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GUARANTEED WAGE
OR

EMPLOYMENT PLANS




Bulletin No. 906

UNITED STATES DEPARTMENT OF LABO R
BUREAU OF LABOR STATISTICS

GUARANTEED WAGE OR EMPLOYMENT PLANS
Bulletin No. 906
A reprint of Appendix C from Guaranteed Wages: Report to the President
by the Advisory Board, Murray W. Latimer, Research Director

LETTER OF T R A N S M I T T A L
U n it e d S t a t e s D

epar tm en t of

B ureau

of

L abor,

L a b o r S t a t is t ic s ,

Washington , June 9, 1947 .
T

he

S ecretary

of

L abor:

I have the honor to transmit herewith a report on guaranteed wage and
employment plans, which was prepared in the Bureau’s Wage Analysis Branch
and submitted to the Office of War Mobilization and Reconversion for inclusion
in their final report. The field work was conducted under the direction of the
Bureau’s regional wage analysts.




E w an C lague,
H

on.

L. B.

S chw ellenbach,

Secretary oj Labor.

Commissioner,

PREFACE
In the summer of 1944 the Bureau of Labor Statistics began an inquiry into
the subject of guaranteed wage and employment plans, anticipating a general
demand for information on the nature of such plans and of the Nation’s experience
with them. At the time the Bureau began its inquiry, union demand for a guar­
anteed annual wage was at issue in a dispute case before the National War Labor
Board, involving the basic steel industry and the United Steel Workers of America.
In rendering its decision in November 1944, the Board refused to grant the union’s
demand under conditions prevailing at the time. However, in view of the lack of
adequate information relating to guaranteed annual wage plans, it was recom­
mended that a thorough study of the subject be made by a special commission to
be appointed by the President.
On March 20, 1945, the President designated the Advisory Committee of the
Office of War Mobilization and Reconversion to survey “ the whole question of
guaranteed wage plans and the possibility of their future development in American
industries as an aid in the stabilization of employment and the regularization of
production.” Following this action, the Bureau’s program was carried on in
cooperation with the Guaranteed Wage Study Staft, designated by the Office of
War Mobilization and Reconversion to investigate the problem. In December
1945, the Office of War Mobilization and Reconversion submitted to the Bureau
of Labor Statistics a request for a survey of specific experiences with existing and
discontinued guaranteed wage and employment plans.
The following report summarizes the major findings of the Bureau’s survey,
and appears as Appendix C of the Final Report to the Advisory Board of the
Office of War Mobilization and Reconversion which was prepared by the
Guaranteed Wage Study Staff.
The Bureau’s forthcoming final report on guaranteed wage and employment
plans will include an analysis of the major characteristics of a number of individual
plans.




i

CO N TEN TS
Page

Definition and methodology employed in this study________________________________________
Definition_______________________________________________________________________________
Methodology________________________________________________________________________
Historical development of plans__________________________________________________________
Initiation of plans___________________________________________________________________
Discontinuance of plans_____________________________________________________________
The net status of plans_ ___________________________________________________________
_
The extent and nature of guaranteed wage or employment plans in the United States „ _
Currently operating plans-----------------------------------------------------------------------------------------Prevalence______________________________________________________________________
Characteristics____________________________________________________________________
Discontinued plans__________________________________________________________________
Experience with Government legislation-------------------------------------------------------------------------------




ii

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1
2
2
2
5
7
8
8
8
10
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16

