in the general w a g e level are excepted. Special wage tribunals are established to decide on such requests if the parties cannot agree. 2 T h e Impartial C h a i r m a n is appointed f o r the life of the agreement.

1

2

EFFECTIVE LABOR

ARBITRATION

achieved peaceful solutions were found through decisions. Moreover the parties have found that their negotiations for new contracts have been made easier and speedier because the Impartial Chairmanship prevents the accumulation of grievances under the old contract. The Impartial Chairmanship has been partly responsible, therefore, for the elimination of strikes over new contract terms as well as over problems which arise during the life of the contract. The success of the system has not been dependent upon a single and unique personality as Impartial Chairman or upon certain economic conditions. During its operation since 1929, six men have served as Impartial Chairman. Likewise the system has been tested during years of depression as well as during years of prosperity; during years of war as well as during years of peace; during years when the technology was comparatively stable as well as during years when rapid changes of equipment, yarn, styles, and methods were being made. The result is a system which has been tested and proved effective under various conditions over a period of 18 years. An understanding of the procedures, techniques, and principles of this system should prove to be of value to all students of industrial relations, especially to those management and labor groups in other industries which are seeking satisfactory methods of stabilizing their industrial relations. PURPOSES OF S T U D Y

The purposes of this study are three: 1.

2.

3.

to present in an orderly and understandable fashion the procedures, techniques, and principles developed and tested by the Impartial Chairmanship of the full-fashioned hosiery industry. to determine the factors and conditions which led to the adoption of these procedures, techniques, and principles and to analyze critically their effects on the economics and other phases of the industrial relations of the industry. to discover what defects exist in the system as it now functions and to examine the possible remedies.

INTRODUCTION

3

METHOD OF RESEARCH All of the 1566 problems presented to the Impartial Chairmen and t h e decisions rendered by t h e m d u r i n g the period 1929-1945 were carefully read and analyzed with the purpose of discovering the various principles, procedures, and techniques which were developed and employed. Statistical analyses of these problems and decisions were also m a d e by placing on I . B . M . cards the various aspects such as t h e nature of the problem, the time consumed in settling it, t h e m e t h o d of settlement, and other significant data. T h e tables in Appendix A are the result. T h e convention reports of t h e Federation and other pertinent material f r o m the files of t h e Federation and the Association, such as the minutes of meetings d u r i n g which the Impartial Chairmanship was considered, were carefully studied. T h e files of the office of the I m p a r t i a l Chairman also proved to be a rich source of information. I n addition, a number of studies of arbitration in other industries and of other phases of industrial relations in the hosiery industry, especially those prepared by D r . George W . Taylor, were examined. T h i s material was supplemented by interviews and correspondence with the officials of the Association, the officials of the U n i o n , and all of the men who have served as Impartial C h a i r m e n . Finally, the author's experience as D e p u t y Impartial C h a i r m a n and Impartial Chairman over a period of more than two years provided much first-hand information.

C H A P T E R II

DISTINGUISHING CHARACTERISTICS OF T H E INDUSTRY system, if it is to be successful, must be geared to the industry which it serves. The Impartial Chairmanship of the full-fashioned hosiery industry is no exception. Its procedures, techniques, and principles have been modified by the environment in which they have been developed and certain of them can be clearly understood only in relation to that environment. This does not mean that they can have no value elsewhere. If such were the case, one of the major purposes of this study— acquainting other industries with a means of maintaining labor peace during the life of their contracts—would not exist. It does mean, however, that if the factors which have been especially active in conditioning the Impartial Chairmanship of the fullfashioned hosiery industry are not at work in a particular industry, a successful impartial chairmanship in the latter may necessitate some adjustment of these procedures, techniques, and principles. A N ARBITRATION

T H E P R O C E S S OF

MANUFACTURING

Familiarity with all of the details of the process of manufacturing full-fashioned hosiery is not essential to an understanding of the Impartial Chairmanship. Some knowledge of the basic equipment and operations, however, will be helpful. This section, therefore, is intended to be not a complete and detailed description of the process but rather a presentation of the minimum amount of knowledge of the equipment and operations necessary to an intelligent understanding of the material which follows it. Before the recent war, silk was the most important raw material of the hosiery industry. Nylon, rayon, and cotton were also used and by 1941 ranked next to silk in importance in the order named. During the war, rayon and, to a smaller extent, cotton +

CHARACTERISTICS O F T H E INDUSTRY

5

completely replaced silk and nylon. At the present time, however, nylon is the most important yarn and is likely to remain so unless a superior synthetic is developed. The size or diameter of nylon yarn is measured in deniers. 1 The lower the denier, the finer the yarn and, therefore, the sheerer the hosiery which is made from it. The size of rayon yarn is measured in the same way. Thus a 20-denier stocking is very sheer, whereas a 150-denier stocking is heavy and coarse. Silk on the other hand is usually measured by "thread." The lower the "thread" count, the finer the silk. One-thread silk is equal to 14-denier nylon or rayon. Cotton is measured by count and, unlike the other three types of yarn used, the higher the count, the finer the yarn. Thus 80-count cotton is finer than 40-count cotton. The former corresponds to 75-denier whereas the latter corresponds to 150-denier. Full-fashioned hosiery is produced on multi-section knitting machines of which each section knits a separate piece of fabric.2 The sections are so synchronized that all knit the same part of the stocking at a particular moment. The fabric is knit flat rather than in tubular form. The term "full-fashioned" is derived from the fact that the hosiery is "fashioned" to fit the leg snugly, by adding stitches at the broad parts of the leg and dropping them at the narrower parts. It is this adding and dropping of stitches which makes full-fashioned machines more complicated and delicate than equipment which knits fine straight fabric. The number of sections per machine usually varies from 18 to 32.3 The machines also vary in the fineness with which they knit as measured in terms of gauge. The gauge of a machine is the number of needles per 1^2 inch on the needle bar. Since each needle produces a single loop in every row of knitting on the stocking, the greater the number of needles, the closer the stocking is knit. Thus 51- or 54-gauge indicates a finely knit, whereas 39-gauge indicates a coarsely knit, stocking. Low-denier 1 The term denier is not new. It was used to indicate the size of silk before the advent of rayon and nylon. Today in the hosiery industry, however, the term is used almost exclusively in relation to the synthetic fibers. 2 There are some single-section (Wildman) machines used in a few mills. 3 There is some longer-section equipment. T w o association mills have seven 40-section machines.

6

EFFECTIVE LABOR ARBITRATION

yarn is used on the fine-gauge and high-denier on the coarsegauge machines. In the unionized mills, each knitter operates only one machine. The machines are arranged in pairs so that one machine faces another. The two knitters in each aisle are supposed to cooperate with each other, although each one is responsible for his own machine only and generally is paid according to the stockings produced on it alone. Cooperation between knitters in the same aisle, which is known in the industry as "helping," is very important if maximum production is to be attained. 4 About 80 per cent of the knitting equipment is now of the single unit or backrack type,5 that is, it is capable of producing both the leg and the foot in one knitting operation. Previous to the development of this type of equipment, the leg was produced on one type of knitting machine and then transferred to another type of machine on which the foot was knit. In some mills this old procedure is still followed, either because they have been unable to obtain the backrack equipment or because management is of the opinion that a better product is secured by the use of separate machines. The machine on which only legs are made and the knitters who operate them are both referred to as "leggers." The legs, having been knit on the legging machines, with a few extra rows at the instep, are taken to the footing department and given to the toppers. Whereas the knitters are men, the toppers are girls and women. The toppers place the legs on topper bars, each of which has a row of needles the same width as the end of the leg fabric. Each small loop in the last row before the extra rows is placed on a point on the topper bar. The toppers then unravel the extra rows and take the bars to a footing machine where they help the knitter place the legs in the sections of the machine. Each loop from the topper bar is slipped onto a needle in the footing machine. An experienced topper or footer accomplishes the transfer of the whole stocking in a few seconds by a quick twist of the wrists. Two or three toppers work with each 4

For a fuller explanation of "helping" see pp. 128-31. The "Reading" Full-Fashioned. Knitting Machine, Statistical Survey, Textile Machine Works, p. 9. 5

1946,

CHARACTERISTICS OF THE INDUSTRY

7

footing knitter depending upon the number of sections of the machine and the speed of the toppers. The knitting of the stocking is completed on this footing machine or "footer" as it is called in the trade. The knitter who operates a footing machine is also known as a "footer." A helper may be employed on the longer-section footing machines. When the backrack or single-unit method is used, the topping and separate footing operations are eliminated and the labor costs reduced. Whether made on backrack or legging and footing machines, full-fashioned stockings are knit as flat fabric. The next two operations consist of closing the stockings by looping and seaming—operations which are performed by women and girls. The leg and the bottom of the foot are seamed and the heel and toe are looped on stockings made on leggers and footers. On the backrack type of stocking, the heel also is seamed, leaving only the toe to be looped. Looping rather than seaming is used only where it is necessary to prevent runs. It is accomplished on machines with points similar to those on a topping bar except that they are set in a dial or circular row. The looper "sets up her work, stitch for stitch, very much like the transfer-bar topper. In closing the heel or toe of the stocking, she places two stitches on each needle, one from the lower side of the heel or toe, and the corresponding stitch from the upper side. The dial revolves and, as each needle passes under a sewing needle attachment, the sewing needle inserts a loop of thread under the two stitches and joins them together." 8 After the looping operation, the stockings are seamed, simply by stitching together the two sides of the fabric on a sewing machine specially built for that purpose. The operator must be careful to match the various points on the two sides and to keep the seam straight. Following the seaming operation, the stockings go to the examiners. These are girls or women who have been trained to detect flaws in the knitting, seaming, or looping. Examining is usually performed on an expanding form which is shaped like a •Ruth J. Woodruff, The Hosiery Industry, p. 13. Quoted by George W. Taylor, The FuU-Fashioned Hosiery Worker, pp. 187-88.

8

EFFECTIVE LABOR ARBITRATION

leg. A stocking is pulled on, the form expanded, and then turned around by the operator. Defective stockings are marked and segregated for the menders. The menders are skilled women who use specially constructed hooks to pick up dropped stitches and make such other repairs of the stockings as are required. Up to this point the stockings have been worked on "in the gray," that is, they have not been dyed.7 If the stockings are made of nylon they will go through one more operation—preboarding—before being dyed. Pre-boarding consists of placing the stockings on leg-shaped forms which are then subjected to heat and steam to press the stockings into the proper shape and to set the nylon stitch. After the pre-boarding operation, in the case of nylon, or the mending operation, in the case of rayon, silk, and cotton, the stockings are dyed. Following the dyeing operation they are boarded. This is much the same as pre-boarding. The stockings are stretched over forms while still wet and dried with heat to the proper shape. Then the stockings go to the finishing department, where the major operation is pairing. There are no left and right stockings, but the pairer must put together two which match as nearly as possible in length, color, etc. The pairer also removes any defective stockings which may have been missed by the examiners or damaged in the dyeing process and sends them to the "finished menders" for repair. The stockings are then stamped, folded, labelled, boxed, and made ready for shipment. T H E HOSIERY

WORKER

Hosiery jobs, although requiring considerable skill and intelligence (especially the knitting jobs performed by men), are not so taxing as to leave the workers physically and mentally exhausted at the end of the working day. Moreover, wages in the industry have been above the average of all American industries generally. Thus the hosiery worker has had a margin of energy and funds for intellectual development if he desired it. The Union at times has encouraged it by providing materials and discussion leaders, especially in economics and industrial T Some stockings used to be knit from dyed yarn and were referred to as "ingrain." This method has been discontinued in virtually all association mills.

CHARACTERISTICS OF T H E INDUSTRY

9

relations. At present it has a full-time educational director. The result has been a greater understanding of the principles of economics and industrial relations on which the Impartial Chairman's decisions were based and, therefore, a greater willingness to accept them than might be found among workers with less opportunity for intellectual development. CAPABLE U N I O N L E A D E R S H I P

The leaders of the Federation or National Union have been drawn entirely from the ranks of the workers. None has had the advantage of advanced formal education, although some have had high-school training, but they know their industry well from the operation of its equipment to the economic difficulties which it faces and they have been willing to approach these economic difficulties with a reasonable attitude. As one writer has stated, they have had "a healthier respect for cold facts than for any amount of eternal principles and unassailable theories." 8 This attitude has made it possible for them to understand and to support the Impartial Chairmanship at times when others might have abandoned it. Moreover, the integrity of the union leadership gave management the confidence to join with it in the establishment of the Impartial Chairmanship. The leadership has been able to keep the Union well disciplined. There have been few open breaks within the ranks, although differences over issues have been argued out vigorously and democratically on the convention floors. The power in the Union, although derived from the membership, is concentrated in the hands of the national officers and the National Executive Board. Wildcat stoppages have been very few in number and of short duration.· ASSOCIATION-WIDE BARGAINING

An important group of the unionized full-fashioned hosiery manufacturers are joined together into an employers' association known as the Full-Fashioned Hosiery Manufacturers of America, Inc. The Association has a membership of 38 companies at 8 8

Fortune, J a n u a r y 1932, p. 52. See pp. 101-5.

10

EFFECTIVE LABOR ARBITRATION

present. Its major purpose is to represent the companies in dealing with the Union. 10 All collective bargaining is carried on by it rather than by the individual companies. The Association was organized late in 1929 specifically for that purpose with the encouragement of the Union, which desired to place its bargaining on an industry-wide basis. The contract negotiations, therefore, are conducted by the Association and the Federation (National Union). The "National Labor Agreement" which is negotiated every two years provides for uniform commitments for all association mills and furthermore sets the basic pattern for all non-association mill contracts. U N I F O R M PIECE-RATE STRUCTURE

One of the principal reasons for turning to association-wide bargaining in 1929 was the desire to achieve uniform piece rates throughout all association mills. It was believed that this would tend to halt the anticipated downward spiral of prices and wages in the industry. Complete uniformity was not attained immediately, but the area of uniformity was extended gradually along both geographical and task lines until today, except for a few minor operations, uniform piece rates are paid throughout all association mills. Likewise the minimum hourly rates which become effective under certain circumstances and which are calculated for each individual worker on the basis of prior piecerate earnings are determined by a uniform method throughout all association mills. Uniformity, however, was not achieved, nor has it been maintained, without struggles within the Union and within the Association as well as between the two organizations. There have been times when local union groups have opposed the uniform rate structure. During the depression, the pressure within the Union against the uniform structure came from those employees in marginal firms who found that the maintenance of the standards resulted in unemployment for them. During the recent prosperity in the industry, on the other hand, some of the locals in the more profitable firms have opposed uniformity because 10 This Association should not be confused with the National Association of Hosiery Manufacturers which is the trade association of the hosiery industry and includes non-union as well as union companies.

CHARACTERISTICS OF T H E INDUSTRY

11

they have believed that they could secure higher rates by bargaining on a plant basis. Likewise within the Association there have been disagreements over the degree and nature of uniformity in the rate structure. A number of the association mills manufacture nationally advertised brands. These branded mills tend to institute and maintain much higher quality standards than do some of the non-branded producers. As a result, if uniform piece rates are secured throughout the Association, the branded houses attain a competitive advantage over some of the non-branded houses, which has caused disagreements between the two types of producers. Similar arguments have occurred within the Association regarding the rates to be paid on various types of machines. At one time, for example, mills in which 42-gauge 20-section equipment predominated maintained that the rates on such equipment were too high compared with the rates on 45-gauge 24-section equipment. In the discussion of the principles of secondary rate determination in Chapter IX, further attention will be given to the difficulties inherent in this problem of uniformity. Practically all of the production workers in the Association mills are on piece rates. Over the years a complicated rate structure has been built up with base rates for the various types of equipment and a multitude of additions and deductions for machine attachments, style differences, speed of operation, etc. A worker's complete piece rate can seldom be found as such in the Agreement. Instead, the Agreement provides tables of base rates, extras, and deductions from which the complete piece rate may be calculated.11 The 1943-1945 Agreement contains twenty-two pages of such tables. To acquaint the reader with each of these 11

T h e calculation of a knitter's rate, f o r example, may be as follows: +.9264 ( 0 Base Rate (42-gauge machine on r a y o n ) —.0303 ( 2 ) Speed & Section deduction (20-sections 56 cpm) + .0320 (3) Rayon E x t r a —.0246 (•) Course Adjustment (1350 — 1300 = 5 0 ) + .0101 ( 5 ) Picot E x t r a +.0082 ( 6 ) Additional Picots (2 in welt) + .0062 (7) Stripe E x t r a (even number courses) + .0169 ( 8 ) Heel Plaiting (entire heel at 40 c p m ) Total Final Rate (fractionally adjusted to nearest half cent)

$1.2329 $1,235

12

EFFECTIVE LABOR ARBITRATION

tables is beyond the scope of this study. It is sufficient to know that a complicated piece-rate structure in which an attempt has been made to achieve balance is now in effect. Although adapted to the particular needs of the hosiery industry, it is not basically different from those found in a host of other industries. PROTECTIVE T I M E - R A T E STRUCTURE

Some workers such as firemen, engineers, watchmen, janitors, and in some mills, menders, are paid regularly on an hourly basis at rates established separately in each mill. In the case of engineers and firemen, the contract provides that Rates of pay for engineers and firemen shall be equal to the prevailing U n i o n rates of pay for engineers and firemen within the locality of the member mill. 1 2

Only 15 per cent of hosiery workers are in these categories, however, and when reference is made to "time rates" or "hourly rates," the parties usually have in mind the minimum or protective time rates of piece-rate workers. The most important feature of this part of the wage structure is that all time rates are related to individual piece-rate earnings. There are three time rates which apply under various conditions to be explained later and which are known as the 80 per cent, 90 per cent, and 100 per cent time rates. These rates are percentages of the individual worker's "regular average earnings" while on piece work. The Agreement provides the following formula: T h e regular average earnings of each employee based on a fiveweek earning period shall be determined for each six ( 6 ) month period, ahd shall be based upon full-time work on conventional styles and shall not include earnings while on n e w style development, style change, machine breakage or m i n i m u m w a g e . 1 8

These "regular average earnings," then, become the basis for any time-work payment which a worker may receive. Thus each worker has a different time-work basis depending upon his piece12 National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry, Sec. C-21. Reproduced in Appendix B. 18 Ibid., Sec. C-14.

CHARACTERISTICS OF T H E INDUSTRY

13

work earnings. Time-work earnings as well as piece-work earnings, therefore, reflect the productive ability of the worker. This system relieves management of the necessity of setting either individual or department time rates, both of which are undesirable because the former frequently results in charges of favoritism and the latter tends to penalize the efficient workers and overpay the inefficient. A worker may increase or decrease his time-work earnings by increasing or decreasing his piece-work production. The 80 fer cent hourly time-work rate is paid under the following conditions: (1) Waiting for work: The Agreement reads: W h e n e v e r operator will be required to wait at the mill for yarns or for work, as will be properly recorded, hourly rates based upon 8 0 per cent of the regular average earnings of each employee shall be paid, it being understood that if the waiting time of the operator in any week shall not exceed one-half ( J 4 ) hour, no payment shall be made for such waiting time. . . . N o interval of time less than ten ( 1 0 ) minutes duration is to be counted in computing the half hour or m o r e . 1 4

(2) Machine breakage: When a machine breaks through no fault of the operator, the time lost by the operator is payable at 80 per cent of average earnings. (If the machine breakage is due to carelessness on the part of the operator, however, he must aid in its repair and receives no payment for time so spent except the weekly guarantee.) (3) Style change: The styles of stockings being produced on knitting machines are changed from time to time according to the demand of the company's customers. Such changes necessitate machine adjustments and also the attainment of experience by the knitter before normal production can be regained. In the transition period while production is still low, the worker's hourly earnings, if calculated at the regular piece rates, might drop to 50, 40, or 30 per cent of his normal piece-rate earnings. If style changes were made frequently, as they are at some mills, the worker's earnings over a period of time might be seriously 14

Ibid., Sec. C-8.

1+

EFFECTIVE LABOR ARBITRATION

affected. Consequently, the Agreement provides that following a style change the worker shall be guaranteed his 80 per cent hourly rate for three weeks or until his production during a halfday period is such that his piece-rate earnings exceed the 80 per cent. The 80 per cent applies only when piece rates for the new style can be calculated from the Agreement. The 90 per cent hourly time-work rate is paid under the following conditions:16 (1) Prolonged style change: If, during the three-week period, the worker's piece-rate earnings have not exceeded the 80 per cent for a half day he is henceforth paid the 90 per cent rate, provided the inability to exceed the 80 per cent has not been "due to the fault of the operator." 18 This 90 per cent rate provision was added because otherwise the worker might continue to suffer a 20 per cent loss for a long period because of machine or yarn difficulties beyond his control. (2) Initial o-peration of new machines, extended machines, and machines with backrack attachments: The 90 per cent rate is also paid for initial operation of all new, extended, or completely reconditioned machines, or for the initial operation of machines after the backrack attachment has been added. The 90 per cent rather than the 80 per cent rate was made applicable in these cases because usually considerable time is required to get the complicated knitting machines up to normal production and during the breaking-in period adjustments and repairs must be continually made. (3) Style development: This term may be misleading to the layman. Style development as defined in the Agreement means: "Operations for which piece rates are not provided by the Agreement or by a decision of the Impartial Chairman." 17 The 90 per cent rather than the 80 per cent rate is provided for this type of operation because the worker has no possibility of exceeding the time rate. The 10 per cent differential between the worker's 18 The 90 per cent hourly rate is also payable under certain other special conditions as set forth in the Blank Company Agreement of February 19, 19+2. 18 National Labor Agreement, 1943-1945, Sec. C-8b. Reproduced in Appendix B. " Ibid., Sec. C-9.

CHARACTERISTICS OF T H E

INDUSTRY

15

normal piece-rate earnings and his time-work earnings on "style development" is provided in order to give an incentive to get the "bugs" out of the new style and raise the production to a point where the parties will be willing to set a piece rate on it. The 100 fer cent hourly time-work rate is payable for the making of samples. When the operator is working on samples his machine is being continually changed. Small lots are being run off with no possibility of achieving anything like normal production. No purpose would be served in providing the worker with less than his 100 per cent rate and if less were paid there would always be objection to running samples. The 80 fer cent weekly minimum wage is also calculated from the "regular average earnings." The Agreement provides that "minimum wages shall be paid on a weekly basis at 80 per cent of the regular average earnings of each employee." Before this provision was adopted, minimum wages were paid on a daily basis at 75 per cent of regular average earnings. The manufacturers contended, however, that the daily system involved too much bookkeeping and tended in some instances to hinder the piece-work incentive. The Union agreed to change the weekly minimum if it were raised from 75 to 80 per cent. Thus, at the present time, a worker cannot receive less than 80 per cent of his "normal" piece-work earnings, regardless of his production during any particular week. In analyzing the time-work structure described above, it becomes clear that the parties have had two thoughts in mind during its development. First, they have attempted to guard the worker against serious losses in earnings from conditions beyond his control. Second, they have attempted not to interfere with the operation of the piece-work incentive. REASONABLE AND RESPONSIBLE MANAGEMENT

Like that of the Union, the leadership of the Association has been capable and reasonable. It has accepted the Union and has made a sincere effort to deal with it fairly and openly. Along with the union officials, the association and company officials take pride in the success which they have had in maintaining peaceful industrial relations since the organization of the Asso-

16

EFFECTIVE

LABOR

ARBITRATION

dation in 1929. Management in general appears to be closer to its workers than in many other industries. This is undoubtedly due in part to the fact that a considerable number of the men who now form the management group were once active in the Union. M r . Lang, for example, who was president of the Association until his death in 1946, was at one time treasurer of the Union's largest local and Mr. Gieges, who is general manager of one of the major mills, was at one time president of the Union. The size and financial responsibility of the companies which make up the Association is another factor which has affected the Impartial Chairmanship. The average number of workers per association mill is 341.18 They are not so large that management is far removed from the workers. On the other hand, they are not "fly-by-night" establishments. Even the smallest association mill represents an investment of several hundred thousand dollars. CLOSED SHOP AND CHECKOFF

Since 1931 limited closed shop and checkoff provisions have been a part of all the contracts between the Association and the Union, 19 making it easier for the Union to discipline its own members without fear of decreasing its membership. Furthermore, they have removed the possibility of discrimination between union and non-union workers, a condition which caused considerable difficulty for the impartial chairmanships of certain other industries.20 T H E STYLE FACTOR

The complications of the piece-rate structure are due to a considerable extent to the style factor in the industry. Thousands of styles are possible in full-fashioned hosiery and changes are made frequently in every plant. When a style change is made it is always necessary to calculate or negotiate a new rate for the 18

From a study made by the Association. See pp. 118-19. 80 See Amalgamated Clothing Workers of America, Research Department, Tht Clothing Workers of Chicago, 1910-22, p. 60. 19

CHARACTERISTICS OF T H E INDUSTRY

17

knitting operation and often for the other operations. Frequent minor technological changes also play a part in complicating the rate structure and lead to numerous grievances and arbitration hearings on rate determination. IMPROVING TECHNOLOGY

The output per knitter per hour in association mills has been continually increasing since 1929. Then few, if any, machines operated at more than 55 courses per minute.21 Today operation at 76 courses per minute is not unusual. Likewise, the number of sections per machine has been greatly increased. Whereas, in 1929 it was customary to think of 18- and 20-section machines, today all new equipment contains 30 or more sections. The output per knitter has been increased further by the rapid adoption of single-unit and backrack machines which eliminate the separate footing operation.22 This increased production per worker and the inability of the unionized mills to expand the market for their goods have been important factors in causing the number of production workers employed in association mills to decrease.23 H I G H PERCENTAGE OF LABOR COSTS

Of major importance when wages are under consideration is the high percentage of labor costs to total costs in the industry. In 1939 wages in the full-fashioned hosiery industry represented 36.5 per cent of the value of the product. Only one out of forty major American manufacturing industries outranked full-fashioned hosiery in this respect.24 PARTIAL UNIONIZATION OF INDUSTRY

The Union has never been able to extend its control throughout the entire industry. During the period covered by this study, an increasing proportion of the production of full-fashioned 21

A course is one f u l l row of stitches across the fabric. See p. 6. 23 G. Allan Dash, Jr., Margaret P. Byers, and Miriam L. Levin. Earnings of Full-Fashionei Hosiery Workers in Union Mills, 1945, p. viii. 24 Ε. B. Alderfer and Η. E. Michl, Economics of American Industry, p. 12. 22

18

EFFECTIVE LABOR ARBITRATION

hosiery has come to be made in non-union mills. This change was largely the result of the development of the industry in the South26 and in other areas outside of the union strongholds.2® At the present time the union membership is less than 50 per cent of the total employees in the industry. SEVERE COMPETITION

Of all the conditioning factors, none has been more important than the strongly competitive nature of the industry. The fluctuating price of the product, the instability of profits, and the high mortality rate among firms in the industry indicate a condition of vigorous competition.27 In the past the instability of the price of silk was an important cause of the severity of competition. With the almost complete replacement of silk by nylon, the supply and price of which can be stabilized, this cause has been removed. There are, however, a number of other factors which may be expected to cause the industry to remain highly competitive. The nature of the market is one of these other factors. Because of the low cost of shipping hosiery in relation to its value, there are no areas in which competition is sheltered because of geographic isolation. The market for each plant is nation-wide, that is, each plant is in direct competition with every other plant which produces similar hosiery. The companies in the industry have always been numerous and there has been no one leader which could inaugurate and maintain price leadership and "friendly competition" as in the steel industry.28 Nor has the Textile Machine Works which 26

56.5 per cent of all modern full-fashioned knitting machines are located in the South. See The "Reading" Full-Fashioned Knitting Machine, Statistical Survey, 1946, p. 11. See also Table C, p. 212. 28 George W . Taylor, "Going South," Textile World, April 1936, pp. 867-68. 27 In the terminology of recent economic theory the condition in the hosiery industry could not be classified as "perfect competition" because of the product differentiation resulting f r o m the style factor. T h e economic theorist would be forced to classify the condition in the hosiery industry as one of "imperfect competition." See Raymond T . Bye, Principles of Economics, A Restatement, pp. 347, 371 or Paul F. Gemmill, Fundamentals of Economics, pp. 37, 398, and 407. 28 Alderfer and Michl, op. cit., pp. 69-79.

CHARACTERISTICS OF THE INDUSTRY

19

produces practically all of the knitting equipment, attempted to control the production of the finished product as the Hartford Empire Company did in the glass container industry.28 Furthermore, there appears to have been no effective attempt to control prices among the companies through their Association or by other means except during the N R A and ΟΡΑ days. Entrance into the industry has not been difficult, despite the high cost of new knitting machines. Second-hand equipment has always been available. One knitting machine is all that is necessary to get into the business, because the knit fabric can be sent to other companies for completion. The result is that "family shops" have been numerous. Because of their lower labor costs they have offered severe competition to the regular companies. More important than the competition of the small "family shops" is that of the larger non-union mills. As already indicated, the Union has not been able to organize the entire industry. Some areas have been known as non-union territories. In these areas the lower wage rates and the absence of the single-machine rule have given the non-union mills a competitive advantage. Their labor-cost differential has been sufficient at times to encourage the opening and expansion of mills in the non-union areas, especially in the South, when Northern unionized mills were finding it difficult or impossible to operate full time. 29

Ibid., pp. 211-15.

CHAPTER

III

BRIEF HISTORY OF T H E IMPARTIAL CHAIRMANSHIP1 ADOPTION OF T H E IMPARTIAL C H A I R M A N S H I P

twenties were difficult years for the unionized section of the full-fashioned hosiery industry. Despite severe price cuts accompanied by wage cuts, the unionized manufacturers were finding it increasingly more difficult to compete with non-union manufacturers, especially with those in the South. As a result, union hosiery workers had trouble finding and keeping jobs and many of those who were employed were working part time only. Most of the new and more efficient equipment was being installed in the non-union plants and even some of the old equipment was being moved to non-union areas. The proportion of the industry under union control was rapidly declining. In 1929 the president, recognizing that the Union faced a serious condition, said: T H E LATE

W e have lost rather than gained control of the industry; it is time to try something else beside fighting. . . . W e are not in a position to fight for conditions, to fight for wages, to fight for hours, to fight for anything else except for the maintenance of our organization. Probably on this convention hinges the whole question of whether a year from today there will be a convention of full-fashioned hosiery workers or not. 2

The union leadership wisely reasoned that the difficulties could be overcome most effectively by joint action on the part of the Union and the unionized companies. In the fall of 1929, there1

Emphasis ί» placed in this chapter on hitherto unpublished data regarding the adoption of the Impartial Chairmanship and Dr. Abelson's term of office. The years since 1931 have not been dealt with in detail because a comprehensive account of these years is already available. See George W. Taylor, "Hosiery," Chapter 9 in How Collective Bargaining Works, edited by Harry A. Millis. 2 Quoted by Gladys L. Palmer, Union Tactics and Economic Change, pp. 102-3. 20

HISTORY

21

fore, it issued a call to the management of all union mills to meet with it as a group for the purpose of finding means of combating those factors which were working to the detriment of both parties. 3 Management accepted the invitation and the conference opened in Philadelphia on April 17, 1929. This date is significant in the collective bargaining history of the hosiery industry, for it marks the first time that manufacturers from the unionized mills met as a group to discuss conditions with the Union. 4 In reading over the reports of the conference, one is impressed by the cooperative and friendly attitude adopted by both groups from the outset to the conclusion of the conference. M r . Joseph Haines served as spokesman for the manufacturers. In his first speech he emphasized the acceptance of the Union by the manufacturers assembled and their desire to cooperate with the Union for their joint benefit. H e reviewed the economic difficulties faced by the union manufacturers, pointing out that "at least 60 per cent of the machines . . . are operated by non-union knitters, producing hosiery at substantially less per dozen than it can possibly be produced at the union wage rates," and that, "non-union production is increasing twice as fast at this time as union production." H e then proceeded to outline a series of proposals which in the opinion of the manufacturers were necessary if the union mills were to hold their own in the competitive struggle. T h e major proposals were:

8

1.

double machine operation

2. 3. 4.

decreased wage rates extension of apprenticeship training time greater discipline and efficiency on the part of U n i o n workers.

Proceedings, 1929 Convention, American Federation of Hosiery Workers, p. 4. 4 Mr. William Smith, secretary-treasurer of the Union, wrote in a memorandum at that time, "In spite of the fact that every effort on the part of the non-union manufacturers . . . was made to destroy the effect of the meeting, it was the largest gathering of responsible executives in the Full-Fashioned Hosiery Industry that was ever brought together at one time." "Resume Leading up to the Negotiations between the Union and the Manufacturers in 1929," in the files of the American Federation of Hosiery Workers.

22

E F F E C T I V E LABOR ARBITRATION

As the conference proceeded, it became apparent that the union manufacturers were also interested in the extension of union membership to the non-union mills." The Union through its spokesman and president, M r . Gieges, immediately agreed to the extension of apprenticeship training time, some decreases in wage rates, and an effort to obtain greater discipline and efficiency. It opposed double machine operation, however, arguing that the additional helpers required by such operation would further increase the number of men familiar with hosiery machine operation at a time when the supply of knitters was already excessive. The Union then made certain additional proposals which included: 1. uniform contract provisions including wage rates in all union mills 2. a closed shop 3. arbitration. The Union maintained that arbitration as a final means of settling all grievances under the contract would make possible the greater discipline which the employer desired. The closed shop, it contended, was essential if it were to hold its membership while putting into effect the wage cuts and other provisions which would be unpopular with the rank and file. Several types of arbitration procedures were suggested by the manufacturers and by the Union. Finally the parties agreed that a single Impartial Chairman would be the most satisfactory method. Neither party appears to have considered the establishment of the Impartial Chairmanship as a major accomplishment at that time. The chief issue was double machine operation. Most of the time of the conference was spent on this question. Within the Union a bitter controversy developed between those who favored and those who opposed double machine operation. In the end the Union agreed to the doubling up of certain machines and the manufacturers agreed to the exclusion of non-union members from the major occupations in their plants. Certain wage cuts were also accepted and it was agreed to make a scientific study of all rates with the purpose of achieving balance and 6

Ibid., p. 23.

HISTORY

23

uniformity. The small amount of time expended by the conference in the discussion of the Impartial Chairmanship as compared with the other issues is indicated by the fact that in Mr. Smith's resume of the negotiations, it occupies less than two out of 52 pages. Likewise in the special union convention which was called to consider the new agreement, the Impartial Chairmanship provision was overshadowed by the double machine operation issue and the wage issue. Of the 630 pages reporting the discussion at the convention only 13 pages were devoted to the Impartial Chairmanship. The new union president, Emil Rieve, however, grasped the significance of the Impartial Chairmanship when he stated: W e have a guarantee that peace will be maintained indefinitely in our unionized districts and we will have something to offer a nonUnion employer as an inducement to deal with the Union. W e feel that the Union employers as a result of this agreement will be able to exert influence on their fellow non-Union employers to get into the organized section of the trade as a means of creating a stable industry. W e can make a tremendous step toward eliminating the strike as a means of maintaining standards and can create as it were a higher state of civilization in our industry by removing war as an instrument of public policy in our trade. W h a t man among us is not vitally interested in bringing about such a state of affairs? W e get not only peace with honor but peace with a guarantee of justice and a machinery for bettering trade conditions.®

The convention, however, gave little consideration to the issue. The brief discussion was brought to a close by a statement by Mr. John Banachowicz of Milwaukee who said, W e are creating a new machinery in our industry. W e don't know how it will work out and for that reason I think this discussion is perfectly useless. . . . I t is an experiment and we will have to see how it turns out. 7

When the question of accepting the new agreement came before the convention for a vote it was approved. Later the manu6

Proceedings,

p. 24.

τ Ibid., p. 338.

1929 Convention, American Federation of Hosiery Workers,

24

E F F E C T I V E LABOR

ARBITRATION

facturers also approved it. Along with double machine operation,8 wage decreases, union security, and a number of other things, therefore, the Impartial Chairmanship became a part of the collective bargaining system. Since the Full-Fashioned Hosiery Manufacturers of America, Inc., the Association which now bargains for the manufacturers as a group, had not yet been formed, individual contracts were signed with each company. Each contract contained the following provisions: All grievances arising in any shop shall be adjusted by the Union and the Employer involved; in the first instance sueh grievances shall be submitted to the Shop Committee and the Shop Foreman or Superintendent representing the Employer, and in the event that they cannot adjust such grievances, the matter shall then be submitted to the officials of the Union and the officials of the Employer. In the event the Union and the Employer cannot agree, the grievances shall be referred to the Impartial Chairman for settlement, who shall give his decision not later than ten (10) days after the case has been referred to him. His decision shall be final. The Impartial Chairman shall be Paul Abelson, of New York City, who is hereby designated to act throughout the term of this agreement. In the event of his death or resignation his successor shall be chosen by a committee representing the Employer and a Committee representing the Union within fifteen (15) days thereafter. T h e compensation and expenses of such Impartial Chairman shall be borne jointly by both groups. T h e Union hereby agrees to provide and continuously maintain a blanket surety company bond in the sum of T e n thousand ($10,000.00) dollars to protect all the employers who sign this agreement or counterpart thereof, to cover any assessment which may be imposed by the Impartial Chairman for any breach under this agreement. In the event of a breach of this agreement by an Employer and/or Employers the Impartial Chairman shall assess an amount as damages for such breach, which damages shall be paid to the Union by the Employer and/or Employers committing such breach. Thus it was not with great consideration and great expectations that the Impartial Chairmanship was ushered in. It was thought of simply as a part—and not the most significant part—of a 8 Double machine operation was discontinued in 1931 under the pressure of increased unemployment of knitters.

25

HISTORY

united program by which the union manufacturers and the Union were joining forces in order to meet the competition of the non-union manufacturers. D R . ABELSON'S CHAIRMANSHIP,

1929-1931

The manufacturers and the Union secured Dr. Paul Abelson of New York City as their first Impartial Chairman. Dr. Abelson was no novice at labor arbitration. H e had held, among other arbitration posts, the Impartial Chairmanship of the fur industry continuously since 1914 and the Impartial Chairmanship of the headgear industry since 1916.® Thus he brought with him to full-fashioned hosiery a knowledge of mediation and arbitration procedures, techniques, and principles developed and tested during some fifteen years of service in other industries. The ability of the Impartial Chairmanship to pass through the first crucial years successfully was due in considerable degree to the backlog of knowledge and experience upon which Dr. Abelson could draw to meet the difficult problems which arose. Under his leadership it was not long before the parties realized that the Impartial Chairmanship was one of the most significant parts of their new relationship. The first year of operation convinced both the Union and the manufacturers that in it they had an institution which was perhaps more important to their mutual development than any of the other provisions of the 1929 Agreements. During that first year it served their purposes well. By providing a terminal point in grievance procedure it put an end to long drawn-out negotiations over minor issues and freed the union leaders for organizational work and the manufacturers for the task of increasing efficiency in their plants. By providing prompt and equitable settlement of all problems, it eliminated any reasonable cause for stoppages which had cut the workers' incomes and increased the manufacturers' costs in previous years. Moreover, it provided both parties with a "whipping-boy" to whom they could shift some of the onus of adjustments necessitated by the general wage cuts, which both parties recognized as inevitable. Finally, the existence of law and order in the unionized section of the industry provided the • From correspondence with Dr. Abelson, August 14, 1946.

26

EFFECTIVE LABOR

ARBITRATION

Union with a good argument when attempting to secure recognition from non-union employers. It is not surprising, therefore, that at the 1930 convention of the Union when the Impartial Chairmanship was scarcely 10 months old, Mr. Rieve, the union president, expressed the opinion that "it has already become a permanent feature of the collective life of the industry"10 and urged the delegates to instruct the negotiating committee to seek its continuance in all new agreements. The membership was convinced of the soundness of this request. A committee elected to consider the president's annual statement gave the Impartial Chairmanship first place on its report and recommended That the arbitration clause be continued in any future agreements entered into. Your committee is in hearty accord with this recommendation, feeling that it is an intelligent and practical instrument for the adjustment of the many and diversified problems that arise in all industries. Arbitration must result in a great economic saving and the prevention of much needless and bitter sacrifice on the part of the workers as well as the manufacturers. 11

The delegates to the convention, following the recommendation of their committee, voted to continue the Impartial Chairmanship. In the negotiations with the manufacturers, the latter also indicated their desire for its continuance. The 1930 agreement, therefore, included provision for the Impartial Chairmanship. It had weathered its first year and had won a permanent place in the collective bargaining structure of the hosiery industry. Dr. Abelson continued to serve as Impartial Chairman until September 1931. During his period of service a number of the procedures, techniques, and basic principles of the industry were established. From the beginning, Dr. Abelson wrote into his decisions the reasoning by which he had arrived at his conclusions.12 This has continued to be standard practice in the industry. He also introduced the method of identifying decisions which 10 Proceedings, 1930 Convention, American Federation of Hosiery Workers, p. S3. 11 Ibid., p. 524. 12 In some industries, the umpire or impartial chairman states in writing the decision only. No attempt is made to explain the reasons f o r it.

27

HISTORY

has likewise become standard in the industry. H e divided his two-year term into four periods and gave the decisions issued in each period a letter. Thus the decisions issued during the first period were A l , A2, etc., those issued during the second were B l , B2, etc. Throughout this study, frequent references will be made to the decisions rendered by the various Impartial Chairmen. Those rendered by Dr. Abelson are identified by the letters A to D inclusive.13 During his two years as Impartial Chairman, 68 problems were presented to Dr. Abelson for settlement. 14 They dealt with a variety of questions, but there was considerable emphasis during this period on the basic rights of management and the basic rights of the Union under the new agreement. Dr. Abelson met these problems with a courage and foresight which resulted in a firm foundation upon which the "common law" of the industry could be built. D R . TAYLOR'S CHAIRMANSHIP,

1931-1941

For their second Impartial Chairman, the parties chose Dr. George W. Taylor, now Professor of Industry at the Wharton School of the University of Pennsylvania. Dr. Taylor had the advantage of a thorough knowledge of the technical and economic problems of the industry. H e had lived and worked in Reading, a hosiery manufacturing center, for a number of years. Moreover, he had published important research studies of the hosiery industry. 18 During the early years of Dr. Taylor's chairmanship there was still much emphasis on the basic rights of the parties under the agreement. Management's rights of administrative initiative, uninterrupted production, method of operation, and use of property and the Union's rights of protest and appeal, retroactivity, control of jobs, and administration of its own internal affairs were the subjects of frequent important decisions.18 Principles were See Table I, Appendix A. See Table 14, Appendix A . 15 Significant Post-War Changes in the Full-Fashioned The Full-Fashioned Hosiery Worker. » See Chapter VII. 1S

11

Hosiery Industry

and

28

EFFECTIVE LABOR ARBITRATION

established on all of these questions by Dr. Taylor. In other less basic, although equally difficult, problems, such as those involving promotion, discharge, and lay-off, Dr. Taylor in his decisions also laid down the principles which have continued to guide the parties and the succeeding Impartial Chairmen. In the matter of rate cases, Dr. Taylor grappled with the difficult problems involved in establishing and administering association-wide uniform piece rates. Although he did not crystallize the principles covering this field so clearly as those in the nonrate field,17 here too considerable progress was made. Time studies and wage studies were introduced to aid in rate determination. Most of the other techniques and procedures now employed in both rate and non-rate cases were introduced and thoroughly tested during Dr. Taylor's chairmanship. Dr. Taylor placed much emphasis upon the mediation function of the Impartial Chairman and over one-third of all the problems presented to him were settled by agreement of the parties. As it was considered desirable to have a record of these agreements, the Impartial Chairman was asked to put them in writing. These reports came to be known as S.W,D.'s 18 and for identification purposes are numbered S.W.D.l, S.W.D.2, etc. In 1932 Dr. Taylor decided that a distinction should be drawn between decisions of the Impartial Chairman which establish principles or rates with general application throughout the industry and those which deal with problems of significance only to a single mill. The term "Memo" was adopted to signify the latter type of decisions and they have since been identified as Memo 1, Memo 2, etc.19 The more important decisions, that is, those with general application to all mills, continue to be identified with letters. During Dr. Taylor's chairmanship, letter decisions Ε to Μ inclusive were issued. Some of the L and Μ decisions, however, were written by Mr. W . E. Simkin, who served as Associate Impartial Chairman during the last few years of Dr. Taylor's chairmanship.20 " See Chapter VIII. Settled without decision. 19 See Table 1, Appendix A. 20 See Table 1, Appendix A.

18

HISTORY

29

Of the six men who have served as Impartial Chairman, Dr. Taylor's influence on the system has been the greatest by far. During the ten years of his service, 959 problems were presented to him by the parties.21 This figure represents 61.2 per cent of all the problems presented to the Impartial Chairmanship during the period covered by this study (1929-194-5). When he resigned in 1941 to become Impartial Umpire between General Motors Corporation and the United Automobile Workers of America, most of the basic principles, techniques, and procedures were well established so that the tasks of the recent Impartial Chairmen have been largely those of interpretation and application. RECENT IMPARTIAL CHAIRMEN

During Mr. Simkin's service as Associate Impartial Chairman, he had the opportunity to learn the procedures, techniques, and principles under Dr. Taylor's tutelage. When the latter resigned, M r . Simkin was asked to become Impartial Chairman. During his chairmanship the emphasis was on rate problems because of the shift from silk to nylon followed by the further shift from nylon to rayon and also the introduction of new equipment, especially long-section, high-speed, single-unit machines. As the war developed, however, Mr. Simkin was called upon more and more by the government to aid in the settlement of labor problems of greater significance to the war effort. In the spring of 1943, having been appointed Chairman of the Shipbuilding Commission of the War Labor Board, he resigned as Impartial Chairman. During Mr. Simkin's chairmanship, letter decisions Ν and part of letter decisions Ο were issued.22 A total of 349 problems were referred to Mr. Simkin during his combined terms as Associate Impartial Chairman and Impartial Chairman. 23 Mr. Simkin was replaced by the author, who had served as Deputy Impartial Chairman since the fall of 1941. The author's term as Impartial Chairman was abruptly terminated in December 1943, however, by induction into the armed services. During 21 22 28

See Table 14, Appendix A. See Table 1, Appendix A. See Table 14, Appendix A.

