Monthly Archives: December 2014

CHANGING THE METHOD OF PAY: Introduction

Posted by Kathryn Schwartz on December 15, 2014
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At the beginning of the Twentieth Century one of the largest industrial employers in America was shoemaking, and several of the most influential studies on the development of the economics of industrial relations focused on this industry (Commons, 1909)1. One of the unique characteristics of the industry was its tradition of piece rate methods of pay. Just before World War П almost 90 percent of workers in American shoemaking were paid through a piece rate system (Davis, 1940). fully

Through the 1980s, the majority of U.S. shoe manufacturing firms used piece rate methods of pay (Bureau of Labor Statistics, Industry Wage Survey 1987). But as firms closed in the face of intense import competition and new plants did not open, the surviving shoe manufacturers turned increasingly to time rates of pay. By 1997, over three-quarters of employees in the industry were paid primarily by time rates in an industry that had declined dramatically.
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CHANGING THE METHOD OF PAY: The Economic Situation in the American Shoe Industry

Posted by Kathryn Schwartz on December 13, 2014
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Our analysis parallels the work of Dunlop and Weil on the introduction of modular production in the textile industry, another low wage sector facing severe import competition.

The similar response of the two sectors suggests that in highly competitive industries subject to low-cost foreign competition, modular modes of production with time rates of pay offer a competitive edge to firms compared to piece rate systems. Still, given the productivity advantage of piece rates, we surmise that some form of group incentive system or gain sharing might provide the “last American shoe manufacturers” with greater staying power in the market. website
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