APPENDIX C—GUARANTEED W AGE OR EMPLOYMENT PLANS
D E FIN IT IO N A N D
EM P LO YED IN

M ETH O D O LO G Y
TH IS STU D Y

D EFIN ITIO N
The Bureau of Labor Statistics has included
in its study o f guaranteed wage or employment
plans all arrangements, written or unwritten, by
which an employer guaranteed or assured to some
or all of his employees, in advance, a definite
period of employment equal to at least 3 months
a year, or an equivalent amount of wages.
This definition is broad, and covered plans
framed in a variety of ways: plans which were
designated as “ guarantees” by the employers and
unions which operated under them, and plans
which did not carry the title of “guarantee” but
which in fact operated as guarantees. In a rela­
tively small number of cases, the plans provided
for an “ annual wage.” In the majority of cases,
employment was guaranteed for a stated number of
weeks per year and hours per week, frequently
less than 52 weeks per year and 40 hours per week.
In practice, these guarantees of employment, as
well as the few guarantees that were explicitly
stated in terms of wages, did guarantee wages for
the total number o f hours a year over which em­
ployment was guaranteed. A distinction between
“ guaranteed wage” and “ guaranteed employment”
plans was unnecessary for the purpose of this
study.
Despite the general inclusiveness of the defini­
tion employed, a number of problems arose re­
specting its application in border-line situations.
The distinction between a guarantee plan and a
private unemployment benefit plan, for example,
was difficult to draw. The latter were included
only where the period of time over which benefits
were paid was 3 months or more and where there
was a commitment to pay benefits regardless of
the size of reserves set aside for this purpose.
It was difficult also, in many instances, to draw
the line between a guarantee and an employer’s




oral pledge that work in his establishment would
be “ steady.” A large degree of stability is in­
herent in many types of industry. Moreover,
many employers have maintained fairly stable em­
ployment in their plants, frequently as a result
of planned production and hence employment
regularization, without instituting formal guar­
antees. The volume of employment regulariza­
tion planning in this country is, in fact, far greater
than that encompassed by the actions o f the firms
that have guaranteed wages or employment. The
practice of employing white-collar personnel on
an annual rate basis is widespread, especially in
government, financial, and institutional estab­
lishments. Guarantees of minimum weekly hours
or wages are found in many labor agreements,
notably in the meat-packing and trucking indus­
tries; the practical effect of these arrangements
is to afford a guarantee of almost full weekly
earnings even when wage earners work only dur­
ing some part of each week. In none of these
situations, however, is there a formal pledge or
assurance of continued employment, and the em­
ployee is not free from the possibility of lay-off
or loss of his job. Oral arrangements (amounting
to 36 percent of the currently operating plans in­
cluded in the study) were included only where
there was a formal guarantee or assurance of con­
tinued employment or wages.
Many of the plans contained the theoretical pos­
sibility of abrogation or modification during the
life of the guarantee period under various cir­
cumstances. Provisions for modification or can­
celation of an announced guarantee did not result
in exclusion of the plan from the study.
The so-called wage advance plan was another
type of guarantee which raised questions of in­
clusion. Such plans are sometimes regarded as
loan arrangements, because their central feature is
the advancement of wages by the employer during
short-hour weeks, and the repayment by workers
during weeks in which longer hours are worked.
They are different from loan plans in essential
1

characteristics, however. Where there was no
obligation to repay the advance unless the em­
ployer provided sufficient work to enable the
advance to be repaid, the plan was considered to
be a guarantee of wages or employment for the
maximum period over which wages were advanced,
and was included in the study.
M ETH ODOLOGY
On March 1, 1945, the Bureau of Labor Statis­
tics mailed a brief questionnaire to about 90,000
employers for the purpose of determining the
extent to which guarantee plans had been adopted
in the United States. From the replies to this
questionnaire, from a canvass of previous studies
and available literature on the subject, and from
a list of employers who had filed contracts with the
Wage and Hour and Public Contracts Divisions
under section 7 (b) (2) of the Fair Labor Stand­
ards Act, the Bureau was able to compile a list of
firms which appeared to have had a guaranteed
wage or employment plan in effect at some time.
The Bureau then conducted a field inquiry to de­
termine finally whether these arrangements ac­
tually met the requirements of the definition of
guaranteed wage or employment plans used in this
study, and whether these plans had actually oper­
ated. At the same time, information was collected
on the basic features and provisions of those plans
which met the definition that had been established.
A total of 241 plans (196 still in operation and 45
that had been discontinued) were surveyed in this
manner and are included in the tabulations in this
report. To this group were later added 106 addi­
tional discontinued plans about which informa­
tion was obtained subsequent to the field survey.
This number included 96 cases which operated
under the Wisconsin unemployment compensation
law in 1934 and 1935.
In addition, the Bureau made more specific and
detailed investigations of the operations of 62
of the plans and the situations into which they
were introduced. Some o f the material gathered
in the course of this subsequent investigation is also
presented in this report.