30

EFFECTIVE LABOR

ARBITRATION

this brief period the remainder of letter decisions Ο and the first part of letter decisions Ρ were issued.24 A total of 103 problems were referred to the author for decision during his term as Deputy Impartial Chairman and Impartial Chairman. 28 Dr. W. R. Buckwalter, Professor of Economics at Temple University, was then secured as Impartial Chairman. His task was made difficult because of the lack of opportunity to become informed about the industry and the Impartial Chairmanship prior to his term of office. Dr. Buckwalter remained as Impartial Chairman for one year, deciding early in 1945 that he would prefer to return to teaching. During his chairmanship he handled 69 problems,28 issuing the remainder of letter decisions Ρ and part of letter decisions Q. 27 After Dr. Buckwalter's resignation, the parties chose G. Allan Dash, Jr. as Impartial Chairman. Mr. Dash had assisted Dr. Taylor in the industry for some years when the latter was Impartial Chairman. Moreover, he had served as Impartial Chairman for the Keystone Hosiery Manufacturers, a group of companies in Reading, Pa., and had followed Dr. Taylor as Umpire at General Motors. H e was well versed, therefore, not only in the technology of the industry but also in the procedures, techniques, and principles of the Impartial Chairmanship. Mr. Dash has continued to serve as Impartial Chairman up to the time of writing. T H E IMPARTIAL CHAIRMANSHIP TODAY

Throughout these years and under the leadership of these different personalities, a number of changes have been wrought in the Impartial Chairmanship. The functions of the Impartial Chairman have been more clearly defined. The 1566 grievances which have been settled have established a body of accepted principles which now serve as precedents. Likewise, various procedures and techniques which were employed in the early years have been replaced by other methods which have proved more 24 25 26 27

See Table See Table See Table See Table

1, Appendix A. 14, Appendix A. 14, Appendix A. 1, Appendix A.

31

HISTORY

satisfactory. As now constituted, it may be described as a procedure whereby all disagreements or problems (except those involving changes in the general wage level or changes in the terms of the contract) which occur during the life of an agreement between the Full-Fashioned Hosiery Manufacturers of America Inc., and the American Federation of Hosiery Workers and which cannot be settled by agreement of the parties are referred to a third party, the Impartial Chairman, for final and binding settlement. The 1943-1945 Agreement between the parties provides for the Impartial Chairmanship as follows: E . A D M I N I S T R A T I O N OF T H E

RELATIONS

B E T W E E N T H E PARTIES

(E-l) No Strikes or Lockouts. The contracting parties, for themselves, their successors or assigns and for their respective members, officers and agents, agree that for the full period of this agreement, there shall be no strikes, stoppages, boycotts or lockouts, nor picketing of any kind or form whatsoever, however peaceable, nor demonstrations, displays or advertisements tending to excite sympathy or protests, and that neither of the contracting parties will authorize, permit, countenance or suffer the existence or continuance of any of the acts hereby prohibited. The Union, however, reserves the right to strike any mill where the Employer fails to carry out the decisions of the Impartial Chairman, duly rendered in writing, within ten days after such employer shall have been served with such decision. The Employer reserves the right to lockout any department or dismiss the entire personnel of such department and/or the entire mill where members of the Union in any department refuse to carry out the decisions of the Impartial Chairman, duly rendered, within ten days after service upon the Union of such decision. Such jobs so affected by a lockout will remain union jobs and the Union is empowered to fill such vacancies so caused, subject to the right of the Employer to fill such vacancies in case the Union fails to do so, as elsewhere in this agreement provided. (E-2) Grievance Machinery. All grievances arising in any shop shall be adjusted by the Union and Association and/or Member involved; in the first instance such grievances shall be submitted to the shop committee and the shop foreman or superintendent representing the Member, and in the event that they cannot adjust such grievances,

32

EFFECTIVE LABOR A R B I T R A T I O N

the matter shall then be submitted to the officials of the Union and the officials of the Association and/or Member. In the event the Union and the Association and/or Member cannot agree, the grievance shall be referred to the Impartial Chairman for settlement, who shall give his decision within ten days after the case has been referred to him or as soon thereafter as is possible. His decision shall be final. (E-3) Impartial Chairman. The Impartial Chairman shall be Thomas Kennedy of Philadelphia, who is hereby designated to act throughout the term and continuance of this agreement. In the event of his resignation, permanent physical incapacity or death, his successor shall be chosen by a committee to be composed of three representatives of- the Union and three representatives of the Association, and the majority of the whole committee shall be necessary to the choice of such successor. Such successor shall be chosen within fifteen days after the vacancy shall have occurred. The compensation and expenses of the Impartial Chairman shall be borne jointly by the Association and the Union. The parties hereto may at any time during the term of this agreement or renewal thereof designate a Deputy Impartial Chairman to act for the Impartial Chairman and under his supervision and direction whose compensation and expenses shall likewise be borne jointly by the Association and the Union. He may act during the absence or incapacity of the Impartial Chairman. (E-4) Jurisdiction of Impartial Chairman. Any and all matters of dispute, difference, disagreement or controversy and any kind or character between the Union and the Association and/ or Member involved, involving or relating to wages, rates, hours, conditions of work, and the relations between the parties, arising during the term of this agreement or any renewal thereof, including but not limited to the interpretation, construction or application of the terms of this agreement, shall be submitted to the Impartial Chairman for final and binding decision by him. It is understood and agreed, however, that the Impartial Chairman shall not have power to alter, modify or change this agreement or any of the terms or provisions thereof, and the Union and the Association and/or Member involved agree to be bound by and abide by the decisions of the Impartial Chairman. Thus the parties voluntarily relinquish their right to use economic force to settle disputes during the life of the agreement and accept in its place a system of law and order. The system is voluntary in the sense that there is no power outside the industry

HISTORY

33

which forces the parties to continue it in effect from contract to contract. It is compulsory, however, in the sense that during the life of a contract both parties are morally bound to submit all disputes on which they cannot reach agreement (except those involving changes in the general wage level or changes in the agreement) to the Impartial Chairman and to abide by his decisions.

CHAPTER

AUTHORITY OF T H E

IV

IMPARTIAL

CHAIRMAN

JURISDICTION

A DISTINCTION may be drawn between primary and secondary arbitration. Primary arbitration includes the determination of the general level of wages of a company or an industry and the determination of terms of a new contract. Secondary arbitration, on the other hand, is limited to the determination of individual rates in line with an established level of wages and the interpretation of clauses already a part of a contract. Secondary arbitration may also include the determination of issues not covered by the contract which arise during its life. 1 In the hosiery industry the parties have limited the power of the Impartial Chairman to secondary arbitration. Within this area, however, the jurisdiction of the hosiery Impartial Chairman is complete. The contract provides that all disputes arising during the life of the contract "including but not limited to the interpretation, construction or application of the terms of this agreement shall be submitted to the Impartial Chairman for final and binding decision by him." Thus during the life of the Agreement, the Impartial Chairman has jurisdiction over extracontract as well as over contract issues. The extent to which the Impartial Chairman's decisions have been concerned with extra-contract issues depends on the concept of a labor contract. If the concept is that past practices not changed or modified specifically by the contract are deemed to be covered by it, then many issues, although not mentioned in the contract, are not extra-contract. Under this concept of a labor agreement, the Impartial Chairman, because he has followed the policy of mling in favor of customary practices on such issues, has been merely interpreting the contract. Only where disputes have arisen over conditions which have developed since the consummaSee David A. McCabe and Richard A. Lester, Labor and Social tion, pp. 110-11. 34 1

Organiza-

AUTHORITY

35

tion of the contract may the Impartial Chairman be considered to have ruled on extra-contract issues under this concept. Regardless of whether one accepts this broad concept of the contract or a more narrow concept whereby only those issues specifically stated are deemed to be covered by it, extra-contract jurisdiction is essential if the Impartial Chairmanship is to perform the function of removing all reasonable causes for resort to economic force during the life of the Agreement. The Agreement cannot be so comprehensive as to offer guidance on all problems. Entirely new issues are bound to arise. Unless the Union were willing to agree that all extra-contract problems should be decided unilaterally by management, an area for conflict would be left open. In the hosiery industry it is inconceivable that the Union would have accepted the principle that administrative initiative2 and uninterrupted production3 are basic rights of management under the Agreement if arbitration of extra-contract issues had not been provided. 4 Even if the Union and the Association should forego the use of economic force during the life of an agreement which did not provide for arbitration of extra-contract issues, the results would not be satisfactory. Unsolved problems would simply accumulate until the end of the Agreement. Negotiations of a new agreement, therefore, would become a much more difficult task. It was in order to prevent such "crisis negotiations" and to insure the equitable solution of all problems without resort to economic force that the Association and the Union agreed to extend the Impartial Chairman's jurisdiction to cover extra-contract issues during the life of the Agreement. 5 2

See pp. 97-101. See pp. 101-5. 4 This broad type of jurisdiction—permitting the Impartial Chairman to decide extra-contract issues—is limited generally to industries such as clothing and hosiery where collective bargaining has been in operation f o r a number of decades. In the mass production industries in which collective bargaining has been more recently established, the usual practice, if arbitration is employed at all, is to limit the arbitrator's jurisdiction to interpretation of agreement terms only. T h e 194S contract between General Motors and the United Automobile Workers, f o r example, provides that the umpire may not "add to" the terms of the Agreement. 6 George W. Taylor, "Hosiery," Chapter 9 in How Collective Bargaining Works, edited by Harry A. Millis, p. 4J9. 8

36

EFFECTIVE LABOR

ARBITRATION

Although the Impartial Chairman's jurisdiction includes the power to rule on extra-contract issues, three areas have been excluded from it. First, the arbitration clause provides that "the Impartial Chairman shall not have power to alter, modify, or change this Agreement or any of the terms or provisions thereof." On a number of occasions the Impartial Chairman has refused to render decisions on matters because such decisions would have violated this provision." In one such case the Impartial Chairman reasoned: Even though certain terms of the agreement may not work out as was anticipated, the Impartial Chairman cannot change those terms. That must be accomplished by a further agreement of the parties who made the agreement in the first place. The Impartial Chairman has not been given the right to make a new agreement nor to change the agreement terms. Even should the parties to the contract agree by mistake to certain terms, the Impartial Chairman has not the power to rectify these mistakes by decision.7

In all of these cases the Impartial Chairman is placed in the position of being the judge of his own jurisdiction. The agreement clearly states that he must neither alter nor modify its terms, but it is the Impartial Chairman himself who must decide whether a certain decision will have that result. The courts, of course, will always review an arbitration decision if one of the parties contends that jurisdiction has been exceeded by the arbitrator. Neither the Union nor the Association has sought to limit the jurisdiction of the Impartial Chairman in any case by appeal to the courts and they are not likely to do so in the future. The Impartial Chairman, therefore, for all practical purposes interprets the limits on his power which the parties have imposed. An examination of the cases in which the Impartial Chairman has refused to render a decision for this reason, however, indicates that a sincere attempt has been made not to expand the jurisdiction by decision into areas not intended by the parties in their agreement. The reasonableness of this limitation on his power is obvious. The parties certainly should reserve the right to insist that the clear terms of the Agreement be carried out as β 7

Decisions E 42, Η 31, Κ 13, Κ 25, and Memos 11, 228, 340. Decision Ε 42.

AUTHORITY

37

intended, regardless of the opinion of the Impartial Chairman concerning their equity. Second, the jurisdiction of the Impartial Chairman does not extend to disputes regarding the general level of wages in the industry. Since decisions of this type would involve changing all the rates specified in the Agreement, they are excluded from his jurisdiction by the provision which denies him the right to change any of the terms of the contract. Furthermore, the parties have established in the Agreement a special procedure for handling disputes over general wage-level changes. The "flexibility clause" permits either party to seek a change in the general wage level at any time during the life of the agreement and provides for the establishment of a special wage tribunal in case the parties cannot agree on the percentage change to be made. Thus the Impartial Chairman is limited to secondary wage determination. The wisdom of this second limitation might appear to be open to serious question. It is unlikely that an "ad hoc" arbitrator will be as familiar as the Impartial Chairman with the economic condition of the industry and the competitive wage requirements of the association mills. The Impartial Chairman is also likely to know the labor market conditions and the earnings needs of the hosiery workers more thoroughly than someone from outside the industry. Moreover, as a result of his intimate knowledge of the parties and their day-to-day relationship, he is in a better position to know what each one really believes would be a fair settlement. Finally, if the parties agree that the wage increase or decrease shall be made in such a way as to eliminate inter-job inequities, he is more capable of making the adjustments intelligently. Thus there are good reasons why this area should not be excluded from the Impartial Chairman's jurisdiction. On the other hand, there is a very important reason for eliminating it from his jurisdiction—decisions in this area are very likely to make the arbitrator persona non grata to one or both of the parties. Because there is no generally accepted body of principles for determining wage levels, a considerable range of increase or decrease, as the case may be, can be justified by one approach or another. No matter what decision the arbitrator makes in a general wage-level case, therefore, one or both of the

38

EFFECTIVE LABOR ARBITRATION

parties are likely to feel that the decision is grossly inequitable, especially when conditions necessitate a general decrease in wages. Since employees are usually working only part time and are having difficulty making ends meet at the existing wage rates, they find it difficult to accept even a small wage cut; and since manufacturers are usually suffering severe losses at such times, they find it difficult to regard even a sizable wage cut as adequate. Because general wage-level changes affect all manufacturers and all workers under the Agreement, the feeling against an arbitrator after a decision of this type in one or both of the groups may be so general and so severe that the one decision destroys his usefulness to the industry. It is significant in this respect that of the six arbitrators who have been chosen to determine general wage-level changes under the flexibility clause in the hosiery industry, not one has been invited to serve a second time. A further indication of the desirability of excluding this area from the jurisdiction of the Impartial Chairman is to be found in the experience of the shoe industry in Haverhill, Massachusetts. There the parties gave their impartial chairman power over general wage-level disputes. The results were unsatisfactory. The impartial chairman system could not stand the shock of general wage-level decisions. Norton in his study of this experience concludes: If trade unions and employers are to attain any success in the use of arbitration, they should distinguish clearly between two general types of cases involved. More success can be expected in interpretative cases where the arbitrator applies a clause in a trade agreement to a specific set of facts and also when the two parties have jointly determined the basic wage scale. Less success can be expected where the Board is called upon to determine labor standards for the industry, especially when no principles of wage determination are incorporated in the trade agreement. 8

The parties in the hosiery industry have decided not to risk the loss of a good Impartial Chairman by forcing him to decide general wage-level cases which can be solved by other arbitrators. For, although there are a considerable number of capable "ad 8 Thomas L. Norton, Trade Union Policies in the Massachusetts Shoe Industry, 1919-1929, p. 3J9.

AUTHORITY

39

hoc" arbitrators available, it is not so easy to find a person who combines the specialized knowledge of the industry and the type of personality which is necessary to success as an Impartial Chairman. Furthermore, an Impartial Chairman is likely to improve as he continues to serve an industry. It takes a period of time to become thoroughly familiar with the technology, customs, "common law," 9 rate structure, and personalities of the industry 5 to develop clear principles of secondary arbitration j and to attain confidence in one's ability to judge. Rapid changes of Impartial Chairmen because of loss of confidence in them due to decisions on the general wage level means, therefore, that the secondary arbitration will be less efficiently performed. The parties in the hosiery industry have decided to avoid this by excluding primary wage determination from the jurisdiction of the Impartial Chairman. Finally, disputes over the terms of a new contract are also excluded from the jurisdiction of the Impartial Chairman. The Agreement definitely limits his power to disputes "arising during the term of this agreement or any renewal thereof." 10 A wise limitation for reasons very similar to those advanced for the exclusion of general wage-level disputes. The general wage level itself may be, and frequently is, a new contract issue. In addition, other new contract issues may be extremely significant to both parties and just as devoid of accepted methods of solution. Consider for example such issues as the closed shop, the checkoff, or reporting pay. It would be as difficult for an Impartial Chairman to survive decisions on these issues as on general wage-level changes. It would be unwise to risk the loss of a competent Impartial Chairman on issues of this type. 8

See pp. 90-92. National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry, Sec. E-4. Reproduced in Appendix B. For an example of a contract providing f o r arbitration of disputes over new contract terms see the 1945-1946 agreement between Lehigh Valley Transit Company and Amalgamated Association of Street, Electric Railway and Motor Coach Employees of America. On pages 31 and 32 of this agreement it is provided that "In the event that the parties cannot reach an agreement on the proposed changes or modifications [of the old agreement], then such changes or modifications as either party may desire to have arbitrated, shall be arbitrated as provided in Article II, section 3, of this agreement." 10

40

EFFECTIVE LABOR ARBITRATION

Drawing the line between extra-contract issues arising during the life of the Agreement and disputes over the terms of a new agreement and including the former while excluding the latter from the Impartial Chairman's jurisdiction may appear illogical at first consideration. There are good reasons, however, for making the distinction. As already explained, final settlement of all issues during the life of the Agreement by the Impartial Chairman is essential if the Union is to be expected to accept management's rights to administrative initiative11 and uninterrupted production. Moreover, since the parties are usually able to foresee the major issues and to include them in the Agreement, extracontract issues arising during the life of an agreement are usually of less significance and coverage than disputes over the terms of a new agreement. Finally, under the present system, decisions on extra-contract issues can be revoked by either party at the end of an agreement. They permit the collective bargaining system to function smoothly during the life of the Agreement, but they do not saddle the parties permanently with conditions of which one of them may severely disapprove. If, on the other hand, the Impartial Chairman were given jurisdiction over the terms of new contracts such would not be the case. The decisions would become irrevocable by either of the parties not just for the life of the Agreement but for as long as the Impartial Chairman remained. For all of these reasons, the distinction between extra-contract issues during the life of the Agreement and disputes over new contract terms appears to have been wise. To summarize, the parties to the Agreement in the hosiery industry have denied the Impartial Chairman the power to: 1. change the terms of the existing agreement, 2. change the general level of wages of the industry, 3. decide the terms of new agreements. All other disputes which arise during the life of the Agreement including extra-contract issues are included within the Impartial Chairman's jurisdiction. It is the conclusion of this study that the 11

By administrative initiative is meant the right to make all immediate decisions in the plant with no objections and hindrances from the workers or the Union except protest and appeal. See pp. 97-101.

AUTHORITY

41

present jurisdiction is satisfactory and should be neither expanded nor contracted. L I M I T E D FUNCTION

The analysis of the jurisdiction of the Impartial Chairmanship has indicated already that it is not a panacea intended to resolve all causes of conflict between management and labor. It is instead a specific technique designed to control labor-management conflict within a specific area only. Strikes, lockouts, or other uses of economic force may still occur in the hosiery industry, for there are at least three areas of conflict which are beyond the scope of the Impartial Chairmanship.12 The Impartial Chairmanship operates only in unionized hosiery plants. Since most of the industry is not unionized there is a wide area where organizational strikes or lockouts may occur. Obviously such strikes do not indicate a failure of the Impartial Chairmanship. They do indicate, however, that the area within which it may be expected to bring labor-management peace is limited. Likewise, it could not be expected to control the conflicts resulting from rival unionism and jurisdictional disputes. These are not serious problems in the hosiery industry although one small hosiery plant was organized by the United Mine Workers some years ago. If they were serious, as they are in some industries, the Impartial Chairmanship would not prevent the strife which usually accompanies them, for the Agreement is between the management and one union only. It could not be expected, therefore, to prevent another union from using force either to oust the original union completely and gain recognition for itself or to cause the original union to relinquish the right of its members to certain types of work. Finally, the Impartial Chairmanship cannot be effective in preventing the use of economic force to settle disputes over the terms of a new contract. As previously explained, the jurisdiction does not extend to this area. 12

In the General Motors-United Automobile Workers Umpire system and similar systems in other industries where the umpire is not permitted to decide "extra-contract" issues, these constitute a fourth area of conflict beyond the scope of the arbitration procedure.

42

EFFECTIVE LABOR ARBITRATION

Thus strikes, lockouts, and other exhibitions of economic force may still occur in the hosiery industry even though the Impartial Chairmanship continues to function effectively within the area of conflict it was developed to control. This limited function of the Impartial Chairmanship should be emphasized and publicized. Otherwise, resort to economic force due to conditions in the labormanagement relationship in areas beyond the province of the Impartial Chairmanship may cause loss of faith in an institution which, although admittedly limited in its scope, can play an important role in achieving labor-management peace.

CHAPTER V

PROCEDURES INTRODUCTION

operation of any system of permanent arbitration is dependent upon smoothly functioning procedures. A system may fail for other reasons, but no system is likely to succeed if the procedures are poorly adapted to the needs of the industry and the collective bargaining structure which they are intended to serve. By the term "procedures" is meant the accepted methods of conducting the arbitration. It includes such things as the manner of petitioning the Impartial Chairman for a hearing and the order of presentation of data at the hearing. Some of the procedures are especially designed for this particular industry and, therefore, might not be effective in other industries. Most of them, however, could be adapted elsewhere with only slight modification. T H E SUCCESSFUL

Method

of

Analysis

There are several ways in which the procedures employed by the Impartial Chairmanship might be analyzed. Each procedure might be classified according to a series of groupings and then defined and analyzed separately. Such an approach would have the advantage of systematic presentation. Much more is to be gained, however, by using a typical case as a medium through which the procedures may be observed and analyzed. This latter method will enable the reader to get a picture of the entire machinery in actual operation. Types of Cases

The cases or disputes which are brought to the Impartial Chairman for decision may be divided into two major groups— rate cases and non-rate cases. Although the techniques employed by the Impartial Chairman in dealing with these two types differ 43

44

EFFECTIVE

LABOR

ARBITRATION

considerably, there is very little difference in the procedures followed. In order to illustrate procedures, therefore, it will be sufficient to examine in detail only one—a non-rate case. The few additional procedures which are employed in rate cases only will then be explained separately. A TYPICAL CASE

A Grievance

Arises

In 1939 one of the member companies of the Association purchased five new 51-gauge 24-section machines. These were higher-speed machines capable of producing finer hosiery and more dozens per hour than any of the old machines which the company had in operation. Under the wage scale in effect in the industry a knitter working on this new equipment could earn considerably more than on one of the company's old machines.1 The average 40-hour wage on new 51-gauge 24-section leggers in 1939 was $44.60, whereas the average 40-hour wage on old 42gauge 20-section leggers during the same period was $35.44.2 The operation of the new machines required more skill and effort, but it is clear from the above figures that the extra skill and effort were well compensated. As a result, when the company installed this new equipment, every enterprising knitter who was operating an old machine and who felt that he had the ability to operate a new machine desired to be promoted. Most of the knitters realized, however, that certain of their fellow workers had more right than they had to the new machines and therefore did not attempt to secure them. It happened, however, that there were more knitters who believed that they should be given a promotion than there were new machines. 1 This condition is still true. The average 40-hour wage on new 51-gauge 30-section leggers (on plain styles) in 1945, the last year for which exact data are available, was Ι7Ϊ.56 whereas the average wage on old 42-gauge 20-section leggers (on plain styles) during the same period was $46.80. See G. Allan Dash, Jr., Margaret P. Byers, and Miriam L. Levin, Earnings of FullFashtonei Hosiery Workers in Union Mills—1945, pp. 15-17. 2 George W. Taylor, Earnings of Full-Fashioned Hosiery Workers in Union Mills—1939, p. 4.

PROCEDURES

45

Local Negotiations Before the new machines were ready to operate, the management of the plant examined the records of the various knitters in an attempt to determine who should receive the promotions. Having made such an examination and having reached a decision, management could have waited until the machines were ready to operate and then arbitrarily placed the knitters of its choice on them. Then if the local union had disagreed with management's choice, it could have instituted a grievance and could have requested to have the new machines operated by other knitters. Furthermore, it could have demanded retroactive compensation for the knitters who it believed should have been given the promotions originally. In the hosiery industry, however, problems are not so handled. The right of management to administrative initiative is an accepted principle3 within the industry, but management has long since come to recognize that in a case in which the welfare of a worker or a group of workers is greatly affected and in which a sudden decision is not necessary, it is better to discuss the matter with the shop committee and to attempt to reach an agreement than arbitrarily to place its own decision into effect. T h e method used by this company to fill the new jobs was as follows. T h e company placed on the bulletin board a notice which described the jobs and requested knitters who desired the new positions and who felt that they had the necessary qualifications to apply for them. When the applications were received, management discussed them with the shop committee. Agreement was reached on some of the promotions but not on all of them. A number of meetings were held between management's representatives and the shop committee in an attempt to solve the problem. At these meetings the records of the contending workers were analyzed and compared. After careful exploration 8 Decision Β 4 (October 6, 1930) states, " T h e very basis o f the National Labor Agreement with the arbitration machinery which is an integral part of it lies in this principle, namely, that the employer must have the right of administrative initiative." See pp. 97-101.

46

EFFECTIVE LABOR A R B I T R A T I O N

and prolonged discussions of the matter, however, management and the shop committee each was still of the opinion that the qualifications of its own candidates were superior. National Negotiations The dispute was not referred directly to arbitration. Neither a company nor a local union may bring a case before the Impartial Chairman. 4 That privilege has been reserved to the Association and the Federation. Early in the history of the arbitration system it was recognized by the Impartial Chairman and the parties that certain advantages would accrue if the filing of cases were limited to the national organizations. T h e advantages of this procedure are clear. First, it is more orderly. Both the Federation and the Association have developed a definite pattern for filing cases with the Impartial Chairman. This uniformity saves the Impartial Chairman considerable time when it is necessary to refer to the filing letters. Second, the national officials are more capable of stating the cause of the dispute in such a manner that the Impartial Chairman can comprehend its exact nature. Third, the same dispute may occur at a number of mills at the same time, in which case the national officials can consolidate them and avoid repetitious filing. More important than all of the above advantages, however, is the further opportunity for settlement of the dispute by agreement before it goes to arbitration. The national officials, being somewhat removed from the actual scenes of the grievances, are able to view them more objectively—with more light and less heat. As a result, compromise settlements are sometimes possible at this stage when the local parties are in no mood to seek such solutions. In addition, officers of either of the national organizations, being more familiar with the precedent decisions which constitute the "common law" of the industry, 6 may recognize that the Impartial Chairman is certain to rule against their claim and therefore advise their constituent to settle with the other party rather than to seek a decision. 4 Proceedings, 1929 Convention, American Federation of Hosiery Worker«, p. 337. 8 See Chapters VII, VIII, and IX.

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When it became dear to the local parties in the promotion case that they could not reach an agreement on certain of the promotions, the shop chairman wrote to the Federation explaining the dispute and requesting that the Federation seek to bring about an agreement with the Association or, failing to do so, ask for a hearing before the Impartial Chairman. Before filing the case with the Impartial Chairman, officials of the Association and officials of the Federation made a serious but unsuccessful attempt to bring about a settlement. When it appeared that further discussions would not be profitable, the Federation requested the Impartial Chairman to conduct a hearing and render a decision. Filing for the

Hearing

In this promotion case, the Federation rather than the Association requested the Impartial Chairman to conduct a hearing. The process of filing for the hearing was neither complicated nor formal. One of the officials of the Federation simply addressed a letter to the Impartial Chairman setting forth briefly the nature of the grievance and asking the Impartial Chairman to hold a hearing and render a decision on the matter. A copy of the letter was sent at the same time to the Association. (The request for the hearing could have been filed by the Association or by both the Federation and the Association acting jointly.)® Arranging the

Hearing

Upon receipt of the application for the hearing, the Impartial Chairman got in touch with the parties by telephone and attempted to set a time and place which would be convenient to all who were expected to attend. This was difficult because association, company, and union officials had full calendars. As a result it was not possible to have the hearing immediately. Indeed it was not possible to hold it for several weeks. The delay in this particular case was due in part to the fact that the plant is some distance from Philadelphia, where the Federation, the Association, and the Impartial Chairman have their offices. The parties, β

See Table 8, Appendix A. It indicates that the Federation has filed 84.7 per cent of all cases, the Association has filed 12.1 per cent, and they have jointly filed 3.2 per cent.

+8

EFFECTIVE LABOR ARBITRATION

however, were very cooperative in setting the date for the hearing as early as possible. They realized that it was to the best interest of all concerned to have this disagreement settled quickly. There are some cases, however, in which it might be to the advantage of one of the parties to postpone the hearing. (For example, a company may be seeking a reduction in a temporary piece rate, in which case it might be to the advantage of the Union to stall, or the Union may be seeking an increase in a temporary piece rate, in which case it might be to the advantage of the company to stall.) The Impartial Chairman must guard against any such postponements which might be to the advantage of the party seeking the delay. If the Impartial Chairman had been convinced that either party was deliberately attempting to delay the date of the hearing, therefore, he would have set a time and would have insisted that the parties attend or forfeit the opportunity for the oral presentation of their case. The Impartial Chairman, however, will not call a hearing while a work stoppage is in progress.7 If all the workers or a group of them at this plant had refused to work pending the settlement of this dispute, therefore, the Impartial Chairman would have refused to hold a hearing until they had returned to their jobs. This procedure has been very effective in preventing stoppages for the purpose of securing quick hearings.8 Furthermore, it has removed any thought from the minds of the parties that a decision of the Impartial Chairman may have been influenced by the desire to get the employees to return to work. The Impartial Chairman has insisted that the arbitration machinery has been adopted as a substitute for the use of economic force and that a reversion to the latter deprives the party of the right to appeal to the peaceful and orderly substitute. In other words, workers engaged in a stoppage or companies engaged in a lockout are "outlaws" who during the period of the stoppage or lockout 7

Stoppages have been infrequent and of short duration in the hosiery industry. In only 20 out of the 1566 grievances filed with the Impartial Chairman was there a stoppage involved. In all but 2 of these the workers had returned to work before the hearing was requested. See Tables 4 and J, Appendix A. 8 See Decision Ν 24 in which the Impartial Chairman ruled ". . . the orderly process of arbitration under the existing agreement does not permit the hearing of a case while a strike is in progress."

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forego the protection provided by the arbitration clause of the Agreement.9 The Hearing Hearings in cases involving plants and workers of the Philadelphia area are usually held at the Impartial Chairman's officeEven in the Philadelphia area, however, some hearings are held at the plants because the parties feel that it is easier to explain the case to the Impartial Chairman on the spot. This is especially true in cases which have certain technical or mechanical aspects. In cases outside the Philadelphia area, the hearings are held at hotels, union halls, or mill offices. Convenience and custom are the determining factors. The parties do not insist on neutral ground. In the case under discussion the hearing was held at a hotel. It was very informal. The Union was represented by one of its national officials, the local shop chairman, the member of the shop committee in whose department the grievance arose, and the workers concerned. Management was represented by one of the officials of the Association, several representatives of the company, and the superintendent of the department in which the problem arose. The Impartial Chairman opened the hearing by reading the letter sent to him by the party filing the case. Then he followed the customary procedure of permitting the party which had filed for the hearing (the Union in this case) to present its case without interruption except from the Impartial Chairman, who asked questions from time to time. When the Federation had finished, the Association was given an opportunity to present its case without interruption. Each party presented studies to show the quality and quantity of work which its respective candidates had done in the past on their old machines as well as the records of their years of service. There followed then a period during which either side could ask questions or refute material presented by the other side. The Impartial β There are no "fly-by-night" firms in the hosiery Association. If such a condition existed, as it does in some other industries, the Impartial Chairman might have been forced to adopt a different attitude on this question. Since there is little likelihood that a hosiery company will disappear before the Union can receive justice through the regular peaceful channels, there is no necesity f o r stoppages and the Impartial Chairman has acted accordingly.

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Chairman decided who should speak and on one occasion found it necessary to declare a personal attack out of bounds. (This seldom occurs at hosiery hearings.) With this one exception, the hearing was conducted in a friendly and courteous manner. The parties exhibited real respect for each other.10 No stenographic record was taken at the hearing. This tended to keep it informal, and the parties, including the workers who were involved, felt free to express themselves. The Impartial Chairman took such notes as he felt were necessary to enable him to make his decision. These were later filed with the decision for future reference. At times the Impartial Chairman asked a worker or the manufacturer to express himself more fully, but usually this was done without prompting. During this particular hearing neither party exhibited any tendency to compromise or to agree with the other side.11 The Impartial Chairman continued the hearing by asking questions of the participants until he felt that he had gathered all the pertinent facts and opinions. After-Hearing

Discussion

The parties did not leave the hearing room immediately, but remained for a discussion of other matters. This is a customary practice in the hosiery industry. New technical developments in the industry, reminiscences of the old days, or the latest joke starts a friendly get-together which usually lasts for several hours. If the hearing ends near the lunch or dinner hour, the 10 The late Justice Brandeis noted the same condition when he was one of the arbitrators in the New York garment industry. He wrote, "They have the same respect f o r one another which opposing· lawyers have for each other. Their conflict does not create enmity. The men, though contending f o r exactly the opposite results, become friends." Alfred Lief, Brandeis, The Personal History of an American Ideal, p. 331. 11 Sometimes in presenting a case one of the parties may become acquainted with certain aspects of the problem with which it was formerly unfamiliar. For this reason or f o r some other cause, it may wish to reconsider its position before proceeding further with the hearing. A request may be made, therefore, to withdraw and discuss the matter privately. This may result in a new offer of settlement which may be acceptable to the other party. When this occurs the Impartial Chairman simply records the agreement and files it in his office as an "S.W.D." which means "settled without decision." Table 10 in Appendix A shows that 27.4 per cent of all grievances were settled in this manner.

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group is likely to go to a nearby bar or restaurant and drink and eat together. The conversation is always cordial and at times may be far afield of hosiery. The importance of these friendly afterhearing meetings cannot be overemphasized. They have been an important factor in contributing to the friendship and confidence which exists between the association officials and national union officials. Furthermore, they have provided a means of conveying this same spirit to the local groups. At these get-togethers, the national leaders of the Union and of the Association make a real effort to create mutual understanding between the local union leaders and local management representatives. In most cases they have been successful. Many are the times that the local parties have come to a hearing with strongly belligerent attitudes toward each other only to leave, following a friendly after-hearing gettogether, in a much more cooperative spirit. Of the various customs and procedures that have been developed in the industry, few, if any, have contributed more to the stability of labor-management relations than these informal discussions. A cceftance of the Case by the Impartial Chairman

If the Impartial Chairman had become convinced before, during, or after the hearing that this promotion problem was beyond his jurisdiction he would have refused to accept it.12 Likewise, if he had decided that the parties had not thoroughly negotiated the issue he would have returned it to them for further consideration.13 Neither objection applied to the present case, however, so the Impartial Chairman accepted it and proceeded with the task of determining an equitable solution. Deciding the Issues

In arriving at his decision, the Impartial Chairman employed a number of the techniques which will be discussed in detail in 12 Since 1929 the Impartial Chairman has refused to arbitrate only 7 grievances or 0.4 per cent of the total because he considered the matter beyond his jurisdiction. See Table 11, Appendix A. 13 Since 1929 the Impartial Chairman has returned 39 grievances or 2.5 per cent of the total to the parties f o r further negotiation. In all but two of these cases the parties were able to reach agreement without refiling f o r a new hearing. See Table 11, Appendix A.

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EFFECTIVE LABOR ARBITRATION

the next chapter. H e consulted the Agreement and the prior decisions in order to determine the "common law" of the industry on this subject of promotions. H e found little help in the Agreement, but in a number of prior decisions he discovered that the principle had been established that promotion should be made on the basis of ability, seniority to be the determining factor only if abilities were equal. 14 In attempting to apply this principle to the facts of the present case, the Impartial Chairman discovered that certain significant payroll data had not been presented at the hearing. H e arranged a visit to the plant, therefore, and together with a representative of the company and a representative of the Union gathered from the company's books the additional data which he desired. Then he applied the principle to the facts of the case and determined which of the knitters should receive the promotions to the new machines. Writing the Decision In writing his decision, the Impartial Chairman followed a definite pattern which is now well established in the industry. First the background of the case, the issue involved, and the items upon which the parties agreed were presented. This was followed by the arguments of the Federation and then by the arguments of the Association. The Impartial Chairman then analyzed these facts and arguments and gave his own conclusion with the reasons. Finally, he wrote a brief and concise statement of the decision and set it off from the rest of the material at the end of the presentation just prior to his signature. The full presentation of the case in writing by the Impartial Chairman consumed more time than would have been required if he had issued simply a brief statement of decision with no attempt to acquaint the parties with his understanding of the facts and his reasoning in the case. The complete statement was essential in the hosiery system, however, because this decision would become the basis for future agreements and future decisions. It was important, therefore, that the parties know in detail not only the end results of the Impartial Chairman's reasoning but also the process of reasoning itself. A number of promotion cases 14

See pp. 136-46.

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in the future might be avoided if the parties could gather from this decision the line of reasoning which would be followed in similar cases. The writing out of the decision also had the advantage of causing the Impartial Chairman to be more precise in his reasoning and judgment. Finally, it provided him with an opportunity to sell the decision to the parties. Under the Agreement the parties had to accept the decision, but the long-run success of the system depends on whether the parties are convinced that the decisions are equitable.15 Issuing the

Decision

Before issuing the decision formally, the Impartial Chairman talked it over with the officials of both the Federation and of the Association. It would have been much easier, of course, for him simply to have issued it and "let the chips fall where they may." The explaining of the decision to the parties before issuance, however, had several important advantages. First, if any part of the decision was not clear to either party, there was an opportunity to change the wording in such a way as to make it so. There was less likelihood, therefore, of disputes over its meaning and intent. Secondly, the Impartial Chairman might have made an error of date or number of workers involved or some other factual matter which the parties could have corrected. Finally, the conversation on the question caused the decision to fall with less suddenness on the loser and prevented him from taking a definite stand on it before having a personal talk on the matter with the Impartial Chairman. After the decision had been discussed with an official of the Union and an official of the Association, typewritten copies of it were sent to each and one was filed in the Impartial Chairman's office. Later, mimeographed copies were made and sent to each company and each local union, where they have served and will continue to serve as a basis for settlement by local negotiation of similar cases. 16

T h e techniques employed by the Impartial Chairman to gain the parties' acceptance of his decisions will be discussed in Chapter VI. See pp. 86-89.

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LABOR

ARBITRATION

Enforcing the Decision There was no problem of enforcement in this particular decision. Both parties accepted the verdict of the Impartial Chairman and proceeded to carry it out. This is the usual practice in the hosiery industry. In the early days of the Impartial Chairmanship, however, trouble with enforcement was anticipated and the first few national agreements provided for the posting of bonds by the Union and the assessing of damages against the Union or the employers if either should fail to carry out the terms of a decision by the Impartial Chairman. The 1929 Agreement, for example, contained the following provisions: 8. T h e U n i o n hereby agrees to provide and continuously maintain a blanket surety company bond in the sum of T e n thousand ($10,0 0 0 . 0 0 ) dollars to protect all the employers w h o sign this agreement or counterpart thereof, to cover any assessment which may be i m posed by the Impartial Chairman for any breach under this agreement. In the event of a breach of this agreement by an Employer a n d / o r Employers the Impartial Chairman shall assess an amount as damages for such breach, which damages shall be paid to the U n i o n by the Employer a n d / o r Employers committing such breach. 1 6

Later, in December 1931, this was carried a step further when the parties agreed in Negotiation No. 2, supplementing the 1931 Agreement as follows: A r r a n g e m e n t s are to be undertaken to have the local unions provide bonds to the Federation in order to insure the carrying out of the A g r e e m e n t and to increase the responsibility of U n i o n m e m bership.

Actually these provisions proved meaningless, because the Federation and the Union locals were not able to find a bonding company which was willing to assume the risk.17 The more recent agreements have simply provided for the 16

Articles of Agreement, American Federation of Full-Fashioned Hosiery Workers, 1929, p. 2. 1T From a conversation with Mr. William Smith, secretary-treasurer of the Federation.

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use of economic force by either party if the other party fails to carry out the terms of a decision. Part of section E-l of the 194319+5 National Labor Agreement reads as follows: T h e U n i o n , however, reserves the right to strike any mill where the Employer fails to carry out the decisions of the Impartial C h a i r m a n , duly rendered in writing, within ten days a f t e r such employer shall have been served with such decision. T h e E m p l o y e r reserves the right to lockout any department or dismiss the entire personnel of such department a n d / o r the entire mill where m e m b e r s of the Union in any department refuse to carry out the decisions of the Impartial C h a i r m a n , duly rendered, within ten days after service upon the U n i o n of such decision.

Actually the enforcement of decisions seldom results in any difficulties. On a few occasions, however, a company or some workers have taken serious objection to a decision and have threatened not to abide by it. Both the Association and the Union have taken strong stands on this question. Although stoppages of a few hours or of a day or so have sometimes occurred as a result of unfavorable decisions, they have never had the approval of the national union leadership. Instead, the national union officials have insisted that decisions are final and binding and must be observed even if extremely unpopular. Whenever it has been necessary, they have gone to the plants and have persuaded their people to remain at work and abide by the decision. The association officials have taken the same attitude. As a result there has been no serious enforcement problem. The acceptance of the decision by the parties in the promotion case under discussion represented the last stage of the grievance machinery which started to operate when the company and the local Union found themselves in disagreement. Throughout the entire period, work in the plant continued without interruption. The company secured its production; the workers received their wages. A principle of the "common law" of the industry was applied fairly by an impartial tribunal and a peaceful and orderly settlement resulted. By these same procedures, 1566 grievances were successfully resolved in this industry during the period September 1929 to August 1945 inclusive.

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EFFECTIVE LABOR ARBITRATION PROCEDURES IN R A T E

CASES

The procedures employed in rate cases are very similar to those employed in non-rate cases. Rate problems arise usually because a company introduces a new style of hosiery, a new method of operation, or a new machine and either the Agreement contains no rate for the new task or the parties disagree regarding which of several of the agreement rates apply. Procedures have been developed whereby the company may begin production in such cases without awaiting an agreement with the Union or a decision from the Impartial Chairman on the rate for the new operation. The usual method is to begin operation on the "90 per cent style-development rate." This is an hourly rate which is calculated for each worker from his previous piece-rate earnings as described in Chapter II. Since it is 10 per cent less than his normal piece-rate earnings, the worker has an incentive to get a piece rate for the job as soon as it can be operated efficiently. Management also has an incentive to get a piece rate for a job as soon as possible because production is almost always increased by more than 10 per cent when the piece rate becomes effective. The use of the 90 per cent rate has been accepted by both of the parties, however, as a satisfactory procedure for preventing the halting of production and wages while piece rates are being settled. Two other procedures are possible—agreement by the parties on a temporary piece rate or the unilateral setting of a temporary rate by the company, subject to retroactive adjustment. These last two procedures are not used as frequently as the 90 per cent hourly rate. Regardless of which of the three procedures is employed, however, production and earnings are made possible while permanent rates are being established. The other procedures followed in rate cases such as filing for hearings, method of conducting hearings, writing decisions, and enforcing decisions are much the same as in non-rate cases. It is largely in the techniques employed by the Impartial Chairman in arriving at his decision rather than in the procedures followed that these two types of cases differ.

C H A P T E R VI TECHNIQUES INTRODUCTION

procedures are not sufficient in themselves to assure a successful impartial chairmanship. J u s t as a company with the most efficient machinery may fail if its workmen and management lack skill and apply poor techniques in the operation of that machinery, so an impartial chairmanship with the best of procedures may fail if adequate skill and techniques are not employed. T h e success of the hosiery Impartial Chairmanship has been due in no small measure to the soundness of the techniques which have been developed and used in it. GOOD

MEDIATION TECHNIQUES

In the full-fashioned hosiery industry, the Impartial Chairman has always acted as conciliator and mediator as well as arbitrator. This dual function may be criticized by some who feel that there should be a clear distinction between the two and that an Impartial Chairman decreases his usefulness when he attempts in any way to conciliate or mediate. Such an opinion is not shared by the Webbs, however, who, after a study of labor arbitration in Great Britain, concluded that the success of the leading arbitrators in that nation was " f a r more due to these arts of conciliation than to any infallibility in . . . awards." 1 Likewise, a recent psychological study of arbitration in this country concludes that "arbitrators who do not depend largely on persuasion and out-ofcourt settlements quickly lose their popularity with both sides." 2 Norton in his study of labor arbitration in the shoe industry in Haverhill found that the Union and the Association considered settlements in which the arbitrator aided in bringing agreement Sidney and Beatrice Webb, Industrial Democracy, p. 2 3 9 . Samuel P. Huyes, J r . , "Psychology of Conciliation and Arbitration Procedu res," Chapter 18 o f Industrial Conflict, A Psychological Interpretation, edited by George W. Hartmann and Theodore Newcomb, p. 387. 1

2

57

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EFFECTIVE LABOR ARBITRATION

between the parties as far superior to decisions.8 The numerous voluntary settlements which have resulted from the use of this procedure in the full-fashioned hosiery industry and the respect which the Impartial Chairman machinery continues to command from both parties further confirms this opinion. A number of techniques may be employed by the Impartial Chairman in order to encourage agreements between the parties. First, he should make an effort to provide an atmosphere and create a mood which is conducive to agreement. It must be remembered that considerable emotional pressure may have been built up before the case was referred to him. First steps in removing the pressure may be taken by the Impartial Chairman as the parties gather at his office. There is always a period of time prior to the opening of the hearing itself when there is an opportunity for conversation. An attempt should be made during this period to guide the conversation into fields where the parties have common opinions and heated arguments will not occur. Because the Impartial Chairman in the hosiery industry has an opportunity to become well acquainted with the parties, friendly personal matters are frequently the subject of these pre-hearing talks. Questions such as: "What do you hear from the boy in the service, George?" or "What's this I hear about you shooting deer right off the porch of your cabin, Elwood?" or "How are things up at your country place, Bill?" break the ice and create a much more cooperative spirit which is likely to be carried over into the hearing proper. With very few exceptions, the parties present their cases with little show of emotion. Sometimes, however, this is not true. If it is apparent that strong emotional pressure exists after the hearing begins, the Impartial Chairman may permit the parties to "blow off steam" so long as the attacks are not personal. Thus the early part of the hearing may at times perform the function of a safety valve and the Impartial Chairman would be in error if he should attempt to prevent all such outbursts. During and following the presentations by the parties, however, it is the task of the Impartial Chairman, by a cool and dignified, yet friendly and under3

Thomas L. Norton, Trade Union Policies in the Massachusetts Shoe Industry, 1919-1929, p. 158.