2




H IS T O R IC A L D EV ELO P M EN T O F P LA N S

1
*

IN ITIA T IO N OF PLANS
Until the passage of unemployment compensa­
tion legislation, the history of guarantee plans was
part of the history of individual efforts, unaided
by government, to mitigate the effects of unem­
ployment in particular industries and plants.
During this early period, the idea o f guaranteeing
wages was not differentiated from other unem­
ployment compensation arrangements. In fact,
the term “ guaranteed wages” was not used in con­
nection with early plans that have since come to
be known as “ guaranteed wage” or “ guaranteed
employment” plans. A good example of this
situation was reflected in the language of the Proc­
ter & Gamble Co. plan, introduced in 1923, which
provided a 48-week-a-year guarantee of employ­
ment by assuring that no worker would be unem­
ployed for more than 4 weeks a year.
Trade union sponsorship and individual em­
ployer initiation were both important in the early
history of guarantees. During the nineteenth
century trade union activity had in several in­
stances encompassed the furnishing of out-of-work
benefits to members, but such arrangements, of
course, carried no obligations by employers to fur­
nish work. The first plans in which employers
assumed responsibility for providing work or
wages were those of the decade of the 1890’s, ne­
gotiated in the wallpaper industry, by brewery
workers, by textile printers in a New Jersey dyeing
and finishing establishment, and established by a
small midwestern retailer o f sporting goods.
Best-known among the early guarantee plans
were those in the wallpaper industry. A guar­
antee of 11 months5 employment was first intro­
duced in 1894, as a result of negotiations between
the National Association of Machine Printers and
Color Mixers and the National Wall Paper Com­
pany, then a newly formed amalgamation control­
ling from 50 to 75 percent of the industry. In 1896
the guarantee was extended to 12 months a year;
modifications were made in subsequent years. The
independent companies in the industry followed
1 The material in this section of the report is based upon data
gathered by the Bureau of Labor Statistics and upon published
accounts of guaranteed wage or employment plans.

the bargaining pattern set by the largest firm, and
the plan became industry-wide for members of the
wallpaper association who bargained with the
T
union. Similar arrangements were made by nego­
tiation with the National Print Cutters’ Associa­
tion of America, which in 1923 joined with the
National Association of Machine Printers and
Color Mixers to form the United Wall Paper
Crafts.
Among the other early arrangements, that in­
volving the National Union of the United Brewery
Workmen of the United States is known to have
arisen in at least two areas, Philadelphia and New
York, and took the form of contract provisions
restricting lay-off of regular employees to no more
than specified numbers of days during the dull
season of the year. The. agreement between the
Machine Printers Beneficial Association and a New
Jersey textile finisher provided each journeyman
printer full pay for any period of unemployment
prior to July 15 of each year, and half pay for
any period of unemployment during the remainder
of the year. The plan of the midwestern sporting
goods retailer provided an oral guarantee of 52
weeks’ pay each year to all employees who had
passed a probationary period of approximately 90
days.
Guarantee plans introduced during the early
years o f the twentieth century involved small
establishments in which employers made oral com­
mitments to all or some of their workers to pro­
vide them with year-round employment. A retail
men’s furnishing store, starting in 1905, guaran­
teed permanent employees 52 weeks of work at full
weekly hours; a coffee-roasting establishment, in
1912, began to pay its production workers full
weekly pay during slack season weeks; a poultrycleaning establishment began, in the following
year, to guarantee 52 weeks o f full-time employ­
ment to permanent workers; a small department
store began the same guarantee in 1914; and a
small drug firm about 30 years ago instituted
a year-round weekly wage payment plan covering
2 employees.
The next well-known plan, that of the Columbia
Conserve Company of Indianapolis, a producer
o f soups and other canned products, appeared in
1917. The guarantee was part of a broader social
experiment which included profit-sharing and an
employee council to give permanent workers a