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standing approach, to attempt to develop in both parties a cooperative spirit. 4 As a result, one of the parties frequently makes a new proposal which is by that time acceptable also to the other party. An " S . W . D . " results and the Impartial Chairman by simply creating the proper atmosphere has accomplished far more than would have been accomplished by a formal decision. Some disputes reach the Impartial Chairman not because the parties have a basic disagreement but because they have failed to understand each other. A second technique which may be employed, therefore, in attempting to get agreement is to make certain that each side has a clear and precise conception of the requests or offers of the other side. This can be accomplished by having each state exactly what he hopes to secure as a result of a decision. If the statements are at all hazy, the Impartial Chairman can clarify them by asking questions until there can be no doubt regarding the precise position of each party. Sometimes the result is that they find that they are really in agreement when their positions are carefully stated. In addition to providing the proper atmosphere and making sure that the parties clearly understand each other's position, the Impartial Chairman may be able to bring about agreement by acquainting one or both of them with certain facts or figures with which they were unfamiliar. For example, a decision on an identical question some time in the past may have been overlooked. By asking in what respect the present case differs from the one previously decided he may cause one of the parties to recognize that it would be better to settle by agreement. In another case, the company may object to the payment of an extra rate for a certain method of operation which it has recently introduced. It may claim that the new method should result in no decrease in production and therefore if an extra were added the piece-work earnings of the operators would be out of balance. The Impartial Chairman as a result of the wage study data which are available at his office5 may be able to show the company that at a number of other mills where the same method has been employed and an extra has been paid for a long time, excessive earn* John R. Hicks, The Theory of Wages, p. 148-9. 6 See pp. 77-82 f o r explanation of the wage studies.

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ings have not resulted. The company upon reviewing such figures may be willing to agree to the extra requested by the Union and again a formal decision is unnecessary. A fourth technique which applies only in certain cases may be used. This consists of acquainting the party seeking the decision with certain disadvantages which are likely to accrue to it if the decision is in its favor. The ramifications of decisions are often far-reaching and the party making the request may have failed to consider the end results. The Impartial Chairman has made frequent use of this technique in order to secure acceptance of his decisions and it is to those written decisions that we must turn for examples, but the technique is also very effective in bringing about agreements or withdrawals. In one case a company insisted that it had the right arbitrarily to change agreed-upon conditions of work. The Impartial Chairman ruled against the company, but in so doing pointed out, "If the management would have the right arbitrarily to change agreed-upon or well-established conditions of work, the Union would have to be accorded the same right.® The Impartial Chairman concluded that such a condition would result in great disadvantages to the company. In another case in which the Union sought the application of regular extras to knee-length styles, the Impartial Chairman warned that if regular extras applied, so also would the regular deductions and the Union would therefore lose more than it would gain.7 Finally, there is another technique which may be employed to encourage agreement between the parties. This one is less obvious than the others and requires considerably more skill on the part of the Impartial Chairman if it is to be used successfully. It consists of conveying to the parties, in such a way that they will accept it as their own, the pattern of logic or framework of reasoning which must be applied to the case under consideration if an equitable solution is to be found. How can this be accomplished? In the hosiery cases it appears to have been accomplished primarily by the use of well-worded and carefully arranged questions. As the hearing develops, the Impartial Chairman is likely to discover the criteria or framework of reasoning on which his de6 7

Decision Κ 51. Memo 76.

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TECHNIQUES

cision should be based. There is certain material of fact and opinion which he must then secure from the parties in order to fill in that framework. If the questions are asked in the proper sequence, it is very likely that the pattern which is in his mind will also become clear to the parties. Frequently, of course, it will be a pattern which they had recognized before but had rejected for one reason or another. On the other hand, it may be a pattern which had not previously occurred to the parties and, once it becomes clear to them, they may be able to work out a solution themselves. It is a combination of the above techniques which is usually employed when the Impartial Chairman is of the opinion that agreement may be achieved. Skill in bringing about agreements requires in addition an acute sense of timing. It is important, for example, to know when to suggest a temporary adjournment in order that the parties may attempt to work out new proposals or when to make available certain data which may have been overlooked. During the 16 years covered by this study, at least 27.4 per cent of all problems presented to the Impartial Chairman resulted in agreements between the parties. 8 In recent years, however, the percentage of such settlements has decreased rapidly. 9 This raises the question of whether these mediation techniques have been employed less efficiently by recent Impartial Chairmen or whether other factors have reduced the effectiveness of their application. A full discussion of this question is reserved until Chapter IX. 1 0 T E C H N I Q U E S IN D E C I D I N G N O N - R A T E

PROBLEMS

Finding and Creating the "Common Law" In making a non-rate decision, the Impartial Chairman employs a number of techniques. First, he consults the Agreement and carefully rereads those sections which bear on the problem. The intent of the Agreement is one of his most important guides ' See T a b l e 11, Appendix A. T h e percentage settled in this manner is larger than this figure indicates because some have not been recorded. * See T a b l e 11, Appendix A. 10 See pp. 216-19.

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in arriving at a decision. The Impartial Chairman in the hosiery industry is thoroughly familiar not only with the wording of the Agreement but also with the intent of the parties, since he is usually present and acts as chairman during agreement negotiations. Frequently, he finds, however, that either the Agreement is silent on the problem before him or its application is not clear. Having referred to the Agreement, the Impartial Chairman will turn next to previous decisions which have been written on this or similar subjects. Each decision which has been issued since the Impartial Chairman machinery began functioning in the industry in 1929 has been filed together with all notes, letters, and studies which pertain to it. A convenient index of all these decisions has been prepared by Mr. Richard F. Peden, a member of the staff of the Association.11 In addition, the Impartial Chairman maintains a card index which enables him to ascertain quickly the decisions which have been rendered on any problem. These cases form the "common law" of the industry. Unless otherwise indicated, each case becomes a precedent for future decisions.12 In fact each decision becomes a part of the National Labor Agreement which provides "all decisions and rulings of the Impartial Chairman . . . not in conflict with the terms of this Agreement are hereby adopted and shall be binding upon the parties hereto." 13 It is interesting to note in this respect that if the arbitration machinery is functioning properly, the Impartial Chairman should be continuously working himself out of a job; that is, each decision should provide the parties with the means of settling similar problems without referring them to the Impartial Chairman. Many questions are settled by the parties each year in this manner—one of the important advantages of maintaining permanent arbitration machinery. In reading over the past decisions, the Impartial Chairman may discover that in cases previously decided certain principles 11

Handbook of Decision Principles. This differs from the situation in the New York coat and suit industry and in the Illinois coal industry where the Agreements specifically provide against the use of decisions as precedents. 13 National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry. Sec. C - l . Reproduced in Appendix B. 12

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were established which are applicable to the present case. H e will probably decide this case in line with these principles, but he need not necessarily so decide. In the last analysis, he must be convinced that the decision he writes is equitable, regardless of the manner in which the problem has previously been handled. T h e keynote of any decision must be fairness to both parties rather than narrow interpretation of the wording of the Agreement or of former decisions. But previous decisions have also been written with that very goal in mind. In addition, the previous decisions have become a part of the "common law" of the industry. As such, they have been accepted and enforced throughout the industry by both parties. The Impartial Chairman will hesitate, therefore, to write any decision contrary to the precedents already established. T h e reversal of any considerable number of decisions would negate one of the most important advantages of the permanent arbitration machinery. 14 In some cases of course the Impartial Chairman discovers that the problem has not been dealt with either in the Agreement or in previous decisions. I n other words, no principle has yet been established by the "legislature" or the "judges." 1 5 Such cases become fewer as time goes on and decisions accumulate. When they do occur, however, or when the Agreement and previous decisions do not appear adequate, the Impartial Chairman turns next to the customary practice of the industry. Unless the case presents a problem entirely new to the industry, it is probable that a certain way of dealing with it will have become customary 14 It could be argued that the Impartial Chairman has no authority to reverse a decision, since every decision becomes part of the National Labor Agreement which provides that "the Impartial Chairman shall not have power to alter, modify or change this Agreement or any of the terms or provisions thereof." 15 For an interesting analysis of the parallelism between our democratic political government and industrial government such as we are discussing here see Wilfred Carsel, A History of the Chicago Ladies' Garment Workers' Union, p. 84. "The agreement was the 'industrial constitution.' T h e association and the union, meeting in joint session at the conference board were the branches of the 'legislature.' The Board of Arbitration was the 'judicial organ,' which interpreted the law and substituted civil action f o r armed conflict. . . . And, completing the picture, the whole framework of this government rested upon the active will and consent of the governed—the workers in the industry."

64

EFFECTIVE LABOR ARBITRATION

in a number of the plants. The Impartial Chairman will attempt to discover what the practice has been and, if he finds a considerable degree of uniformity, is very likely to decide in accordance with it.18 The logic behind this procedure is that all matters cannot be covered in the Agreement without making it too cumbersome and, therefore, it is understood that the continuance of customary practices is intended throughout the life of the Agreement in those matters which are not specifically covered by it. On one occasion the Impartial Chairman went so far as to deny a request which he recognized as "logically foolproof" because the condition complained of was one of "long-established custom in the industry which has attained the sanction of unwritten but common-law practice."17 Even if there is lack of uniformity throughout the industry, but a certain method has been customary at the plant in which the grievance arises, the Impartial Chairman is likely to decide in line with that practice.18 This will not be true of course if the custom is contrary to the provisions of the Agreement or previous decisions. In such cases the local custom, no matter how well established, must give way.19 From time to time problems arise, however, concerning which the Agreement, previous decisions, and even customary practices offer little or no direct help to the Impartial Chairman. In such cases he may draw from his own or other arbitrators' experience in other industries. Principles that have worked well elsewhere may prove satisfactory with some adjustments in the hosiery industry. During the first two years of the arbitration system, Dr. Abelson transplanted to it a considerable number of principles with which he had become familiar in other industries.20 It appears that other impartial chairmen have depended less on the principles developed in other industries, but it is reasonable to assume that they were familiar with the developments elsewhere and were influenced by them. But principles cannot always 18 17 18 19 20

Decisions Η 8, Κ IS, and Memo 449. Decision Ν 4S. Decisions A 14, F 26, and Memos 268, 440. Decision A 16. From correspondence with Dr. Abelson, August 14, 1946.

TECHNIQUES

65

be taken as they exist in one industry and transplanted successfully to another. Frequently adjustments—sometimes drastic— are necessary to fit the needs of the new industry; sometimes entirely new principles have to be developed. In any event, when the Agreement, previous decisions, and customary practices give no guidance, the Impartial Chairman must depend primarily upon his own resources—his sense of logic, equity, and fair play which, although always the final deciding factor in any case, plays a greater role in this type. In such cases, the Impartial Chairman must move with special care, because, as already indicated, each decision becomes a precedent on which others are based. The first few decisions on any problem, therefore, assume major significance. Thus, in settling a case for which there is no precedent, the Impartial Chairman must not only be guided by the equities in the case at hand but must also consider the various ramifications and longrun effects of the principle being established. Moreover, in permanent arbitration machinery the Impartial Chairman must live with his decisions. Applying

the "Common

Lav?'

Having determined by one of the above means or a combination of them the basic principles on which the decision should be based, the Impartial Chairman must next determine how to apply these to the immediate case. Both the Union and the Association will have presented data and arguments to support their respective sides in the case at hand. These must be carefully analyzed. Such an analysis is not always easy. The parties' statements with respect to the facts are sometimes very contradictory. In one case the Impartial Chairman complained, "The two sets of facts as presented have certain discrepancies that can scarcely be reconciled."21 In another case he commented, "The principles are clear but precisely what are the facts?"22 In many cases the facts can be checked by examining records, written agreements, and minutes of negotiations, but sometimes adequate records are not available. In several instances where the parties had disn 22

Decision G 33. Memo 3.

66

EFFECTIVE LABOR ARBITRATION

agreed frequently regarding the facts of cases, the Impartial Chairman ordered that careful written records be kept at the plant in question.23 The examination of company records by the Impartial Chairman is an established and accepted technique in this industry. In most cases payrolls and production records provide all the material which the Impartial Chairman requires to make his decision.24 Sometimes, however, as in the rehabilitation cases in which some of the companies alleged financial inability to live up to their commitments to purchase new equipment, the Impartial Chairman has examined the other books of the company.25 The examination of company books, however, is an infrequent occurrence. Usually the company presents at the hearing all the production, payroll, and financial data which are required by the Impartial Chairman and the Union usually has sufficient confidence in the management of the company not to request an independent investigation of the books.26 It is understood, of course, that the Impartial Chairman will not divulge the results of an examination of the books except in the very general way which the writing of the decision necessitates. Sometimes during the preparation of a decision, the Impartial Chairman will discover that he is not thoroughly familiar with certain technical details, knowledge of which is essential to an intelligent analysis. In such cases he may find it desirable to visit the plant or plants involved in the dispute in order to examine the operations in question. The companies and the Union have always welcomed such visits. At one time an arrangement was made to have the Deputy Impartial Chairman spend several afternoons each week over a six months' period observing the operations in a plant in order that he might be better equipped to perform his task when he later became Impartial Chairman. Both parties have realized that nothing is to be 23

Memo 245, Decisions Η 24, Η 30. Decisions G 21 and Memos 1, 106, 4IS, 447. 25 Decisions Ε 52, L 15, SA 5, SA 68, SA 80, SA 90. 2e T h i s differs from the New York ladies' garment industry where the Impartial Chairman has a staff of accountants continuously at work examining the books of the various companies. See Frank C. Pierson, Collective Bargaining Systems, p. 162. 24

TECHNIQUES

67

gained in the long run by having an Impartial Chairman who is not thoroughly familiar with all aspects of the industry. I f there are any legal or technical aspects to the case regarding which the Impartial Chairman feels the need of advice, he may call in such experts as he deems necessary. T h e need for such advice has not been frequent because the Impartial Chairman, being permanent, becomes more or less of a hosiery expert himself. On several occasions, however, he has sought the advice of an attorney in order to be certain that he was acting within his jurisdiction under the Agreement or to make sure that a particular decision was so rendered that it did not conflict with state or federal laws. 27 Likewise, in two cases in which quality standards of hosiery were involved, he sought the advice of experts in that field.28 Finally, he has employed accountants 2 " and time-study experts 30 at times to make special studies. In addition to demanding more data from the parties, calling in experts for advice, or making special studies himself, the Impartial Chairman sometimes discusses the problem with officials of the Union or of the Association. T h e parties have had sufficient confidence in each other and in the men whom they have chosen to be Impartial Chairmen not to insist that any consultation with one of them be held in the presence of the other or in written form only. This is extremely desirable, since many of these men have spent most of their lives in the hosiery industry and are, therefore, much more familiar with many aspects of it than the Impartial Chairman. It is especially desirable in cases with technical problems. Likewise when personalities are involved, as in discharge cases, certain aspects may be made clearer by personal conversations with the officials of the Association and of the Union. It should be emphasized, however, that the initiative for such discussion rests with the Impartial Chairman. T h e y are not a means whereby the parties attempt to bring pressure on him but rather a means by which he secures additional information from them. Once the case has been heard, 27 28 29 80

Decision Ο Memos 13, Decisions Β Decisions Ε

22. 449. ! 5, G 21, Η 36, and Memo 106. 32, Ε S 3 , F 4 2 , and Memo 102.

68

EFFECTIVE LABOR ARBITRATION

the parties do not take the initiative in discussing the issue again with the Impartial Chairman. Having collected all the available information on the question, the Impartial Chairman must then make his decision. Sometimes the material which has been collected and the arguments presented by the parties point clearly to only one decision. Usually, however, it is not a question of black and white. Most of the grievances which reach the Impartial Chairman are those in which each side feels that it has a good case and usually has. The Impartial Chairman, therefore, must weigh carefully the factors on each side and must finally determine where the balance of equity lies. In addition, he should do this with dispatch, for one of the major advantages of the Impartial Chairmanship is that it provides a means of quick settlement of disputes.31 TECHNIQUES IN R A T E DETERMINATION 3 2

In addition to the non-rate type of case discussed in the previous section, the Impartial Chairman must also render decisions involving rate determination. Slightly over one-half of all grievances presented for decision have been of this type.88 As might be expected, some of the techniques employed in these cases differ from those employed in non-rate cases. Not all piece-rate cases are industry-wide in scope; some piece rates are set for special methods or special conditions in a particular plant and, if those special methods or conditions are never adopted elsewhere, they remain applicable to that one plant only. The Impartial Chairman in setting a piece rate, however, must be continually aware of the fact that once established for a particular mill it applies to any other mill which adopts the same methods and conditions. Thus, he must always take into account conditions throughout the entire industry even when setting what appears at the time to be a rate which will not have broad application. Sometimes he has felt it necessary to protect 81

See pp. 219-22, f o r a discussion of the desirability of dispatch in rendering- decisions. 82 For an explanation of the piece-rate and time-rate structure, see pp. 10-IS. 88 Table 3 of Appendix A shows that 40.0 per cent of all grievances have concerned piece rates and 13.6 per cent have concerned hourly rates.

TECHNIQUES

69

himself by providing that, because of unique conditions, the rate would apply only to the mill under consideration and would not constitute a precedent. Splitting the

Difference

By the end of a piece-rate hearing, usually two piece rates have been requested of the Impartial Chairman—one considerably higher than the other. These generally form the limits within which the piece rate will be established. But it does not follow that the rate must be somewhere in between. Either the Union or the Association may have requested at the hearing an equitable rate and if such is the case the Impartial Chairman must be ready to decide in favor of it. 34 H e should make no attempt to "split the difference." T h e result of such action would be disastrous because a premium would then be placcd on the making of extravagant claims at the hearings. I t is even more important that the Impartial Chairman should never consider the offers made during negotiations as limits beyond which the rate should not be placed. During negotiations one of the parties may have made a very liberal offer in an effort to bring about a quick settlement and to avoid the use of the Impartial Chairman machinery. If the other party rejects the offer and causes the issue to come before the Impartial Chairman, it should realize that it does so with the possibility of receiving a less desirable rate than that offered in negotiations. In the case which we have been discussing, for example, the Association may have offered an extra of $.05 per dozen on the new style and the Union may have rejected this and countered with $.10 per dozen. If the Impartial Chairman as a result of thorough analysis concludes that $.02 is the fair and equitable extra he should establish it even though the company offered $.03 more in negotiations. Likewise, if the Impartial Chairman concludes that a $.15 extra is fair and equitable he should establish it, even though the Union was willing to accept $.05 less in negotiations. T o do 34

T a b l e 13, Appendix A, indicates that in 17.7 per cent of all piece-rate cases the Impartial Chairman decided that the rate requested by the Union was wholly justified and in 21.9 per cent he decided that the rate requested by the Association was wholly justified.

70

E F F E C T I V E LABOR A R B I T R A T I O N

otherwise would place a premium on extravagant claims in negotiations and would discourage concessions on the part of the Union or the Association in an attempt to settle rates by negotiation. Thus the Impartial Chairman machinery would be hindering instead of aiding the settlement of problems by the parties themselves. Numerous cases which otherwise would have been settled by the parties would come to the Impartial Chairman for decision. Arbitration would be replacing negotiation—a condition which must be avoided. The first task for the Impartial Chairman is to master an understanding of any technical problems involved in the case. H e will have the samples of the work which were presented at the hearing and notes on the explanations given by the parties. If there are aspects which he cannot understand from these, he should get in touch with the parties and seek further information. If he has not seen the style being produced, a trip to the mill, where both the union and association officials can explain the operations to him, may be desirable. In addition, he may consult books which have been written to explain the machines and operations in the industry.88 A good knowledge of the technical aspects of a case is very important. The confidence of the parties in the Impartial Chairman will depend in part upon the knowledge of the operations which he displays. Reference to A greement and Previous Rate Cases Having acquainted himself thoroughly with the technical aspects of the case, the Impartial Chairman will turn next to the Agreement. This time he will be concerned with the rate tables and the extras and deductions which constitute the latter part of the Agreement rather than with the first part which deals with principles. The rate section of the Agreement will be studied for several reasons. First, the Impartial Chairman must be certain that the complete rate cannot be calculated from the data provided therein. If it can be, no case exists. Second, in most cases it will be possible to calculate part of the rate from the agreement 8 6 William Davis, Hosiery Manufacture; M. C. Miller, Knitting FullFashioned Hosiery; Ε. M. Schenke, Manufacture of Hosiery and Its Problems; and George W. Taylor, The Full-Fashioned Hosiery Worker.

TECHNIQUES

71

tables. Finally, the Agreement may contain rates for operations similar to those under discussion. These will serve as guides in setting values in the case pending. In some cases there may even be agreement rates for operations so similar that the Impartial Chairman may feel that it is equitable to make the old rates applicable to the new conditions. In one such case the decision read, "This part of the task is equivalent to a stripe made with an odd number of courses, for which the agreement sets a rate of $.0121." 3e Then the Impartial Chairman will turn to the previous rate decisions, most of which have been incorporated in the rate schedule of the Agreement. 37 Certain unusual extras and deductions have been omitted, however, and the Impartial Chairman may find that a ruling was made previously on the style in question or he may find rates for very similar operations which may serve as guides. The index of decisions prepared by Mr. Peden 88 contains all rate cases as well as principle cases so that it is not difficult to find the pertinent decisions. In any style-change rate case the problem usually resolves into: (1) the production which will be normal on the new style under permanent piece-rate operation, and (2) the earnings which are equitable for the workers on the style in question. When these have been determined, the rate is secured by simply dividing the proposed earnings by the anticipated production. How does the Impartial Chairman determine earnings and production? Let us consider first the matter of production. Production on Temporary Rate We have already stated that most styles will be in production when the Impartial Chairman is requested to determine the piece rate. T h e worker will be receiving a temporary piece rate or the "style development rate" which is an hourly rate equal to 90 per cent of the individual worker's previous piece-rate earnings. Thus, some production figures on the new style will be available. 38

Memo 38. Every rate set by the Impartial Chairman becomes a part of the Agreement. 3T

88

Of.

cit.

72

E F F E C T I V E LABOR A R B I T R A T I O N

Obviously such figures must be viewed cautiously because the worker, being on a temporary piece rate or on an hourly rate and knowing that his present production may be a factor in determining the permanent piece rate, is not likely to produce as large a quantity as he will produce once the permanent piece rate is in effect. Furthermore, it always requires some time to get the "bugs" out of the machines when the style is changed to any considerable extent and for an operator to develop the rhythm of motions required to achieve maximum production on a new style. For all of these reasons the early production figures cannot be considered as indicative of future production. Usually they will serve one purpose, however, that is, they will set the minimum production which may be expected. On the other hand, the Impartial Chairman must be careful about assuming that the production at the temporary piece rate or the hourly "style development rate" represents the minimum below which production will not fall, because the company may have created ideal operating conditions which may not be maintained after the permanent piece rate is set. Specially selected yarn, unusual servicing, and exceptional machine care during the early period of the operation of the style may offset the factors which tend to deter production. Thus, although the actual production of the new style on the temporary piece or the "style development rate" provides one avenue of approach in determining normal production, it cannot be relied upon to lead to accurate results. Time Studies Another approach which has come to play an increasingly important role in the determination of the production which may be expected on a new style is the use of time studies. While the studies are usually prepared by the Association alone, union representatives are almost always present at the machine when the times are clocked. Two members of the association staff have become proficient in the making of time studies of hosiery manufacturing operations. When a style change of major significance is undertaken, therefore, the Association will send one of these men to the plant to make a time study of the new operation. The Union has not objected in general to the making of these studies

TECHNIQUES

73

and there has been practically no problem in securing the cooperation of the workers chosen to be studied. 39 T h e Union has been content to criticize the results of the time studies without demanding the right to participate in them. This condition can be explained by a number of factors. T h e Union has lacked personnel trained in time-study methods whereas the Association has had two such men available. There was also originally a suspicious attitude on the part of the workers to time studies which caused the Union to avoid them. Perhaps most important in the acceptance of the Association's time studies has been the integrity with which they have been made. Although there is frequently considerable disagreement between the parties regarding the production estimates which the Association deduces from the studies, there has been little questioning of the amount of time reported from the actual clocking of operations. T h e disagreements arise over the allowances permitted by the time-study men for certain items which cannot be clocked—but must be estimated—such as allowance for personal needs or allowance for breakage. There is another reason, however, why the Union may prefer not to join with the Association in the preparation of the time studies. By remaining aloof during their preparation, it is in a position to criticize the results without having to back up the criticism with its own time-study figures which might be proved erroneous by future production. Thus, the Union may consider that its opportunity to secure higher rates during negotiations and arbitration is better under the present procedure by which the Association alone prepares the time studies. Since time studies are playing an increasing role in piece-rate determination, an Impartial Chairman should be familiar with the methods and techniques so as to be in a position to analyze intelligently those presented to him. 40 Assuming that he has such 89 In addition to the open manner in which the Association has approached the workers, this may be due in part to the high level of intelligence among hosiery workers. Shumard noted that "as a general thing, intelligent workers respond best to the T. S. M." F. W. Shumard, Primer of Time Study, p. 93. 40 See Ralph Mosser Barnes, Motion and Time Study; Walter G. Holmes, Apflied Time and Motion Study; Stewart M. Lowry, Harold B. Maynard, and G. J. Stegemerten, Time and Motion Study and Formulas for Wage Incentives; also Shumard, o f . cit.

7+

EFFECTIVE LABOR ARBITRATION

knowledge, he will have an opportunity during the hearing to question the time-study men regarding any item which may appear to be unusual. Upon more intense analysis after the hearing, if certain items appear to be out of line, he may request that the time-study men explain the item and may check the explanation by discussing it with association and union officials. As indicated above, there is usually very little questioning of the clocked time. Nevertheless the Impartial Chairman cannot accept even the actual clocked time without careful clocking. After he has been in office for some time, he will know from experience approximately the length of time required for certain tasks. Also he may refer to previous time studies on similar tasks. In this way he can make at least a rough check of actual clocked times. In this respect it would seem that if the hosiery industry intends to continue to use time-study data in rate determination, it would be well to attempt to establish certain standard task times and standard formulas. A standard time formula for welt turning, another one for insertion of bars, and others for the other major tasks in the industry could probably be developed. This statement does not imply that a single time should be established for welt turning regardless of the nature of the machine, yarn, or style. It is clear that the time required will vary with the nature of each of these items and perhaps with others. Such variable items, however, although precluding a single time, do not preclude the establishment of a formula which would include those very items as variables. Such formulas have been developed and used successfully in other industries.41 Their development in the hosiery industry would make unnecessary full and complete time studies on each new style or operation and would be of great value to the Impartial Chairman in all ratedetermination cases. Standard time formulas, once thoroughly tested and approved, might be employed also in such a way as to eliminate much of the difficulty over rating the skill and effort exhibited by the employee during the timing of the operation. Lacking approved standard time formulas, the Impartial Chairman must check each time study carefully to make sure that the proper rating 41

Lowry, et al., of. cit., pp. 357-426.

TECHNIQUES

75

has been applied to the employee's expended efficiency and effort. Fortunately, the normal operating skill and efficiency of an employee may be determined in a piece-rate industry, such as fullfashioned hosiery, by the preparation of earnings and production studies from time to time. 42 But the earnings and production study will show the workers' normal efficiency and effort under a permanent piece rate. It will not show the actual skill and effort which he put forth while being timed. Regardless of the technique employed, the rating applied to skill and effort must depend in the last analysis upon the judgment of the time-study analyst. Yet as Barnes points out in his study, "a time standard is no more accurate than these [skill and effort] factors." 43 It appears impossible at the present stage of the development in time-study techniques to measure skill and effort with accuracy.44 Shumard maintains that " T w o experienced time-study men should come within 7 per cent of each other's ratings for an operation as a whole or for any element in the cycle." 45 Barnes is of the opinion that Shumard's figure is too low and suggests that differences of 10 to 15 per cent in skill and efficiency ratings may be expected among experienced time-study men analyzing the same worker at the same time or indeed from the same analyst on different occasions.46 Regardless of which figure we accept, it is clear that this factor causes a degree of uncertainty in timestudy figures which cannot be overlooked. Since the Impartial Chairman does not conduct the time studies himself in the hosiery industry, he is in no position to render competent judgment on the efficiency and skill put forth by the worker who was timed. One of the disadvantages in having the time studies made by the Association alone is that the time-study analyst may be accused of bias regarding the skill and effort rating applied. T h e other phase of any time study which the Impartial Chairman must consider carefully even though he has faith in the integrity of the analyst is that section which deals with the allow42 43 44 48 4i

See pp. 77-82. Barnes, of. cit., p. 277. Lowry, et al., o f . cit., pp. 207-2S. Shumard, o f . cit., p. 76. Barnes, of. cit., p. 277.

76

EFFECTIVE LABOR ARBITRATION

ances. The time which the analyst claims as normal or standard for any operation is arrived at by levelling the clocked time by the skill and effort rating and then adding the allowances. Unfortunately, regardless of the method employed, the allowances, just like the skill and efficiency rating, depend upon judgment. Allowances may be divided into four classes: personal, fatigue, unavoidable delays, and special.47 Personal allowances, according to Holmes, may vary from 3 to 10 per cent depending upon the nature of the job and working conditions in the plant. 48 Fatigue is also very difficult to judge. Shumard has suggested a number of methods for eliminating guesswork in this respect, but a study of the methods which he suggests indicates that in the last analysis the fatigue allowance depends on the analyst's judgment. It cannot be measured scientifically.49 Unavoidable delays and special allowances are by their very nature difficult to judge. In the hosiery industry, machine difficulties or yarn difficulties may occur on the average more or less frequently during normal operations than during the period of the time study. There is also the whole problem of whether conditions during the study are more nearly ideal than one could expect them to be normally at the plant. In one rate decision, the Impartial Chairman in adjusting the production predicted by the time study remarked, "Nor can rates be set for the operation of a department, based upon the production of an expert who, on a test, receives much more servicing than is normally provided to the department as a whole." 60 If abnormal conditions do exist during the time study, how much of an allowance should be made for these conditions? All this, of course, is a matter of judgment and regardless of the expertness of the time-study analyst there is always a margin of error. Although the Impartial Chairman must analyze time studies carefully and test their results with all other means at his command, the conclusion must not be drawn that time studies are of 47 48 49 50

Lowry, et al., o f . cit., p. 127. Holmes, o f . cit., p. 209. Shumard, o f . cit., p. 242. Decision G 44.

TECHNIQUES

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no value to him. In an industry in which it is necessary to establish numerous piece rates, time studies are indispensable if the Impartial Chairman machinery is to operate successfully. But it should be realized that they provide only one of a number of complementary tools which should be brought into play if maximum efficiency is to be attained in rate-determination cases. This same conclusion was reached in the Chicago men's clothing industry some years ago when the Trade Board ruled that "time tests, covering, necessarily, a limited amount of work, should not be the sole criterion of what is a fair rate." 51 Earnings and Production

Studies

Another type of information which the Impartial Chairman will find extremely valuable in rate-determination cases is data concerning the past production and earnings of the workers. As already indicated, the normal operating skill and effort of any worker who is being used in a time study could be obtained by comparing his past production and earnings with those of other workers who were doing similar work. Such data may also be used to find the average production in the past on types of work very similar to the one under consideration. This average production on similar types of work can then be used by the Impartial Chairman as a gauge of the production which may be expected on the new type of work. Such earnings and production data may be gathered specifically for each piece-rate case as it arises, or general surveys of all earnings and production may be made at agreed-upon intervals, the results of which would then be available when needed. The latter procedure is followed in the hosiery industry. The general earnings and production study has much to recommend it over the specific study for each rate case. The Impartial Chairman is enabled to operate much more efficiently in the field of rate determination since he has available a body of reliable information on recent earnings and production on the various types of equipment in the industry. In addition, since he B1

Amalgamated Clothing Workers of America, Research Department, The Clothing Workers of Chicago, 1910-22, p. 311.

78

EFFECTIVE LABOR ARBITRATION

conducts the study he is providing the parties with a tool which will make it easier for them to settle their own problems and to increase production and earnings in the industry. The first earnings and production study supervised by the Impartial Chairman was completed in June 1933 and covered 1932 earnings and production. Since that time, seven additional studies have been made covering the years 1934-1935, 1938, 1939,1941, 1943, 194J. It will be noticed that starting in 1939 the studies were made every other year. The new agreement negotiations between the parties have been held biennially in the summer of odd-numbered years and the earnings and production studies have been timed so as to be available for those negotiations. It is intended that this procedure will be continued in the future. The value to the parties of having available recently compiled reliable data of the sort provided by earnings and production studies at the time of contract negotiations is obvious. The question may arise, however, as to whether the issuance of the studies just prior to the negotiations may not seriously limit the period during which they are useful, since the parties may change the general wage level or alter specific rates during the negotiations. The answer is that such changes will not negate the value of the study. Changes in the general wage level or in specific rates are not likely to influence production materially and the earnings figures can simply be adjusted by the changes provided in the new agreement. The method followed in making an earnings and production study is as follows. The Impartial Chairman has cards prepared for the recording of the production and earnings of each worker for a stated five-week period. Sufficient cards to cover all workers, marked with an identifying company number, are sent to each mill. At the company offices, the earnings and production data are transferred to these individual cards. If the five-week period selected for the study does not represent a normal piecerate operating period for any particular employee, then management must choose another five-week period and indicate on the worker's card the weeks chosen and the reason for the change. The cards are then checked by the Union's shop committee which signs a statement declaring that the cards have been examined

TECHNIQUES

79

and are accurate. This statement together with the cards is then sent to the Impartial Chairman. In order to calculate the various averages and to prepare the multitude of tables which make up the earnings and production study, the Impartial Chairman hires a number of comptometer operators and other temporary assistants. The Impartial Chairman himself carefully supervises all of the work and makes sure that everything is checked and double checked so as to eliminate the possibility of errors. Since this study will be used for two years as an important tool in negotiations and decisions, time consumed in assuring its accuracy is well spent. Averages are computed for each type of equipment in each mill and for the industry as a whole. The data may also be broken down according to certain styles, as, for example, mesh and plain styles. Likewise breakdowns may be made according to the type of yarn, whether nylon, rayon, or silk. Other breakdowns may be made according to the fineness of the yarn, the number of toppers a footer has, etc. The Impartial Chairman in cooperation with the Union and the Association decides the classifications likely to be helpful for future negotiations and decisions. Table A is page 64 from the 1945 earnings and production study. It shows the earnings and production on 45-gauge 24-section legging machines on plain and on non-run styles in the various mills of the Full-Fashioned Association and several nonassociation union mills. These non-association mills joined with the Full-Fashioned Hosiery Manufacturers of America which is referred to throughout as "the Association." The 1945 study contained 127 pages of tables similar to those here illustrated. The direct costs of the studies, which are borne jointly by the Association and the Union, have been between $2300 and $2500 in recent years. The 1943 study cost $2323 without charging any of the Impartial Chairman's salary to it. Assuming that a full month of the Impartial Chairman's time was consumed in the study, the cost would be increased to slightly over $3000. Since a survey is made only once every two years and the cost is divided between the two parties, the cost to each is roughly $750 per year, a minor expense. In comparison with the small cost of making these general earnings and production studies, their value to the

80

EFFECTIVE LABOR ARBITRATION TABLE

A

P A G E 6 4 O F E A R N I N C S O F F U L I ^ F A S H I O N E D H O S I E R Y W O R K E R S IN UNION

MILLS—194S

Leggers, cont'd. No. of Wkrs.

Company

Avg. Hrly. Prod.

Avg. 40-kr. Wkly. Prod.

Avg. Hrly. Earns.

Avg. 40-hr. Wkly. Earns.

45-gauge, 24-section-—Plain Full-Fashiomd 6 19 21 29 32 35 37 64 66 67 80 103 104 10J Total

Association

8 88 14 80 15 8 20 4 11 2 5 39 4 24

1.604 1.265 1.293 1.352 1.318 1.364 1.321 1.203 1.330 1.449 1.278 1.577 1.515 1.591

64.16 50.60 51.72 54.08 52.72 54.56 52.84 48.12 53.20 57.96 51.12 63.08 60.60 63.64

$1.475 1.267 1.300 1.289 1.361 1.350 1.244 1.160 1.367 1.425 1.197 1.563 1.444 1.446

$59.00 50.68 52.00 51.56 54.44 54.00 49.76 46.40 54.68 57.00 47.88 62.52 57.76 57.84

322

1.373

54.92

$1.337

$53.48

Ν on-Association 23 55

1.217 1.252

48.68 50.08

$1.119 1.248

$44.76 49.92

. . . 78 Total T o t a l 45-24—Plain . . . . . 400

1.242 1.347

49.68 53.88

$1.210 $1.313

$48.40 $52.52

81 205

. . ...

45-gauge, 24-section—Non-run Fidl-Fashioned 29 108 Total

.

Association

42 25

1.129 1.250

45.16 50.00

$1.642 1.600

$65.68 64.00

67

1.174

46.96

$1.626

$65.04

53.80 48.64

$1.755 $1.658

$70.20 $66.32

Ν on-A ssociation 211 T o t a l 4-5-24—Non-Run .

22 89

1.345 1.216

Union, the Association, and the Impartial Chairman is enormous. This can be illustrated by comparing the advantages which this

TECHNIQUES

81

type of general survey has over specific surveys conducted as problems arise. The first advantage is the time element. Although a general study requires the outlay of considerable time and effort when it is made, in the long run it probably requires less than a large number of small studies. More important, once the general study is completed, its data are immediately available to the solution of any piece-rate case which may arise. The general survey, therefore, avoids the delays involved in making a special study for each case and thus makes possible more rapid processing of rate-determination cases. A second advantage of this type of wage and production study is that there are likely to be fewer differences of opinion regarding the normality of the data if they are compiled at a time when neither party knows for what specific purpose they will be used in the future. Once having agreed at the time of the general study that the data are normal or representative, neither party is likely to object to their use in specific cases. A third advantage is the use to which the study may be put by the parties in their negotiations. In the solution of day-to-day wage and production grievances there will be available a store of accepted earnings and production information which will be of great value. In addition, when the time arrives to negotiate a new agreement or to consider a general wage-level increase, the data of the survey will serve as a basis for their decisions. In this respect it is well to time the making of the surveys so that the compilation will be completed just prior to the time of the regular agreement negotiations. A fourth advantage of a general wage and production study is the opportunity that it provides for the comparison of production and earnings in different plants. The survey will bring into focus any inefficient operation by indicating production below the industry average. As a result both the Union and management know where to concentrate their attention. If, for example, the production in a certain mill on a certain type of machine is 40 per cent below the industry average, the management and the Union may assume that it would pay them to spend some time and energy investigating that situation. On the other hand, manage-

82

EFFECTIVE LABOR ARBITRATION

ment at times may erroneously feel that the workers at its plant are not producing satisfactorily on a certain type of equipment. The study, if it shows production at the plant in question equal to or better than the industry average on that type of equipment, usually satisfies management. To the Impartial Chairman, the general earnings and production study is important primarily as another tool to aid him in rate-determination cases. The tables and averages in the study provide him with a means of gauging the average production which may be expected under normal operating conditions on any particular type of equipment. Furthermore, the individual workers' cards which form the raw data of the study supply a reliable means of determining the normal skill and effort (as measured in productivity) of any particular worker or group of workers. Establishing

Antici-pated

Production

There is no neat, cut-and-dried formula by which future production may be judged with accuracy. The Impartial Chairman should use all three of the tools discussed above: (1) present production on temporary rates, (2) time studies, (3) earnings and production studies. The results of each must be carefully analyzed in terms of the results of the other two. In the last analysis, the anticipated production figure set by the Impartial Chairman is a matter of judgment on his part. The three tools mentioned above, if used together intelligently, will prevent him from missing the mark by a wide margin. He cannot expect to anticipate production with complete accuracy and fortunately it is not necessary. If balance is to be maintained in the rate structure, however, his estimate must not be far wide of the mark. The skill and judgment of the Impartial Chairman in estimating production is quickly and certainly determined. Usually within a short period after the new piece rate, based on the anticipated production, is placed into effect, production is such as to support or condemn his estimate. Frequently he will be pleased. Sometimes, but not too often if he is to remain Impartial Chairman, he must expect to be surprised.

TECHNIQUES

83

Establishing Equitable Earnings In addition to aiding in estimating production, the earnings and production study is of value in establishing equitable earnings for the job in question. The study shows the earnings on jobs similar to the one involved in the case to be decided. For example, in a case involving a new plain (not mesh) style on a 45gauge 24-section machine, by turning to page 64 of the 1945 Earnings and Production Survey, which is reproduced on page 80, the Impartial Chairman will find that average earnings on this type of equipment in Association mills during the study was $53.48 per forty-hour week. After making adjustments for any wage increases which may have been granted since the study was made, the Impartial Chairman will have a figure which he can accept as representing average earnings on this type of equipment. The earnings and production study figure for average earnings, however, must not be accepted as representing equitable earnings for the new style. It is only the base from which such earnings may be calculated, for it does not take into consideration the difference in the amount of work, skill, hazard, unpleasantness, and responsibility which may be involved in the new job. It is an accepted principle in the industry that earnings should vary with the above factors.82 Measuring these factors, however, is not easy. The time study will aid in determining whether the amount of work is more or less than average by showing the amount of idle time which the worker has while the machine is operating on the new job. A knowledge of the technical aspects of the job will aid in determining the skill, hazard, and responsibility involved. But none of these factors lend themselves to precise measurement and even if they did there would still be the problem of the amount of weight which should be given to each one in adjusting the earnings figure of the earnings and production study. In the last analysis, therefore, the establishment of an earnings figure depends upon the judgment and common sense of the Impartial Chairman. After having analyzed all the information available from the time study, from the earnings and 62

Decisions G 22, Η 14, SA 21, and Memo 408.

84

EFFECTIVE LABOR A R B I T R A T I O N

production study, and from his own technical knowledge of the task, he must establish an earnings figure which so far as he can judge is reasonably in balance with the rest of the rate structure. It will be noticed that we say "reasonably" in balance. It is not expected that every small difference of skill or of the other factors mentioned above will find expression in earnings. It is understood that there will be a certain amount of variation in these factors between any two styles and it would complicate the rate structure too much to attempt to compensate precisely for all of them. Only when the departure from the average of skill, work, etc., is exceptional are earnings differentials warranted. 63 Setting the Rate Once equitable earnings and anticipated production have been established, the determination of the rate is a matter of dividing the first item by the second. The result is the rate per dozen. This new rate is then compared with that portion of the rate which could be calculated from the agreement and the difference is established as an extra for the unique operation in the new style which prevented the calculation of a rate from the agreement tables." This new extra will then be available for any other style containing this new operation which may be produced in the future. When a new agreement is made, it will be included in the rate section. The Time Element Throughout this entire procedure, the Impartial Chairman should work with as much dispatch as is consistent with the production of a good rate decision. It must be remembered that during the period when he is arriving at his decision, neither the company nor the workers are profiting as much as they will when the permanent rate is established. This is true because the worker is either on a 90 per cent hourly rate or on a temporary piece 63

Both balance and simplicity are discussed in Chapter IX as principles of rate determination. Pp. 180-85 and 188-90. 54 If the unique operation f o r which no rate is available constitutes a minor part of the production of the style, the extra will probably be set by timestudying only the unique operation, evaluating the time, and setting an extra accordingly.

TECHNIQUES

85

rate. If on 90 per cent, he is suffering an automatic 10 per cent decrease in earnings during the period. Even if on a temporary piece rate, his production is not likely to be up to the peak which will be reached when a permanent rate has been established. Thus the worker desires and expects quick action on rate cases. Management is in the same position, because the lower production on the 90 per cent hourly rate or on the temporary piece rate results in higher production costs than will be attained after the permanent rate has been established. One of the important advantages of the permanent Impartial Chairman machinery is that it makes possible rapid settlement of rate disputes by providing a terminus. Otherwise rate disputes might drag on in negotiations for long periods without settlement. Unfortunately, the time consumed in rate cases has tended to increase.65 It is hoped that this tendency will be reversed in the near future, for the reaction of the companies and the workers to the longer time has been very unfavorable. A more thorough discussion of this problem is reserved for Chapter IX. Finality of Rate

Decisions

As explained in the discussion of the enforcement of a non-rate decision, all decisions of the Impartial Chairman are final and binding on the parties. The finality of rate decisions warrants further examination at this point. Once the Impartial Chairman establishes a permanent rate, it will not be altered by him unless he has made an error of fact or calculation. If he has made an error in judgment only, which is certain to happen at times, the rate remains in effect despite its inequity, because otherwise no rate decision would ever be final. Every rate would be tmporary and subject to change. Obviously, such a situation would not provide the condition necessary to induce the fullest effectiveness of the incentive system. If workers knew that management could request a revision of the rate as soon as the earnings established by the Impartial Chairman were exceeded, they would naturally hesitate to exceed them. The clever thing might be to cut production intentionally very low for a period after the rate had been issued and then appeal to the Impartial Chairman for a higher 66

See Table 16, Appendix A.

86

EFFECTIVE LABOR ARBITRATION

rate on the basis that the expected earnings could not be achieved. Management would find it difficult to bid on large orders of work because it would not be able to determine its labor costs on any particular style for anything but a very short period. This principle was restated in 1941 when an attempt was made to reopen a rate case. It is a well established principle in the industry that decisions of the Impartial Chairman are final and binding. . . . If decisions could be reopened before the Impartial Chairman at the request of either party, an intolerable situation would develop. W h e r e the Impartial Chairman is in doubt as to the final equity of a rate he establishes, the decision provides that the rate be temporary. . . . W h e r e the rate is not set as a temporary rate there is no provision for reopening the case before the Impartial Chairman. H o w e v e r , it is always recognized that rates established by decision can be changed by negotiation at the signing of a n e w contract or if necessary during the life of a contract. It is emphasized that such changes must be made by negotiation. 5 8 SELLING T H E DECISION

In the hosiery industry it has become customary to write into the decision in some detail the reasoning pursued in arriving at the conclusions. Likewise, it has become customary for the Impartial Chairman to talk with the parties regarding each decision before it is formally issued. Both of these procedures provide an opportunity to convince the parties of the merits of his rulings. A number of techniques have been developed and are employed by the Impartial Chairman to accomplish this purpose. The first is showing the parties that he has a clear understanding of the facts of the case and has given due consideration to every argument presented by each party at the hearing. The parties come to the hearings well prepared. They spend considerable time and energy developing what they consider to be the important aspects of the case and it must be remembered that these men are experts in their field. The Impartial Chairman, therefore, cannot afford to neglect any argument which they may have presented. Special attention should be given to the arguments advanced by the loser. The Impartial Chairman should 66

Decision SA 93.

TECHNIQUES

87

show clearly why those arguments were not convincing and in addition, the positive reasons for arriving at his own decision. T h e r e are certain other techniques which, although not applicable in every case, may be employed in some cases to convince the parties of the equity of the decision. One of the most effective is to point out to the losing party the disadvantages which would accrue to it if the decision had been in its favor. Obviously, this technique cannot be employed in every case because sometimes there would have been no disadvantage to the losing party if it had won the case. On the other hand a decision, especially in a system where each one becomes a precedent, may have ramifications and end results which the party seeking the decision has overlooked. Sometimes these would be disadvantageous to the party seeking them. I n one decision in which the Impartial Chairman denied management the right to give preference in employment to a stockholder he reasoned, "Promotion of a less efficient worker because of stock ownership would not be a practice which would be acceptable in the long run even to the stockholders. Such a practice would benefit one owner at the expense of the other owners." 5 7 In another decision in which he denied the Union's request that he prohibit the sale of equipment by a company, he stated, Even apart from any legal questions that might surround the use of economic force to prevent the sale of machinery, the union again fails to analyze the fundamentals that are involved in this problem. By using economic force to prevent the removal of equipment, the union would be merely treating the symptom and not the cause of the trouble. T h e r e are a number of real questions to be faced that cannot be met so simply as setting up a picket line. T h e y are: ( 1 ) W h y do concerns have to sell machines to get working capital to keep in operation? ( 2 ) W h a t is to be done about a situation where the same machines that can only be operated at a loss in one section can produce profits in another?