voice in the management of the enterprise. Phases
of the experiment which attracted public attention
included the steps taken by the company after
introduction of the plan to level out its normally
seasonal production pattern, and the eventual
turning-over of ownership to the permanent work­
ers covered by the guarantee.
Employer interest in the problem of employ­
ment security is reported to have increased sub­
stantially after the business depressions o f 1914
and 1921, and also as a result of the increasing
general interest in scientific management and im­
proved personnel procedures. A number o f un­
employment benefit plans, many of which had
characteristics that are currently attributed to
guarantee plans, were adopted during the period
between 1919 and the passage of Federal and State
unemployment compensation legislation. These
plans typically provided for the payment of outof-work benefits rather than for a guarantee of
continuous employment. Where the unemploy­
ment benefits covered an extended period of time,
the line of demarcation between an unemployment
benefit plan and a guarantee plan was difficult to
distinguish. As has already been indicated, un­
employment benefit plans that provided assurance
of benefits for 3 months or more have been
included in the data on guaranteed wage or em­
ployment plans presented later on in this report.
Several unemployment benefit plans are worthy
of mention at this point because o f their similarity
to many of the early guaranteed wage or employ­
ment plans. None of them were included in the
data contained in subsequent sections of this re­
port, because they did not meet the 3-month
guarantee test referred to above. In 1919 the
Dutchess Bleachery, followed in 1920 by an af­
filiate, the Kockland Finishing Co., began setting
aside part of its profits in order to provide its
workers half pay during periods of unemploy­
ment. The American Cast Iron Pipe Co. intro­
duced an unemployment benefit plan in 1924; the
Brown & Bailey Co. did likewise in 1927. During
the same period of time, a number o f unemploy­
ment benefit plans were introduced by joint agree­
ment between management and labor, notably in
the needle trades in New York and Chicago, and
in the hat and lace industries.
Among the plans introduced during the 1920’s
that can be classed as guarantees, the most notable
3

were the joint agreements of the Cleveland gar­
ment industry and the International Ladies’ Gar­
ment Workers Union (1921), the plan of CrockerMcElwain Co. and its affiliate, the Chemical
Paper Co. (1921), the Procter & Gamble Co. plan
(1923), and the joint agreement between the Sea­
board Airline Railway and a federation covering
its shop craft employees (1928). The plan in the
Cleveland ladies’ garment industry was the first
of several unemployment compensation devices in­
troduced in the apparel industry during the 1920’s,
and the only one that qualified as a guarantee
under the definition used in this study. By agree­
ment with the International Ladies’ Garment
Workers Union, Cleveland apparel manufacturers
guaranteed 20 weeks o f full employment in each
6-month period (later changed to 40 weeks a
year), at two-thirds of minimum weekly wages
(later changed to half of minimum wages). The
Crocker-McElwain plan assured year-round em­
ployment at full pay to workers with at least 5
years’ service; in subsequent years this plan was
modified to provide, finally, less than 50 percent
of full-time annual compensation. The Procter
& Gamble plan assured 48 weeks’ employment to
all workers with at least 6 months’ service. Since
the time o f its introduction, the plan has been
somewhat modified, principally by limiting eligi­
bility to workers with at least 2 years’ service.
The Seaboard plan as originally introduced was a
guarantee o f annual employment for an agreedupon number of shop employees each year.
As was the case during the earlier two decades
of the century, the occasional introduction of a
less formal plan by small employers continued. A
shoe retailer guaranteed and maintained yearround employment to 15 regular employees start­
ing in 1923; a commercial machinery wholesaler
guaranteed 52 full weeks’ pay a year to 2 service
mechanics; beginning about 1924, a Michigan coal
dealer guaranteed weekly wages throughout the
year to 7 employees regardless of prevailing con­
ditions ; in the same year, a garment manufacturer
introduced a guarantee of 52 weeks’ full pay cov­
ering a group of key workers; from 1 to 4 plans of
similar character were introduced during each of
the remaining years of the 1920’s.
Introduction of guarantees and unemployment
benefit plans continued during the depression of
the early 1930’s. The General Electric Company