( 3 ) Even aside from labor rates, why are

some manufacturers anxious to operate machines outside of union influence?

( 4 ) W h a t is to be done about the removal of machines

that occurs when they wear out and are not replaced? T h e hundreds of machines that are gradually wearing out are moving just as surely 87

Decision L 29.

88

EFFECTIVE LABOR A R B I T R A T I O N

as the few that are placed on a truck and shipped elsewhere; because there are no plans to replace them. And while the use of economic force to prevent a few machines from moving might do just that, it also serves to place a high barrier against the installation of new equipment by manufacturers who lack confidence in union methods. 88 In numerous other decisions this same technique of pointing out to the loser the disadvantages which would have accrued to him if he had won has proved effective in convincing the parties of the desirability of the Impartial Chairman's ruling. 69 The written decision may also be used to appeal to the integrity and sense of responsibility of the parties. 80 Furthermore, it provides a means of giving advice to and seeking cooperation from them. In one case the Impartial Chairman fined employees for engaging in a stoppage but then advised the company as follows, W h e n changes in rates are in order it is important that employees be advised by their own officials as to the reasons for the changes or that, if a verbal announcement be made prior to a shop or departmental meeting, it should be done jointly by management and a representative of the shop committee. Precipitate notice without warning is likely to result in reactions which are not related to the merits of the change. 81 In another case the Impartial Chairman advised that, In the near future before either party has a stake in any particular instance, an agreement on a maximum period for which retroactive payments or deductions are to be made should be determined by negotiation.®2 In a decision on seaming rates the Impartial Chairman sought cooperation as follows, This memo is issued as a request for the active cooperation of both parties toward a better performance in the seaming department. 83 Decision Κ 37. Decisions Κ 18, Κ 29, Κ 45, Κ 47, Κ 51, Ο 11, and Memos 75, 76, 193, 196, 210, 417. 6 0 Memo 420. 6 1 Decision Ν 9. • 2 Memo 268. β 3 Memo 71. 88

88

TECHNIQUES

89

Thus the Impartial Chairman has employed a variety of methods to secure the acceptance of his decisions by the parties. They are part of a larger body of techniques developed under the Impartial Chairmanship which have contributed greatly to its success.

C H A P T E R VII

T H E COMMON LAW OF T H E INDUSTRY— T H E BASIC R I G H T S OF M A N A G E M E N T AND UNION THE

N A T U R E OF INDUSTRIAL C O M M O N

LAW

IN THE previous chapter it was pointed out that the Impartial Chairman, in rendering decisions on the various problems presented to him, creates in the industry what corresponds to common law. The Agreement between the parties may be compared to a legislative code. It sets the general pattern of conduct for the industry, but, just as a political code cannot be so detailed as to provide the solution to every legal dispute, so the Agreement cannot be so detailed as to supply the answer for every problem which arises in the mills. Perhaps the ideal condition would be an agreement "at once so flexible and so minute, as to supply in advance for every conceivable situation the just and fitting rule." 1 Obviously such an agreement is beyond the limit of human powers. Attempts that have been made in some industries to care for minute details in the agreement have resulted in extended and difficult contract negotiations, as well as later conflicts over interpretations of the interpretations. It appears better to limit the agreement to the determination of general issues and to depend upon day-to-day negotiations supplemented by the decisions of an impartial chairman to fill in the details. Where the impartial chairman machinery is employed, it corresponds to the judicial system in the political world. As the judge interprets and applies the codes established by the legislature and at times fills in the open spaces in the law, so the impartial chairman interprets and applies the agreement and at times creates new rules to govern conditions not covered by its provisions. T h e code in political life and the agreement in industrial life may be compared to skeletons. They can be little more. The flesh and blood of the system is added by the courts in the 1

B e n j a m i n C a r d o z o , The Nature

of the Judicial

90

Process, p. 143.

RIGHTS O F M A N A G E M E N T AND U N I O N

91

political world and by day-to-day negotiations and the impartial chairman in the industrial world. T h e impartial chairman actually passes on some of the most significant aspects of the relationship between the parties. This will be apparent as the various principles developed by the Impartial Chairman of the hosiery industry are analyzed. I n the hosiery industry the decisions of the Impartial Chairman, unless otherwise indicated, 2 become precedents upon which future decisions will be based. Thus in this industry the Impartial Chairman is clearly and purposely engaged in the creation of a system of industrial common law or as Professor Slichter calls it "industrial jurisprudence." 3 Even in those industries in which the decisions of the impartial chairman are not permitted to be considered as precedents, however, the effect is not dissimilar. In both the New York coat and suit industry and the New York men's clothing industry, it is provided that no case establishes a precedent for a decision in another case. Yet the Impartial Chairman for the coat and suit industry wrote in 1937, In practice, however, the effect of a decision covering a particular point in dispute has been to bring about its application by the parties themselves to other disputes involving the same point. 4

And Miss Morgan in her study of arbitration in the New York men's clothing industry, although defending the procedure of not deciding cases by precedents, concludes that "the arbitration machinery helped to build up a code of industrial law which was not based upon precedent of the Chairman's decisions so much as it was based upon the educational effect of participant clarification of vital terms." 5 Miss Morgan also observed that certain types of cases became less frequent and concluded that such cases "had consistently received adverse decisions, and the reasons for these decisions had been given in such a manner as 2 For examples of non-precedent making decisions see Decision Ε 6, Ε J 6, Η 4+, Μ 6, and Memos 199 and 249. 3 5. H. Slichter, Union Policies and Industrial Management, p. 1. 4 Sol A. Rosenblatt, "The Impartial Machinery of the Coat and Suit Industry," The Arbitration Journal, July 1939, p. 226. 8 Rita Morgan, Arbitration in the Men's Clothing Industry in New York City, p. 66.

92

EFFECTIVE LABOR ARBITRATION

to constitute the enunciation of certain principles of industrial relationships." 6 Thus even where the direct use of precedent is outlawed, it is difficult for a permanent impartial chairman to avoid taking part in the development of a system of industrial common law. I s INDUSTRIAL C O M M O N - L A W D E V E L O P M E N T

DESIRABLE?

Not all students of the problem are agreed, however, that such industrial common-law development is to be desired. Realizing that it is difficult to prevent it when a permanent impartial chairman is employed by an industry, some have raised this as a serious objection to the system.7 There is no doubt that certain dangers in this respect must be guarded against by an impartial chairman. H e must never become so welded to precedents as to prevent the application of equity in any particular problem. Uniformity and consistency can be purchased at too high a price. In labor arbitration it is always too high when the result is serious inequity. The industrial common-law development may also have the effect of resulting in long, complicated, costly, legalistic presentations at the hearings and decisions which exhibit the same undesirable characteristics. Likewise, local issues may come to be settled solely by reference to precedent without regard to local conditions affecting equity. These results must be avoided. One of the great advantages of an impartial chairman system, if it is functioning properly, is that it is flexible, inexpensive, and simple as compared with legal procedure. In the hosiery industry the Impartial Chairman has insisted that the complicated legalistic approach be avoided in both hearings and decisions. It is a danger against which the parties, as well as the Impartial Chairman, must be vigilant. In contrast to the undesirable features which may develop in a system of industrial common law, there are positive values which it may contribute to the collective bargaining of an industry. If the negative results can be avoided and the positive results * Ibid, p. 104. 7 Samuel P. Hayes, "Psychology of Conciliation and Arbitration Procedures," Chapter 18 of Industrial Conflict, A Psychological Interpretation, edited by George W. Hartmann and Theodore Newcomb, p. 425.

R I G H T S O F M A N A G E M E N T AND U N I O N

93

attained, as they have been to a considerable degree in the hosiery industry, the system has much to recommend it. W h a t are the positive results which may be attained? In an industry which, like hosiery, has adopted the policy of uniformity of direct labor costs through uniform piece rates, the development of industrial common law is unavoidable. 8 T h e Impartial Chairman cannot have one method of determining piece rates in one plant and a different method in another. Since the rates must be uniform, he must develop uniform practices or "common-law principles" in establishing them. Unless his decisions are consistent from plant to plant, the goal of uniformity is not achieved and the parties discover that profits for management and earnings for workers above the industry average depend not only on efficiency but also on ability to argue before the Impartial Chairman. This the Impartial Chairman must certainly avoid, yet in avoiding it he must follow a pattern of consistency in his awards which automatically gives rise to industrial common law. Consistency is necessary not only to achieve uniformity but also to impart stability to the bargaining system. If the parties are led to expect that the Impartial Chairman may reach different decisions in cases involving identical issues, then no issue can ever be considered as settled, even for the life of the Agreement. T h e result is confusion, claims of unequal treatment, and lack of faith in the arbitration system. On one occasion the writer was called upon to arbitrate a dispute between a steel company and the steel workers' union. During the hearing it was explained by the parties that two previous cases involving the identical issue had been arbitrated at the plant in the recent past. W h e n the writer questioned the desirability of conducting another hearing on the same issue, the parties informed him that decisions did not establish precedents and therefore the present hearing was in order. In this case the two previous arbitrators had rendered different decisions. T h e writer agreed with the interpretation of one of them and wrote his decision accordingly. That settled the immediate grievance but not the principle involved. Presumably there have been 8

See pp. 172-80.

94

EFFECTIVE LABOR ARBITRATION

more cases on that same issue and it would be interesting to know how the score stands now. As for the faith of the parties in arbitration, it had been severely damaged. Even if the first arbitrator was wrong, the acceptance and enforcement of his interpretation of the principle until the end of the Agreement would have been preferable to the confusion and lack of stability which resulted. The development and acceptance of industrial common law also results in the saving of time and energy. In the situation cited above, the parties must prepare new briefs and attend a new hearing every time another worker is affected by the issue. Furthermore, an arbitrator must conduct research and reason through the issue on each occasion. Finally, the parties lack the advantage of a body of accepted principles to guide them in their day-to-day negotiations. Under an impartial chairman system, if the impartial chairman is reasonable, his decision will have consistency. Then if the parties are provided with written copies of these decisions, day-to-day negotiations will be speeded and fewer arbitration cases will be necessary. Reference was made above to the danger of stultification and inflexibility resulting from the establishment of a system of industrial common law. The danger can be avoided. In the first place any movement in this direction can be corrected by the parties themselves. The Impartial Chairman is appointed only for the life of the agreement and his decisions can be modified at any time by negotiation of the parties. The crux of this whole matter of inflexibility versus stability and consistency appears to lie in the interpretation of the word "consistency." If this word is given a narrow legalistic interpretation so that decisions turn on the dictionary meaning of a word or the placing of a comma, then certainly the development of industrial common law is to be avoided. But industrial common law need not and should not be applied in that way. It is consistency of the spirit and the intent of decisions which should be maintained. If this is done, an industrial common law can be developed which is at once flexible and stabilizing, flexible in the sense that any situation which is unique can be given special treatment, stabilizing in that certain general principles are established which apply to all situations.

RIGHTS OF MANAGEMENT AND UNION T H E HOSIERY COMMON

95

LAW

In the sixteen years that the Impartial Chairmanship has been in operation in the hosiery industry, a sizable body of industrial common law has been developed. Some of it is so closely related to the customs, technology, and relationships of the industry that it will not have great significance to the industrial world as a whole except to indicate the flexibility which such a system may have in adjusting to the peculiar conditions of a trade. Most of the principles, however, are more general in nature and the success which has attended their application would appear to warrant their examination by those who are active in less mature collective bargaining systems. T h e remainder of this chapter and Chapter V I I I will be devoted to an analysis of the hosiery common law relating to non-rate issues. T h e hosiery common law of rate determination will be discussed in Chapter I X . T H E B A S I C R I G H T S OF M A N A G E M E N T

Much has been written in recent years regarding the erosion of management's rights by collective bargaining procedures and the undesirable effects that this action is having on the discipline and the productive efficiency of labor. This attitude is well stated by Slichter. P r o t e c t i n g the s t a t u s of m a n a g e m e n t a n d p r e s e r v i n g its essential p r e r o g a t i v e s h a v e n o t been a sufficiently definite objective of either union or e m p l o y e r policy in building up our system of industrial jurisp r u d e n c e . I n actual b a r g a i n i n g , the w o r k i n g rules of trade unions are built u p g r a d u a l l y o n e o r t w o at a time. T h i s leads to a n atomistic consideration of their e f f e c t s , w h i c h m a y cause their e f f e c t s as a w h o l e to be o v e r l o o k e d . F o r e x a m p l e , in o r d e r to p r e v e n t the e m p l o y e r f r o m d i s c r i m i n a t i n g a m o n g union m e m b e r s , his discretion at e v e r y point ( a w a r d i n g o v e r t i m e , p r o m o t i o n s , m a k i n g l a y o f f s ) m a y be so limited that he n o l o n g e r h a s p r o p e r i n s t r u m e n t s f o r e n c o u r a g i n g efficiency. E a c h of the individual rules m a y s e e m quite fair a n d defensible, a n d yet a s a b o d y they m a y p r o d u c e an e f f e c t which no one intended a n d which is inimical to the interests of the w o r k e r s t h e m s e l v e s . 9

There can be no doubt that in a highly competitive and partially 9

Slichter, of. cil., p. 578.

96

EFFECTIVE LABOR ARBITRATION

unionized industry, such as hosiery, the dilution of management's rights to the point where efficiency of operation is hindered may prove detrimental to the employees as well as to the owners, for interference with efficient operation increases costs and places the unionized mills at a competitive disadvantage. The result must be either less employment or lower wages or both for union members. On the other hand, employees should be protected against arbitrary action and discriminatory treatment. Without such protection it is doubtful that maximum efficiency of production can be attained. Feelings of injustice and frustration are hardly the best incentives to efficient workmanship. In addition, dictatorial methods, even though efficient in material matters, might prove highly destructive of human values. Workers do not live by bread alone. The ideal system would be one which afforded the employees the maximum of protection against arbitrary and discriminatory action and at the same time allowed to management the maximum authority to bring about efficiency of operation. One might conclude from Slichter's statement that these two aims are in conflict and that the best we can hope to do is to strike a proper balance between them. Such is not necessarily the case. It depends upon the methods employed. If certain methods are used, the two do become incompatible. If, for example, in regard to promotions, demotions, and layoffs, workers are protected against discrimination by strict adherence to seniority, then obviously the two are in conflict. Workers are promoted, demoted, or laid off regardless of performance, and management is deprived of the use of one of the important methods of achieving greater efficiency of operation. The seniority method, however, is not the only one by which discrimination may be avoided in such cases. The same thing may be accomplished by strict adherence to superior performance as the criterion by which decisions in these matters are made. If this latter method is followed, management is free to reward efficiency and the two aims become completely compatible. There will, of course, be disagreements at times regarding the supe-

RIGHTS OF MANAGEMENT AND U N I O N

97

riority of the ability and performance of certain workers and, when these cannot be solved by the parties themselves, reference to an impartial judge, such as the Impartial Chairman in the hosiery industry, may be necessary. This does not mean that management has been deprived of the right to reward efficiency. It means rather that a system has been developed whereby management can offer these rewards for efficiency only and must be ready to prove before an impartial person that such is its policy. Throughout the entire structure of principles which has been developed by the Impartial Chairman in the hosiery industry, the establishment and protection of employees' rights by methods which maintain and strengthen rather than weaken the powers which management requires for efficiency of operation has been a basic policy. It will be evident throughout the entire analysis of the principles. It is most striking, however, in this first section in which the basic rights of management are discussed. A great many rights have been reserved to management under the hosiery common law. Of these, however, four appear to be fundamental. These are the rights of administrative initiative, uninterrupted production, method of operation, and property. Administrative

Initiative

One of the most important common law principles developed by the Impartial Chairman is management's right of administrative initiative. This may be defined as the right to make all immediate decisions in the plant with no objections and hindrances from the workers and the Union except those of protest and appeal. This was illustrated in Chapter III when it was pointed out that management could have made a promotion which it considered equitable without first consulting the Union. The Union's rights in the case would have been those of protest, appeal, and retroactivity but not of original decision. It is worth noting that this was not a customary practice in the hosiery industry before the adoption of the Impartial Chairmanship in 1929. Previously, if a dispute arose, the machines

98

EFFECTIVE LABOR ARBITRATION

and men involved remained idle until an arrangement satisfactory to both management and the Union was reached.10 The Union did not recognize the right of management to make decisions on disputed issues even on a temporary basis. The Union's position in this respect is easily understood. In a collective bargaining system which provided no definite terminal point such as the decisions of the Impartial Chairman provide in the present system and no guarantee of retroactive adjustment which is a part of the present common law of the industry,11 the Union felt justified in demanding that administrative initiative be jointly shared. Otherwise, a condition which the Union considered as highly inequitable might be initiated and continued by management over a long period of time, even to the end of the Agreement, by simply extending negotiations on the matter. If the condition were finally altered, the company might refuse any retroactive adjustment. Both of these results would have weakened the Union's bargaining position. Under such a system the Union considered it necessary to insist upon sharing administrative initiative. The sharing of administrative initiative was altered by the Impartial Chairman very early in the history of the new system. The basic, precedent-making decision on this question was issued in 1930 by Dr. Abelson, the first Impartial Chairman. The heart of the decision is to be found in the following paragraph: T h e Impartial Chairman rules that the very basis of the National Labor A g r e e m e n t with the arbitration machinery which is an integral part of it lies in this principle, namely, that the employer must have the right of administrative initative, and that the rights of the workers are protected by the unlimited right under the terms of the agreement to protest against acts of the firm and to bring those grievances before the Impartial Chairman for adjudication if these grievances are not adjusted by management to their satisfaction. T h e Impartial Chairman finds that in all disputes between m a n 10

George W. Taylor, "Hosiery," Chapter 9 in How Collective Bargaining Works, edited by Harry A. Millis, p. 467. Gladys L. Palmer, Union Tactics and Economic Change, p. 149. 11 See pp. 115-18.

RIGHTS OF MANAGEMENT AND UNION

99

a g e m e n t a n d w o r k e r s on which reasonable m e n m i g h t d i f f e r , the right of a d m i n i s t r a t i v e initiative rests with the

firm.12

Numerous other rulings have reinforced the above decision and have sanctioned its application to particular circumstances, but the basic principle has remained unaltered. 13 W h y did the Impartial Chairman believe it necessary to place this power in management's hands? As already indicated, it had not been a customary part of the collective bargaining procedure. Presumably it was done for two reasons. First, because it was a logical and necessary part of the new system which was being established, and second, because its results would be beneficial to both parties to the Agreement. Another principle of the new system is uninterrupted production. 14 Yet if production is to be uninterrupted it logically follows that the power to make immediate decisions must rest with one and not both of the parties. T h e Q u a k e r technique of refusing to take any action until all parties are satisfied with the solution is admirably suited for certain situations but not for the handling of day-to-day shop grievances without interruption of production. Furthermore, as the quotation from Dr. Abelson's decision indicates, the new system provides the Union with certain rights of appeal and retroactivity which give it a means of securing equitable treatment of grievances without insisting on sharing administrative initiative. Finally, the placing of this power in the hands of one of the parties alone was necessary if the financial benefits of uninterrupted production which will be discussed presently were to be achieved. This right was given to management rather than to the Union because the former is accustomed to making decisions regarding matters over which disputes may arise. Also, it is in a better position to see the over-all picture of plant requirements. Furthermore, since it is composed of a smaller number of persons with highly concentrated authority, it can arrive at decisions with Decision Β 4. Decisions F 2, F 8, F 24, Η 40, Κ 8, Κ 29, Ν 8, and Memos 11 1, 127, 138, 224, 439. 1 4 See pp. 10 1-5. 12 13

100

EFFECTIVE LABOR ARBITRATION

greater speed than the Union where the democratic process is relied upon to a greater extent. Finally, management is in a better position to assume financial responsibility for its decisions. It represents the owners of the equipment and supplies. If errors are made which result in damage to these items it is in a position to assume such losses, and, if retroactive adjustment of pay is necessary, it is in a position to make such adjustments. Such is not always the case with the workers or the Union. The above reference to retroactive adjustments by management indicates that the right of administrative initiative is a responsibility as well as a privilege. Management has the right to make all immediate decisions within the plant, but at the same time it must assume the responsibility for any undesirable or inequitable results which flow from such decisions. The Impartial Chairman has ordered management to make retroactive adjustments when in his opinion the action taken by its representatives resulted in unfair losses to the employees. An analysis of this question is reserved until later, however, since retroactivity represents one of the basic rights of the Union. 15 Furthermore, the right of administrative initiative carries with it the duty to use it wisely and with due regard for the rights of employees. In several decisions the Impartial Chairman has censured employers for lack of discretion in the manner in which they made use of it. In one decision he wrote: It is, of course, to be expected of each manufacturer that he use his administrative powers in good faith and with due regard of the generally accepted rights of his employees and particularly of those rights outlined by the Agreement. Such administrative powers cannot be used in such a manner as to result in oppressive dealing. 1 '

In another decision, after severely reprimanding a group of knitters who had refused to follow an order, the Impartial Chairman went on to censure the management for not explaining the reason for the order. In this case a simple explanation would possibly have prevented difficulties and would certainly have constituted the minimum require1JS

Pp. 115-18.

16

Decision F 2.

RIGHTS OF MANAGEMENT AND UNION

101

m e n t s of g o o d personnel p r o c e d u r e . . . while the c o m p a n y r e p r e s e n t a tives h a v e been vested with a u t h o r i t y , it is e x p e c t e d t h a t they will properly use such a u t h o r i t y to s e c u r e s m o o t h n e s s of o p e r a t i o n s

and

not in a n a r b i t r a r y m a n n e r . 1 7

Thus management has been given the right of administrative initiative but along with that right it must accept the responsibility to use it wisely and to make retroactive adjustments when its decisions do not coincide with those of the Impartial Chairman. Uninterrupted

Production18

T h e right of administrative initiative is closely related to that of uninterrupted production. T h e latter would be impossible if administrative initiative were shared and the right of administrative initiative would be meaningless if workers had the right to stop production until management's decision satisfied them. This principle was not established by the Impartial Chairman. T h e parties included this in the Agreement which inaugurated the new system of collective bargaining in 1929. Article 5 of the 1929 Agreement reads as follows: T h e c o n t r a c t i n g parties, f o r t h e m s e l v e s , their successors o r a s s i g n s a n d f o r their respective m e m b e r s , officers a n d a g e n t s , a g r e e t h a t f o r the f u l l period of this a g r e e m e n t , there shall be n o strikes, boycotts o r lockouts, n o r picketing of a n y kind or f o r m w h a t s o e v e r ,

however

p e a c e a b l e , n o r d e m o n s t r a t i o n s , displays o r a d v e r t i s e m e n t s t e n d i n g t o excite s y m p a t h y or protests c o n c e r n i n g the relations or m a t t e r s in dispute b e t w e e n the c o n t r a c t i n g parties, a n d that neither of the c o n t r a c t i n g parties will a u t h o r i z e ,

permit,

countenance

or s u f f e r

the

existence or c o n t i n u a n c e of a n y of the acts hereby prohibited.

The no-strike, no-lockout clause of recent agreements is very similar. Although the wording has been altered slightly, the meaning has not been changed. 19 T h e value of this principle lies primarily in the monetary Decision F 5. See also F 8 and Ν 8. This right is operative, of course, only when a contract is in effect. The Union reserves the right to strike at the end of a contract. 1 9 National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry, Sec. E - l . Reproduced in Appendix B. 17

18

102

EFFECTIVE LABOR ARBITRATION

advantages which it provides to both the workers and the companies. Stoppages are costly to both parties. If they occur, the company loses production, incurs increased overhead costs per dozen, and loses customers because of failure to meet delivery dates. The workers lose their earnings. The magnitude of these monetary losses can be shown best by an example. Suppose a grievance arises on the 45-gauge 24-section legging machine at a plant where ten such machines are being operated on two shifts and the employees or the management refuse to continue production until the grievance is settled. The average production on such machines is approximately 55 dozen per week. The average earnings is $53.48 per week.20 The average time consumed by the Impartial Chairman machinery in processing a case is 38 days.21 If we add some days for negotiation previous to submission to arbitration, we get a period of at least six weeks. Assuming that the Impartial Chairman would not hasten his decisions under pressure of a stoppage, each employee would lose over $300 in wages and the company would lose 6,600 dozen pairs of hosiery. Yet under the Impartial Chairman system such severe losses are entirely unnecessary. The task of the Impartial Chairman so far as this principle is concerned has been largely one of interpretation and enforcement. Interpretation has not been difficult. Any refusal to perform the task assigned by management whether by an individual, a department, or an entire plant has been labelled a violation of this principle of the common law of the industry. Any stopping of production by management because of disagreement with the employees or the Union has been interpreted likewise. Only one exception is recognized, that is if a company or an employee refuses to carry out the terms of a decision of the Impartial Chairman. The Agreement permits stoppages under such circumstances. Section E-l reads as follows: T h e U n i o n . . . reserves the right to strike any mill where the E m p l o y e r fails to carry out the decisions of the Impartial Chairman, duly rendered in writing, within ten days after such employer shall have been served with such decision. T h e Employer reserves the right 20 21

See Table A, p. 80. See Table 15, Appendix A.

RIGHTS OF MANAGEMENT AND UNION to l o c k o u t a n y d e p a r t m e n t or d i s m i s s the e n t i r e p e r s o n n e l of

103 such

d e p a r t m e n t a n d / o r the entire mill w h e r e m e m b e r s of the U n i o n in any department

r e f u s e to c a r r y o u t the decisions of t h e

Chairman,

r e n d e r e d , within t e n

duly

Impartial

days a f t e r service upon

the

U n i o n of such decision.

T h e Impartial Chairman has been careful, however, to guard against the use of this paragraph as an excuse for stoppages which occurred for other reasons. On several occasions the Union has attempted to justify a stoppage in this way, but in each case the Impartial Chairman has ruled against the Union and has penalized the workers. 22 Even "intimidation" and "violation of the Agreement" have been dismissed as insufficient cause for "stopping." Grievances arising from such conditions, if they are real, may be dealt with in an equitable manner without the losses which are incurred by both the company and the workers when stoppages occur. It is interesting to note that a case has never arisen in the hosiery industry in which one of the workers "stopped o f f " because of the danger of irreparable damage to health, respect, or property. Presumably the Impartial Chairman would have to make an exception if such a situation were to arise. Although the principle covers both management and workers, so far only the workers have been guilty of its infraction. Since management has the right of administrative initiative, it would not need to violate this clause. T h e Impartial Chairman has followed a strong policy in dealing with such cases. H e has refused to hear any issue in any case so long as the employees remain "off the job." 2 3 Such employees are considered as "outlaws." In their resort to economic force they remove themselves from the protection of the Impartial Chairman machinery and have no right to appeal to it for a ruling on the grievance which gave rise to the stoppage. This procedure has been considered necessary not only to prevent the losses which both parties would incur while the issue was being decided by the Impartial Chairman but also to prevent the use of the stoppage as a means of placing pressure on the Impartial Chairman to render a favorable decision. The record indicates that the workers' chance of winning a 22 23

Decisions Κ 55, Ν 24. Decision Ν 24.

104

EFFECTIVE LABOR ARBITRATION

stoppage case is small, indeed. Of the 20 cases which have been presented to the Impartial Chairman on this question not one has resulted in a decision favorable to the workers.24 In addition fines and damages have been levied and discharges upheld. The following case illustrates especially well the seriousness with which the Impartial Chairman has viewed the enforcement of this principle. Two men were discharged at one of the plants because of an infraction of discipline. Thirty-seven other knitters stopped their machines and refused to work because they maintained the penalty was too severe. The company thereupon discharged the thirty-seven. In his decision the Impartial Chairman upheld the claim of the Union that the discharge of the first two workers was too severe a penalty for the offense which they had committed and ordered them placed back on their jobs. In the case of the thirty-seven who had stopped work, however, the Impartial Chairman upheld the discharge and wrote: If the clause of the agreement stating that an employer may discharge, if necessary for the operation of his business, means anything at all, it cannot be made inapplicable in the case of a stoppage. 25

In practically every stoppage case in which discharge has not been ordered the Impartial Chairman has insisted that the workers make up the time lost without extra compensation in addition to any other penalty. Although monetary fines were threatened previously, they were not actually enforced until 1941. In a decision resulting from a stoppage of only a few hours the Impartial Chairman fined the Union $ 10 for every worker involved (a total of $200). 2e A few months later a 20-minute stoppage at another plant resulted in a fine of one half day's average earnings for all workers involved, "the total amount collected . . . to be given to a local charitable organization to be designated by the Union and the company."27 Thus the use of monetary fines in stoppages has been established and will probably be used in the future if such cases persist. 24 2e 28 27

See Table 12, Appendix A. Decision Ε 41. Decision Μ 8. Decision Ν 9.

RIGHTS OF M A N A G E M E N T AND UNION

105

Actually the stoppage problem is not serious in the hosiery industry. Only 20 such grievances—a little over one per cent of the total—have been presented to the Impartial Chairman during the 16 years covered by this study. 28 Method, of

Oferatton

On every occasion that the issue has been raised, the Impartial Chairman has insisted that management must have the right to carry out such experiments with equipment and methods of operation as it deems desirable 29 and to install permanently any equipment or methods which it considers to its advantage 80 with the exception only of those methods specifically prohibited by the Agreement. 81 This principle as respects method of operation is well stated in decision L 5. M a n a g e m e n t has the right to determine how its plant shall operate. Since it has determined to combine examining and mending, the union has no right to have this management decision vetoed. This follows even though the union and the Impartial Chairman may have doubts about the efficacy of the new system. A decision on this question is the responsibility of the management. T h e union is fully within its rights, however, in insisting upon a voice in the determination of the labor arrangements that should accompany the change of system.

As regards equipment, Memo 267 contains the following paragraph : T h e Impartial Chairman cannot compel the company to purchase any particular attachments or to change its method of making the W s e course. T h e selection and use of equipment for any given purpose is a management function. However, if certain equipment chosen by a company is non-standard and results in undue loss of earnings, then the Impartial Chairman may require the company to compensate the knitter for trouble directly traceable to the equipment and not the knitter's fault.

Thus the Union's rights in this respect have been limited to the See Table J, Appendix A. See Decisions Η 19, Η 38, SA 20, and Memo 227. 3 0 See Decisions Ε 60, F 26, G 3, L 5, L 21, and Memos 70, 267, 27 J. 8 1 The Agreement provides f o r example that "All knitting machines shall be operated as single jobs." Sec. C-2. 28 28

106

EFFECTIVE LABOR ARBITRATION

"labor arrangements" including the rates to be paid. It has no rights in the determination of type of equipment or method of operation to be employed.32 There are a number of good reasons for this principle. If efficiency of operation is to be attained and advances made in the technology of the industry, management must be free to make changes of equipment and methods. Slichter has pointed out the undesirable consequences to society as a whole of the restriction of management in this respect. Collective bargaining becomes a method of protecting the old against the n e w , of retarding technological change, and of protecting vested interests in obsolete methods. T h u s it becomes a method of keeping d o w n the standard of living. 3 3

The Impartial Chairman could hardly be expected to be a party to anti-social action of this kind even if it were to the advantage of one or both of the parties. In the hosiery industry, however, the maintenance of obsolete methods would react to the disadvantage of both the workers and the management. If unionized mills were prevented from adopting the most efficient equipment and methods, they would soon find themselves unable to compete with the non-union mills where the Union cannot enforce restrictions. The resulting losses would soon be translated into lower earnings and eventually into unemployment for the unionized employees.34 To state it positively, higher wages and more jobs in unionized mills depend 32

Impartial Chairmen in certain other industries have not established this principle. In the Chicago men's clothing industry, management's privilege to introduce technical improvements without consulting the Union was limited to "first, the existence of an emergency, and, secondly, the maintenance of established standards." Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 218. 33 Sumner H. Slichter, "The Changing Character of American Industrial Relations," American Economic Review, Supplement March, 1939, p. 122. 84 The union officials recognize this. William Smith, secretary-treasurer of the Federation, wrote in 1931, "The union for some time past has . . . come to recognize the need for assuming a certain definite share in establishing more efficient operation in the mills where its members are employed." William Smith, "Hosiery Workers' New Agreement," The Textile Worker, January 1930, p. 629.

RIGHTS O F M A N A G E M E N T AND UNION

107

upon more efficient operation in these mills than in the non-union mills. Property

Rights

T h e privilege to buy, use, and dispose of property without interference, except as specifically provided in the Agreement, has been recognized by the Impartial Chairman as another basic right of management. This right has been questioned by the Union in relation to the purchase, use, and sale of goods j the purchase, sale, scrapping, and "shutting down" of equipment; and the temporary and permanent closing of entire plants. In every case the Impartial Chairman has upheld the right of the company, unless there was a specific agreement to the contrary. Management, itself, in its negotiations with the Union has accepted certain limitations to its property rights. These limitations are set forth in the following paragraph (A-2) of the Agreement: T h e Association agrees t h a t its M e m b e r s will not, during the term of this a g r e e m e n t , shut d o w n any of their machines or

finishing

equipment in order to enable the M e m b e r in question to purchase f r o m non-union mills, full-fashioned hosiery capable of being m a d e on said machines, or in order to have such finishing operations perf o r m e d in non-union mills. It is not the intention of the parties by this p a r a g r a p h to restrict M e m b e r s of the Association f r o m purchasing full-fashioned hosiery f r o m anyone they see fit, if the M e m b e r cannot supply its particular needs in its own plant, but a M e m b e r shall not deliberately shut d o w n machines in order to buy full-fashioned hosiery f r o m non-union mills, except as herein otherwise provided. In such cases, a record of such purchases shall be filed with the U n i o n .

In addition, in 1938 supplementary rehabilitation agreements were adopted by the individual companies and the Union in which the companies agreed to purchase specified numbers of new machines in return for wage cuts which averaged 15 per cent. By these agreements the companies modified their right to purchase or not to purchase equipment as they desired. T h e supplementary rehabilitation agreements were temporary, however, and when a company had fulfilled its obligation by purchasing the required number of new machines, its rights in this respect were restored.

108

EFFECTIVE LABOR ARBITRATION

The Impartial Chairman has insisted that management abide by the limitations of property rights which were negotiated with the Union. Fifteen grievances have been filed with the Impartial Chairman in which the Union alleged that management had violated the section of the regular Agreement dealing with purchase of non-union goods or services;35 and 24 grievances have been filed alleging that management has failed to carry out the rehabilitation obligations of the supplementary agreements.88 As one would expect, all of these grievances were filed by the Union. 37 Although insisting that management abide by these limitations, the Impartial Chairman has been careful not to extend them beyond the specific terms of the Agreements. In other words he has left to management the maximum property rights which the limitations agreed upon would permit. This attitude is indicated in the disposition of these cases. Of the 15 grievances in which the Union claimed a violation of the clause forbidding purchase of non-union goods and services, in only two were the decisions favorable to the Union. Of the 24 grievances claiming failure to carry out the rehabilitation program, that is, failure to purchase new machines as agreed in return for wage reduction, the Union claims were considered more substantial, and 13 grievances or 54 per cent resulted in decisions favoring the Union. 88 Where violation was proved and where such violation resulted in loss of earnings to the employees, damages commensurate with the losses were levied against the companies and awarded to the workers.89 So long as there was no specific violation of the limitations agreed to by the parties themselves, the Impartial Chairman has insisted on the maintenance of management's property rights. In the purchase of goods, he has sanctioned purchases even from non-union mills so long as the company's own equipment was not 88 Decisions Β 11, Β 12, Ε 29, Ε 52, Ε 65, F 23, Η 4, Η 36, Κ 26, Μ 3, Μ 5, Μ 10; Memos 114 and 251; S.W.D. 38. 8 ® See SA Decisions Nos. 1, 5, 12, 16, 18, 23, 24, 26, 30, 38, 43, 46, 54, 55, 58, 60, 67, 68, 80, 82, 86, 90, 91, 94. 8T See Table 9, Appendix A. 88 See Table 12, Appendix A. 89 Decisions SA 5, SA 80, SA 90.

RIGHTS OF M A N A G E M E N T AND UNION

109

40

made idle by the action. In the sale of goods, he has ruled that "the agreement cannot impose conditions upon the terms of sale of hosiery." 41 Except during the period when the supplementary agreements were effective, he has decided that the purchase of equipment is a matter to be decided solely by management. T h e Impartial Chairman cannot compel the company to purchase any particular attachments. . . . T h e selection and use of equipment . . . is a management function. 4 2

Likewise, management is free to allow equipment to stand idle. Of course, a signatory concern has the right to shut down machines if they cannot be operated in his interests. . . . There can be no complaint on this score. 43

Also, management may sell equipment at will so long as the sale is "bona fide in nature and made in good faith." 44 In deciding in favor of management on this matter the Impartial Chairman has noted, " N o clause of the agreement prohibits a manufacturer from disposing of equipment for which he has no further use." 45 Finally, management is free to discontinue the operation of its entire plant temporarily or permanently. " T h e determination by management to cease operating at a mill cannot be reversed by decision." 46 It is clear from the above analysis that the Impartial Chairman strongly defended the property rights of management. This defense was undertaken for a number of reasons. In the first place such rights had been exercised by management previous to the advent of the National Labor Agreement. They constituted customary practices. The Agreement itself contained no statement which could be interpreted as indicating the intention of the parties to abandon these practices in general. ( T h e provisions which placed limitations on property rights would indicate that 40

Decision Μ 10. Decision Ε 65. 42 M e m o 267. 43 Decision Κ 7. Under certain conditions, however, work sharing may be required on a group of machines. 44 Decision Ε 68. 45 Decision G 7, see also Decision Κ 37 and M e m o 428. 48 Decision SA 18, see also SA 58, SA 80. 41

110

EFFECTIVE LABOR

ARBITRATION

the parties recognized their existence and merely desired to prevent or modify their exercise in specific instances.) Thus the Impartial Chairman appears simply to have upheld the customary practices which the parties intended should continue unless contrary provision were made in the Agreement. In addition, decisions in favor of the Union in these cases would have been both impractical and illegal. In ruling against the Union's request to declare the closing of a plant a violation of the Agreement, the Impartial Chairman observed: Any decision which might be rendered, ordering a company to operate would be entirely unworkable from practical standpoints. There obviously is no way to compel management to operate a plant.47

Although the legal aspect of the problem is merely mentioned and not developed in the decisions on this question it is clear that no court would have agreed with a decision which denied to management property rights not specifically surrendered in the Agreement. Finally, the maintenance of these rights was recognized as essential to the best interests of the unionized section of the industry as a whole. The Impartial Chairman pointed out that although the employees might gain in the short run if management were deprived of certain of its property rights, in the long run the employees themselves would lose because investment in the unionized section of the industry would be curtailed. In ruling against the Union's attempt to prevent the removal of machines from a plant, the Impartial Chairman said that while such action might prevent a few machines from moving "it also serves to place a high barrier against the installation of new equipment by manufacturers." 48 To summarize, these property rights of management have been preserved not only because they were customary and were not surrendered in the Agreement but also because to have provided otherwise would have been impractical and illegal and would not have been to the best interest of both parties. 47 48

Decision SA 18. Decision Κ 37.

R I G H T S O F M A N A G E M E N T AND U N I O N

111

T H E BASIC R I G H T S OF T H E U N I O N

In the preceding section it was pointed out that the major goal of the establishment of the various principles relating to the basic rights of management has been the promotion of the maximum efficiency of operation possible under the terms of the National Labor Agreement. I n order to achieve this goal, the Impartial Chairman not only has protected those customary rights of management which were not surrendered in the Agreement but in addition has established such new management rights as he has considered essential to the successful attainment of that goal. T h e fundamental reason for following this policy of strengthening management's rights has been the conviction that the greater efficiency of operation which results from it accrues to the advantage of the unionized section of the industry as a whole—to the Union and the workers—as well as to the management and the owners. In establishing principles relating to the basic rights of the Union, the major goal has been to guarantee fair and equitable treatment to the Union and its members. T h e question arises whether it is possible to preserve and extend the guarantees against arbitrary and inequitable treatment at the same time that management's rights are being strengthened. T h e Impartial Chairman in the hosiery industry appears to have successfully accomplished this dual feat. T h e evidence will be apparent in all of the principles yet to be discussed, but especially in the following four which have been included in this section under the heading of " T h e Basic Rights of the Union": (1) the right of protest and appeal, (2) the right of retroactivity, (3) the job right, (4) the right to determine internal Union policy. T h e fundamental reason for extending and strengthening the guarantees of fair and equitable treatment has been not only that they are highly desirable in themselves but also that workers who feel that they have been dealt with fairly are likely to be more efficient workers. This response is advantageous not only to themselves in a piece-rate system but to the managers and owners as well.

112

EFFECTIVE LABOR

ARBITRATION

Protest and Appeal Since under the Impartial Chairman system in the hosiery industry the union has no right of administrative initiative, the only means by which it may legally seek adjustment of any action by management which it feels is inequitable is by protest and appeal. This right is set forth in section E-2 of the Agreement.49 Grievance Machinery. All grievances arising in any shop shall be adjusted by the Union and Association and/or Member involved; in the first instance such grievances shall be submitted to the shop committee and the shop foreman or superintendent representing the Member, and in the event that they cannot adjust such grievances, the matter shall then be submitted to the officials of the Union and the officials of the Association and/or Member. In the event the Union and the Association and/or Member cannot agree, the grievance shall be referred to the Impartial Chairman for settlement, who shall give his decision within ten days after the case has been referred to him or as soon thereafter as is possible. His decision shall be final.

It should be observed that this section of the Agreement places no limitation on the nature or type of grievance which may be submitted to the Impartial Chairman. It reads, "All grievances arising in any shop" if not settled by negotiation "shall be referred to the Impartial Chairman." The Impartial Chairman has insisted, therefore, that any matter may be submitted to him. Some matters may be declared by him to be beyond his jurisdiction,80 but it is the Impartial Chairman and not the parties who decides the question of jurisdiction. As a matter of fact, the question of jurisdiction itself may be part of an appeal. The right to protest and to appeal any matter to the Impartial Chairman may be used by management as well as by the Union, but, because the former may exercise administrative initiative, the right is of significance primarily to the Union.51 It is the means 49

See also section E-+ which defines the jurisdiction of the Impartial Chairman. Reproduced in Appendix B. 60 See p. 36. 81 See Table 8, Appendix A.

RIGHTS OF MANAGEMENT A N D U N I O N

113

by which the Union is guaranteed a fair adjustment of any arbitrary or inequitable action taken by management under the latter's right of administrative initiative. This right of protest and appeal would be very hollow if the jurisdiction of the Impartial Chairman were narrowly confined. T h e Agreement, however, places practically no limitations on the power of the Impartial Chairman except that he should not alter or modify the terms of the Agreement itself. T h e Impartial Chairman has been liberal in interpreting his jurisdiction, 62 although careful to exclude those matters which the parties obviously did not intend to include within its scope.58 It was because of these broad interpretations of appeal and jurisdiction that the Union agreed to give up the sharing of administrative initiative and the direct action which it could employ in any grievance previous to the adoption of the Impartial Chairmanship. T h e Impartial Chairman has actively protected this basic right of the Union against any indirect weakening by management in the form of discrimination or threats against union representatives and employees who insisted on exercising it. In one interesting case the company threatened to discharge a shop committeeman at the first opportunity because of his protests on behalf of aggrieved employees. Later this union representative committed a misdemeanor and was discharged. T h e Impartial Chairman restored the worker to his job because he believed that the company would not have discharged him had it not been for his union activity. In rendering the decision the Impartial Chairman reasoned: There are, of course, limits to the privileges that are to be accorded to the shop committeeman. O n the other hand, the shop committeeman's effectiveness cannot be hindered by a threat of discharge, for the representatives of the union within each shop form an integral part of the industrial relations plan that has been developed under the N. L. A. [National Labor Agreement]. 5 4

This does not mean that the management may not discharge or 62 63 M

See Decision Κ 56. See pp. 33-41. Decision Ε 62.

114

EFFECTIVE

LABOR

ARBITRATION

discipline union representatives the same as other workers,55 provided there is no discrimination because of their union activity. 58 In fact, the Impartial Chairman has stated that union representatives are expected to conduct themselves in an exemplary manner. A union representative should assume an individual responsibility for being a better than average worker. She cannot expect that her position is a guarantee against discipline imposed because of poor workmanship. 5 7

Employees who are not union representatives have also been protected against discrimination or threats of discrimination because they insisted on exercising their right of protest and appeal. In a case in which the Union claimed that the company had intimated that a worker would be discriminated against if he insisted on an appeal, the Impartial Chairman stated: A n y worker has a right to insist on w h a t he believes is due him and to obtain through his union a hearing before the Impartial Chairman if he feels the m a n a g e m e n t is not dealing with him justly. T h r e a t s of m a n a g e m e n t to the worker in such cases cannot be tolerated and any discrimination

in such cases would be dealt with severely by the

Impartial C h a i r m a n . 5 8

T h e Union's right of protest and appeal which replaced the right to share administrative initiative has several distinct advantages. In the first place, it is much less costly to the employees involved in any dispute and to the Union which must use its funds to support them. In the old days when strikes occurred frequently to enforce demands on the employers, the employees suffered loss of earnings. Under the right of protest and appeal, coupled with the right of retroactivity which will be discussed presently, the necessity for strikes and the losses which they entail are eliminated. In addition, the new right involves a much Β β In the Chicago men's clothing industry a shop chairman may not be discharged or suspended, but must be taken to the Trade Board for any disciplinary action. Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 239. 5 6 Decision Ε 63. The discharge of a committeeman was upheld. 6 7 Decision F 16. 5 8 Memo 433.

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less hazardous and more certain method of securing adjustment of grievances. T h e Union could never be sure that it would win, even though justice was on its side, when it resorted to a strike. T h e company might hold out and the Union might be forced to give in. U n d e r the new system the Union is guaranteed a fair hearing before an impartial judge. T h e chance of securing justice is much greater for both parties. Moreover, there were always small grievances which did not warrant a strike. These can now be brought to the Impartial Chairman for adjudication. Finally, a strike always endangered the very life of the Union in the plant. T h e company might successfully refuse to rehire the union employees. U n d e r the new system an appeal to the Impartial Chairman involves no such hazard. Retroactivity T h e need for retroactive adjustments may arise f r o m any one of three causes: (a)

a simple miscalculation of rates

(b) (c)

an open violation of the agreement a difference of opinion between the parties regarding rates or conditions of work, in which case under the right of administrative initiative m a n a g e m e n t ' s opinion becomes temporarily effective pending final decision by the Impartial Chairman.

Problems of retroactivity arising f r o m each of these causes will be analyzed in turn. In the discussion in Chapter I I of the basic characteristics of the full-fashioned hosiery industry, the complex nature of the piece-rate structure of the industry was illustrated. 5 9 U n d e r such a structure it is not surprising that errors in rate calculation occur f r o m time to time. I n order to reduce them, the Impartial Chairman has insisted that the shop committeeman carefully check each rate calculation and has held that "the responsibility for an improper wage payment is invariably shared by both parties." 80 In order that the shop committeeman may perform this function efficiently, the companies have been or59 40

See p. 11. Memo 139.

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dered to supply him with copies of the specifications and rate calculations for each style of hosiery produced. When an error occurs, either party may seek retroactive adjustment. Previous to June 1942 there was no time limit on retroactivity in case of an error of calculation. Considerable sums of money were sometimes involved. The result was hardship and difficulty of collection when the workers were overpaid.®1 On the other hand, when the workers were underpaid, management sometimes discovered to its sorrow that production costs over a long period on a particular style were much higher than had been anticipated when pricing the style. Had the real costs been known, management might not have entered into its production. The Impartial Chairman, recognizing the unfortunate results of unlimited retroactivity in the case of miscalculated rates, recommended as early as December 1931 that a time limit be set.82 It was not until June 1942, however, that the Union and the Association negotiated an agreement which limited retroactive adjustment in such cases to a period of two weeks.63 The Impartial Chairman has since ruled, however, that the two weeks' limitation applies to errors of underpayment only when the company has supplied the Union with copies of the rate sheets. In one case in which a company refused to cooperate and denied the union representative the right to check the company's rate calculations, the Impartial Chairman decided that the two weeks' limitation was non-operative and that the company should make retroactive adjustment for the entire period of underpayment.· 4 The logic in this position is clear. Without access to the rate sheets, the employees and the union representatives cannot check the rates with accuracy and, therefore, should not be expected to share any responsibility if miscalculations occur. In cases involving open violations of the agreement, there is ® In Decision A 10, thirteen workers were ordered to reimburse the company to the extent of $866.67. See also G 13. 62 Decision Ε 23. M From a mimeographed letter sent to each manufacturer and each local union by the Union Executive Board and the Association under date of June 4, 19+2. M Decision Ο 3.

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no time limit to the retroactive adjustment which may be ordered. In one case the Impartial Chairman ordered retroactive pay of $20,500 to the employees of a company which had sent goods to be finished in a non-union mill while its own workers remained idle.85 The action of the company in that case was clearly a violation of the terms of the agreement. In another case in which a company failed to increase certain knitters' pay 30 per cent as provided in the agreement, full retroactive adjustment was ordered. 68 Likewise in several cases where companies failed to pay the minimum wages required by the Agreement, back pay to the time of the beginning of the violation was ordered. 87 Even when the shop committee or the employees had made agreements contrary to the terms of the National Labor Agreement, complete retroactive adjustments were ordered. 88 In cases involving no clear violation of the Agreement, however, but simply a difference of opinion between the parties, it has become the custom to make the decision of the Impartial Chairman retroactive to the time the Union protests the matter to management. 89 In other words, the National Union may not permit an inequitable rate or an inequitable condition of any kind to continue for a long time without protest and then suddenly expect to secure retroactive adjustment for the whole period.70 The parties themselves have agreed that the Union has a responsibility to bring such protests to the attention of management promptly. 71 This right of retroactivity is a necessary concomitant of the right of protest and appeal. Without the former the latter would be incomplete as a substitute for the sharing of administrative initiative and the use of economic force. It would be unreasonable to expect the Union and the employees to accept the principle of uninterrupted production without a guarantee that the equitable solution of any problem, as finally determined by the Impartial 65 ββ βτ 68 69 70 71

Decision L 1 J. Decision Ε 45. Decisions Ε 29, Ε 48, L 7. Decision Ε J 9. Memo 348. Decision Ε 66. Decision Ο 3.

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Chairman, would be made effective as of the time of protest to the management. Even if the Union and the employees could be persuaded to continue production under conditions which they considered inequitable with no guarantee of retroactive adjustment, the result would be unsatisfactory. Under such conditions the employees would undoubtedly place pressure on the union officials to file for a hearing with the Impartial Chairman immediately rather than to attempt adequate negotiation with the company, because every day spent before a final decision was rendered would be to the disadvantage of the employees if their grievance had merit. Likewise management might find it to its advantage to postpone a hearing as long as possible. Even if management did not engage in such practices, it would be difficult to so convince the Union and as a result the proper atmosphere for negotiation would not be present. The efficient functioning of negotiation, as well as arbitration, therefore, necessitates the principle of retroactivity as established. Retroactivity makes uninterrupted production equitable and practical. The advantages of uninterrupted production to the employees as well as to the companies in the unionized section of this highly competitive and partially unionized industry were indicated in the analysis of the basic rights of management. Finally, retroactivity together with the right of protest and appeal is a much superior procedure for seeking equitable adjustment on the part of the Union, since it is not only less costly but less hazardous than the method which it has replaced. The Job Right In 1931 the Association agreed to the Union's request for the closed shop.72 Actually it is a limited closed shop, since under certain conditions employees may begin work without immediately joining the Union. The sections of the 1943-1945 Agreement embodying this policy are as follows: (B-laJ Union Membership. The Association and each Member agree to employ none but members of the Union in good standing in the Full Fashioned Hosiery Mills covered by this agreement, excepting 72

Taylor, of. cit., p. 485.

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office workers, general clerical help and employees engaged in any kind of managerial position or work. Subject to the above mentioned exceptions, no new employees will be hired unless they first become members of the Union, excepting as to inexperienced help, commonly known as learners or apprentices, who may be employed, but who shall have four months after employment within which to join the Union. T h e provisions of this section shall not apply to such new Members of the Association as will have agreements with the Union which will otherwise provide. (B-lb) In the event that the Union cannot supply competent workers within forty-eight ( 4 8 ) hours after formal request is made, the Association and/or Members thereof may secure such workers from other sources, it being understood however that such workers shall become members of the Union within fifteen ( 1 5 ) days after their employment; should, however, such workers fail or refuse to become members of the Union, then and in that event whenever the Union will replace them by competent help from the Union, such outside workers shall be discharged by the Members immediately upon such replacement.

Thus the Union has a right which is comparable to management's two rights of property and method of operation. Management may do as it wishes with its property (except as it has limited this right itself by negotiation) and it may adopt any method of production which it deems desirable, but the jobs which result belong to the Union and its members. Although giving strong support to the basic principle of the job right, the Impartial Chairman has placed certain limitations and qualifications on its application. First, he has insisted that, although all nonsupervisory jobs must be filled by union members, except as specifically provided otherwise in the Agreement, management must still have the right to choose its employees. In other words, the Union may not dictate to the employer which union members he may hire. In 1938, when the Union attempted to enforce a policy by which it would choose all new employees, the Impartial Chairman ruled that the Union was not only acting contrary to the terms of the agreement but also that "by established practice, the employer is free to determine who is to work for him, as long as those chosen are members of the union." The only grounds for complaint, according to the Impartial

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Chairman, would be showing that the "employer has improperly used its right to discriminate against active union persons."73 Second, the Impartial Chairman has excluded all supervisory employees from the closed shop provisions of the Agreement. At one time the Union claimed the right to represent the "fixers." These workers repair the machines and at the same time act as representatives of management in the plant. The Impartial Chairman ruled against the Union because "management must have some representatives in the shop to act as a link between executive and productive operations." The fixers could not serve this purpose and be members of the Union at the same time because It is to be expected that members of a labor organization act together for a common objective. T h e fixer, as a representative of management, is frequently responsible for opposing employee demands when they appear to be in conflict with rights assured to the manufacturers under the labor agreement. 74

In a similar decision the Impartial Chairman also exempted foreladies from membership in the Union.78 Third, the Impartial Chairman has refused to interpret the job right to mean that jobs may not be destroyed or altered by technological changes. Although the Union has the right to jobs, if any, it does not have the right to determine the nature and content of jobs. That privilege is reserved to management under its right of method of operation. In fact, the Agreement itself anticipates the destruction and alteration of jobs by technological changes and provides that workers displaced as a result shall receive first opportunity to fill vacancies which may occur elsewhere in the plant.7" Workers thus displaced, however, may not expect to receive the same earnings on tasks requiring less skill than those formerly performed.77 78

Decision L 10. Decision Κ 2. 75 Decision Η 22. 76 National Labor Agreement, 1943-194S, Section B-3. Reproduced in Appendix B. 77 Decisions G 12, Κ 34. Compare the condition in the Chicago men's clothing industry. " T h e principle that workers have a virtual property right in their jobs, which forbids their displacement by other workers when the 74

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The above limitations on the job right of the Union are justified by their effects on the workability of the collective bargaining system and the efficiency of plant operation, as well as by the fact that it appears clear that the parties did not intend the agreement to extend the Union's rights in this respect beyond these limits. The exclusion of the fixers from union membership is clearly essential to the efficient functioning of the collective bargaining system. If fixers were members of the Union they might find it difficult to discipline fellow union members properly, or to defend the rights of management aggressively because such action might result in the fixers being fined, penalized, or even dismissed by the Union. If fixers were unionized, therefore, management could hardly be expected to place any authority in their hands. Yet if fixers had no authority to speak on management's behalf, hundreds of small problems which arise in the shops and are settled quickly and equitably by the fixers and the workers under the present system would have to be referred to higher authorities. The result would undoubtedly be a slower and generally less satisfactory method of handling minor grievances. All three of the limitations clearly result in more efficient plant operation. Management is free to choose those union workers who best suit its needs. The introduction of more efficient methods of production is not retarded by the necessity of paying for the old skill in a new unskilled job. Finally, management's plans for efficient operation can be placed in effect in the shop by the fixers without fear of retaliation by the workers through the Union. Thus the Impartial Chairman has resisted the extension of the job rights of the Union where the intent of the parties and the good of the industry warranted. On the other hand, when these factors were not present, strong support has been given to this basic union right. This support is indicated first in the determinamethod of work is changed through the introduction of a machine or other labor-saving process, has only become established in consequence of repeated contests successfully waged before the impartial machinery. T h e same is true of the rule that such workers' earnings are to be maintained when they p a « from the old to the new method of working." Amalgamated Clothing Workers of America, Research Department, of. cit., p. 291.

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tion of the jobs to which it applies. Although excluding executive and supervisory jobs, the Impartial Chairman has provided that all other tasks within the plant which union members may be considered capable of performing efficiently shall be considered as union jobs.78 Furthermore, he has provided that such jobs may not be performed by the supervisors even during slack periods. In establishing this principle, he reasoned: "It simply is not equitable that the limited amount of available work be still further reduced by assigning productive tasks to supervisors."79 The Impartial Chairman has held also that partnership or ownership of stock in a company does not relieve an individual of the necessity of being a union member in good standing if he desires to hold a production job in the plant.80 The province of the owners and the province of the Union have each been carefully staked out. Ownership involves the property right previously described, but the job right belongs to the Union. It was recognized that to have provided otherwise would have resulted in discrimination against union members who could not or did not desire to become owners. Furthermore, it was recognized that management, if it so desired, could have used the technique of ownership to nullify completely the closed shop provision of the agreement. Finally, the job right of the Union has been upheld in cases in which employees had their membership in the Union revoked or new employees found it impossible to secure membership. The Impartial Chairman has held that the individual worker has a right to any particular job under the Agreement only through union membership.81 If for any reason, therefore, an old emTS

Decisions Κ 25, Ν 42. Decision Ν 2. The same principle was established in the Chicago men's clothing industry. Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 399. 80 This decision was rendered under the contract between the Keystone Hosiery Manufacturers, a group of Reading, Pa. mills, and the Union, but the Impartial Chairman would undoubtedly apply the same reasoning under the National Labor Agreement. In a similar case in the Haverhill shoe industry, the Arbitration Board likewise ruled that ownership could not be substituted for membership. See Thomas L. Norton, Trade Union Policies in the Massachusetts Shoe Industry, 1919-1929, p. 284. 81 Decisions Ε 71, F 6, Κ 27. 79

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ployee loses his membership or a new employee fails to obtain it after his probationary period, the Union may demand that the employee be replaced.82 In a decision involving the revocation of the membership of a skilled worker, the Impartial Chairman reasoned, "Since Brown is not a Union member, he is not eligible for employment in the plants of signatory concerns. The Franklin Hosiery Company is, therefore, directed to replace Edward Brown by a knitter in good standing." 83 In another case in which the Union refused to open its membership to new learners while experienced operators were unemployed, the Impartial Chairman provided, "Such learners have four months to join the union. If they fail or refuse to become union members, they must be discharged when the union provides a competent replacement who is a member of the Union." 84 Thus the employer may continue to use non-union employees only so long as union members are not available for the jobs. When "competent help from the Union" is made available, "such outside workers shall be discharged . . . immediately upon such replacement." 88 It should be remembered that the Impartial Chairman did not establish the closed shop in the industry. It became a part of the collective bargaining system as a result of negotiations between the parties. The Impartial Chairman has had the task of interpreting and applying the policy which they established. Much has been written regarding the desirable and undesirable results of the closed shop. It is beyond the scope of this volume to make an exhaustive analysis of the problem. Some discussion of its special effects in this particular type of a collective bargaining system, however, appears to be warranted. In approaching the problem it is well to bear in mind the environment in which this entire collective bargaining system was developed. The Union and the unionized companies were embarking upon a new 82

According· to M r . James Batt, former president of the Reading Local, the Union has permitted employees to continue to work without becoming members when their religious beliefs prohibited the joining of Unions. 83 Decision Ε 71. 84 Decision Κ 27. 85 National Labor Agreement, 1943-1945, Sec. B-lb. Reproduced in Appendix B.

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era so far as their relationship was concerned. They proposed to cooperate and to strengthen each other in order to conserve their power for the fight against the non-unionized section of the industry. The closed shop as well as the Impartial Chairman was a part of the program adopted to accomplish this purpose. The closed shop, by making it unnecessary for the Union to spend energy in organizing individual workers in the union shops, left it free to organize non-union shops. Likewise the companies anticipated greater efficiency by the elimination of quarrels between union and non-union workers and the capturing for production of time previously consumed by the workers in "in plant" organizing activity. Finally, the closed shop was granted at a time when economic conditions in the industry made wage reductions imperative. The union leadership recognized the necessity of such reductions, but doubted its ability to control the workers without compulsory membership. The right of the Union to all non-supervisory jobs within the plant has undoubtedly been an important factor in the success of the Impartial Chairmanship. It has eliminated most of the discrimination cases which plagued certain arbitration systems in which the closed shop was not originally adopted.88 In the hosiery industry only four grievances, or 0.3 per cent of the total of 1566 analyzed in this study, could be classified as cases in which the only problem was a claim of the Union that its members were being discriminated against because of union activity.87 Although that cause entered into some other cases, it has never been an important problem. Without the right of the Union to all non-supervisory jobs within the plant, there would undoubtedly have been many such cases. Unfortunately cases involving discrimination for union activity are usually so bitter that the very existence of the Impartial Chairman system may be endangered by any considerable number of them. The closed shop largely eliminated that danger. In addition, the closed shop has aided the Impartial Chairman 88 Amalgamated Clothing Workers of o f . cit., p. 60. 8T See Table 4, Appendix A.

America, Research

Department,

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system by making it possible for the Union to discipline workers without the fear of loss of membership. Among any large group of employees, there are always some "perpetual gripers" who feel that management is not giving them a fair deal. Sometimes the complaints of these people are real; more often they have no foundation. In an open shop, however, the Union finds it difficult to refuse to fight for these people every time they consider themselves to be unfairly treated lest they withdraw from membership. The result is that the impartial chairman machinery in an open-shop industry is cluttered up with cases which the union officials know they cannot win but which they believe they must present. When a closed shop agreement is in effect, the union leadership is in a better position to refuse to carry false grievances to arbitration. Finally, without the closed shop, dual unionism would also be a possibility and it is difficult to see how the impartial chairman system could function under such conditions. Internal Union Policies It has been recognized from the beginning that the internal affairs of the Union and of the Association and companies are beyond the jurisdiction of the Impartial Chairman. His sphere is limited to the relationship between the parties. Such matters, therefore, as dues or initiation fees, expenditure of funds, election of officers, etc. are generally conceded to be non-arbitrable matters. Not all of the policies promulgated by the Union, however, are completely internal in their effect. T h e policies relating to membership offer an interesting example. Union membership is a highly important matter in the industry because of the job right of the Union previously discussed. Since management may not keep in its employ permanently workers who are not members of the Union in good standing, a policy of the Union which refuses membership to certain workers may result in management's losing efficient workmen. It may be questioned, therefore, whether policies on this subject constitute a purely internal union matter. T h e cases involving revocation or refusal of Union member-

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ship have been few in number.88 There have been only two cases in which a company objected to the revocation of the membership of skilled workers.89 In several other cases a company objected to the refusal of the Union to receive new learners into membership. In both of the revocation cases the Union contended, without denial by the company, that the employees whose memberships were revoked had previously engaged in strike-breaking activities against the Union. In refusing membership to new learners, the Union maintained that unemployed skilled operators were already available from its membership. In all of these instances, the Impartial Chairman upheld the right of the Union to determine its own membership. In one of the revocation cases he referred to the "generally recognized right" of the Union to dismiss employees from its ranks.80 In one of the cases involving refusal of membership to new learners, he stated categorically that "The union has the sole right to reject applications for membership."91 Combined with the closed shop, this right to revoke or refuse union membership becomes a powerful weapon which may be used by the Union to keep members in line. The possibility of suppression of minority groups under such an arrangement is obvious. It is not, however, the duty of the Impartial Chairman to police the Union and guarantee democracy and tolerance within it, any more than it is his duty to police the companies and guarantee an honest accounting of all funds. Only as the union membership problem affects the relationship between the parties is it any concern of the Impartial Chairman. In those cases in which the companies have had grievances regarding refusal of membership, the Impartial Chairman has upheld the right of the Union. It is possible, however, that a company might success88 The checkoff, by eliminating dues-delinquency cases, has undoubtedly played a part in keeping the number of this type of case small. 89 Decisions Ε 71, F 6. 90 Decision F 6. In a similar case in the Haverhill shoe industry, the Arbitration Board, in upholding the right of the Union to demand dismissal of an employee not in good standing, stated, "The Union is authority as to the standing of its members and this function cannot be delegated." Norton, o f . cit., p. 307. 91 Decision Κ 27.

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fully appeal a case of this nature if it could demonstrate that the action taken by the Union resulted in severe harm to the company. Such an appeal could be brought under that section of the Agreement which provides that "neither party will exercise its rights, powers, or functions oppressively in dealing with the other." The Impartial Chairman, however, has not always upheld policies which the Union claimed as mattere of its own determination. Reference has already been made to the adoption by the Union of a policy whereby it would determine which union member could be hired by an employer. The Impartial Chairman ruled that that policy was contrary to the Agreement, and therefore could not be enforced.92 At another time a local of the Union adopted a policy by which its members were not permitted to help each other on certain types of work. Again the Impartial Chairman ordered the Union to discontinue this policy because it was contrary to "established practice."93 Finally, he insisted that a union policy whereby every agreement reached by the shop committee with management was subject to approval of the membership was not enforceable because it "would make collective bargaining too cumbersome" and would give the Union an unfair advantage over management in negotiations.94 Only in the above instances in which the policies adopted by the Union clearly affected management has the Impartial Chairman annulled policies promulgated by the Union. Even in the important matter of membership policies which do affect management, he has upheld the right of the Union to sole determination. It is unlikely that the Union would accept interference by the Impartial Chairman on a matter so vital to its own internal welfare. It must be remembered that the Impartial Chairmanship exists only because both parties desire it. It has no power except that which the parties confer upon it and the Union has never conferred control over its membership rules. 92 93 94

See pp. 119-20. Decision J 1. Memo 271.

C H A P T E R VIII

T H E COMMON LAW OF T H E I N D U S T R Y O T H E R NON-RATE PRINCIPLES EFFICIENT WORKMANSHIP

provides that "Both parties will cooperate to obtain efficient operations in the various departments in the Member mills." 1 It has already been indicated that the Impartial Chairman, in establishing those sections of the common law which have been grouped in this study as "the basic rights of management," was guided largely by the desire for efficiency of operation set forth in this provision of the Agreement. In addition to the principles already discussed, there is another group which, although they could not be considered as basic management rights, have as their goal the achievement of efficiency of operation.

T H E AGREEMENT

Helfing The knitting machines in hosiery factories are set up in aisles facing each other, so that under the system of single-machine operation which is mandatory under the Agreement2 each operator has an aisle partner. During the time when the machine is actually knitting, the operator is free except for watching it and listening to it to make sure that it is functioning properly. There are times, however, when the machine is not knitting and when the operator is very busy—such as for example when the welts must be turned or the finished stocking removed and a new set started. These tasks must be performed when the machine is idle. The speed with which they can be accomplished and the machine turned back to knitting is, next to the nature and speed of the machine, the most important factor in determining the number of dozens which can be produced in any given period. If 1 National Labor Agreement, 1943-1945, Full-Fashioned Hosiery Industry, Sec. A-l. Reproduced in Appendix B. 2 Ibid., Sec. C-2. 128

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knitters in the same aisle cooperate with each other, they can synchronize their machines in such a way that when one's machine is stopped and requires a hand operation, the other's is knitting. In this way each one is available to "help" the other and the "down time" of the machine can be cut almost in half. Where a good job of "helping," as this is called in the industry, is accomplished, production is considerably increased. A timestudy comparison made by the Impartial Chairman on new 45gauge 26-section machines indicated a difference in production "of approximately eight dozens per week per machine between an excellent helping job and no helping, all other factors being equal." 3 Since the production during the time of this comparison averaged approximately 72 dozen with a helping job, helping made possible 12.5 per cent greater production.4 The Union has not opposed the general principle of helping and has agreed to the inclusion in the contract of the following provision: It is the intent of this agreement that all workers in coordinate and successive operations, should assist and cooperate with each other and with the m a n a g e m e n t in an effort to maintain efficient production. 5

As a result, cases involving this issue have been few in number— only seven, or one-half of one per cent of the total number of grievances presented to the Impartial Chairman.® As would be expected, most of these were filed by the Association.7 In all of these cases the Impartial Chairman has insisted that the workers must help "as much as is possible and practical."8 When knitters refuse to "help" while on time rate, the Impartial Chairman has provided that "management has the option of withdrawing the 90 per cent prolonged style change rate and may revert to the 80 per cent minimum wage guarantee." 9 The 8

Decision Ν 6. William E. Simkin, Thomas Kennedy, Martha C. Fanslau, Earnings of Full-Fashioned Hosiery Workers in Union Mills—1943. 5 National Labor Agreement, 1943-1945, preface to rate tables. 8 See Table 4, Appendix A ; Decisions A 13, G 4, J 1, Κ 21, Ν 38, and Memos 49, 392. 7 See Table 8, Appendix A. 8 Decision G 4. 8 Memo 392. 4

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policy of the Impartial Chairman on this subject is indicated by the fact that the Union has failed to win a single case in which "failure to help" was the grievance.10 In support of his decisions in these cases, the Impartial Chairman has referred to "the provisions of the contract," "the established custom in the industry," and "the clear and explicit wishes and policy of the national union."11 In addition he has pointed out that if an employee fails to help when on piece rates, he is "simply 'biting off his nose to spite his face' because earnings are decreased accordingly."12 Finally, in reply to those knitters who opposed "helping" because they were of the opinion that the resulting increased production would decrease their employment, the Impartial Chairman explained: This reasoning [that helping causes unemployment] is thoroughly unsound, since it fails to recognize that [this company] competes with other plants, and that all union plants compete with non-union plants. The available business is apportioned to those plants having low costs; the others operate short time or not at all. Accordingly, high hourly production results in lower overhead costs and in the ability of the plant to secure business that might go elsewhere. High hourly production may mean steady employment at a particular concern. 13

There have been some instances, however, when the employees were willing to "help," but were prevented from doing so because of conditions beyond their control. This situation has arisen when poor yarn has made it necessary to stop the machines so frequently that the synchronization needed for "a good helping job"14 was impossible. In other cases when new machines were installed facing a wall so that there could be no aisle partner,15 the Impartial Chairman has held that management must assume part or all of the responsibility for lack of "helping." In the case of a new machine installed without an aisle partner, the Impartial Chairman ordered the payment by the company of an 10

See Table 12, Appendix A. Decision Ν 38. 12 Ibid. 13 Memo 49. 14 Decision Ν 38. 15 In the industry the term "end machine" is used to describe a machine set up in this way. See Decision Ν 6. 11

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extra in order to compensate the knitter for production lost because of the impossibility of "helping." Thus the Impartial Chairman has insisted on "a good helping job" wherever it has been possible and has provided extra compensation where "helping" is impossible. In building the common law on the subject he has emphasized that not only the contractual obligations of the workers but also their economic well-being necessitates "a good helping job." Holding Back Sometimes hosiery workers have deliberately slowed down their operations, thereby decreasing their output per day. In the industry this is known as "holding back." In many ways it is similar to the "helping" problem. It arises from the same causes —fear of unemployment and fear of having the piece rate cut. Its short-run and long-run effects are the same—piece-rate earnings are lower than they otherwise would be, the company's overhead costs are increased, and it has more difficulty securing work for its employees. Finally, it has been met by the Impartial Chairman in much the same manner—by insisting that workers discontinue such practices, by permitting penalties where they refuse to do so, and by ordering that management itself place no barriers in the way of increased production. There are indications that previous to 1920 the Union supported a policy of work limitation. In at least two instances, charges were preferred against members for "handing in too much work in one day as being detrimental to the trade." 16 After 1920, however, it became difficult to enforce such a policy because of the great variety of styles, gauges, and machine speeds. From that date on "the policy of restricting output was less consciously pursued." 17 With the adoption, following 1929, of uniform piece rates throughout the industry, the reason for local limitation was somewhat removed. Likewise the geographic expansion of union membership made a concerted policy more difficult to enforce. Finally, the realization of the union leadership that the future of the unionized section of the industry de18 17

Gladys L. Palmer, Union Tactics and- Economic Change, p. 88. Ibid., p. 89.

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pended on increased efficiency of operation18 resulted in the abandonment of any attempt of this kind. As a result of the union's attitude, there have been few cases on this problem. In the cases brought to the Impartial Chairman accusing individual knitters of deliberate restriction of output, he has censured the employees and supported the companies in penalties, including discharge.19 In one such case he stated: T h e r e is evidence that certain knitters are of the opinion that production should be deliberately restricted. Any action along such lines cannot be tolerated since it would be in direct conflict with the underlying principles of the National Labor Agreement. A knitter is expected to exert every reasonable effort to secure maximum production from his machine and to cooperate with the management toward that end. T h e piece rates of the Agreement are based on this assumption. A deliberate restriction of production represents a situation in which the management may properly exert its right of discharge, should other methods to meet the problem fail to give results. 20

Just as in the case of helping, however, the Impartial Chairman has refused to consider it as a problem in which management has no responsibilities. Workers must produce the maximum amount possible, but management must also do nothing which would interfere with the working of the piece-rate incentive to accomplish this goal. In several instances where the companies have attempted to limit production per worker per day with the hope of securing better work, the Impartial Chairman has ruled against them. 21 Although agreeing that the companies have the right to expect an efficient job of workmanship and that the companies can penalize workers who turn in poor work, the Impartial Chairman maintained that limiting production to accomplish this purpose would penalize the fast and efficient workers and was, therefore, "not in keeping with the general objectives of the piece rate method of payment for either employer or employee." 22 Recalling that employers have frequently and 1 8 William Smith, "Hosiery Workers' New Agreement," The Textile January 1930, p. 629. 1 9 Decision L 6, Memos 34, 40. 2 0 Memo 34. 2 1 Decision Ε 19, Memo 239. 2 2 Memo 239.

Worker,

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rightfully complained when employees engaged in "holding back," the Impartial Chairman reasoned, " I t is not sound policy for an employer to restrict production for this reason and then criticize employees for restriction of production for their own reasons." 23 Quality of Work T h e Union has always prided itself on the quality of work produced by its members. Even before the adoption of the Impartial Chairman system in 1929, the Union itself penalized knitters on several occasions for bad work.24 T h e companies, of course, have always considered good quality of workmanship as something to which they are entitled under the Agreement. It is not surprising, therefore, that the common law which has been developed under the Impartial Chairmanship provides severe penalties for workmanship of poor quality. T h e Impartial Chairman has insisted that "the union has a responsibility in insuring good production and good quality" 25 and "no union official should fail to assist management in securing good work." 28 Although recognizing that "occasional carelessness on the part of every worker cannot be unexpected," he has warned that "if serious carelessness occurs, a penalty may result j if the carelessness is habitual, it may necessitate discharge." 27 In the case of gross negligence resulting in poor work, the Impartial Chairman has maintained that a single occurrence is inexcusable.28 Furthermore, he has set the standards of workmanship very high. In the case of examiners he has provided, " T h e standard for the examiner's job is that every defective stocking must be segregated, and no countenance can be given to a point of view that an examiner is permitted to pass any certain percentage of bad work." 2 9 As penalties for poor workmanship, discharges have been up23 24 25 26 27 28 29

Ibid.

Palmer, of. cit., p. 86. Decision Ε 29. Decision J 8. Decision F 16. Decisions Ε 19, Η 5. Decision J 8.

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held on all but a few occasions.80 This has been true even in single offences when the poor work resulted from gross negligence.81 Where discharges have been considered too severe, they have been replaced by layoffs32 and layoffs invoked by the companies themselves for poor workmanship have been upheld consistently.83 Monetary fines for poor workmanship have not been permitted,84 but management may require that all spoiled work be replaced by the employee without additional compensation.88 In addition to the severe penalties for poor workmanship, the support given by the Impartial Chairman to a promotion system based on ability rather than seniority has been a strong incentive to quality workmanship. Although perhaps too much attention has been paid to quantity produced and not enough to quality in the industry generally, some companies keep careful records of quality and the Impartial Chairman has supported their use in determining eligibility for promotion.38 Working

Conditions

Efficient workmanship can be hindered by management as well as by employees. If management provides working conditions which sap the employees' energy, equipment which does not function properly, and supervisors who are inefficient, the employees may find it very difficult to produce quality goods in large volume. The Impartial Chairman has recognized this fact and has ruled that since the employees are held responsible for efficient workmanship, it is only fair that management should be held responsible for providing the kind of environment and facilities which make it possible. Working conditions in general in the full-fashioned hosiery industry have been considerably better than average. There is no occupational disease hazard and serious accidents are un30 Decisions D 3, Ε 19, F 1, F 16, F 21, G 33, Η 55, Μ 9, and Memo 162. See also pp. 1S2-S3. 31 Decisions F 1 and F 16. 32 Decisions G 32, L 20, L 30. 33 Decisions Ε 3 1, G 29, Η S. See also pp. 157-58. 34 Decisions F 30. See pp. 155-57. 38 Decision Ε 62. See p. 157. 36 See pp. 140-41.

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known. Likewise hosiery employers in general have recognized that it is to their own advantage to provide good light, heat, ventilation, and sanitary facilities. As a result only one grievance regarding working conditions affecting health was presented to the Impartial Chairman during the 16 years covered by the study. In that case the Impartial Chairman made it clear that unhealthful conditions would not be tolerated. There must be no repetition of another winter during which seamers work in a location highly conducive to a succession of colds and similar ailments. If the revised system does not solve the problem of unhealthful working conditions . . . the Impartial Chairman may then direct the company to make such changes in floor layout as seem necessary.87

In addition to providing healthful working conditions, the company "has a duty . . . to make constructive efforts to place the equipment in as efficient form as possible."38 Employees cannot be expected to suffer loss of earnings because of "incompetent fixing or by a lack of supervision."39 Moreover, when old machines are so poor that the "sub-standard production is so low that a good knitter cannot earn a reasonable income on such machines then an aggravated condition results that entitles the Union to request the payment of the old machine extra." 40 Likewise the company is responsible for making all reasonable efforts to supply the workers with raw materials of such quality as to permit efficient operation. In a case in which employees suffered loss of earnings because the company was having its work poorly dyed by an outside shop, the Impartial Chairman maintained that In a real sense the securing of a good dyeing job is not beyond the Company's control. The Company should insist upon it and it should not expect its boarders to suffer inconvenience and loss of earnings because of failure to secure it. 41 37

Memo 270. Decision Ε 29. 39 Decision Ε J4. The same principle was established by the Arbitration Board in the Haverhill shoe industry. See Thomas L. Norton, Trade Union Policies in the Massachusetts Shoe Industry, 1919-1929, p. 258. 40 Decision Ε 3 7. 41 Decision Ο 20. 38

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In the case of a company which was providing its employees with very poor yarn, the Impartial Chairman recognized that "a very real aggravated rayon condition does exist" and ordered the payment of an extra until such time as the company should improve the yarn condition.42 The number of cases, however, in which the Union has sought relief from inefficient practices of management has not been large. The profit incentive has been ample in most cases for the establishment of conditions favorable to efficient workmanship without the application of the principles described above. In demanding that management as well as the workers be responsible for efficient workmanship, the Impartial Chairman has forestalled the criticism that the system operates as "a one-way street" in this respect. In the establishment of all of the principles dealing with efficient workmanship, the Impartial Chairman has emphasized the economic benefits which accrue to both parties from greater production and better quality goods. Reference has already been made to this principle in the section on "helping."48 There can be no doubt of its validity in this partially organized and highly competitive industry. Any principle which would condone inefficient workmanship would result in the long run in loss of earnings to the employees because of loss of markets to the employer. The acceptance of the principles of the "common law" on this subject by the Union and its members has been facilitated by the explanations of the economic factors involved which the Impartial Chairman has included in his decisions. PROMOTIONS

Promotions from one occupation to another within the fullfashioned hosiery industry are few in number. This situation is due to the great differences in the amount and type of skill required by the different occupations plus the fact that some are considered as men's work and others are considered as women's work. A high percentage of the promotions, therefore, occur within occupational groups and consist of moving up to newer and better machines. The manner in which a promotion problem 42

Memo 392. * s See pp. 128-31.

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44

may arise has been discussed already in Chapter V. During the 16 years covered by this study, 52 promotion grievances have been presented to the Impartial Chairman, constituting 3.3 per cent of the total.45 In some years they have been much more important than in others. In 1938, the peak year, they numbered 11, which was 8.5 per cent of all grievances for that year. 46 The Union, the companies, and the individual employees have exhibited keen interest in promotion problems. The Union has been concerned because of the possibility of discrimination. It has been especially interested that workers should not lose the opportunity for advancement because of union activity. The companies have been concerned for a number of reasons. New full-fashioned hosiery machines are expensive and delicate. The companies generally have been interested in promoting the best knitters to them so that the machines will be given the care necessary for their protection. Also because of the high original cost, the high overhead on the new equipment47 makes it necessary, if profits are to be secured, to reduce to a minimum the time when the machines are not knitting. As a result, the companies have been anxious to have fast operators on the new equipment so that the "down time" would be as short as possible. Finally, the companies have been desirous of promoting the most efficient workmen because such action serves as an incentive to all other employees in the plant to increase the quality and speed of their work. The individual employees also have shown much interest in promotion problems. During the period 1938 to 1941 they exhibited even more than their usual interest because the supplementary agreements were in effect. These agreements provided for decreases in wages averaging 15 per cent with the understanding that the savings secured by management would be used to purchase a certain number of new machines.48 The result was that a considerable quantity of new equipment entered the in44

See p. 44. See Table 4, Appendix A. 46 See Table 5, Appendix A. 47 A new 5 1-gauge 30-section knitting machine sells for $26,000 or more. 48 George W. Taylor, "Hosiery," Chapter 9 in How Collective Bargaining Works, edited by Harry A. Millis, p. JOS. 45

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dustry and the employees on the old equipment, who had accepted wage cuts in order to make the purchases possible, felt that they had an investment in the new machines. The employees' interest, however, has not been limited to the 1938-41 period. They have always been greatly concerned with promotion problems because of the very great effect which the solutions have on their individual incomes, employment, and prestige. A promotion from an old machine may make it possible for a knitter to increase his earnings by as much as 50 per cent. Employment on the new high-speed machines is more secure too. Because of the lower variable costs per dozen on new equipment, when management finds it necessary to curtail production permanently it is the old equipment which is "stopped off" first. Finally, the operation of the new high-speed equipment carries with it considerable prestige. The knitters who operate such equipment are recognized by the workers throughout the industry as superior craftsmen. In the shop and in the Union they are treated with respect.49 With so much at stake, it is not surprising that in some of the promotion problems it has been difficult for the parties to eliminate all personal emotions and to consider the matter entirely in an objective manner. As in most other industries, many of the problems of promotion have centered around the importance to be attached to seniority as compared with ability. Fortunately, in the hosiery industry the basic principle had been well established prior to the adoption of the Impartial Chairmanship. The Union as well as the companies had come to accept the policy that promotion should be based primarily on ability—seniority to be the determining factor only if abilities are equal.60 The task of the Impartial Chairman, therefore, has been that of interpreting and applying this established principle. There have been times during these 16 years, however, when the Union has found this principle not to its liking. The same 48 Cf. the condition in the Chicago Cloak Makers Union where, in the early days of the union, the most efficient workman had the right to the floor at union meetings. Wilfred Carsel, A History of the Chicago Ladies' Garment Workers' Union, p. 22. 60 Palmer, op. cit., p. 85.

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can be said of the companies. The Impartial Chairman has insisted, however, that the good of the industry requires strict adherence. When either the Union 81 or a company82 has attempted to have more consideration given to seniority and less to ability the requests have been denied. When management maintained that ownership should be considered more important than ability, the Impartial Chairman ruled against the company and pointed out that such a policy would be inequitable not only to the employees but to the stockholders as well.83 Finally, when a company offered advancement because of certain free services which an employee agreed to perform, the Impartial Chairman censured the management and ordered that the promotion be based entirely on ability.84 Thus, the basic principle guiding all promotions in union jobs in the industry remains that which had become customary previous to the Impartial Chairman system and which was stated in the first decision on the subject: "Selection shall be on the basis of ability, but . . . if all other abilities are equal, length of service is the determining factor." 88 Most of the 52 promotion cases, however, have been concerned with the interpretation and application of this principle rather than disagreements regarding the principle itself. In cases involving the application of the principle, the parties have been unable to agree on the relative abilities of two or more employees. Those cases involving interpretation have been due largely to the inability of the parties to agree on answers to the following questions: What constitutes a promotion? What weight should be given to various factors in measuring ability? How near to each other must abilities be to be considered as "equal"? What rights and privileges, if any, should be accorded to seniority? Should promotions be permanent or subject to "bumping"? 81

Decisions Η 30, J 7, Κ 54, Ν 7, and Memos 120, 23 1, 271. Decision L 16. 63 Decision L 29. See p. 122. 84 Memo 118. 85 Decision Η 30. In the Chicago men's clothing industry, the Board placed more emphasis upon seniority and less upon ability. Amalgamated Clothing Workers of America, Research Department, The Clothing Workers of Chicago, 1910-22, p. 370. 52

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Should openings on the better jobs always be filled by promotions within the plant or may new employees be brought in from the outside for such jobs? What constitutes a promotion has not caused much difficulty, but the question has arisen on a few occasions. The Impartial Chairman has taken the position that a promotion must consist of movement from one type of equipment to a different and better type of equipment. A movement to another machine of the same type because it is better situated as to light or ventilation cannot be considered a promotion and, therefore, need not be made according to ability. In denying the request of a knitter that he should receive a certain machine of a group of the same type, the Impartial Chairman provided that "individual knitters [cannot] 'pick and choose' as to the particular job they are to run" even though they have top ability rating in the plant. 58 In fact the Impartial Chairman has held that "if there is a difference of opinion as to relative desirability of work places, certainly this is a point where seniority should be the governing factor." 57 The factors to be used in measuring ability and the weight to be given to each factor have been the causes of considerable difficulty. The Union has maintained that the companies have tended to emphasize production to the exclusion of other factors such as quality of product and machine care. This emphasis works to the disadvantage of the older workers who although slower may turn out superior merchandise. The Impartial Chairman has agreed that although "production is a primary factor . . . it should not be the sole item considered. Quality of work is equally important." 58 From the time of the first promotion case, the Impartial Chairman has recommended that the parties keep adequate records which show not only production but other characteristics of superior knitting ability such as quality, care of material, needle ability, care of machine, and cooperation. The gathering of such 86 BT 68

Memo 394. Memo 366. Ibid.

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141

data makes possible a more factual approach to the problem. In the companies where such a system has been established and records have been maintained, promotion difficulties have been reduced considerably.89 So far it has been considered neither necessary nor desirable to work out, for application to the industry as a whole, a formula containing certain fixed weights for each of the above factors. Although recommending the factual approach, the Impartial Chairman has not completely eliminated the supervisory employees' opinions as a factor to be considered in promotion cases. H e has insisted, however, that such opinions "should be free from personal bias and should receive lesser weight than the factual data made available by an adequate system of record keeping." 80 The basic promotion principle states that if there is approximately equal ability then seniority becomes the determining factor in promotion. The Impartial Chairman has opposed the "splitting of hairs" in rating workers on the basis of ability. "The determination of 'approximately' equal ability," he has stated, "must be approached in a realistic manner."®1 Where a number of workers have exhibited nearly the same abilities, he has favored placing all of them in the same eligibility group from which promotions are to be made according to seniority.62 Here again, there has been no attempt to establish definite ability ranges within which differences would not be considered important. The Impartial Chairman has stated simply that the rule of reason should apply and that ability ratings should not be too finely calculated. Thus seniority still plays a role, although a secondary one, in promotion. In addition, seniority carries with it certain other rights and privileges. It has been indicated that seniority rather than ability is the factor determining which worker should receive the most desirable work place (not machine) in a group of similar machines. Finally, seniority has been recognized as a 59

Decision L 27.

80 el

Memo 379. Memo 366.

62

Decision L 27.

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more important factor than local residence in choosing employees for promotions "unless there are compelling reasons for adoption of a contrary principle."63 "Bumping" is not permitted in the hosiery industry. In other words, an employee may not be forced off his machine by another employee who has greater ability or seniority.84 The result is that, unless there is a specific understanding to the contrary,ββ each promotion is permanent and if a promoted employee proves capable of performing the new job he need have no fear of being "bumped back" later οη.ββ On the other hand when an employee accepts a promotion he forfeits all rights to his old job. He must sink or swim with the new one.67 His only right, if the new machine proves too difficult for him, or is abolished, or if work on it is discontinued, is to be placed on a preferred hiring list.®8 This policy arises out of a more basic principle which provides that each employee has a right to continue to operate the machine to which he has been assigned unless it can be proved that his performance is unsatisfactory. The principle is well suited to the hosiery industry where much of the efficiency of production depends upon the care which the employees give to their machines over a long period of time. It sometimes requires months for a good knitter to get a machine into good operating condition. The payoff in greater production does not come until after much initial work has been spent on the equipment. If an employee knew that he might be "bumped off" his machine any day, he would hesitate to spend the time and energy required to get and keep it in the best of condition. In fact there would be an incentive to produce as much as possible on it immediately and to defer to the knitter who may have it later the spending of the time and effort necessary to keep it in good running condition. 68

Memo 300. Decision SA 58. For a comparison of the condition in the railroad, streetcar, and printing industries see Harry A. Millis and Royal E. Montgomery, Organized Labor, p. 456. 65 Decision G 35. M Decisions Κ 45, F 18. 67 Decision SA 20. 68 Decision Η 46, Memo 183. 64

OTHER NON-RATE PRINCIPLES

143

Under the present system, however, each worker has a special incentive to keep his machine in "tip top" condition because it is likely to be his machine for a long time. Several cases have been referred to the Impartial Chairman regarding whether the better jobs should be filled by promotion within the plant or by hiring new experienced workers. The Union has argued on both sides of this issue, sometimes favoring promotion from within, but just as frequently opposing it in favor of the hiring of some of its experienced unemployed members.89 The Impartial Chairman has provided that "promotions should ordinarily be made even though unemployed workers are available."70 On the other hand, vacancies do not have to be filled by promotions. W h e t h e r an unemployed person should be hired for a vacancy obviously depends upon the equity of the claims of the present company employees for promotion. If an employee has given l o n g and efficient service, promotion should naturally result. O n the other hand, an employee at work for but a short period of time at a company or one with a poor record should not receive a promotion w h e n a fully experienced employee can be hired from the outside. 7 1

In determining the policy in this way the Impartial Chairman reasoned: "It is neither to the interest of the knitter or the management to insist upon promotion of a knitter who is not capable of working on the job in a thoroughly capable and efficient manner." 72 Thus each case is decided on its merits with the balance in favor of promotion of currently employed workers unless the "necessities of the business" require otherwise.73 These many interpretive decisions have tended to clarify but not to modify the basic principle that promotion is to be determined by ability and only if abilities are approximately equal by seniority. The Impartial Chairman has supported this principle not only because its application had become customary before the 69 70 n

Compare Decisions Κ IS, Κ 29, Κ 45, and Memo 120. Decision Κ 29. Ibid.

"Memo 120. n

Ibid.

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Impartial Chairmanship but also because he considered it workable, equitable, and in the best interests of the industry as a whole.7* The record bespeaks the workability of the principle. For the first six years of the Impartial Chairmanship, the parties were able to settle all of their promotion difficulties without requiring a single decision from the Impartial Chairman. Since that time, although 52 grievances have been filed with the Impartial Chairman on the subject, over 30 per cent of them have been settled without the necessity of decisions.75 With the aid of decisions handed down by the Impartial Chairman in the 35 other cases, the parties have settled hundreds of promotion problems with only two recorded interruptions of production both of which were brief.78 Compared with a promotion system based completely on seniority, however, the hosiery system has several disadvantages. The measurement of ability is of necessity less impersonal and more difficult than the measurement of seniority. Under a pure seniority system, if a worker begins his job a week or even a day earlier than another worker there can be no question regarding which has preference for promotion. Under an ability system, however, judgments must be made. The problem is less difficult in hosiery than it would be in certain other industries, because of the more homogeneous nature of the product, but it is difficult nevertheless. Production in hosiery can be compared without too much difficulty, but production alone is not a fair test of ability. Quality of product, machine care, material care, cleanliness of machine, needle ability, and cooperation should also be measured. All of these factors, however, require personal judgments. They give rise to the possibility of differences of opinion and claims of discrimination which would be far less likely under a straight seniority system. This difficulty has been lessened by the development in many of the plants of a system of rating records maintained cooperatively by the Union and the com74 78 78

Decision Η 30. See Tables 5 and 12, Appendix A. Decision Κ 29 and Memo 164.

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145

pany. When the parties are unable to agree, the Impartial Chairman provides the final judgment. The present promotion system has been criticized also for its failure to reward length of service properly. It is claimed that workers who spend years in the employ of a company should not be deprived of promotion privileges simply because their age makes it difficult for them to attain the production of younger men. That this argument did not carry more weight among the hosiery workers during the early days when the ability principle of promotion was established, appears to have been due to the predominance of young men in the industry at that time. As the industry has ceased its rapid expansion and the average age of the worker has increased, sentiment has been developing in favor of placing more emphasis on seniority. During the 1944 convention of the Union, a resolution was introduced which requested the Executive Board to seek a change in the established promotion principle so as to decrease the emphasis placed on production.77 This criticism of the ability principle has been considerably blunted by the policy prohibiting bumping, the provision that certain rights and privileges other than promotion be accorded on a seniority basis, and the insistence by the Impartial Chairman that ability ratings be not too finely drawn. 78 Seniority, of course, remains the determining factor when abilities are approximately equal. From the point of view of the equity to the individual worker an equally good argument can be made in favor of the ability principle. The development of skill and the expenditure of exceptional effort should also be rewarded. An efficient and industrious worker should not be penalized because of his lack of years of employment. From the point of view of the effect on the companies and on the unionized section of the industry as a whole, there can be no doubt that the established principle is superior to one which bases promotion primarily on seniority. The promotion of the more able and industrious employees has the direct effect of 77 Proceedings, 1914 Convention, pp. 483-4. 78 See pp. 141-42.

American Federation of Hosiery Workers,

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ARBITRATION

decreasing production costs and increasing the quality of product. It has the further indirect effect of encouraging more efficient and speedy operation by all employees, since they know that promotion depends on these factors. The result is a decrease in overhead costs which places the unionized companies in a better competitive position, enabling them to secure more work and thus provide more employment. The economics of the situation, therefore, places a high value on the continuance of the principle that promotions should be made primarily according to ability. DISCIPLINARY MEASURES

The maintenance of efficiency in any industry requires at times the employment of disciplinary measures. Where there is no collective bargaining, management alone determines the occasion for and the extent of punishment. The severest penalty may be employed arbitrarily or unfairly. When an industry becomes organized, one of the major functions of the Union is to prevent the arbitrary and inequitable penalizing of its members. The danger is that the Union will carry its protection to the point where it interferes with the efficient operation of the plants. The task of the Impartial Chairman in dealing with disciplinary measures, therefore, has been to protect the employees against the unreasonable and discriminatory use of penalties and at the same time to aid the companies to the fullest extent possible in maintaining efficiency and discipline. It has already been argued that these goals are not inconsistent.79 The manner in which the problems concerning disciplinary measures have been solved by the Impartial Chairman should provide further proof of this thesis. Discharge

To the individual worker, discharge is the most severe penalty of the industrial world. It means not only loss of a job but usually difficulty in securing a new one. Even if another job can be obtained, it means starting all over again so far as seniority status is concerned. Not infrequently it necessitates moving away 79

See p. 111.

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from a community in which the worker has established himself financially and socially. In addition he often loses pride and feels unfairly treated and frustrated. As a result, there is usually much emotional pressure beneath the surface in these cases. The arguments before the Impartial Chairman in discharge cases, however, have been presented in a reasonable and dignified manner—a tribute to the respect with which the Union, the companies, and the workers view the Impartial Chairmanship. The Union exhibits great interest in discharge cases not only because of the severity of the effect on one or more of its members but also because management may use this penalty in a discriminatory manner. The closed shop in the hosiery industry prevents its use to discriminate against union as opposed to nonunion workers, but the Union must be sure that its active members are not subject to discharge for causes which would result in less severe penalties for less active members. Loyalty to the Union can be quickly destroyed by an indication that it is unable to protect its members from unfair use of the discharge penalty. Management also has much at stake in discharge cases. If the Impartial Chairman rules against the company, there is an inference that management has used the discharge penalty unwisely or in a discriminatory manner. Usually, however, management employs the discharge penalty only as a last resort and, therefore, can point to flagrant violations of disciplinary rules or exceptional inefficiency as the basis for its action. If the discharge is not upheld under such conditions, management's representatives in the plant lose status and discipline suffers or inefficiency is condoned. The National Labor Agreement contains the following section (B-2) relating to discharge problems. Right to Hire and Fire. T h e Members of the Association shall have the free exercise of the right to employ or discharge any worker in accordance with the necessity of his or its business, provided in the case of a discharge from employment such discharge is in good faith. A worker discharged may appeal his case to the Union Committee in that shop, and if still not satisfied with the decision arrived at by the Committee, may bring his case before the Executive Board of the local union. If the Executive Board feels that after due hearing the

14-8

EFFECTIVE LABOR

ARBITRATION

discharge of such worker was discriminatory or unfair, such Executive Board, in its discretion, may take his case before the Impartial Chairman. Should his decision be in favor of the discharged worker, the Employer shall reinstate him in its employ upon such terms and conditions as the Impartial Chairman will designate, providing however, that all grievances of a discharged employee must be submitted to the Impartial Chairman within one week of the employee's discharge, unless the time be extended by the Impartial Chairman, and provided further that in no event shall the back pay of any reinstated employee exceed seventeen days' pay.

With the exceptions of guaranteeing the opportunity of appeal, limiting the time period in which discharge appeals may be presented and limiting the extent of back pay, the Agreement is very general in its treatment of this problem. The terms "necessity of his or its business" and "in good faith" are subject to varied interpretations. To the Impartial Chairman has fallen the task of providing the workaday principles. During the 16 years covered by this study, 83 discharge problems, constituting 5.3 per cent of all grievances filed, were submitted to the Impartial Chairman for adjudication.80 All but one of these grievances were filed by the Union. 81 In recent years the number of discharge grievances has been considerably less than the number per year up to 1938. It would be rash to assume, however, that this has been due entirely to the acceptance and application of principles respecting discharge established by the Impartial Chairman in the period preceding 1939. The changed economic conditions of the early forties compared with the thirties were also important. When business is good and competent employees more difficult to secure, management is less likely to employ the discharge penalty. Neither of these factors, however, explains the severe drop in 1939 nor the tendency to follow a biennial cycle. It was thought at first that the tendency toward a biennial cycle might be due to the timing of the agreements, but this theory had to be abandoned when it was discovered that there were one-year and three-year as well as two-year agreements in force during the period covered by 80 81

See Table 4, Appendix A. See Table 9, Appendix A.

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these figures. Discussions with the association and the union officials and former Impartial Chairmen have failed to elicit a satisfactory explanation of either of these conditions. In dealing with these 83 grievances, the Impartial Chairman has set forth certain conditions under which it is reasonable to employ the discharge penalty. One of these conditions is the use of violence by an employee. Such action whether employed against a representative of management or against a fellow worker is sufficient basis for discharge. "There can be no second chances after violent actions."82 By resorting to force, a worker becomes "responsible for one of the most serious of all possible shop offences" and "there is no question whatsoever that the company is within its rights in discharging" an employee for such action.88 Insubordination may also form a reasonable basis for discharge.84 A company is within its rights in discharging a worker for "a defiant refusal to follow reasonable instructions of the superintendent." 85 When insubordination is accompanied by abusive language or threats by the worker, discharge is without question necessary for the proper maintenance of discipline and the efficient operation of the plant. 88 Refusal to engage in talebearing, however, cannot be considered as insubordination and even a temporary worker may not be discharged for such action.87 Stoppages whether engaged in only by single workers or by groups of workers represent gross insubordination and as such are punishable by discharge. In such cases, however, the companies have seldom employed or requested the discharge penalty because usually they have found it to their own advantage to continue the recalcitrant workers in their employ. When management has resorted to discharge as a penalty for stoppage, how82 M e m o 131. T h e opposite stand was taken by the T r a d e Board in the Chicago clothing industry. See Amalgamated Clothing W o r k e r s of America, Research Department, o f . cit., p. 233. 88 Decision G 43. 84 Decisions Ε 63, G 34, Η 40. 85 Decision G 34. T h e same principle was adopted by the Arbitration Board in the Haverhill shoe industry. See Norton, o f . cit., pp. 281-2. 86 Decision Ν 18 and M e m o 264. 8T Decision G 8. F o r similar protection of temporary employees in the Haverhill shoe industry see Norton, o f . cit., p. 290.

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ever, its action has been supported by the Impartial Chairman provided it was not itself guilty of highly arbitrary practices.88 In the celebrated case already referred to in which the Impartial Chairman upheld the discharge of 37 knitters who "stopped off" because they were of the opinion that two of their fellow workers had been unjustly discharged, the Impartial Chairman agreed with the Union's contention that the two men originally discharged had been dealt with inequitably and ordered their reinstatement. H e insisted, however, that the company was within its rights in discharging the 37 knitters who had "stopped off" in protest. In upholding the company, the Impartial Chairman reasoned as follows: The agreement guarantees that an employer shall have the free exercise of the right of discharge in accordance with business necessities if such discharge is made in good faith. Can there be a better reason for discharge than the refusal to work? In such a case, the man of his own volition, and contrary to the agreement, refuses to perform the tasks before him and prevents the manufacturer from producing goods. Those responsible for stoppages violate one of the essential terms of the agreement. If the clause of the agreement stating that an employer may discharge, if necessary for the operation of his business means anything at all, it cannot be made inapplicable in the case of stoppage.89

Management must come to court with clean hands, however, if it expects to have the penalty of discharge for stopping upheld. In another case where the company discharged seven knitters for a two-hour stoppage, the Impartial Chairman reduced the penalty to a one-week layoff. In reinstating the workers, the Impartial Chairman censured them for their action but said that the company had to assume part of the blame because of continuous negligence and arbitrary action.90 88

The Western Pennsylvania Joint Board in the bituminous coal industry appears to have taken a much more lenient attitude toward employees discharged for stoppages and other types of insubordination. See Frank C. Pierson, Collective Bargaining Systems, p. 45. 89 Decision Ε 41. An almost identical case was decided in a similar, although less severe, manner in the Chicago clothing industry some years previous to the above case. See Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 235. 90 Decision Ν 31.

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Dishonesty is another sound basis for discharge. Where workers have deliberately attempted to pass defective work as good work or where they have requested payment for stockings which they knew they did not produce, the Impartial Chairman has upheld management's decision to apply the discharge penalty.91 In like manner the deliberate restriction of production has been considered as a type of dishonesty and therefore "represents a situation in which the management may properly exert its rights of discharge, should other methods to meet the problem fail to give results." 92 Negligence also may be accepted as an adequate reason for discharge. Usually a single careless act has not been considered sufficient,93 but repeated negligence, especially following a warning, does justify discharge.94 Even a single careless act may warrant dismissal if the negligence is gross.88 In supporting the use of the discharge penalty in cases involving a single act of gross carelessness, the Impartial Chairman has reasoned that the negligence may be "so outstanding as to make it difficult for the company to place further confidence in the work" of the employee.98 The amount of carelessness regarded as sufficient to warrant discharge appears to vary with the occupation. Knitters, who are paid the highest rates of all the unionized employees and who are responsible for the care of the expensive knitting machines, are expected to exhibit "a sense of good judgment and a high degree of alertness. These are among the qualities that have caused recognition of the high degree of skill required in knitting." 97 Therefore, "if a knitter by gross carelessness virtually wrecked his machine, . . . the reasons for discharge would be understood." 98 Likewise, finished examiners or pairers are ex91

Decisions G 10, G 33, Η 23, Κ 23. M e m o 34. 93 Decision F 16. 94 Decisions F 21, Η 2, Η 55, Μ 9. T h e same principle was adopted by the Arbitration Board of the Haverhill shoe industry. See Norton, o f . cit., pp. 278-82. 95 Decisions D 3, Ε 19, F 1, and F 3. M Decision Ε 19. 97 Decision F 3. 98 Decision Ε 19. 92

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pected to exhibit exceptional care, since the finding of defects is one of their principal tasks and also because they are the last workers to view the product before it is sold. Carelessness on their part involves "the potential loss of consumer confidence in the company's product."99 The result might be the loss of customers which would be detrimental to the other employees in the plant as well as to the company. As in the case of knitters, therefore, the extent of negligence sufficient to warrant the extreme industrial penalty is less than in the other occupations in the industry. It must not be inferred, however, that continuous negligence has been condoned in the other occupations, but rather that more tolerance is granted and less severe penalties have been invoked where careless acts are likely to be less costly to the company and fellow employees and where wage rates have not been set with the understanding that the task requires a high degree of alertness. Finally, inefficiency is an accepted basis for discharge. It is, of course, closely related to negligence. Some workers, however, may be inefficient not because of negligence but because of a real lack of skill or ability. Where it has been proved that a worker is considerably below average in speed and/or quality of work, the Impartial Chairman has supported the discharge penalty.100 In such cases, however, the company must show that the low production and/or quality is due to the lack of ability of the worker and not to other conditions beyond his control.101 Likewise, since efficiency is a relative matter, merely being below the plant average or even being the lowest producer in the plant is not sufficient cause to warrant discharge.102 When the company can show, however, that the employee in question is unable to meet "reasonable requirements,"103 the dismissal has been upheld by the Impartial Chairman. Thus discharge may be employed as a penalty for violence j 89

Ibid. Decisions Ε 31, G 20, Η 2, Η 24, Η 52, and Memos 105 and 125. 101 Decision Ε 29. 102 l b i d . 100

103

M e m o 105.

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153

insubordination, including stoppage; dishonesty; negligencej and inefficiency under the conditions set forth above. In all of these cases the "necessity of the business" at times requires the application of this penalty. From the point of view of the employer, this is quite obvious. It is equally true, however, that it is to the advantage of the employees, other than those discharged. Violence, if condoned, might result in physical harm to other employees to say nothing of the undesirable effects of other measures which management might consider necessary to guarantee protection to its representatives. The advantages to the employees of the elimination of insubordination have already been discussed.104 A worker who is dishonest with the company is not likely to show integrity in his dealings with fellow employees. Finally, the retention of negligent and inefficient employees in a plant is definitely to the disadvantage of the careful and efficient employees. Because the work passes from one operation to another in this industry, inefficiency in the early operations would decrease piece-work earnings in the later ones. In addition, the poor quality of merchandise and the higher overhead costs resulting from negligent and inefficient operators would make it difficult for a company to sell its goods in competition with other companies. The result would be loss of work for the efficient employees. Although supporting management in the proper use of the discharge penalty for the causes cited above, the Impartial Chairman has been careful to protect the employees against unreasonable, discriminatory, and inconsistent use of this severe penalty. H e has insisted that it should in no circumstances come to serve as a "poor substitute for the exercise of more constructive efforts of the management." 105 It has been considered "not an arbitrary privilege of the employer but an unfortunate responsibility that must occasionally be undertaken as the only way to preserve efficient operation of a plant."10® Where less drastic penalties could be counted upon to remedy the situation, without the 104

See pp. 97-101. Decision Η J l . ιοβ Taylor, o f . etc., pp. 460-61. 105

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danger of breaking down the general plant discipline, the Impartial Chairman has ordered the discharge penalty replaced.107 Disciplinary layoffs have been viewed as an effective substitute in those cases where discharge has been considered unnecessary and inequitable. In other instances, however, the Impartial Chairman has replaced discharge by lighter penalties because he considered that the company had acted in a discriminatory manner. Even though the offense of the employee has been such as to justify discharge, the Impartial Chairman has refused to uphold it if the Union could show discrimination or inconsistency. Thus, when a company decided to discharge two examiners for poor work, the Impartial Chairman refused to uphold the discharge because the whole department was doing bad work and the records of the girls discharged did not indicate that they were below average. The Impartial Chairman reasoned that "It does not, therefore, appear equitable that they should be singled out for discipline when the necessity for improvement extends virtually throughout the department."108 Similarly when a company discharged only one of two girls who had engaged in a fight in a department, the Impartial Chairman refused to uphold the penalty because the company had retained the other girl.109 In a few instances it has appeared to the Impartial Chairman that the company has made use of the discharge penalty as a means of ridding itself of active union members.110 Where this has been true the penalty has been disallowed and the employee reinstated. These cases have not been easy to judge because in most instances the company could point to inefficient workmanship. The Impartial Chairman has made it clear many times that union activity cannot be used as a means of protecting a worker from just penalties.111 The problem has been to determine that the penalty should be no more and no less severe for the active unionist than for the other employees. 107 108 109 110 111

See Decisions G 32, Η 3, Η 21, and Memo 439. Decision J 8. Memo 414. Decisions Ε 62, Η 46, and Memo 197. See pp. 113-14.

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Finally, the Impartial Chairman has insisted that management must apply the discharge penalty consistently over a period of time. It cannot remain lax for a long period and then suddenly without warning "get tough" and discharge the first person who happens to break the rules at that time. An employee who was discharged for smoking, for example, was reinstated not because the company could not enforce the "no smoking" rule with discharge but because the penalty must be enforced continually "so that there is no doubt about it." 112 Fourteen of the 83 discharge grievances filed with the Impartial Chairman were settled by the parties without requiring a decision by the Impartial Chairman. In most of these cases the employees were reinstated, usually with no compensation for the lost time. In the 69 remaining grievances, the Impartial Chairman was forced to render decisions. In 25 (36.2 per cent) the discharge penalty was considered too severe for one of the reasons discussed above and was replaced by a disciplinary layoff. In 34 (49.3 per cent) the discharge penalty was upheld and in only 10 (14.5 per cent) did the Impartial Chairman favor elimination of all penalties. 113 Fines Monetary fines, imposed on workers by management for inefficiency or disciplinary purposes, are not permitted in the industry. 114 Although some companies had followed this practice 112

Decision Κ 35. See also Memo 420. T h e Impartial Chairman in the hosiery industry appears to have been less lenient in discharge cases than has been true of the arbitration boards in certain other industries. In the Chicago men's clothing industry, Kestnbaum noted that: "A review of the cases involving disciplinary procedures might give rise to the opinion that the general attitude of the Trade Board was one of indulgence, that the burden of proof was invariably on the company, and that the company found it very difficult to get relief, especially in cases involving discharge, unless its position were very clearly supported by the facts." Meyer Kestnbaum, "Study in Management Prerogatives," Harvard Business Review, Autumn 1940, p. 95. See also Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 233. Pierson noted a similar leniency in the Western Pennsylvania bituminous coal industry. Of. cit., p. 45. See Table 12, Appendix A. 114 Decisions Ε 29, Ε 60, F 26, F 30, G 29, and Κ 8. A similar principle was adopted in the Chicago men's clothing industry and the New York women's 113

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previous to the adoption of the National Labor Agreement, the Impartial Chairman ruled that the uniformity of wage rates, which was a recognized goal under the new system, made it necessary to eliminate all monetary fines by employers. The logic of this decision is clear. Fines can be used as a means of securing advantages in labor costs.118 Even if not undertaken with that idea in mind, the result may be the same. If some companies should follow a policy of leniency and others one of severity in the application and size of fines, a hidden differentiation of labor costs not contemplated by the Agreement would result. Another reason for the elimination of fines is the existence of laws controlling or prohibiting them in a number of states. Under statute, fines are not permitted for poor work in Massachusetts where one of the association mills is located. Wisconsin, Indiana, and New Jersey, in each of which a number of association mills are situated, also have legislation limiting or prohibiting fines.116 Finally, there are other methods of attaining efficiency and discipline among workers which have proved more effective and less subject to abuse. Although denying to the employer the right to fine employees, the Impartial Chairman has in recent years made use of monetary fines himself as a means of penalizing employees for violation of their obligations under the Agreement. The penalty has been used in several stoppage cases since 1941 when it was first employed.117 In the first case the employees who engaged in a short stoppage were fined $10 per person.118 In a later case a 20-minute stoppage elicited a fine of one-half day's pay at avergarment industry. See Amalgamated Clothing Workers of America, Research Department, op. cit., p. 234 and Pierson, op. cit., p. 35. 118 In the Chicago men's clothing industry this was advanced by the Trade Board as one of the major reasons f o r eliminating fines. Amalgamated Clothing Workers of America, Research Department, o f . cit., p. 234. 116 John R. Commons and John B. Andrews, Principles of Labor Legislation, p. 336. 117 Previous to 1941 only token penalties or fines subject to collection in case of future stoppages had been ordered. See Decisions Η 3 and Κ 56. Fines f o r stoppages were used by the Trade Board in the Chicago men's clothing industry as early as 1920. See Amalgamated Clothing Workers of America, Research Department, op. cit., p. 262. 118 Decision Μ 8.

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118

age earnings. The Impartial Chairman in agreeing to the Association's request for the monetary penalty did so because other methods, such as discharge, layoff, and causing work to be made up after regular working hours, would have been to the disadvantage of the employer or contrary to Wage and H o u r Law regulations. 120 In addition, it was felt that the direct monetary penalty would have an especially strong effect in preventing recurrences of stoppages. 121 Replacement of Bad Work Actual replacement of poor work by knitters or repair of damage due to carelessness without additional compensation has been approved in a number of decisions.122 It has been necessary, however, to protect the employees against the misuse of this policy by some employers. One company, for example, adopted the practice of not paying at all for work which was repaired by the employee responsible for the original defect. 123 Another company refused to pay for slightly defective work which it continued to process and sell. 124 In both of these cases the Impartial Chairman ordered that the company must pay the regular rates for all goods which it finally accepts. "Any other practice," the Impartial Chairman reasoned, "could too readily lead to abuse. If stockings could be produced without labor cost whenever management termed them as seconds, then earnings would be dependent upon management's whim and could be changed at any time by a reclassification of seconds." 128 Disciplinary Layoffs T h e Impartial Chairman has generally upheld the imposition of disciplinary layoffs by management provided discrimination has not been involved. 128 In supporting the use of the layoff for 119

Decision Ν 9. Decision Μ 8. 121 Pierson is of the opinion that financial penalties are the best means of curbing Agreement violations. See Pierson, op. cit., p. 25. 122 Decisions D 4, Ε 62, F 26, and Η 49. 123 Decision Ε 60. 124 Decision Κ 8. 12« Ibid. 128 Decisions Ε 31, G 29, Η J, L 6, and Memo 329. 120

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inefficiency and carelessness, the Impartial Chairman has reasoned that since fines cannot and indiscriminate discharges should not be used as a means of discipline, the temporary layoff provides the employer with a satisfactory method of achieving the desired results.127 The Impartial Chairman has insisted, however, that the length of the layoff should be consistent with the seriousness of the offense. One company which had previously followed a policy of laying off employees for "the balance of the week" was ordered to change its policy so as to provide a definite number of days off for each offense.128 Demotions Demotion of employees as a penalty for inefficiency and carelessness also has been approved by the Impartial Chairman. T h e Impartial Chairman has been asked to render only two decisions on this problem. 129 The infrequent use of this penalty in this industry is due to several factors. First, the less efficient employees find it very difficult to get the better jobs because promotion is based on ability rather than on seniority. T h e promotion policy combined with the introduction of much new equipment into the industry and the scrapping of old equipment has automatically resulted in the gravitation of the inefficient workers to the poorest paying jobs in the plants. Second, the prohibition of "bumping" makes it impossible to demote an employee unless an opening already exists on a lesser job. * * * * * At the beginning of this analysis of the principles relating to disciplinary measures it was stated that the Impartial Chairman has had the double task of aiding the companies in the promotion of efficiency and discipline and at the same time of protecting the employees against inequitable and discriminatory penalties. T h e principles which have been developed appear to provide a means of accomplishing both of these goals simultaneously. Rather than decreasing efficiency and discipline, the careful pro127 128 128

Decision G 29. Decision Η J. Decision Η 41 and Memo 12.

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tection of employees from arbitrary penalties appears to have had the opposite effect. It is true that the employees have less fear of being unreasonably penalized for minor offenses, but on the other hand there have grown up a respect for the principles and a self-discipline which were formerly lacking. Employees know that inefficiency, carelessness, or infractions of discipline will result in penalties commensurate with the offense and that even political power in the Union cannot be counted upon for protection so long as the Impartial Chairman system continues to operate. On several occasions, company representatives have expressed the opinion that both efficiency and discipline have been greatly improved by the principles of disciplinary measures established by the Impartial Chairman. The union officials, on the other hand, have expressed satisfaction with the manner in which employees' rights have been protected. It is difficult to see how the parties could have arrived at such a satisfactory solution to the discipline problem without the aid of the Impartial Chairman, for the establishment of equitable discipline principles would have been very difficult through negotiation of cases. In most cases, top management feels that it must support its lower executives in order to show its loyalty to them and in order not to cause them to lose status in the plant. The union leaders on the other hand usually feel that they must support the workers and the shop stewards if they are to hold their loyalty. The result is that disciplinary problems, if left to the parties themselves with no possibility of appeal to a third impartial person, are likely to be settled on the basis of economic power in each case rather than in an equitable manner leading to the formation and development over a period of time of an accepted body of principles. It has required a third party, the Impartial Chairman, to establish equitable principles which can be applied universally throughout the industry. T H E W O R K F O R C E AND T H E Q U A N T I T Y OF W O R K

Overmanning The size of the permanent work force in a plant should be adjusted to its normal operating needs. It is to be expected, of

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course, that there will be slack periods during which temporary layoffs and work-sharing may be necessary. There will also be rush periods during which overtime and temporary employees will be required. The size of the permanent work force in each department of the plant, however, should be such that during periods of normal operations, neither overtime nor temporary employees will be required, but all of the permanent workers will be employed full time. If the permanent work force is larger than this, continuous work-sharing and temporary layoffs will be necessary in all but the rush periods. Such a condition is to be avoided because of the resulting inefficiency of operation and the lack of security of full-time jobs for all the employees. On the other hand, if the work force is smaller, the company, except during the slack periods, must carry the added burden of overtime payments and the difficulty of securing and keeping temporary employees. The determination of the size of the work force in each department in each plant which will be consistent with the above goal, however, is not always easy. The Union and the companies have frequently disagreed on the numbers. At times they have disagreed even on the principle itself and they have not been consistent. Sometimes the Union has accused companies of overmanning and has requested that they be ordered to discontinue the practice, whereas at other times companies have accused the Union of attempting to force them to overman and have appealed to the Impartial Chairman to curb the Union. The problems of overmanning have arisen under two conditions. First, there has been that type of case in which a company has wished to add permanent employees to its rolls and the Union has insisted that only temporary employees should be hired. The Union has taken this stand because it has believed that the additional work load at the plant was caused by exceptional conditions which could not be expected to continue. It has insisted that the employees hired to do this extra work be given only temporary status because permanent status gives an employee the right to share in the available work when there is not enough to provide all workers with full-time employment.180 130

See pp. 162-63.

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161

It is understandable that the old employees of the shop through their Union should oppose the hiring of new employees with a status that might force all of them to work only part time during normal operations. At times, companies have insisted on offering new employees permanent status despite union resistance, however, because they have believed that the higher production rate would be normal in the future or because they have found it very difficult to secure competent new workers if only temporary employment status could be offered. Second, there has been that type of case in which a company has been desirous of decreasing its work force and the Union has insisted that workers should not be released but instead that the work should be shared. It is understandable that workers who have been associated in the same shop and in the same Union for many years should prefer to share the work rather than to see any of their number completely unemployed. The company may insist on decreasing the work force, however, because it believes that the lowered production is not just a temporary condition but one which may be expected to continue and because of the increased costs of operating with a larger work force than is required. In both types of cases, the Impartial Chairman has provided that the permanent work force in any department should be only as large as might be expected to permit full-time work for all employees during periods of normal operation. The principle has been established that a company "should not hire new workers in . . . departments where present employees are on part time" 131 or even add fermanent employees to take care of increased production where present employees are working full time unless there is "reasonable assurance that the [additional] flow of work . . . will be relatively consistent." 132 Likewise, the principle has been established that Work sharing is only practical when work is slack because of 131

Memo 232. Memo 301. In a similar case which came before the Arbitration Board in the Haverhill shoe industry, the Union requested dismissal of a worker, alleging overmanning, but the request was denied. Norton, o f . cit., pp. 292-93. 132

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seasonal fluctuations in business. It cannot satisfactorily be practiced where the volume of business of a company has been substantially and permanently reduced. In such cases, a permanent shrinkage of business must result in layoffs or else no employees will ever secure a fair amount of work. 133

Thus companies are not required if the Union requests, nor permitted, if the Union objects, to keep in their employ more workers than they can be expected to supply with reasonably full-time work. Sharing of

Work

It was customary, even before the Impartial Chairmanship, for permanent workers in the hosiery industry to share the available work during slack periods. It has been pointed out that work sharing has been limited to permanent employees and has been approved only when the insufficiency of work to keep all of the employees operating full time is temporary. When such is the case, however, all permanent employees share in the available work to the extent that sharing is practical.134 Work, however, need not be divided absolutely equally especially over a short period of time. It must be shared only "to the fullest practical extent," which has been interpreted to mean that "proper plant operation should not be hindered by work-sharing requirements." 188 In defending this principle, the Impartial Chairman has reasoned: It would be a "bad bargain" for all concerned if work-sharing rules were so rigid that a plant would have to turn down orders or close down entirely because of the impracticability of work sharing 133 Decision Κ 47. See also Decisions G 25, Μ 7, and Memo 189. In the Chicago men's clothing industry, the Trade Board ordered equal sharing of work rather than layoffs even when permanent reduction of business was apparent. Amalgamated Clothing Worker» of America, Research Department, of. cit., p. 393. 134 Memo 20. Supervisory employees, however, are not permitted to share in the work of union members. See p. 122. 136 Decision Κ 47. See also Decision Κ 30 and Memo 196. In the Haverhill shoe industry, the Arbitration Board ruled similarly that "no measure of equal division of work is 'possible' which is not reasonable with due consideration f o r successful and economical operation." Norton, of. cit., p. 295.

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on every order on an exact basis. T h e idea of work sharing cannot be carried to an extreme. 138

Rather than providing for equal division of work on every order or even during every week, the Impartial Chairman has urged the parties to seek an equal division over a season or a year as an "equitable and much more practical" manner of dealing with the problem. 137 I n one case, however, the Impartial Chairman did order the sharing of work despite the fact that the result was to increase the cost of production. T h e company desired to produce all of its needs during temporary lulls in the demand for its product on its new low-cost equipment, forcing the old high-cost equipment and its operators to remain completely idle. The problem was complicated by the fact that the employees on the old machines had contributed through a voluntary wage reduction to the fund used to purchase the new equipment. Even though it meant higher operating costs, the Impartial Chairman felt justified in ordering a sharing of work between the old and the new equipment where it was of the same gauge and where double style change was not necessary, because it would not be "equitable to disregard the claim of knitters on the shorter section machines to work in slack periods when they have all contributed to rehabilitation under a contract which sets stabilization of employment as a goal that is as important as cost savings." 138 T h e insistence on work sharing of a type which decreased efficiency in this case appears to have been amply justified. With this notable exception, the Impartial Chairman has opposed work-sharing rules which would increase costs by decreasing efficiency and thus endanger the securing of the maximum amount of orders for the plant during slack periods. layoffs Since temporary employees have no right to share in the available work when it becomes scarce, they are the first to be laid off 138 137

188

Decision Κ 47. Ibid.

Decision Μ 1.

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when a decrease in production occurs, whether it is temporary or permanent.139 With this exception, however, layoffs, as promotions, must be made according to ability. Seniority is a secondary factor, becoming important only when the abilities of two or more employees are reasonably equal.140 Seniority, however, has been given preference over local residence in determining layoffs. In a case in which management desired to release all out-of-town workers, first, the Impartial Chairman ruled against it, stating: "The Impartial Chairman must uphold the general principle that ability and seniority must be the determining factors in layoff or promotion, unless there are compelling reasons for adoption of a contrary principle."141 In a similar case in which the Union sought preference for local employees, the Impartial Chairman ruled likewise that "place of residence cannot be considered as a factor superseding the above considerations [ability and seniority] ."142 Because of the principle of work sharing discussed above, the preference granted to workers with greater ability in temporary layoffs is not significant. Over a period of time, all permanent employees are supposed to share equally in the work, so it is usually immaterial whether one is laid off early or late in the process. It is in permanent layoffs that the principle becomes important. The older employees have found it difficult to understand why they must give way to younger men who are more efficient. They have appealed strongly to the Union for protection. The Union, however, has been unsuccessful in its cases before the Impartial Chairman. Of the ten layoff cases on which the Impartial Chairman has rendered decisions only two were favorable to the Union and in neither of these was the Union seeking preference for seniority over ability.143 In providing that ability should be the primary factor de189

Although temporary employees may be released when work becomes scarce, they have the same rights as other employees to equitable treatment during their employment including protection against unreasonable or discriminatory use of the discharge penalty. See Decision G 8. 140 Decisions Κ S4, L 12, Ν 5. 141 Memo 300. 142 Memo 354. 148 Decision Η 18 and Memo 300. See Table 12, Appendix A.

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165

termining permanent layoffs or releases, the Impartial Chairman has employed the same reasoning as in promotion cases.144 Although the immediate effects of a permanent layoff on an employee are likely to be far more drastic than the loss of a promotion opportunity and although the ability principle when applied to layoffs in an industry with decreasing job opportunities results in insecurity for all employees as they become older and find it difficult to keep pace with younger men, the Impartial Chairman has supported it because the very "maintenance of the unionized section of this highly competitive industry requires adherence to a policy of increasing not diminishing plant productivity." 148 Overtime T h e principles discussed so far in this section have been developed largely to meet conditions where the quantity of work has not been sufficient to keep all the employees working full time. Fortunately such conditions do not always prevail. Sometimes there is more work than the regular work force operating its regular working hours can do if delivery dates are to be met. One way of meeting such a problem, especially if the amount of excess work is small or if temporary employees are not available, is to ask the regular employees to work overtime. T h e Agreement between the parties contains the following section (C-3) regarding hours of work and overtime: Hours and Overtime. T h e regular hours of work shall be not more than eight hours per day per shift, nor more than five days per week per shift, from Monday to Friday inclusive. Overtime is to be permitted in all departments. All work performed in excess of the regularly scheduled eight hours per day shall be compensated at the rate of time and one half times the regular rate of pay for such employees performing the overtime work. Work on Saturday at overtime rates may be performed only (a) By stock room employees, shipping room employees, maintenance and miscellaneous employees; and, (b) In the finishing department when the required finishing work cannot be done within the regular work week. 144 146

See pp. 138-39. Decision Ν S.

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The overtime provision of the Agreement has not always been worded as above. At one time the parties agreed that certain departments could be worked overtime up to a specified number of hours without additional compensation other than the regular piece rates.148 Later on under the NRA Code, overtime was completely outlawed.147 The present provision was introduced in the 1941-43 Agreement. One might suppose that with the "time and one-half' rate in effect, employees would have been anxious to secure as much overtime as possible and that employers in an industry where wages form such a high percentage of total costs148 would have made Herculean efforts to avoid it. Such, however, appears not to have been the case. It is the employees who have requested relief from overtime and the employers who have requested a liberal interpretation of the contract provision so as to permit considerable overtime. There have been, for example, no cases presented to the Impartial Chairman in which an employee claimed that he had not received his full share of overtime work. There have been, on the other hand, a number of cases in which employees complained that management was requesting an unreasonable amount of overtime work. In establishing the principles of overtime under the present Agreement, the Impartial Chairman has been careful not to revert to the previous inflexible requirements. H e has refused the request of the Union to set any specific limit on the number of hours which may be worked beyond the regular work day.149 H e has insisted only that the companies be reasonable in their requests. In defense of this position the Impartial Chairman has reasoned: Overmanning has been a frequent problem in this industry. If a department is manned to meet peak load requirements it is inevitable that part-time work will prevail during slack periods. Permission for 148

Decision Ε 38 and the 1930 Agreement. Decision Η 28. 148 See Ε. B. Alderfer and Η. E. Michl, Economics of American Industry, p. 12. Of forty industries listed, in only one, the pottery industry, do labor costs form a larger part of the total value of the product than in full-fashioned hosiery. 147

149

Decisions Ν 12 and Ν 21.

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167

overtime work during these peak periods permits a company to meet its customer demands without the inconvenience of securing an excessive number of temporary employees. In many cases . . . experienced temporary employees are not available. Overtime is of distinct benefit to permanent employees. They are able to recapture some, if not all, of the losses from part-time work during the dull periods. Moreover insofar as overtime limits overmanning, the part-time work will be reduced to a minimum. 150 On the other hand the Impartial Chairman has opposed the use of overtime as a long-term method of operation or to such an extent at any one time as to become oppressive. In one case in which a company, over a considerable period of time, required 25 to 30 hours of overtime per week of certain employees, the Impartial Chairman ruled that the company had abused the privilege of the "rule of reason" and ordered it to discontinue the practice.181 In limiting overtime to a reasonable amount and to the meeting of peak load requirements, the Impartial Chairman has reasoned: Overtime should not be used to the detriment of the health of employees. Many experiments have been made which show conclusively that excessive overtime over a long period may impair the health of employees and is almost certain to lessen hourly productivity. The basic 40-hour work week has been reached after a long struggle. It is not the intent of the parties in this agreement to depart in large measure from the 40-hour week. 152 The problem of what constitutes overtime also has been important. The Union has insisted that all hours beyond the regularly scheduled hours should be considered as overtime. Management on several occasions has held that overtime should begin only after eight hours of work on any one day. The Impartial Chairman has agreed with the Union, stating that: The hours specified by the agreement as regular hours are to be worked during regularly scheduled hours. Variations, in time worked, from those hours are to be considered as overtime. . . . It would be not only unreasonable but oppressive to rule that the agreement 180 181 182

Decision Ν 12. Decision Ν 21. Decision Ν 12.

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provides that any . . . hours in a day can be selected for particular days to constitute a regular day shift.153

This principle has been qualified in one respect. In order to overcome an epidemic of lateness which had developed when overtime was being worked, it was provided that "an employee who reports for work late through no fault or request of the company shall not receive overtime pay on that day until after he has made up the time lost as a result of the lateness."154 In providing this exception to the general principle, the Impartial Chairman reasoned: Just as the employee has been given protection against changing schedules of hours and failure of the company to provide work during the regular hours, so the company is entitled to protection against an increase in labor costs because the employee does not work the regularly scheduled hours.185 Reporting

Pay

Before 1941, if for some reason or other there was no work available at a plant and the management knew it but nevertheless permitted the employees to report, the workers received no compensation for the inconvenience and cost of reporting and the management paid no penalty for its inconsideration and negligence. In 1941, however, the parties recognized the inequity of this condition and included the following provision in the agreement which was signed that year: Reporting Pay. Any employee who is required to report for work and who is sent home, through a fault solely attributable to the Employer, and not due in whole or in part to the absence of any member of a team or to other causes beyond the control of the Employer, shall receive full payment for a four hour period at his regular average hourly rate, just as though he had worked during that period.188

Later the parties agreed that an employee on the P.M. shift must 163 Decision established the 164 Decision 188 Decision 186 National

Ε 64. T h e Arbitration Board in the Haverhill shoe industry same principle. See Norton, o f . cit., pp. 300-1. Oil. Oil. Labor Agreement, 1941-1943, Full-Fashioned Hosiery Industry.

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be notified not to report for work two hours before the start of the shift and an employee on the A.M. shift must be notified before the close of the P.M. shift if management is to be relieved of the obligation under the above provision.157 Since the adoption of the reporting pay clause, 15 grievances relating to it have been presented for decision. All of these have been filed by the Union. They have concerned two major questions: (a) When four hours of work at the employee's regular task are not available may the company require that he spend the four hours at some related task if he is to receive reporting pay? (b) Under what conditions, if any, is management excused from the obligation of reporting pay when the worker admittedly was not notified as provided in the Agreement and reports for work only to find that four hours of work are not available? The Impartial Chairman has answered the first question in the affirmative. The intent of the reporting pay clause, he has contended, is not to provide "payment for idleness." "If an employee is required to report and some unavoidable circumstance makes it impossible for him to start his regular operation, he may be required to perform other similar tasks so that a company may receive some return for the four hours' pay." 158 The Impartial Chairman has answered the second question by ruling that only if work is prevented by an occurrence which is unforeseeable and unavoidable and which happens at a time which does not permit notification as required under the Agreement is management relieved of the responsibility of reporting pay. Even if there is "a reasonable doubt in management's mind that work may be available but it cannot be assured" it must assume all responsibility and pay the reporting pay if it permits the employees to report and its judgment proves to be wrong. 159 This has been considered as one of the responsibilities which management must assume in exchange for the right of administrative initiative.160 Workers are given no share in deciding 157

National Labor Agreement, 19+3-1945, Sec. C-lSb. Reproduced in Appendix B. 158 Decision Ν 8. 159 Ibid. 160 See pp. 97-101.

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whether they should report for work. Management alone makes the decision. It seems equitable, therefore, that management should also bear the responsibility. These principles were laid down soon after the reporting pay clause was included in the Agreement and most of the cases have concerned their application to specific circumstances. The major problem has been to determine whether the conditions resulting in lack of work were foreseeable or avoidable. In one case in which a company sought relief from the clause because the lack of work was due to defective work on the part of one of its suppliers, the Impartial Chairman ruled that the reporting pay must be paid. H e reasoned that it was the company's responsibility to see that its suppliers provided it with material of such quality as to permit its employees to work and that it should not expect the employees to bear the inconvenience and expense caused by the failure of its supplier to do a satisfactory job.181 In another case, however, where the weather turned cold suddenly during the night and prevented a mill from operating the next morning, the Impartial Chairman reasoned that the condition was unforeseeable and unavoidable and, therefore, the company was relieved of responsibility.162 Of the 1J cases on the problem, the Impartial Chairman has favored management in slightly more than onehalf of those which required decisions.163 161 162 183

Decision Ο 20. Decision Ο IS. See Table 12, Appendix A.

C H A P T E R IX

T H E C O M M O N L A W OF T H E I N D U S T R Y — RATE-DETERMINATION PRINCIPLES INTRODUCTION

between primary and secondary rate determination was explained in Chapter IV. 1 It was also pointed out that the Impartial Chairman in the hosiery industry is concerned with secondary rate determination only. In other words, the decisions made by the Impartial Chairman do not involve the establishment of the wage level of the industry but are confined to the setting of individual rates in relationship to an existing industry level. It is important to bear this in mind throughout the study of rate cases which follows, for the principles of rate determination which will be discussed apply to secondary rate determination only. Primary rate determination, which is beyond the scope of this study, involves a completely different set of principles. Of the 1566 grievances presented to the Impartial Chairman, 839 or 53.6 per cent were concerned with the establishment of rates. In these decisions a considerable amount of "common law" has been established. Up to this time, however, there has been no attempt to organize and analyze this "common law" and to develop with its help the basic principles of secondary rate determination. Such is the goal of this chapter. T H E DIFFERENCE

P R I N C I P L E S OF SECONDARY W A G E - R A T E D E T E R M I N A T I O N

A study of the problems presented and the decisions rendered in these 839 rate cases has led to the conclusion that in this partially unionized competitive industry with association-wide collective bargaining and a piece-rate wage system, six basic principles of secondary rate determination have been developed. These principles may be defined as: 1

See p. 34. 171

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EFFECTIVE LABOR ARBITRATION

1.

Uniformity of piece rates throughout the entire Association— the same piece rate for the same product made on the same general type of equipment in all mills. 2. Balance of rates within each mill and throughout the industry —rates so set that the differences between them measure accurately the differences in the responsibility, skill, and effort required of the tasks. 3. Sharing—the establishment of rates in such a manner as to permit the workers to share in the savings resulting from more efficient processes and in the large mark-ups of products which bring premium prices. 4. Simplicity of rate structure—a structure so compact and so lucid that the workers, union representatives, and management representatives have no difficulty comprehending and applying it. 5. Incentive—payment made in such a way as to encourage each worker to produce rapidly and efficiently. 6. Protection of workers from severely subnormal hourly earnings due to conditions beyond their control.

It has been found that the "common law" of the hosiery industry relating to rate determination may be organized logically around these six basic principles. Uniformity

Prior to 1929 there was a lack of uniformity of rates within the hosiery industry. The Union did not have even a list of standard "union rates"2 such as exists (although it is not always strictly adhered to) in a number of trades. Instead the rates in each shop were negotiated individually and without recognition of inter-plant relationship. Each company and each union local attempted to get the best bargain in the industry. The resultant rates mirrored the differences in economic strength and bargaining skill between the various companies and union locals. During the early twenties, the Union was in a strong economic position. The demand for hosiery was rapidly expanding. Knitters were scarce and manufacturers competed strongly with each other for the available supply. In comparison with other 2

From a conversation with William Smith, secretary-treasurer of the American Federation of Hosiery Workers.

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PRINCIPLES

173

trades, hosiery workers were able to command premium wages. Under these conditions, there was no pressure on the union officials to secure uniformity. In fact the best interests of the workers were served by avoiding uniformity and playing one manufacturer against another in a scarce labor market. 8 In the late twenties, however, the situation changed. T h e supply of hosiery had been increased to such an extent that prices dropped precipitously. The high wages of the earlier period, which had attracted a large number of workers into the field, and the greater productivity of the newer equipment ended the scarcity of trained operators. Furthermore, the percentage of the workers who were union members was decreasing. T h e union leaders recognized that a decrease in wage level was unavoidable. They recognized also that uniformity of wage rates would be to the advantage of their members during the retreat. Carl Holderman, vice-president of the Union, speaking before its 1928 convention stated this point of view as follows: D u r i n g the f e w years w h e n the industry was expanding, when wages were increasing and conditions were being bettered, the policy for the Federation as a whole was that each branch should negotiate for its o w n prices and conditions, with the result that w h e n any particular branch received an increase that increase was always used by some branch to secure an increase for themselves. . . . It was a system which benefited all of us and, under the circumstances, was the proper one to follow. H o w e v e r , during the past year and a half or t w o years . . . , w e are placed on the defensive . . . and the manufacturer w a s able to use the lower w a g e to bring d o w n the w a g e of those that were paid a little higher. 4

Many of the manufacturers became convinced that uniform wage rates would be advantageous to them also. As a matter of fact, there were present in the late twenties in the hosiery industry all of those conditions postulated by the market theory of unionism whereby it is contended that if an industry is one with ( 1 ) a large number of firms, (2) mature technology, (3) labor costs a high percentage of total costs, and (4) no expanding 3

Gladys L. Palmer, Union Tactics and Economic Change, p. 101. Proceedings, 1928 Convention, American Federation of Hosiery Workers, p. 33J. 4

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market, management will welcome uniform union wage rates as a factor in attaining price stability.5 Management in the hosiery industry had come to realize that driving down wage rates in individual mills gained a very transitory advantage which soon backfired. With lower labor rates a mill could reduce its prices and secure a larger percentage of the market, but the advantage in one mill was soon offset by the demands of other mills for similar or more drastic rate cuts in order that they might decrease their prices to the new competitive level. The result was great instability and downward pressure on prices which were detrimental to the companies as well as to the workers. In uniformity of piece rates, management saw the possibility of stabilizing one of its major costs. It hoped that the result would be greater stability of prices for its finished products." The first attempts at uniformity, however, were not very successful.7 Although some advances were made prior to 1929, the attainment of any considerable degree of uniformity awaited the formation of the Association in that year. Without an association of manufacturers which could bargain for all of its members, uniformity could be accomplished only by the Union's forcing on all manufacturers the rates which it had established itself or for which it had successfully bargained with one manufacturer. The manufacturers, as one would expect, objected to uniformity under such conditions. With the establishment of the Association, however, management was in a position to bargain as a group with the Union and to negotiate piece rates to which all would agree. All piece rates were not immediately made uniform, but since 1929 uniform piece rates have been extended to more and more operations.8 B

.Richard A. Lester, Economics of Labor, pp. 559-60. McCabe points out that this has been the union's strongest argument for uniform piece rates over a competitive area. See David A. McCabe, "Problems of Industry-Wide or Regional Trade Agreements," American Economic Review, Supplement, March 1943, p. 166. 7 See statement by President Gieges, Proceedings, 192S Convention, American Federation of Hosiery Workers, p. 75. 8 The yean 1938 to 1941 are exceptions. During these three years the companies and the Union reverted to individual rate contracts as part of the rehabilitation program. The uniform rate contract was restored again in September 1941. β

RATE-DETERMINATION PRINCIPLES

175

In addition to enabling both a union and a group of manufacturers to stage a more orderly retreat when economic conditions necessitate it, a uniform piece-rate structure has other important advantages. It causes more emphasis to be placed on efficiency. When it is no longer possible for a company to gain a competitive advantage by cutting direct labor rates, efficiency becomes the major production factor for converting losses into profits. In like manner workers, knowing that they cannot get special high piece rates from their individual manufacturer by clever bargaining techniques, are likely to spend less energy developing the latter and more in increasing their output. Fear of having piece rates cut because of high earnings is also diminished, since workers know that the rate will no be cut throughout the whole industry just because production and earnings are high in one shop. The effect of uniformity of piece rates on efficiency, however, is not entirely one-sided. It is true that it does make it impossible to secure piece rates below the industry level by bargaining. Thus the inefficient firms cannot remain in competition by paying substandard piece rates. On the other hand, it does not prevent these inefficient firms from gaining the protection of low worker-earnings. In fact, it guarantees such protection. For uniformity, as interpreted in the hosiery industry, means uniformity of direct labor costs per unit of output. The inefficient producers who use poor methods and provide poor working conditions nevertheless pay the same variable or direct labor costs for their hosiery as the producers who use the best methods and provide the best working conditions. It is uniformity of direct labor costs per unit of product, not uniformity of direct labor costs per unit of energy and skill consumed. Thus the possibility of lower direct labor costs per unit of product as an incentive to management to develop better methods and provide better working conditions is removed. The advantage to be gained by more efficient management must be measured in terms of decrease in overhead, better quality of product, and less labor turnover and not in terms of savings of direct labor costs. The efficient producers are therefore placed in a less advantageous position than they would be if rates were completely in balance, that is, if they were adjusted

176

EFFECTIVE LABOR ARBITRATION

so that compensation was commensurate with labor, skill, and energy consumed. On the other hand, the efficient producers can be sure that such advantages in overhead, quality, and stability of working force that the better methods assure will not be offset by lower piece rates in the less efficient mills. In the hosiery industry this latter danger was very real and led the efficient producers to favor uniformity of direct labor costs per unit of output despite the inequities discussed above. It was a matter of choosing the lesser of two evils. In addition, gross differences in operational efficiency have been recognized as necessitating exceptions to the principle of uniformity. Uniformity of piece rates also makes comparisons of earnings in different plants more meaningful. Without uniformity, earning differences may be due to rate differences. With piece-rate uniformity, however, earnings considerably below the Association average for any department are a warning signal to management and the Union. They know where their efforts to improve efficiency and increase average earnings are likely to be most effective. Uniformity also relieves the union officials of the necessity of negotiating each piece rate at each mill. As a result they are able to spend a much larger part of their time and energy in other activities including organizing the non-union section of the industry. In the hosiery industry this was viewed by both parties as an advantage. The unionized manufacturers were hopeful that the Union with more time and energy to spend on organizing could capture the whole industry and thus completely eliminate all differences in direct labor costs among hosiery plants. Finally, uniform piece rates make for a better relationship between the Union and the manufacturers. The Union cannot accuse a particular manufacturer of trying to chisel rates below the competitive level. Nor can a manufacturer accuse the Union of giving other manufacturers "a better break" on piece rates. With uniform rates arrived at by open negotiation between the Union and the Association, there is no fear of special "sub rosa" rates. In order to make sure that individual companies and local unions do not set up special rates in contradiction to the uniformity principle, it has been decided that rates negotiated by

RATE-DETERMINATION PRINCIPLES

177

individual companies and union locals have no status unless approved by the Impartial Chairman or by the Association and the Federation. 9 In one of the earliest decisions rendered under the Impartial Chairman system, uniformity of piece rates was recognized as "one of the basic principles of the National Labor Agreement." 10 In later decisions it has been referred to as "fundamental to the existing agreement" 11 and as "a major objective" of the collective bargaining system.12 As one would expect, therefore, any attempt to secure at a particular mill special non-uniform piece rates, whether higher or lower than those applicable to the rest of the association mills for the same method of operation and the same working conditions, has been opposed by the Impartial Chairman. Both the Union and individual companies have attempted to securc such special treatment at times but without success. In a number of cases one of the parties has requested an extra or a deduction from the standard piece rate for a certain operation because earnings at the plant have been below or above the association average. The Impartial Chairman has decided that high or low earnings in themselves represent no claim for special non-uniform rates. "The agreement aims at uniformity of piece rates, not uniformity of earnings." 13 Some variation from the average is to be expected.14 If all low earnings were to be continually moved up to the average then the average itself would continually advance and additional extras would have to be granted "ad infinitum." In like manner the granting of deductions to pull earnings down to the average would become an endless process. Moreover, earnings are only symptoms, not basic causes, and the latter may or may not be ground for special rate consideration. An abnormally large variation of earnings from the average, for example, may be due to the exceptional efficiency or inefficiency of the workers, in which case special piece 9

Decision Β 1. Decision A 9. 11 Decision Ε 35. 12 Decision Ε 10. 18 Decision A 13. 14 Decisions Η 42, L 4, and Memos 155, 210, 216. 10

178

EFFECTIVE

LABOR

ARBITRATION

15

rates should not be considered. On the other hand they may be due to non-standard methods of operation or non-standard working conditions, in which case the desirability of special piece rates should be explored.1® Likewise, the exceptional conditions of the local labor market cannot be considered as cause for variation from the standard agreement piece rates. One company requested a lower rate for a certain operation because the rate for that operation in other industries in its community was considerably lower than in the towns where other Association mills are located. The Impartial Chairman in denying the request stated: It is clear that each contracting party agreed to the principle of equalizing labor costs in the industry. . . . T h i s major objective cannot be achieved if local conditions provide an excuse for deviating from the wage structure agreed upon. 1 7

Finally, the financial or competitive position of a company cannot be considered as a justification for variation from the standard agreement piece rates. If it were, uniformity would cease to exist during depression periods and one of the major purposes for which it was established—the promotion of stability and orderly retreat during periods when the industry faces economic difficulties—would be lost. In one case a company attempted to have its employees voluntarily "kick back" 30 per cent of their earnings in order that the company might reduce prices and thereby secure more work. The Impartial Chairman in prohibiting the arrangement reasoned: Such an arrangement w o u l d be contrary to the National [ L a b o r ] A g r e e m e n t because of the individual manner of its consummation and because it is a deviation from the principle that labor cost of member mills are to be equal. T h e company's contention that its workers can do whatever they desire with their w a g e s once received is obviously a poorly taken position. 18 15 18 1T 18

Decisions Ε 25, Ε 57. Decisions Ε 19, Ε 26. Decision Ε 10. Decision F 19.

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179

The difficult cases on this subject have not been the above types, however, but rather those in which special piece rates were requested because of allegedly non-standard methods of operation or non-standard working conditions. Standard piece rates throughout an industry are equitable to the manufacturers and to the workers in the various plants only if methods and conditions are standard throughout the industry. As has been indicated, and will be discussed in detail later, a structure of rates so balanced that earnings will be commensurate with skill and effort is another major objective of the rate structure of the industry. Yet balance cannot be achieved if the same rates are made applicable to varying methods and conditions of work, and methods and conditions in the various plants are never absolutely identical. Should every difference in method of operation and conditions of work, therefore, result in a difference in piece rate and should uniformity be abandoned in favor of complete balance and equity? The Impartial Chairman decided against such a position. H e has attempted to secure the major benefits of both uniformity and balance without carrying either to the extreme. H e has therefore had to judge each case on its merits and apply the rule of reason. Exceptions to the standard piece rates have been approved only where it could be shown that the methods of operation or the working conditions within the plant were sufficiently non-standard that an employee of average efficiency, if paid the uniform rate, could not be expected to produce earnings reasonably near to the association average for that occupation. Thus only major differences in methods of operation and conditions of work have been considered as bases for variations from the standard agreement piece rates.19 "Signatory plants cannot be required to do their tasks in an identical manner, but must be permitted the right to meet their individual needs without paying extra rates or making deductions for reasonable variations."20 In one case, for example, the Impartial Chairman refused to establish a 19

Decisions Ε 19, Ε 25, Ε 3 5, Ε 57, G 14, Η 12, Η 13, and Memos 179, 230, 356, 437. 20 Decision G 42.

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ARBITRATION

number of extras and deductions to compensate for slight differences in machine attachments. In support of this decision the Impartial Chairman reasoned: One might set up a different rate for each tackle and on each type of machine. It would be possible to go even further and provide for rates that take into account the differences between management efficiencies in the use of this tackle. A rate so determined would vary proportionately with the loss of production experienced in each plant. T o follow this method of rate setting would be to ignore the principles underlying the determination of the entire rate structure, of the National Labor Agreement. The National Agreement has been developed to provide uniform labor rates in order that wages would be less affected by the competitive situation in the hosiery market. In pursuance of this objective, uniform piece rates have been set for tasks that are not always similar . . . It seems clear that . . . one uniform rate should be set for the average prevailing experience.21

A few occupations, however, have been recognized as involving methods which differ so much from plant to plant that no attempt has been made to establish uniform piece rates. This has been true, for example, of finished mending. When one or the other of the parties has complained that the rate paid in a particular mill for one of these occupations has been above or below the rate paid elsewhere in the Association and has requested that it be adjusted accordingly, the Impartial Chairman has denied the request. T h e price of uniformity in terms of loss of equity would be too high. The balance of earnings within the plant and throughout the industry would be upset too much by the insistence on a uniform piece rate in such cases.22 Balance In the list of principles of secondary wage determination, balance has been defined as the existence of a wage rate for each task commensurate with the responsibility, skill, and effort required of the worker. There are few who would deny that this 21 22

Decision F 28. Decisions Ε 56, F 36, and Κ 24.

RATE-DETERMINATION PRINCIPLES

181

is a desirable goal. The difficulty, however, is that its attainment conflicts with the attainment of three other desirable goals, namely uniformity, sharing, and simplicity. It has always been conceded by the parties in the hosiery industry that the rates are considerably out of balance. This lack of balance is due to the development of the rate structure by bargaining over a period of years. The skill and economic position of the bargainers was not always the same. Sometimes the Association and at other times the Union was in the driver's seat. Whether a particular rate is too high or too low compared with the rest of the rate structure depends to a considerable degree upon which condition existed at the time it was established. Even if the bargaining position of the parties had remained the same throughout the years, however, discrepancies and inequalities could be expected because of the "rule of thumb" methods which were employed in the early days plus the difficulty of changing improper earnings differentials once they have become customary. In an early decision, the Impartial Chairman referred to this condition as follows: It is well known that the rate structure in the full-fashioned hosiery industry, especially as regards to extras, as it has developed in the last ten years or so, has contained a very large number of absurdities and inequalities. T h e s e inequalities and extras were specifically embodied in the agreement of 1 9 2 9 but provision was made for time and effort studies, on the basis of which a more rational rate structure as regards to extras would be negotiated by the parties. 23

The time and effort studies referred to in this decision were made by an engineering firm at the joint expense of the Association and Union. The conclusions of this study, however, if put into effect, would have called for such wide adjustments of existing rates that the parties felt their application would have caused too severe a reaction. The existing differentials were too solidly entrenched by custom. Thus the Impartial Chairman has had to deal with a rate 23

Decision Β 2.

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structure which was not devised and developed in a logical and scientific manner. This has greatly complicated the difficulties of establishing balanced rates for new styles and new operations. Frequently it has been a matter not of fitting a new rate into a well-balanced section of the rate structure but rather of setting a rate in such a manner as to provide as little additional unbalance as possible. The latter is obviously more difficult and gives less satisfactory results than the former. 24 Another major difficulty confronting the Impartial Chairman in his attempt to create balance in the wage structure has been the lack of clear definitions of standard tasks. When the parties agreed on standard rates for various operations they did not indicate the job contents for which such rates were to apply. Perhaps they felt that the methods employed throughout the industry were sufficiently definite so that there was no need for such job descriptions or perhaps they feared that such definitions would encourage a multitude of disputes over unimportant deviations. At any rate, standard tasks were not described and as a result the Impartial Chairman has had no ready criteria by which to judge methods which have been considered non-standard. Rather than attempt to develop a complete set of standard task descriptions, the Impartial Chairman has met each problem as it has arisen by making an industry-wide study of the occupation.25 If a particular operation has been found to prevail generally throughout the industry, it has been considered as part of the standard task and no extra or deduction from the uniform agreement rate has been permitted.2* Where it has been discovered that the method of operation is non-standard, however, the problem has been more difficult because in such cases balance and uniformity come into conflict. This conflict and the manner in which the Impartial Chairman has dealt with it have been described in the section on uniformity. Only where the refusal of an extra or a deduction would 24 Norton found a similar condition in the Haverhill shoe industry. See Thomas L. Norton, Trade Union Policies in the Massachusetts Shoe Industry,

1919-1929, 28 26

p. 249.

Decisions Ε 34, Η 32, Η 3 J, Ν 4, and Memo 319. Decisions G 18 and Ε 39, and Memo 440.

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183

have resulted in considerable lack of balance has the Impartial Chairman approved a departure from the standard rate.27 The claim of sub-standard or "aggravated" working conditions is another situation where uniformity and balance conflict. Sometimes a company may be employing standard methods, but its yarns or machines or some other condition may be so poor that an employee of average efficiency finds it impossible to make nearly average earnings. Frequently, such conditions are temporary—as for example when a company gets a single bad shipment of yarn. Sometimes, however, they are permanent—as for example, when a company's knitting equipment is so old as to be beyond rejuvenation. Where the condition has appeared to be of short duration, the Impartial Chairman has refused to establish any extras, maintaining that the minimum guarantees were established to protect the worker in just such conditions. Temporary extras have been employed in other cases where it seemed that the condition would continue for a considerable length of time28 and permanent extras have been granted where it has been clear that the condition would be lasting.29 In dealing with these cases, however, the Impartial Chairman has granted extras only if it could be proved that truly aggravated conditions of considerable proportion existed. Conditions which could be expected to permit earnings within 10 per cent of the association average have been considered "expectable and normal" and, therefore, not good ground for deviation from the standard rate.80 Thus, the sacrifice of balance to uniformity has been considerable. Most of the cases in which balance has been a factor, however, have not been concerned with differences of methods or conditions but rather with differences of styles. These latter are intraplant as well as interplant differences and the problem of uniformity is not important because the parties have always recognized that piece rates per dozen should vary with the style produced. It is here, however, that balance conflicts most with 27

Decisions Ε 34, Ε 57, Ε 72, G 44, Η 17, J 2, and Memos J7, 425, and 437. 28 Memo 362. w Decisions Ε 26, Ε 36, Ε 59. 80 Decision Η 42.

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simplicity, for, whereas the number of differences in methods of operation in each occupation is limited to the number of mills, such is not the case with styles. Hundreds of different styles of hosiery have been produced by the mills since the introduction of the Impartial Chairman machinery and the number of style changes possible is practically limitless. If perfect balance is to be maintained even within occupations in a particular mill, however, each style must have a separate set of rates. It is the attempt to maintain balance as between styles that has been largely responsible for the complex rate structure of the industry. It appears, however, that a much simpler rate structure could have been purchased only at too high a price in terms of balance and the undesirable results which flow from the lack of it. A balanced rate structure for each occupation within a plant has many advantages. If a rate structure is not balanced between styles for each occupation, the same workman may receive a sharp cut in earnings when the company shifts from one style to another which requires the same skill and energy. It is difficult for employees to accept a piece-rate system which permits such obvious inequities. Even with the multitude of extras and deductions now in effect, some changes in earnings do result from style changes because the extras and deductions are not in perfect balance, and when the change in earnings is downward the employees object. If the company changes all the machines of a certain type from a high- to a low-earnings style, a general drop in the morale of the group of workers operating the machines is usually noticeable. When the company finds that it is desirable to change only part of a group of machines to a lower-earnings style, the reaction may be even worse because of the feeling of discrimination. Yet if the rate structure were to be simplified by removing many of the extras and deductions, earnings changes resulting from style changes would be more certain and more severe. It appears to have been wise, therefore, to continue a rather complex wage structure. It has been neither possible nor desirable, however, for the Impartial Chairman to follow the principle of balance completely in establishing rates for new styles. It has not been possible

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because of the lack of balance in the existing structure—a condition which it is beyond his jurisdiction to correct. It has not been desirable because just as maximum simplicity of rate structure could be purchased only at too high a price in terms of balance, so also complete balance could be purchased only at too high a price in terms of simplicity. 81 Likewise complete balance could be achieved only by eliminating sharing as one of the six principles of secondary rate determination; for it is clear that complete balance of rates would not permit the adjustment of individual rates in relation to the savings of specific technological changes or the profits of premium products. It has been necessary, therefore, to compromise, as it was necessary to compromise when balance conflicted with uniformity. Here again, the Impartial Chairman in determining how far to follow one of these principles at the expense of the others has had no clear-cut formula to guide him. It has been necessary to follow "the rule of reason."®2 Sharing This principle has been defined as the establishment of new rates in such a manner as to permit the workers to share in the savings resulting from more efficient processes and in the exceptional mark-ups of products which bring premium prices. When it has been followed, it has been effectuated by the establishment of extras on such processes and products. The principle is by far the most controversial of the six which have been developed by the Impartial Chairmanship. Actually it removes the Impartial Chairmanship from the field of secondary rate determination, since the establishment of extras for this purpose results in a change of the wage level of the industry. It has been emphasized that on the whole the Impartial Chairman has considered his 31 See C. Canby Balderston, "Balance in Wage Setting," Harvard Business Review, Autumn, 1945, pp. S3-S4. 82 Decisions Ε 52, F 13, Η 12, Η 14, and Memos 210, 216, and 230. T h e Arbitration Board in the Haverhill shoe industry adopted the same policy and stated in defense of it, " T h e multitudinous and kaleidoscopic style changes of women's shoes make it next to impossible to devise such a nice variation of extras as will accurately vary prices in accordance with the difference in work received." Norton, o f . est., p. 257.

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task to be one of fixing rates in a proper relationship with rates already established by the Agreement. So far as the Impartial Chairman has followed this principle of sharing, however, rates have been established in relation not to the existing levels but to other factors which really guarantee that certain earnings will be out of line with those levels. The question may well be raised whether this method of distributing the savings of technological changes and the exceptional mark-ups of premium products is either desirable or fair. First, it may be argued that all of these savings and exceptional mark-ups should go to the owners, since they are the risk bearers. They absorb the losses which occur when a new technique is unsuccessful or when a new style is a drug on the market. Why, therefore, should they not have the total gains when a new technique or a new style is successful? Moreover, if the gains are held by the owners, competition should cause them to be passed on eventually to the public in the form of lower prices. This, it may be argued, is a better method of sharing in a competitive economic system. Even if it is agreed that the hosiery workers should share directly in such savings, it may be argued that the present method is not fair. For what happens is that the advantages of technological changes or premium products under this method are shared only with those employees who through no fault of their own happen to be at a point in the plant where the technological changes occur or the premium product is produced. Would it not be fairer to cause these extra profits to be shared more generally throughout the plant as a result of general wage increases? Finally there are those who would insist that the changing of the wage level which such sharing involves is a function which should be performed by the management and the Union themselves rather than by the Impartial Chairman. A search of the decisions reveals no case in which the Impartial Chairman actually stated that this principle was a determining factor in setting the rate. Dr. Taylor has stated, however, that extras have been employed "not only to account for deviations from standard conditions but also to permit sharing be-

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tween workers and managements in more efficient processes and in products which can bring a premium price."33 In following this principle, the Impartial Chairman was not introducing something new into the industry. The parties themselves adopted this policy in negotiating rates for new styles and new processes. In Negotiation 17 in 1940, for example, T h e r e was general agreement that knitters on these styles should earn more than on comparable all sük styles. F r o m the workers standpoint this is justified by the additional skill and hazard involved. F r o m the company position, slightly higher rates can be paid because the styles carry a premium on the market because of the price limitations imposed by the holders of the patent rights.

Thus in applying this principle the Impartial Chairman was following a policy which was not inconsistent with the practices of the parties themselves. In addition to the fact that the Impartial Chairman simply was following an already established policy of the industry, much more can be said in defense of this principle. Although the placing of special extras on particular jobs and styles results in an unfair distribution of these gains among the workers, it must be recognized that the alternative might be no sharing at all with the workers. One of the results of sharing, however, has been the willingness and even the desire on the part of the hosiery workers to participate in technological improvements. Through this principle of sharing, the worker has been given a stake in such changes. H e has an incentive to see that more efficient methods of operation are successfully employed in his job. It may well be, therefore, that on the whole the owners and the public have gained more by this policy than if the owners had refused to share. Thus this principle of sharing is complementary to the principle of incentive. It is contradictory, however, to uniformity, balance, and simplicity. It conflicts with uniformity because if the savings of every small method which results in more efficient operation at each plant are shared with the worker in the form ** From a letter to the author, April 7, 1947.

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of an extra, then rates between plants and even within plants would have to be so numerous as to make uniformity of rates meaningless. Likewise, simplicity would be destroyed by following the principle of sharing to its ultimate conclusion. Finally, it conflicts violently with the principle of balance. So far as rates are set so as to share the savings of technological improvements or the profits of premium-priced goods, instead of solely on the basis of differences in the skills, responsibilities, efforts, and other factors which are considered in properly evaluating jobs, the principle of balance is violated. Simplicity An impartial chairman should attempt to achieve the maximum amount of simplicity in the rate structure which is compatible with the attainment of the major advantages of the other rate-determination principles, for a simple rate structure has a number of distinct advantages. It enables management to calculate rates with speed and certainty, thus reducing the payroll department's errors and costs. It increases the ease with which labor costs can be determined, thus enabling the company to offer bids for new work promptly. Most important, however, from the Impartial Chairman's point of view, is the effect on the labor-management relationship. Ease of calculation of rates gives the workers confidence in the rate system and avoids the suspicions which are certain to arise under a complicated rate structure. Finally, the fewer errors under a simple structure make retroactive adjustments with their undesirable effects less frequent. The ultimate in simplicity would be a rate structure which provided one single hourly rate for each occupation. Such a rate structure would have, in addition, the advantage of complete uniformity. It might also be so built as to provide for the differences in responsibility, skill, and effort required in the various occupations and thus satisfy one criterion of balance. On the other hand, it would fail completely to achieve balance so far as the effort and skill exerted by individual workers is concerned. Its most important defect, however, would be its conflict with the principles of sharing and incentive. The desirability of

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this last principle, in a competitive and partially organized industry such as hosiery, is obvious.84 Incentive can be achieved, however, only by means of a piece-rate system, and the maintenance of a piece-rate system in the hosiery industry with its multiplicity of styles, to say nothing of differences in machines and methods of operation, necessitates a rather complicated rate structure if the inequities of severely unbalanced rates are to be avoided. Every one agrees that the rate structure of the National Labor Agreement is complex. In an early decision, the Impartial Chairman stated: "When one considers the complications of the rate structure in the hosiery business in the evolution of the industry, the complexities and variations become bewildering to an outside observer." 35 Although the structure has been simplified in one respect (greater uniformity of rates among the plants) since the writing of this decision, it has become more complex so far as extras and deductions for machine and style differences are concerned. Fortunately, from the point of view of simplicity, the parties have not superimposed a bonus system on top of the regular piece-rate schedule. There are no special extras which become effective after a worker produces more than the standard quantity per hour. In some industries the bonus calculations are the most complicated part of the rate structure. Furthermore, the Association has succeeded in making the structure more workable by developing tables which eliminate much individual calculation of extras and deductions. A new standard work sheet which has been introduced by the Association for the calculation of rates should prove very helpful in eliminating errors of omission, since it is set up in such a way as to provide a check on all the important rate components. In keeping with the principle of simplicity, the Impartial Chairman has refused a number of small extras and deductions which, although equitable, would have complicated the structure to an extent not warranted by their effect on balance.88 In refusing the Union's request for a special extra for making a slightly 84 35 86

See pp. 190-91. Decision A 9. Decisions A J, Ε 27, F 28, F 36, G 42, Η 12, and Memos 210 and 230.

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different type of reinforced toe, for example, the Impartial Chairman reasoned: It is obviously impractical to set different rates for every method of making reinforcements. . . . T h e rate schedule for reinforcements alone would be a bulky document, if each different type of reinforcement were assigned a special rate. 8 7

Even when a new operation has been so different that a rate for it could not possibly be calculated from the existing rate structure, the Impartial Chairman has refused to add a new rate if the operation has been one which would not be performed frequently. H e has reasoned that it is better to pay the employee an hourly rate, since the loss in incentive would be more than offset by the gain in simplicity.88 Incentive A piece-rate system provides many advantages to both parties in an industry such as hosiery. It causes workers on any particular job to be paid in relation to the skill and effort which they put forth. This is more equitable to both the workers and the companies than paying the same rate regardless of output. It also tends to eliminate arguments regarding whether a worker is doing "a fair day's work." Furthermore, the earnings and production records of an incentive system provide a continuous record of the efficiency and ability of each worker. Such records are very important in an industry which bases promotion on ability rather than on seniority. Finally, the greater production which the incentive system encourages results in decreased overhead costs which place the unionized mills in a better competitive position. Management is able to place lower bids and secure more work, thereby making possible not only higher earnings but also more employment than under an hourly-rate system. The piece-rate system is not something new in the hosiery industry. Long before the adoption of the Impartial Chairman system in 1929, the workers were accustomed to being paid in 87 88

Decision F 36. Decision F 36 and Memo 326.

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this manner and accepted it without resentment. Thus the Impartial Chairman has not had the difficult task of supporting an incentive system which one of the parties opposed in principle. In dealing with the individual rate cases which have come before him, however, he has had to see to it that barriers were not established which would prevent the piece-rate system from performing its incentive function efficiently. In this respect he has not been entirely successful. The difficulties encountered by the Impartial Chairman with this principle have been due to its conflict with the principle of protection from subnormal earnings. In attempting to protect employees from losses in earnings due to conditions beyond their control, the Impartial Chairman, on two occasions, has ruled in such a manner that incentive was severely hindered. The first departure in this respect was made in setting the so-called "style development rate" at 98 per cent of each worker's previous piecerate earnings.39 An understanding of this situation requires an explanation of the term "style development." Sometimes when a new style is placed on the machines it is found that a piece rate for it cannot be calculated from the existing agreement schedules. Likewise, the parties may not want to attempt to negotiate a new piece rate for the style until the "bugs" are out of it and production is up to normal. In the meantime the machines have to be operated and the workers have to be paid. Operating under such conditions has come to be known as "style development" and the rate per hour paid to the worker as the "style development rate." It has been recognized that in order to provide an incentive to the employees to get production on new styles up to normal as soon as possible, piece-rate earnings should exceed "style development" earnings. In establishing only a two per cent differential, however, the Impartial Chairman severely underestimated the amount of monetary incentive required to accomplish this purpose satisfactorily. One company, in complaining against the 98 per cent payment, contended that it "gives no incentive and encourages low 8e Decision Ε 22. For other applications of the 98 per cent rate see F 36, Η 6, Η 15, and Memo 136.

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production." The company further claimed that it had "sufficient evidence to indicate to its satisfaction that an entire department may have consciously held back on production."40 Criticism was not limited to this one company. It was general. The two per cent differential, it was argued, was not sufficient to call forth the best efforts of the employees. Many workers, it was claimed, preferred to "coast along on time rates" rather than put forth the effort necessary to increase production to the point where piece rates would be established. The Union was forced to recognize the validity of this criticism and eventually joined with the Association in replacing the 98 per cent rate established by the Impartial Chairman with the 90 per cent rate which is now in effect.41 The 10 per cent differential seems to be sufficient in most cases to accomplish the task which the two per cent failed to do. On another occasion the Impartial Chairman related the piece rate to the number of press-offs so that the greater the number of press-offs, the greater the piece rate per dozen of finished stockings.42 A press-off is a partly-knit stocking which is removed from the machine by the knitter because of some defect discovered in it before it is completed. The intention in providing this press-off extra was to protect the employees against losses due to poor yarn—a frequent cause of press-offs. Unfortunately, in addition to greatly complicating the calculation of rates in the plant where it was made effective, the decision also served as a deterrent to efficient production, for many press-offs can be avoided if the machine is kept in proper condition by the knitter. Placing a premium on press-offs served to encourage rather than penalize poor knitting practice. Fortunately, the press-off extras were temporary and as a part of a supplementary agreement were applicable to one mill only. The Impartial Chairman did not extend the use of these extras to other mills or continue them beyond the temporary period at the original mill. With these two exceptions, neither of which has remained part 40 41 43

Decision L 25. See pp. 14-1 J. Decision SA 77.

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of the "common law," the Impartial Chairman has followed a policy of strengthening rather than weakening the incentive system. This is illustrated in three decisions, all of which concern hourly minimum guarantees. The Agreement provides that when a knitter's machine is changed to the production of a new style, even though the piece rate for the new style can be calculated, the knitter is guaranteed 80 per cent of his previous piece-rate earnings for three weeks. If he has not exceeded the 80 per cent figure by three weeks, he is guaranteed thereafter 90 per cent of previous piece-rate earnings. In some instances it has appeared that the employees have not tried too vigorously to raise their production to the point where the piece-rate earnings would exceed the guaranteed earnings, especially at the end of three weeks of operation when the 90 per cent rate became effective. In order to provide added incentive in such instances, the Impartial Chairman has ruled that employees who do not perform a good "helping" job under such conditions may be reduced to the 80 per cent rate. Likewise, any stragglers among a group of knitters who lag behind in production and remain on the 90 per cent after the others have exceeded it with piece-rate earnings may be reduced to the 80 per cent rate.·43 Finally, if one knitter on a machine exceeds the guaranteed earnings, whether it is 80 or 90 per cent, the knitter who operates the machine on the opposite shift loses his right to the guarantee and receives only the piece-rate wages which he earns.44 By these provisions the Impartial Chairman has attempted to prevent individual workers from abusing the guaranteed earnings provisions of the Agreement. The result has been to make the incentive system more effective. Protection

A certain amount of protection of earnings in the form of minimum hourly rates, however, need not impede the operation of an incentive system. In fact, it can be of great help to its successful functioning by preventing the development of a hos48

Memo 406. ** Decision Ν 44.

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tile attitude on the part of the employees. If the hosiery piecerate system contained no minimum hourly guarantees, hourly earnings for individual workers would at times drop to extremely low levels because of conditions entirely beyond the workers' control. Under such conditions it would not be long until the workers' friendly attitude toward the incentive system would give way to demands through their union for "a more equitable" system whereby payment would be made by the hour instead of by the number of units produced. The parties recognized this fact and provided minimum hourly guarantees which, as explained in Chapter II, are geared to the incentive system.45 Thus the Impartial Chairman, in attempting to protect employees against severe losses due to conditions beyond their control, did not introduce a new principle into the industry. In a number of decisions the Impartial Chairman has supported this principle of protection in ways which have not resulted in serious loss of incentive. In most cases it has been a matter of extending the protection to cover certain conditions or certain groups of employees where there was some doubt of its application. Management contended, for example, that the 80 per cent style-change and the 90 per cent prolonged style-change rates were intended for the knitting department only. By a series of decisions, however, the Impartial Chairman made these guaranteed earnings applicable to the other departments because the wording of the Agreement did not make clear the intention of the parties and "on the basis of equity there is no reason to single out certain operations for preferential treatment." 4 · Likewise, the Impartial Chairman ordered the payment of an hourly-rate guarantee to knitters for breaking in new machines if production remained low because of machine difficulties beyond the control of the knitter for an abnormal period of time.47 The parties later made this latter provision unnecessary by agreeing to pay the 90 per cent hourly rate for breaking in all new machines from the beginning until such time as piece-rate earnings should exceed that amount. The Impartial Chairman then made the 45 48 47

See p. 12 and Decision Κ 10. Decision Ν 37. See also Decisions J 6, L 25, and Memo 4-4. Decision Η 44 and Memo 136.

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90 per cent hourly rate applicable to completely reconditioned machines as well as to new machines.48 It was the Impartial Chairman who first developed the difference between the style-change (80 per cent) and prolonged style-change (90 per cent) rates in order to equitably compensate employees who are unable to exceed the 80 per cent rate after a reasonably long period because of conditions completely beyond their control. In providing for a time rate higher than the 80 per cent under such conditions the Impartial Chairman reasoned: It is not reasonable to expect an employee to work indefinitely at style change rates [ 8 0 per c e n t ] if the production remains unduly l o w , solely because management did not properly perform its part of a style change or if continued machinery difficulties are responsible.· 49

In extending the protection of the guaranteed earnings, the Impartial Chairman has cautioned against the abuse of it. In ordering the application of the style-change and prolonged stylechange rates to the auxiliary departments he warned that there should be no "countenancing of 'slow downs' in production to fall back on the 80 per cent or 90 per cent rates." The payment of the hourly rates for any but a short period of time has been viewed as a symptom of either lack of effort on the part of employees or rates which are out of balance. "In either case, extended use of time-rate payment is not the answer to the situation. . . . This is a piece-rate industry and too extensive use of any sort of time rates is unsatisfactory to employees and employers alike."50 G E N E R A L CONCLUSIONS REGARDING SECONDARY WAGE-RATE DETERMINATION

It must not be inferred from what has been written that each of the Impartial Chairmen in the hosiery industry has had a clear concept of these six basic principles and the relationship between them and has consciously viewed each rate case with such a back48 49

80

Decision Ο J. Decision Κ 10.

Decision Ν 37.

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ground. In fact, it is certain that such has not been the case. At times one or two of the principles have been analyzed in their application to a particular case, making possible the growth of the "common law" described above. At no time, however, in the decisions or in the other writings examined in preparation for this study, were these six basic principles either described or their relationship analyzed. For the first time, therefore, the common law of the hosiery industry relating to rate determination has been compiled and analyzed in detail. This analysis, moreover, has resulted in certain conclusions regarding secondary rate determination which have more general industrial application. What are these broader conclusions? First, in a partially unionized, competitive industry with industry-wide collective bargaining and a piece-rate wage system, there are six major problems of secondary wage determination. These may be stated briefly as (1) uniformity of rates, (2) balance of rates, (3) sharing, (4) simplicity of rate structure, (5) incentive, and (6) -protection of workers from severe decreases in hourly earnings due to causes beyond their control. Second, the relationship between these problems is complex. In some respects they are complementary, in other respects contradictory. In other words, action aiding the solution of one of them may help or may hinder the solution of one or more of the others. Uniformity and simplicity, for example, are complementary. As greater uniformity of rates is achieved, fewer extras, deductions, and special rates for particular plants remain a part of the wage structure. The result is a more compact structure from which rates may be calculated with greater ease and certainty. Uniformity and balance, on the other hand, are contradictory. Perfect balance would require innumerable special extras and deductions from the standard rates to compensate for the many differences in methods and conditions in the various plants. Its complete achievement would eliminate uniformity of piece rates. Balance is in conflict with sharing. In fact all of the other factors except incentive and protection are in conflict with shar-

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ing. Only incentive can be said to be definitely complementary to sharing. Balance also clashes with simplicity. In part this arises over the same issues as the clash between balance and uniformity. Since uniformity and simplicity are complementary, action which hinders uniformity hinders simplicity also. The conflict between balance and simplicity, however, is not limited to their repercussions on uniformity. Even if complete uniformity of rates between plants were achieved, simplicity would still be in conflict with balance regarding extras, deductions, and special rates for different styles of the product within the various plants. Balance and incentive are both complementary and contradictory. A completely balanced piece-rate structure would result in complete equity of earnings. There could be no basis, therefore, for "lying down" on the job because rates are either too high or too low. On the other hand, a completely balanced rate structure would be very complex. The difficulty of calculating rates from such a structure would cause suspicion on the part of the employees and also would result in disputes over the computations which might more than offset the advantages of balance so far as the effect on incentive is concerned. It follows, of course, that uniformity and simplicity are also both complementary and contradictory to incentive. Incentive and protection are complementary up to a certain point and contradictory beyond that point. Protection of the employees from severe losses in hourly earnings due to malfunctioning of the incentive system results in a better acceptance of the system by the employees, and as long as there is a considerable potential earnings differential between the guaranteed rates and the piece-work rates, the adverse effect on incentive will not be significant. As the differential is narrowed, however, the possibility of increased earnings for increased effort becomes less inviting, and protection and incentive become contradictory goals. The ultimate in both simplicity and protection could be achieved together by eliminating the piece-rate system entirely. Single hourly rates for each occupation would greatly decrease the number of rate calculations and guarantee a certain hourly rate regardless of production. The clash with the principle of

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incentive, however, is obvious. On the other hand, an attempt to achieve protection with a piece-rate system and to relate the two as has been done in the hosiery industry causes the rate structure to be more complicated than it would be if no attempt were made to protect the employees against severe decreases in hourly earnings. Third, since the relationship between the principles is complex, the development of the best rate structure does not consist simply of following each of these principles to the fullest extent, but rather involves the weighing and balancing of both contradictory and complementary forces with the hope of securing the best possible combination. Unfortunately, there is no clear-cut formula by which an arbitrator or impartial chairman may be guided in this process. Reason and common sense are standard equipment for successful arbitration of rate cases.

CHAPTER Χ

APPRAISAL A N D

CONCLUSIONS

D I S P O S I T I O N O F CASES

OF THE 1566 problems presented to the Impartial Chairman by the parties, 1091 or 69.7 per cent resulted in decisions. The remaining 30.3 per cent were either returned to the parties for further negotiation, declared by the Impartial Chairman to be beyond his jurisdiction, or settled voluntarily by the parties without decision.1 In 29.9 per cent of all the cases decided by the Impartial Chairman, the Union received what it had requested and in an additional 14.8 per cent the decisions favored the Union, that is, they were much nearer to the Union's requests than to the Association's. On the other hand, in 35.6 per cent of the decisions the Association received what it had requested and in an additional 9.3 per cent the decisions favored the Association's requests. Altogether 44.9 per cent of the decisions were more favorable to the Association's requests than to the Union's as against a total of 44.7 per cent in the Union's favor. 2 In only 10.4 per cent of the decisions did the rulings split the difference so closely between the parties as to be considered favoring neither. It is surprising that of the total of 1091 decisions rendered over a period of 16 years, the rulings have favored the Union's and Association's requests almost exactly the same number of times. Does this mean that the Impartial Chairman has been fair and equitable in making decisions? Not necessarily—the percentage of cases won by each party is no measure of the soundness or fairness of an impartial chairmanship. In fact an impartial chairman in order to be fair and equitable might find it necessary to favor the requests of one of the parties in 90 or even 100 per cent of his decisions. In this respect an impartial chairman is 1 2

See Table 11, Appendix A. Calculated from Table 11, Appendix A. 199

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like a baseball umpire.8 No one would call a baseball umpire fair just because he called an equal number of strikes and balls against each team. It depends on the pitches. If they are not across the plate, they are not strikes. Likewise in an impartial chairmanship it depends on the requests of the parties. If the requests are unreasonable they must be denied regardless of the number of decisions the party may have won or lost in the past. Only if it is assumed that the parties have been equally reasonable on the average in their requests over the years and that the problems have been of equal significance would these statistical results indicate that the Impartial Chairmanship has been fair and equitable. If the decisions are broken down according to year, Impartial Chairman, or nature of problem, no such fifty-fifty results are obtained. In 1932 for example, 59.8 per cent of the decisions favored the Union's requests whereas only 36.6 per cent favored the Association's.4 On the other hand, during one Impartial Chairman's regime, 55.0 per cent of the decisions favored the Association's requests compared with 43.3 per cent which favored the Union's.6 In non-rate problems, the Association's requests have been favored more than the Union's, whereas in rate problems the Union's have been favored more than the Association's.® These figures show that the fact that the decisions have favored the requests of each party almost an equal number of times has not been the result of a planned policy on the part of the Impartial Chairman to divide the wins and losses equally. Furthermore, the fact that the decisions in only 10.4 per cent of the cases split the difference between the parties' requests indicates that the Impartial Chairman has not followed this policy in individual cases.7 Instead he has attempted to render just and equitable rulings regardless of the requests of the parties or their scores of wins and losses. 8 See William E. Simkin and Van Dusen Kennedy, Arbitration of Grievances, p. 14. * Calculated from Table 11, Appendix A. 8 Calculated from Table 14, Appendix A. β See Tables 12 and 13, Appendix A. T Calculated from Table 11, Appendix A.

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There is really no way in which the Impartial Chairmanship can be proved to be fair or unfair by statistics of cases won or lost. Is there any other criterion which might be of value in this respect? The opinions of the officials of the Union and of the Association should be helpful. It would not follow, of course, that because one or both of the parties expressed the opinion that the Impartial Chairmanship has been unfair such has been the case. One or both of the parties may simply be unreasonable. On the other hand, strong convictions on the part of both groups that the Impartial Chairmanship has been fair over the years is the best proof available. Fortunately this condition exists in the fullfashioned hosiery industry. The author has talked with the officials of both the Association and the Union and the opinion is unanimous on both sides that on the average over the years the decisions have been fair and equitable. George Lang, president of the Association from 1932 until his death in November 1946, said when questioned on this point, W e haven't been pleased with every decision. In fact we think some of them have been pretty bad. Of course we see them from only one side, so you have to expect that. I'd say that the decisions on the whole have been very fair. We're satisfied with the way it's worked out.

And Alexander McKeown, president of the Union, replied in a similar manner, T h e Union is satisfied that it has received a square deal from the Impartial Chairmanship. Sometimes we haven't received everything we thought we ought to get in a particular case but over all I think we got what was coming to us—no more and no less. That's the way it should be. If it wasn't, the Impartial Chairmanship wouldn't have lasted these sixteen years. E F F E C T S ON O T H E R P H A S E S OF I N D U S T R I A L R E L A T I O N S

Grievance Procedure The Impartial Chairmanship has not operated in a vacuum. I t has been affected by and in turn has affected other phases of industrial relations in the industry. As would be expected be-

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cause of the close relationship with the Impartial Chairmanship, the other steps of the grievance procedure have been influenced considerably. In a previous chapter it was pointed out that the Impartial Chairmanship, through the development of the common law of the industry, makes possible the quick and easy settlement of many grievances at the early stages of the grievance procedure.8 This is one of its most significant contributions. Each decision becomes not only a precedent for future decisions but also a point of reference for the parties in their attempt to settle disputes without recourse to the arbitration machinery. The parties know that once the Impartial Chairman has decided a certain issue at a particular plant in a certain manner he is likely to decide the same issue in the same way if it arises at another time or at another plant. As a result, if the issue does arise again, neither prolonged negotiations on it nor reference of it to the Impartial Chairman is likely to occur; for each party realizes that the other will not accept less than the Impartial Chairman has granted on a previous occasion and will probably grant again. Even when a new grievance is somewhat different from any on which a ruling has been made, decisions on similar subjects may still be helpful to the parties. Because the Impartial Chairman explains the processes of reasoning by which he arrives at his decisions, the parties are provided with patterns which they may follow in similar cases. The result is that many grievances are settled much more easily and quickly in the early steps of the grievance procedure than would be possible if it were not for the common law of the industry as embodied in the Impartial Chairman's decisions. In providing the parties with this body of industrial common law which enables them to reach agreements with greater ease, the Impartial Chairman is like an old guide in a new land who is called upon from time to time to lead parties into an uncharted area. Each time he notes certain landmarks and prepares a map which he makes available to the parties for future use. The map then makes it possible for them to find their way in that region at a later date without the aid of the guide. Moreover, the map may enable the parties, when exploring adjacent 8

See p. 94.

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203

areas, to find their own way by keeping the landmarks of the area already mapped in view. Needless to say, as more and more of the new land becomes mapped, the need for the old guide decreases. If it were not for the fact that the parties by additions to and changes in the contract continue to open up new areas for exploration, he might eventually work himself out of a job. Exactly how many agreements are reached each year at the early steps of the grievance procedure because of the existence of the body of industrial common law is not known, but conversations with union and company officials indicate that they are numerous. The providing of reference points for voluntary settlements is not the only way, however, in which the Impartial Chairmanship affects the other steps in the grievance procedure. By supplying a terminal point and by guaranteeing retroactive adjustment where equity demands it, the Impartial Chairmanship provides an atmosphere in which thorough and unhurried negotiation of grievances can be carried on without fear of loss to either party. In a piece-rate case, for example, if the Impartial Chairmanship were not a part of the collective bargaining system, the Union would feel itself forced to demand a quick settlement rather than permit its members to work at a rate which it considers grossly inequitable. If a quick settlement was not forthcoming, a stoppage might result. Thus lengthy negotiation, if required to arrive at an equitable solution, could not be carried on, at least not in an atmosphere devoid of the pressure of economic force. Under the Impartial Chairmanship, however, the Union knows that it can appeal the case to the Impartial Chairman and that he will adjust the rate retroactively so that neither party will have lost by spending the time required to arrive at a sound settlement of the problem. The Impartial Chairmanship also prevents the clogging of the grievance procedure by one or two issues on which the parties cannot reach agreement despite lengthy negotiations. A certain discharge or promotion grievance in a plant may be considered so important to one of the parties that no other problem will be considered until it is settled. If there were no terminal point to the grievance procedure such as is provided by the Impartial Chairmanship, the inability to solve this particular problem

204

EFFECTIVE LABOR ARBITRATION

would prevent the consideration of any other grievance for a dangerously long period of time. On the other hand, the Impartial Chairmanship provides an easy alternative to thorough negotiation which the parties may be tempted to overuse. Why spend time and energy trying to arrive at a voluntary settlement of a difficult problem when an equitable solution can be received quickly and with no additional cost from the Impartial Chairman? This effect on the thoroughness of grievance negotiations will be presented more fully later on as a criticism of the Impartial Chairmanship as it now operates. At this point it is sufficient to note that this is not a necessary effect. It represents instead a misuse which can and should be corrected. The effect of the Impartial Chairmanship on the ability of the parties to reach compromise settlements is also of dual nature. The possibility that the issue may eventually go to the Impartial Chairman for settlement may cause the parties to avoid making reasonable offers to each other because of fear of setting limits beyond which the Impartial Chairman may not go in rendering his decision. Thus in a piece-rate case both the Union and the Association may consider 1J cents a reasonable rate, but neither may be willing to propose it because it fears that the other party may then appeal to the Impartial Chairman using the 15-cent proposal as a base from which to secure a further increase or decrease. This practice has been discouraged by the refusal of the Impartial Chairman to consider offers during negotiations as limits beyond which he may not go in his decisions. Furthermore, the statistics show that the Impartial Chairman has not followed a policy of splitting the difference. Nevertheless it appears that the practice of holding to exaggerated demands in order to be in a better position before the Impartial Chairman has been followed in some cases and, to the extent to which it has been, the successful negotiation of grievances has been hindered rather than helped by the Impartial Chairmanship. The very fact that the parties must eventually present their arguments to the Impartial Chairman, however, if they cannot reach an agreement themselves probably causes them to adopt a more reasonable and factual approach during grievance negotia-

APPRAISAL AND CONCLUSIONS

205

tions; for the Impartial Chairman will analyze and criticize the arguments and will make his decision on the basis of facts and equity. T o appear to have been unreasonable in negotiation may harm one's case before the Impartial Chairman. As Emil Rieve, former president of the Union, said before one of its conventions, T h e whole character of the relationship and dealings with the employer, it seems to me, is elevated to a higher level as a result of the fact that our arbitration machine is always held in abeyance. Both sides know that they cannot come before a third party with unclean hands and expect to accomplish the best results in a negotiation. Both sides are forced, I think, to become more responsible and more intelligent. 9

On the whole this effect appears to have outweighed the possibility of exaggeration of demands. Contract Negotiations Although the Impartial Chairman serves only during the life of an agreement and has no power to settle new contract terms if the parties cannot agree on them, he nevertheless has had considerable effect on contract negotiations by serving as chairman of the contract negotiating meetings. The presence of this neutral and respected third party makes possible a more orderly procedure. Moreover, he serves as a conveyor and interpreter of proposals between the parties. When asked to do so, he also helps to phrase new clauses so that they will be acceptable and devoid of ambiguity. H e holds the parties together and may even suggest new approaches at times when the negotiations are stymied. Because of his knowledge of the industry and its problems and personalities he is much more effective in this respect than a conciliator from the federal government or some other outside agency. Before contract negotiations, the Impartial Chairman prepares an extensive wage study covering every operation in every association mill, 10 which provides the parties with unbiased and accepted factual data on which the wage negotiations may be 9 Proceedings, 1930 Convention, American Federation of Hosiery Worker«, p. 84. 1 0 For a description of the wage studies see pp. 77-82.

206

EFFECTIVE LABOR ARBITRATION

based. Although there are always arguments regarding the size of the increases or decreases which should be put into effect, debate over what the workers have earned during the past year is avoided by this technique. In addition to the wage study, the parties may request special studies on particular problems which are to be negotiated. This gathering and analyzing of data by the Impartial Chairman has been an important factor in the success of the contract negotiations. The Impartial Chairmanship also makes it possible for the parties to start contract negotiations with a clean slate. If it were not for the Impartial Chairmanship, many grievances might go unsolved during the life of a contract. The result would be that at contract-negotiation time the parties would have to spend time and energy which should be spent on major policies considering a host of festered minor issues. Moreover, the attitude of the parties during contract negotiations is likely to be more conducive to the settlement of major issues such as the general wage level or the general policy on promotion if they do not have before them unsettled minor grievances, such as a claim for a $.03 extra on a certain operation retroactive for six months or a claim that a company must reconsider a certain promotion made eight months ago. One of the major contributions of the Impartial Chairmanship to the success of the contract negotiations has been the prompt settlement of all grievances under the old contract, thus preventing in this industry what have come to be known as "crisis negotiations." By eliminating stoppages during the life of the contracts, the Impartial Chairmanship has enabled the parties to approach new negotiations without the bitterness and the lack of confidence in each other which stoppages frequently instill. The parties know that once an agreement is signed it will be subject to reasonable interpretation and will be enforced throughout all association mills. Finally the success of the parties in settling their problems during the life of agreements through the Impartial Chairmanship without resort to economic force has accustomed them to the methods of peaceful settlement and has developed a pride in their record of unbroken successful relations which they are anxious to extend. Considerable credit, therefore, for the success-

APPRAISAL A N D

CONCLUSIONS

207

ful negotiation of all new contracts since 1929 without resort to economic force by either party must go to the Impartial Chairmanship. ECONOMIC EFFECTS

Costs The costs of the Impartial Chairmanship are shared on a fifty-fifty basis by the Association and the Union. In 1945 the total expenses including the Impartial Chairman's salary were $16,360.55. The share paid by each party in that year, therefore, was $8,180.28." During the same year the total expenditures of the Union for all purposes were $343,174.98. 12 Thus the cost of the Impartial Chairmanship to the Union in 1945 represented only 2.38 per cent of the Union's total expenditures. 18 To the companies, the costs of the Impartial Chairmanship represent an even smaller percentage of their expenditures. T h e total expenditures of all 38 association companies are not available. The relationship between the cost of the Impartial Chairmanship and the expenditures of five member companies for which these data are available, however, is shown in Table B, which reveals that in none of the companies studied did it exceed four one-hundredths of one per cent of total expenses. T h e cost to all five of the companies represented only one one-hundredth of one per cent of total expenses. Thus the direct monetary cost of the Impartial Chairmanship to the industry can be disregarded. It is an insignificant amount when compared with total costs. Contributions In return for these small outlays, the Impartial Chairmanship has made a number of significant contributions to the economic 11 T h e Union paid an additional $117.83 to the office of the Impartial Chairman f o r the printing of 100 additional copies of the Wage Study. 12 From the Treasurer's Report, American Federation of Hosiery Workers, 1945. 13 In 194S the Union conducted some arbitration proceedings with nonassociation mills which raised its total arbitration expenditures to $8,670.15 or 2.5 per cent of all expenditures.

208

EFFECTIVE LABOR ARBITRATION

well-being of that section of the industry which it serves. The most important contribution has been the almost complete elimination of strikes and stoppages. Prior to the adoption of the Impartial Chairmanship in 1929, the industry was plagued by both authorized strikes and unauthorized wildcat stoppages. TABLE

Β

COST OF T H E IMPARTIAL CHAIRMANSHIP COMPARED WITH T O T A L EXPENSES OF COMPANIES

Total expenses ο f company1 $1 1,709,000 8,167,000 6,461,000 4,333,000 1,088,000

Company A Β C D Ε Five companies combined . . . $31,758,000

Percentage of Association dues paid by company* 7.12 10.34 9.55 8.95 4^63

40.59

Cost of Impartial Chairmanship as a Cost of percentage Impartial of total Chairmanship company to company expenses $ 582.43 0.005 845.84 0.010 781.22 0.012 732.14 0.017 378.75 0.035

$3,320.38

0.010

1 Data secured from annual reports filed with Securities Exchange Commission. 2 Data secured from Full-Fashioned Hosiery Manufacturers of America, Inc.

Stoppages occurred over such minor issues as "weather, insufficient ice-water, and holidays for fishing."14 Stoppages over yarn and machine conditions and rate disagreements were very frequent. "The assignment of a new style to one or several machines invariably led to a demand for an extra rate. Pending agreement the jobs in question were not run."15 In addition to the stopping off of individual mills and individual machines, major strikes were carried on by the Union to secure more favorable contract terms. In Philadelphia in 1919 a thirteen-week strike closed practically all hosiery mills in the 14

George W. Taylor, "Hosiery," Chapter 9 in How Collective Bargaining Works, p. 467. " hoc. dt.

APPRAISAL AND CONCLUSIONS

209

1

city. ® Again in 1921 all hosiery mills in Philadelphia except two were closed for more than a year.17 Similar strikes were held in other parts of the country. In 1928 a major strike at the Allen-A Company at Kenosha, Wisconsin, cost the Union about $2 million and so injured the company that it never regained its former important position in the industry.1® These strikes and stoppages were costly to the companies, the workers, and the Union. Because overhead costs continued when the machines were idle, the companies' production costs were increased. Moreover, their inability to meet delivery schedules lost them customers. The effect was to decrease the companies' profits and make it more difficult for them to meet the competition of non-union mills. The costs to the workers were measured not only in the direct loss of pay during the idle time but in many cases in layoffs, because the companies were unable to compete for orders with the mills where overhead costs were lower and delivery guaranteed. The cost to the Union of this constant warfare was also heavy. In addition to losing dues, the Federation was forced to subsidize the striking employees and their locals. The reference to the Kenosha strike indicates the expensiveness of these struggles to the Union. Speaking in favor of the Impartial Chairmanship at the 1930 Convention of the Union, Mr. Rieve, the president, said, I can only point out to you delegates the very obvious fact that if in the course of a year the arbitration machine will only prevent one small strike that it will have more than saved its entire cost in actual dollars and cents. 19

Under the Impartial Chairmanship practically all stoppages have been eliminated. In addition to making possible uninterrupted production, the Impartial Chairmanship has released management and union officials from unreasonably long and involved grievance negotia1β

Ibid., p. 470 Ibid., p. 472. 18 Ibid., p. 481. 19 Proceedings, 1930 Convention, American Federation of Hosiery Workers, p. S3. 17

210

EFFECTIVE LABOR ARBITRATION

tions. As a result management representatives have been free to spend more time and effort on increasing plant efficiency. This has had the direct effect of reducing costs and bettering the competitive position of association mills. Union representatives have been free to spend more time and effort on organizing the unorganized workers. The Union has not been highly successful in its organizational work, especially in the South, but where it has succeeded it has insisted on levelling rates and conditions up toward association levels. Moreover, the greater organizational efforts of the Union have caused non-union mills to increase rates in order to make the Union less attractive to their employees. Both directly and indirectly, therefore, the release of the management and union officials from unreasonably long drawn-out negotiations has placed the association mills in a better competitive position. In addition to aiding the companies, this has made possible more employment and better rates for the union workers. Finally, the Impartial Chairmanship had an important effect on the morale of the employees and their willingness to cooperate individually and through the Union with management in the introduction of new equipment and techniques.20 The bitterness which frequently follows strikes and stoppages and accompanies festering grievances is absent from association mills. Among those employees who are familiar with the operation of the Impartial Chairmanship there is a certain pride in being part of a just and intelligent system for the settlement of grievances. To the extent that this improved morale has resulted in decreased costs and better production, association mills have been placed in a better competitive position. Thus the Impartial Chairmanship, by making possible uninterrupted production, by releasing union and management officials for more productive work, and by improving employee morale, has contributed to the economic well-being of that section of the industry which it serves to an extent far in excess of the small amount which its maintenance requires. 20

In 1938 the Union accepted a IS per cent reduction in labor costs with the understanding that the savings would be used by the manufacturers to purchase new equipment.

APPRAISAL AND CONCLUSIONS

211

Stabilization One of the goals of the parties in undertaking association-wide bargaining and adopting the Impartial Chairmanship in 1929 was the attainment of stability of prices, profits, and wages. In this respect the plan did not succeed. Prices continued to decline after 1929 and non-union mills continued to enjoy a labor cost differential despite the negotiation of wage cuts by the Union which by 1932 had brought union wages on the average 60 to 65 per cent below the 1927 peak level. 21 Notwithstanding the economic contributions of the Impartial Chairmanship, many union mills failed and large numbers of union workers were unemployed even at the lower rates. T h e NRA stabilized the industry temporarily, but following its demise wage cuts, failures, and unemployment returned. "During the last three months of 1937, 4,500 Philadelphia employees lost their jobs through plant liquidations." 22 Government control and allotment of yarn stabilized the industry during the war and the high postwar demand plus the fact that much machinery was scrapped and none was built during the war years has resulted in postwar prosperity, but there is reason to believe that this condition is temporary. The basic conditions which made for instability during the late twenties and the thirties are still present in the industry. 28 The lack of stability in the industry, however, has not been viewed by the Association and the Union as a failure of the Impartial Chairmanship. Both parties have believed from the beginning of the new collective bargaining system in 1929 that stability depends among other things on uniform or nearly uniform labor costs throughout the major portion of the industry and that such a condition in turn depends on the extension of union organization and effective collective bargaining to the nonunion areas. T h e failure of the 1929 plan to achieve stability, therefore, is attributed primarily to the inability of the Union to organize certain large sections of the industry. If complete union21

Taylor, o f . cit., p. 485. Ibid., p. 501. 28 T h e substitution of nylon f o r silk represents one major exception to this statement. 22

212

EFFECTIVE LABOR ARBITRATION

ization should be achieved and uniform or nearly uniform labor costs accepted under an industry-wide contract, then the Impartial Chairmanship, by aiding in the enforcement of the contract rates, would be an important factor in maintaining stability. Up to the present, however, the Impartial Chairmanship has not had an opportunity to perform this function over an area of the industry sufficiently large to make it effective. From the public's point of view, it is doubtful if such industry-wide stabilization would be desirable. Its achievement probably would mean higher wages and higher prices for full-fashioned hosiery. Movement to the South Along with stabilization, the parties hoped to stop the movement of the industry to the non-union South. This goal also has TABLE C PERCENTAGE OF F U L L - F A S H I O N E D HOSIERY PRODUCED IN SOUTWERN M I L L S 1

Year 193+ 193J 1936 1937 1938 1939

Percentage o! Production 22.0

22.7 30. 5 30.5 3+.7 37.7

Percentage

of Year

Production

19+0 19+1 19+2 19+3

+0.2

19++ 19+5

+3.8

++.2 +3.2 +5.+ +5.9

1

Data for this table are from Hosiery Statistics—1946, published by National Association of Hosiery Manufacturers, New York City.

not been achieved. Table C shows that the percentage of fullfashioned hosiery produced in the South has increased rapidly since 1934. Although figures for the earlier years are not available, it is agreed that this movement had set in prior to the adoption of the Impartial Chairmanship in 1929. Criticism of the Impartial Chairmanship, however, for this reason is not warranted. The movement to the South has been due largely to the labor cost differential between the two areas and the Impartial Chairmanship has had no control over the general wage level in the mills which it serves.

APPRAISAL

A N D

CONCLUSIONS

213

Likewise in non-rate matters the Impartial Chairman's task has been largely one of interpreting the Agreement so as to reflect the intention of the parties. Since it is generally agreed by the officials of the Union and the officials of the Association that the decisions of the Impartial Chairman have been fair, 24 it must be concluded that the rates and other conditions which affect labor costs established by these decisions have been in line with those negotiated by the parties. If the wage level in association mills, therefore, has been such as to cause a movement of the industry to the non-union South, the fault has not been with the Impartial Chairmanship. It could hardly be expected to remedy a condition over which it had no control. C R I T I C I S M S AND S U G G E S T E D

IMPROVEMENTS

Despite the success which the Impartial Chairmanship has enjoyed in the hosiery industry and the high esteem in which it is held by representatives of both labor and management, analysis of the operation of the system during the years covered by this study indicates a number of possible improvements, adoption of which would further enhance its value to the industry. Some of these have been suggested in previous chapters. In this section it is proposed to discuss four of them in some detail and to suggest means whereby they may be eliminated. T h e four are: (1) use of the Impartial Chairmanship as a substitute for thorough negotiation, (2) decline in the mediation function of the Impartial Chairmanship, (3) delays in the Impartial Chairmanship procedure, (4) inadequate education of the workers and local union and management representatives in the procedures, principles, and values of the Impartial Chairmanship. Use as a Substitute for Thorough

Negotiation

Analysis of the 1566 grievances presented to the Impartial Chairman reveals that many of them could have been and should have been settled by negotiation. It is paradoxical that the very success of the Impartial Chairmanship in other respects is one of the major reasons for this defect. For it is largely because the Impartial Chairmanship has operated with such a high degree of 24

See p. 201.

214

EFFECTIVE LABOR ARBITRATION

fairness and efficiency that the parties are tempted to permit it to decide issues which could be solved by more thorough negotiation. There are, however, other reasons. First, the successful negotiation of a problem may require long, tiring sessions of study, debate, and compromise. Such sessions are not pleasant. When they become drawn out, the Impartial Chairmanship offers an easy alternative. Second, the facts of the problem in dispute may be such that one or both of the parties realize that it may be difficult to persuade their constituents that the settlement was fair. A solution brought about as a result of a decision of the Impartial Chairman removes the direct responsibility from the union and association officials. If the solution proves to be unpopular and if the attack by the workers or by the companies is vigorous, the Impartial Chairman can serve as the whipping boy. Finally, there is always the possibility that lengthy and frustrating negotiations on an especially difficult problem may result in the development of ill-will between the parties to such an extent as to impair their future good relations. Under such conditions are the parties not justified in referring the problem to the Impartial Chairman for decision rather than insisting on settlement by means of negotiation? Moreover, the answer cannot be a categorical yes or no. There are times when the best interests of the collective bargaining system may be served by referring a problem to the Impartial Chairman even though it could be solved by further negotiation. But in deciding to refer any particular dispute to him, the parties should be guided not only by the immediate effects of a quick and easy settlement of the particular problem at issue but also by the long-run cumulative effect. For the avoidance of negotiation in itself is undesirable. If collective bargaining is recognized as one of our important democratic institutions, then any tendency of the parties to avoid the responsibility of settling their problems through the more democratic procedure of the bargaining table, simply because the arbitration procedure is easier, must be viewed with alarm. It is generally agreed that democracy functions best where as many decisions as possible are made by the direct representatives of the constituents, especially when the representatives are qualified by experience to make such decisions. In most of the problems pre-

APPRAISAL AND CONCLUSIONS

215

sented for decision, the parties themselves are far more familiar than the Impartial Chairman with the facts of the case and the needs of the industry with respect to it. The undesirable effect on the democratic nature of the collective bargaining system as a whole is only one reason for using the Impartial Chairmanship sparingly; others concern the operation of the machinery itself. The settlement of minor problems decreases the prestige of the Impartial Chairmanship, making it less effective in dealing with the major problems for which it is really intended. Furthermore, the crowding of the docket with a large number of cases is one of the reasons for the delays in the procedure which is a major criticism of the system as it now operates. Several steps could be taken to guard against this usurpation of the function of negotiation by the Impartial Chairmanship. The Impartial Chairman, himself, could help by insisting on thorough negotiation before accepting any problem for decision. In the past this technique has been employed to some extent.28 From 1929 to 1945, however, only 39 problems or 2.5 per cent of all problems presented to the Impartial Chairman by the parties were returned for further negotiation.26 This technique could be used more extensively. Thorough negotiation of problems at the present time is lacking, especially at the Association-Federation level. Although the National Labor Agreement provides for such negotiation, the parties admit 27 that in recent years there has been a tendency to disregard this phase of the Agreement. Since cases can be filed with the Impartial Chairman only by officials of the Association or Federation, all grievances must pass through their hands. In this process they sometimes recognize weak cases on the part of their constituents and recommend settlements rather than arbitration. But there is seldom any real negotiation at this level and when each party has a reasonably good case, this last step of the grievance procedure before arbitration is little more than a conveyor belt. The collective bargaining system needs strengthening at this 26 26 27

See p. 51. See Table 11, Appendix A. From conversations with officials of both the Union and the Association.

216

EFFECTIVE LABOR ARBITRATION

point. The establishment of a joint national grievance committee whose sole function would be to bring about agreements at the Association-Federation level is recommended. It would seem wise to have a small committee composed of not more than three representatives of the Union and three representatives of the Association in order that it could meet frequently and reach decisions with speed. The Impartial Chairman should then accept problems only after this committee has made a thorough effort to find solutions without his aid. Removed from the scene of the disputes and containing members not directly affected by the issues but nevertheless familiar with them, the committee should be able to settle many problems which otherwise would be referred to the Impartial Chairman.28 Finally, greater effort should be made to bring about more efficient negotiation at the local level. This might be accomplished by better education of the local company and union officials in the art of negotiation and in the "common law" of the industry. This problem will be discussed in greater detail later on under a separate heading. Decline in the Mediation Function of the Impartial Chairmanship Another criticism of the Impartial Chairmanship as it now functions is the decrease in the number of voluntary settlements which the Impartial Chairman has been able to bring about during and after hearings. These have come to be known as S.W.D.'s (settled without decision). The number of S.W.D.'s reached a peak as early as 1933, and since then has declined until at present it is insignificant.29 28 In the Chicago men's clothing industry a committee such as is proposed here was established. During twenty-six months of operation, the committee (Trade Board) solved 206 cases and only 17 went to the Arbitration Board. Amalgamated Clothing Workers of America, Research Department, The Clothing Workers of Chicago, 1910-1922, p. S8. 29 See Table 11, Appendix A. According to Dr. Taylor, these statistics do not tell the complete story regarding agreements reached by the parties during and after hearings, because during his term as Impartial Chairman a number of voluntary settlements were issued as formal decisions. This means that the difference between the percentage of cases settled by this method in the past and the percentage settled by this method recently is even greater than the figures indicate.

APPRAISAL AND CONCLUSIONS

217

T h e statistics reveal that on the whole the Impartial Chairmen have been more successful in bringing about S.W.D.'s in nonrate cases than in rate cases. Whereas 31.9 per cent of all non-rate cases were settled in this manner, only 23.9 per cent of piece-rate cases and 22.5 per cent of hourly-rate cases were so settled. 30 Since the number of non-rate cases has tended to become a smaller percentage of the total since 193 8,81 it might be concluded that this change in the nature of cases has been an important cause of the decrease in S.W.D.'s. Research reveals, however, no correlation between the percentage of non-rate cases and the percentage of S.W.D.'s. 32 Furthermore, the decrease in the percentage of voluntary settlements has been so much greater than the decrease in the percentage of non-rate cases that the latter cannot be considered as a very important cause of the former. T h e statistics reveal also that the six men who served as Impartial Chairmen during the period covered by this study differed greatly in the percentage of cases which they were able to dispose of by S.W.D.'s. 33 One Impartial Chairman does stand far ahead of the others in this respect. In one year, 1933, he was successful in getting the parties to reach agreements themselves in over 50 per cent and during his entire period of service in more than one-third of all grievances filed with him. 34 A superficial analysis might lead one to conclude that a major cause of the decrease in S.W.D.'s has been the lack of mediation ability on the part of the recent Impartial Chairmen. That this represents the major cause of the decline in S.W.D.'s, however, is belied by the statistics which reveal that the decline in S.W.D.'s began in 1934—although there was no change in the chairmanship between 1931 and 1941. Moreover, the decline during the years 1933 to 1940 is no less severe than in the more recent years. It must be concluded, therefore, that, although differences in the ability of the Impartial Chairman to mediate may have contributed to the decrease, they are probably not the basic cause. 30 31 32 83 34

See Tables 12 and 13, Appendix A. See Table 3, Appendix A. Cf. Tables 3 and 11, Appendix A. See Table 14, Appendix A. See Tables 11 and 14, Appendix A.

218

E F F E C T I V E LABOR A R B I T R A T I O N

One of the causes for this decrease in mediation has been the growth of the industrial common law. As it has developed, the parties themselves have been able to settle many issues on which previously they would have sought the aid and advice of the Impartial Chairman. Another cause, however, is that it has been easier and more convenient in many cases to let the Impartial Chairman render a decision than to negotiate a settlement with his help. Once the Impartial Chairmanship had proved its ability to render equitable and workable decisions, the parties tended to depend on it to give them the answers rather than to hel-p them to seek the answers to their problems. Again it is paradoxical that the very success of the Impartial Chairmanship in rendering satisfactory decisions has been a basic cause of a defect in the system as it now functions. There are those, of course, who would not look upon the decrease in the number of S.W.D.'s as an unhealthy condition. It depends on one's concept of the major function of an impartial chairmanship. Is it arbitration or mediation? Is the job of an impartial chairman primarily that of interpreting and laying down the law or is it that of aiding the parties themselves to find the solutions to their problems? T h e viewpoint taken in this study, of course, is that it should be the latter and the reasons have already been presented in some detail. 35 If one conceives of the Impartial Chairmanship's primary function as that of mediation, then the decrease in S.W.D.'s becomes most significant. T o the extent that the S.W.D.'s disappear, the Impartial Chairmanship is failing in its most important function. There is apparently no alteration of the structure of the collective bargaining system which would aid in remedying this defect. T h e Impartial Chairmanship as now constituted can serve exceedingly well as a mediation agency. T h e proof is the success which it enjoyed in that capacity in the past. It will be recalled that in 1933 more than 50 per cent of all grievances presented to the Impartial Chairman resulted in S.W.D.'s. T h e correction of the present condition is largely a matter of change in attitudes. Both union and management officials should make a serious effort to revive the spirit which made possible the S.W.D.'s in 88

See pp. J7-S8.

APPRAISAL AND CONCLUSIONS

219

the past. The Impartial Chairman can do much to encourage the parties to revive it. The techniques which he may employ to bring about agreements were analyzed in Chapter VI. Needless to say, if these techniques are to be successful, the Impartial Chairman must be convinced himself that the primary function of his office is mediation rather than arbitration. Delays One of the principles of good impartial chairmanship procedure, discussed in Chapter VI, is the arrangement of hearings and the rendering of decisions with reasonable dispatch.88 The National Labor Agreement recognizes this in providing that the Impartial Chairman "shall give his decision within ten days after the case has been referred to him or as soon thereafter as is possible." 37 Unfortunately the record has not been good in this respect. On the average the Impartial Chairman has required 19.6 days following a hearing to render his decision. This is almost double the time set forth in the Agreement. Moreover 18.4 days were required to get the parties together for a hearing. Thus on the average a total of 38.0 days elapsed between the request for a hearing and the rendering of a decision.38 Moreover, the time consumed by the Impartial Chairmanship procedure has tended to increase during the period covered by this study. In fact, the average total time consumed per case by each successive Impartial Chairman with one exception constitutes an increase over that consumed by his predecessor. Not one of the Impartial Chairmen since Dr. Taylor has averaged less than 44 days per case from request for hearing to decision. It must be remembered that these figures are averages. Some cases have consumed many more days. Compared with the time which law courts would consume on these cases, the recent figures are still very favorable. Likewise management and labor in many other industries would be delighted if their arbitration machinery could be made to work 38

See pp. 84-85. National Labor Agreement, 1943-19+5, Full-Fashioned Hosiery Industry, Sec. E-2. Reproduced in Appendix B. 38 See Table IS, Appendix A. 31

220

EFFECTIVE LABOR ARBITRATION

with the speed of the hosiery Impartial Chairmanship. Nevertheless the trend is undesirable and should be reversed if possible. There are a number of reasons for the increase in delay. At times the number of grievances presented for decision has been so large that the Impartial Chairman has found it more difficult to arrange hearings and decisions with dispatch. Requests for hearings and cases heard, but as yet undecided, tended to accumulate at times, causing long delays. More judicious use of the Impartial Chairmanship at such times would reduce the backlog of cases. The average time consumed by the Impartial Chairmanship procedure on a rate case has been higher than on a non-rate case.39 In general, rate cases have become more complicated in recent years because of the more complex rate structure and the installation of more intricate equipment. The increased complexity of the cases accounts for the increased delay in rate cases, and indirectly, by consuming so much of the Impartial Chairman's total time, may help to account for the delay in non-rate cases also. The increase in the proportion of cases involving mills outside of Philadelphia is another cause of the increased delay. During the war years when travel was restricted, the handling of cases away from Philadelphia was especially difficult. The desire of the parties for thorough industry-wide studies of a number of problems has also consumed time, preventing the Impartial Chairman from rendering decisions with more rapidity. Furthermore, some of the Impartial Chairmen have taken on arbitration work in other industries which at times has been permitted to interfere with their work in the hosiery industry. Finally, the difference in training and temperament of the Impartial Chairmen may have been important. The effects of the increase in the time consumed by the Impartial Chairmanship procedure are very undesirable. One of the major advantages of an efficiently functioning impartial chairmanship is that it provides a reasonably quick terminus to the 89

T h e averages are as follows: Piece-rate case»—4-1.1 days; hourly-rate cases—37.6 days; non-rate cases—35.1. See Table 16, Appendix A.

APPRAISAL AND CONCLUSIONS

221

grievance procedure and thus prevents the festering of the grievance. As the time consumed increases, this advantage becomes less pronounced. Furthermore, the more time the Impartial Chairman requires to schedule, hear, and decide a case, the greater the amount of retroactive adjustment which is necessary. Since heavy retroactive adjustments are never pleasing to the party which is forced to make them, the Impartial Chairman should not contribute to increasing their size by avoidable delays. Moreover, delays by the Impartial Chairmanship in cases involving the establishment of piece rates for new styles or new equipment cause loss of income to both the company and the workers which cannot be made up by retroactive adjustment. 40 A number of steps could be taken to insure greater dispatch in the handling of cases. During the war, some of the union representatives in the Mid-West suggested a separate Impartial Chairman for that part of the country in order to avoid the delays which were occurring in the scheduling of hearings and the rendering of decisions. No action of this kind was taken nor is it recommended. The possibility of conflicting decisions and nonuniform rates which might result from having two chairmen would be more harmful than the delays which might be overcome. With the return of travel facilities to peacetime conditions, the problem in the mid-western mills should become less difficult. It will be well, however, for the Impartial Chairman and the parties to give grievances in these mills as speedy attention as possible. Perhaps the most important remedy is the very recognition by the Impartial Chairman and the parties of the unfortunate consequences of delay and the determination on their part to eliminate it as much as possible. This should mean that hosiery cases have first call on the services of the Impartial Chairman at all times and that he feels free to do other work only when the hosiery docket is completely clear. It should mean also that Union and management representatives make a greater effort to make themselves available for early hearings. Better pre-hearing preparation by both the parties and the Impartial Chairman so that all the pertinent questions are asked «Seep. 116.

222

EFFECTIVE LABOR ARBITRATION

and all the pertinent data are presented at that time would also be helpful. In the past, delay has frequently been caused by the necessity of getting in touch with the parties and securing information after the hearing which could have been presented at that time. A few hours spent by the Impartial Chairman in reviewing similar cases and becoming familiar with the facts of the present case before the hearing are often worth more than several days of study after the case has been heard and the parties are no longer available as a group for questioning. Education

Both the Association and the Union have been negligent in the matter of educating their constituents in the procedures, principles, and values of the Impartial Chairmanship. Many of the cases which come before the Impartial Chairman could be eliminated at their source if the local people were more familiar with the "common law" of the industry and the manner in which the Impartial Chairmanship functions. Moreover, an understanding by the workers and the local management representatives of management's right of administrative initiative and the worker's rights of appeal and retroactivity as developed by the Impartial Chairmanship would avoid many misunderstandings and do much to prevent the few stoppages which still occur. Finally, knowledge of the collective bargaining system of which they are a part should lead to an enthusiasm to make it work even more successfully than it has in the past. Education has been neglected by the parties for a number of reasons. Since the system has worked with reasonable success, there has appeared to be no urgent need to spend large amounts of time and money in educational activities. Furthermore, the Union has been busy organizing new members and the manufacturers have been busy trying to produce at costs which will meet competition. During the depression both parties were forced to conserve their funds for basic operations and during the recent war raw material and manpower problems demanded the energy which might have been used for education. Recently the Union reorganized its educational department and hired a full-time director and assistant. It is hoped that con-

APPRAISAL AND CONCLUSIONS

223

siderable work will now be done to educate the workers, especially those who are serving as local leaders, in the principles and functions of the Impartial Chairmanship. Management would do well to emulate the Union in this respect. The foremen and supervisors in every plant should be brought together from time to time for a series of conferences on this subject. The companies, the Union, and the Impartial Chairmanship all stand to gain by more thorough education at the local level. In this respect the Impartial Chairman might be called upon to aid in the preparation of material and the leading of discussion groups. Such material as is prepared for educational work within the industry should also be made available for wider distribution. In addition it may be desirable to prepare special articles for distribution to other unions and other industry groups. It is surprising how little is known outside of the hosiery industry of this very successful and significant experiment in collective bargaining. The parties have a social responsibility to make the results of it well known, especially to those union and company officials in other industries where adoption of some or all of the techniques might be instrumental in developing more stable industrial relations. SUMMARY CONCLUSIONS

Jurisdiction The jurisdiction of the Impartial Chairman is limited to secondary arbitration, that is, he has no right to rule on (1) changes in the contract, (2) the general wage level, (3) terms of a new contract. Despite the fact that the Impartial Chairman would be well equipped to rule on the issues of primary arbitration, the denial of jurisdiction in this area is sound because of the desirability of allowing the parties an opportunity during contract negotiations to negate his decisions and the danger that decisions on the general wage level might make him -persona non grata and thus eliminate his value in secondary arbitration. Peaceful settlement of general wage-level disputes is provided for by means of a special wage tribunal.

224

EFFECTIVE LABOR ARBITRATION

Procedure A series of procedures which, on the whole, function smoothly and efficiently has been developed. The only major change suggested in this area is the establishment of a national grievance negotiating committee which would serve as a final step before the Impartial Chairmanship. Techniques The techniques employed by the Impartial Chairmen have been highly effective in causing the parties to accept the system and the decisions rendered through it. In addition to the methods developed to aid in arriving at equitable decisions in rate and in non-rate cases, mediation techniques and techniques employed in gaining the acceptance of the decision by the parties have been especially important. Greater emphasis should be placed in the future on the mediation techniques. Non-Rate Principles A body of industrial common law has evolved from the Impartial Chairman's decisions. The decisions serve as precedents for future decisions and, even more important, provide the parties with guidance and aid in settling grievances through negotiation at the earlier stages of the grievance procedure. By following the policy of making the intent rather than the strict wording of each decision the basis of precedent, the legalistic and inflexible approach which might lead to inequities in this common-law approach has been avoided. Analysis of the decisions shows the development of a well-knit, well-rounded, logical body of industrial common law. The development has been such as to encourage efficiency of operation at the same time as it guarantees protection and equity to both labor and management. Especially significant has been the restoration to management of the right of administrative initiative. A firm but fair discipline policy has also proved beneficial to both parties.

A P P R A I S A L AND C O N C L U S I O N S Rate-Determination

225

Principles

Analysis of the rate cases reveals six goals which the Impartial Chairman has attempted to achieve: 1. Uniformity of piece rates throughout the entire Association— the same piece rate for the same product made on the same general type of equipment in all mills. 2. Balance of rates within each mill and throughout the industry —rates so set that the differences between them measure accurately the differences in the responsibility, skill, and effort required of the task. 3. Sharing—the establishment of rates in such a manner as to permit the workers to share in the savings resulting from more efficient processes and in the large mark-ups of products which bring premium prices. 4. Simplicity of rate structure—a structure so compact and so lucid that the workers, union representatives, and management representatives have no difficulty comprehending and applying it. 5. Incentive—payment made in such a way as to encourage each worker to produce rapidly and efficiently. 6. Protection of workers from severely subnormal hourly earnings due to conditions beyond their control. The emphasis on these goals has varied from time to time. In none of the decisions, however, was an attempt made to show the relationship existing between all six. The analysis of relationship in this study has revealed that while some of the six are complementary, others are contradictory. In other words, these goals are not mutually achievable and therefore no clear-cut formula of secondary rate determination is possible. To achieve the best results, the Impartial Chairman must pursue one goal only to the extent that the effect on some of the other goals is not too undesirable. This necessitates the balancing of objectives and the following of the rule of reason. Economic

Effects

The economic effects are difficult to measure because of the many other contributing factors. Although the Impartial Chair-

226

EFFECTIVE LABOR ARBITRATION

manship has not been able to stabilize the industry completely or to stop its movement to the South, there is reason to believe that stability has been greater and the movement less than they would have been without the Impartial Chairmanship. The elimination of stoppages, the return to management of the right of administrative initiative, the firm discipline policy, and the improved morale resulting from the Impartial Chairmanship have increased efficiency of operation, thus placing the association mills in a better competitive position than they would have attained without the Impartial Chairmanship. The workers in turn have benefited by more employment and better pay. Effects on Other Phases of Industrial

Relations

The effects on the other phases of industrial relations have not been entirely one-sided. There has been a tendency on the part of management and labor to avoid thorough negotiation of all grievances at the early stages because of the ease with which the Impartial Chairmanship can be employed and the satisfactory decisions which it has rendered. On the other hand, by providing the parties with a body of industrial common law and guaranteeing final equitable adjustment including retroactivity, the Impartial Chairmanship makes possible a proper atmosphere for thorough negotiation. New contract negotiations have been made more successful by the supplying of unbiased data by the Impartial Chairman and by the elimination of "crisis negotiations" resulting from the accumulation of unsolved grievances under the old contract. Defects

There are four major defects in the Impartial Chairmanship as it now functions. These are: (1) use as a substitute for thorough negotiation, (2) decline in the mediation function, (3) delays in the processing of cases, (4) inadequate education of the local union and management officials and the workers in the value and function of the Impartial Chairmanship. None of these defects, however, is inherent in the system and methods for their elimination have been suggested.

APPRAISAL A N D CONCLUSIONS

227

Wider Application Great interest has been exhibited recently by both management and labor leaders in the development of satisfactory terminal points for grievance procedures. The desirability of this development was one of the few things on which the President's National Labor-Management Conference of 1945 was able to reach complete agreement. The conference resolved that: Collective bargaining agreements should contain provisions that grievances and disputes involving the interpretation or application of the terms of the agreement are to be settled without resort to strikes, lockouts, or other interruptions to normal operations by an effective grievance procedure with arbitration as its final step. 41

This interest has arisen from the recognition that unless effective terminal point procedures, techniques, and principles are available in a unionized company or industry, industrial peace may be marred by stoppages and crisis contract negotiations and efficiency in production may be hindered by the festering of grievances and the challenging of management's claim to administrative initiative. Since the Impartial Chairmanship has been effective in these respects in the hosiery industry, would its broad adoption have the same effect throughout industry generally? It is believed that many of the procedures, techniques, and principles developed and tested by the hosiery Impartial Chairmanship could be adopted with profit in other industries. The extent to which this may be true in any specific industry or company, however, would depend upon the similiarity of the economics and industrial relations of that industry or company to those in hosiery. Such analyses are beyond the scope of this study. The hosiery experience is made available here, however, for those companies and industries which are seeking guidance. 41 The Presidents 1945, p. 45.

National

Labor-Management

Conference,

November

5-30,

APPENDIX A STATISTICAL ANALYSIS OF GRIEVANCES PRESENTED TO THE IMPARTIAL CHAIRMAN OF THE FULL-FASHIONED HOSIERY INDUSTRY THE TABLES in this appendix are the result of an analysis of the 1566 grievances which arose in member mills of the Full-Fashioned Hosiery Manufacturers of America and were presented for decision to the Impartial Chairman of the Hosiery Industry during the period September 1929 to August 1945 inclusive. In other words, to use the language of the statistician, the study represents a complete enumeration of the universe selected. T h e raw material for the analysis was secured by reading the decisions and the collateral data which are filed with them at the office of the Impartial Chairman, 1520 Locust Street, Philadelphia, Pa. T h e material has been tabulated by calendar years. This has the disadvantage of making it difficult to measure the effect of contractual changes on the arbitration machinery, since the contract termination date in the industry is August 30. On the other hand, it makes possible comparison and correlation with other statistical data of the industry and of the economy in general, most of which are available only on a calendar-year basis. For the purposes of the present analysis, the latter was considered more important than the former. In a number of the tables, the categories "miscellaneous piece-rate grievances" 1 and "miscellaneous non-rate grievances" 2 occur. T h e number of items in each of these categories is large. Such a condition would not usually be considered as good statistical procedure. Usually miscellaneous categories should contain only a small percentage of the total items. T h e larger number in this analysis, however, is justified for several reasons. First, in piece-rate grievances, the management and the union officials tend to think of cases as falling within the seven specific categories which have been adopted in this analysis and to consider all other piece-rate cases as "miscellaneous." A similar condition exists 1 2

See Tables 6, 7, 9, 13, 16. See Tables 4, 5, 9, 12, 16. 228

APPENDIX

A—TABLES

229

as regards categories of non-rate grievances. T h u s "miscellaneous piece-rate grievances" and "miscellaneous non-rate grievances" are in themselves customary categories. Second, a number of attempts were made to break away groups of grievances from the miscellaneous categories. In each case, however, it was discovered that any new class which would be comparable in meaning to those already established would be so small that it would have been necessary to create an unwieldy number of them if the number of items in the miscellaneous categories was to be decreased appreciably. T h e analysis indicated, in other words, that although all grievances were easily classified into one of the three major categories —piece-rate, hourly-rate, and non-rate grievances—when an attempt was made to sub-classify the piece-rate and non-rate grievances as to cause, sizable miscellaneous categories were necessary because of the wide range of minor causal factors and the diffusion of items among them.

T A B L E

1

A U T H O R S A N D T I M E S O F I S S U A N C E O F D E C I S I O N S AND

Letter decisions

Period issued

Memos

MEMOS

Impartial Chairman

A Β C D Ε F G

— — — — 1 — 2- 34

9/29- 8/30 9/30- 2/31 3/31-6/31 6/31-8/31 9/31- 8/32 9/32-12/33 1/34-12/34

Abelson Abelson Abelson Abelson Taylor Taylor Taylor

Η J Κ

35-124 125-152 153-212

1/35- 3/36 4/36- 7/37 8/37- 9/38

Taylor Taylor Taylor

L

213-241

10/38-12/39

Μ

242-277

1/40- 8/41

jl^!01' / bimkin

Ν

278-404

9/41- 8/42

_ Ο

405-450

, , 9/42- 8/43

Jsimkin /Kennedy CSimkin, L· ' /Kennedy

P

45 ,

„ Q SA*

"506

507-530 -

9

/43"

9/44- 8/45 1/39-10/41

I bimkin

IBuckwalter (Buckwalter, j j ^

ySimkin

* The SA or supplementary decisions were issued during the rehabilitation period when separate supplementary contracts were signed with each mill.

TABLE

2

GRIEVANCES ACCORDINC TO MAJOR TYPES BY YEAR Year

Non-rate

1929* 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945"F

1 IS 37 58 30 62 71 50 57 90 47 39 54 47 39 21 9

TOTAL

727

Piece-rate

Hourly-rate

8 14 22 52 25 59 90 31 32 30 20 36 76 66 29 31 5

1 3 6 11 4 8 19 16 20 10 6 12 36 24 16 17 4

626

TABLE

213

Total 10 32 65 121 59 129 180 97 109 130 73 87 166 137 84 69 18_ 1,566

3

PERCENTAGE DISTRIBUTION OF GRIEVANCES ACCORDING TO MAJOR TYPES BY YEAR Non-rate

Year 1929* 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945F Total

..

....

10.0 46.8 . . . . 56.9 47.9 .... 50.8 . . . . 48.1 . . . . 39.4 . . . 51.5 52.2 69.2 . .. 64.4 44.8 . . . . 32.5 . . . . 34.3 . . . . 46.4 30.4 . . . . . . . 50.0 ....

46.4

Piece-rate

Hourly-rate

Total

80.0 43.8 33.9 43.0 42.4 45.7 50.0 32.0 29.4 23.1 27.4 41.4 45.8 48.2 34.5 45.0 27.8

10.0 9.4 9.2 9.1 6.8 6.2 10.6 16.5 18.4 7.7 8.2 13.8 21.7 17.5 19.1 24.6 22.2

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

40.0

13.6

100.0

* D a t a f o r last three months of year only, f D a t a f o r first nine months o f year only.

TABLE • N O N - R A T E GRIEVANCES ACCORDINC TO CAUSE

Cause

Percentage of non-rate grievances

'Number

Company rights 55 Discharge 83 Discrimination 4 Fines 17 Helping 7 Hiring 9 Hours of work 14 Layoff 11 Minimum wage 42 Overmanning 13 Overtime 27 Promotion 52 Purchase of non-union goods or services 15 Rehabilitation obligations . . . . 24 Reporting pay 15 Right to job 33 Right to machine 14 Stoppage 20 Union rights 56 Work sharing 47 Miscellaneous 169 Total

~727

Percentage of all grievances

7.6 11.4 0.6 2.3 1.0 1.2 1.9 1.5 5.8 1.8 3.7 7.2

3.5 5.3 0.3 1.1 0.5 0.6 0.9 0.7 2.7 0.8 1.7 3.3

2.1 3.3 2.1 4.5 1.9 2.8 7.7 6.5 23.1

1.0 1.5 1.0 2.1 0.9 1.3 3.6 3.0 10.6

100.0

46Λ

TABLE

J

0 0 2 2 2 1 0 2 2 2 1 1 0 0 1 1 0

0 1 0 0 0 0 3 1 0 1 0 0 0 1 0 0 0

55

83

4

17

7

'S

m

ε •S 32 Ρ 'S °

ο «

0 2 1 1 1 0 2 1 1 0 1 3 2 0 0 0 0

ο 0 0 0 0 0 0 0 0 0 0 5 9 10 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 2 0 10 2 1

δ 0 0 1 2 1 7 1 2 2 9 1 1 3 1 0 1 1

15

24

15

33

I li 0. 1929* . . . . . 0 1930 . 0 1931 . . . . . . 0 1932 1 1933 . .. 0 1934 . . . . . . 0 1935 . . .. 1 1936 . . . . . . 4 1937 . . . . . . . 6 1938 . . . . . . 11 1939 . . . . . . 5 1940 . . . . . . . 5 1941 . . . . . . 5 1942 . . . . . . . 9 1943 . . . . . . . 2 . .. 1 1944 1945+ . . . . . . 2 Total . 52

l i t «M