4




in 1930 adopted an unemployment-pension plan,
covering 12 of its electrical apparatus manufactur­
ing plants, and in 1931 adopted a plan guarantee­
ing 50 weeks’ work of not less than 30 hours each
(modified in subsequent years) to employees with
2 years or more service in 12 lamp manufacturing
plants. The Wm. Wrigley, Jr. Co. in 1934 adopted
an employment assurance plan with unemploy­
ment benefits varying according to a sliding scale
dependent on pay level and length of service. The
plan of Geo. A. Hormel & Co., meatpackers of
Austin, Minn., was started on a small scale in 1931
and its scope gradually extended until in 1940 it
covered all but a small percentage of the com­
pany’s employees.
During and following the depression o f the
early 1930’s, the character of the plans introduced
shifted from guarantees of unemployment bene­
fits to guarantees of continued employment.
Compulsory unemployment insurance legislation
was adopted in Wisconsin in 1932 and at later
dates in other States, the latter chiefly under the
provisions o f the Federal Social Security Act.
The legislation permitted modification of the con­
tribution or tax features in the cases of employers
who provided guarantees of employment or wages
equivalent to legislatively-established standards.
The chief, and as far as can be ascertained, the
only direct effect of the legislation upon the in­
troduction of guarantee plans occurred in the case
of the Wisconsin law, which completely exempted
from the unemployment tax employers who guar­
anteed 42 weeks’ pay (at 36 hours a week, changed
in 1935 to 40 weeks at two-thirds of full-time) to
their workers. A total of 96 employers operated
guarantee plans under this law for a period of
slightly more than a year, beginning in 1934 and
ceasing at the end o f 1935. A t that time the stat­
utory provisions in Wisconsin were changed to
conform to the requirements of the Federal stat­
ute, applicable to all State unemployment com­
pensation laws, under which employers who guar­
anteed employment or wages were given tax
credits, but not complete exemption. Only six
additional States—California, Florida, Idaho,
Indiana, Minnesota, and Oregon— are reported to
have made provision in their unemployment com­
pensation laws for guarantee plans, but none of
them implemented the clauses with the necessary

administrative regulations. No guarantee plans
were ever adopted under these laws.
Further legislative provision affecting guaran­
tee plans was made in 1938, when the Fair Labor
Standards Act was adopted. Under section 7 (b)
(2) of this act, exemption from penalty over­
time provisions (up to 12 hours a day or 56 a
week) was granted in cases where workers were
employed—
“on an annual basis in pursuance of an agreement with his
employer, made as a result of collective bargaining by
representatives of employees certified as bona fide by the
National Labor Relations Board, which provides that the
employee shall not be employed more than 2,080 hours
during any period of 52 consecutive weeks.”

To date, very few employers have used this ex­
emption. The most substantial plan operating
under the provision is that of Geo. A. Hormel &
Co., which had been in operation prior to the
passage o f the act.
During the period following the depression of
the early 1930’s, greater numbers o f plans were
introduced yearly than in any year prior to the
depression. During the years 1938-42 new plans
were introduced at the rate o f from 19 to 23 a year,
compared with a maximum of 4 a year during the
1920’s, and from 2 to 6 during the early 1930’s.
The latter half of the 1930’s saw the introduction
of a number of “ basic crew” provisions in agree­
ments in the wholesale and retail trades. Under
these contracts, specified numbers of workers,
ranging from less than half to well over threequarters o f the workforce, were guaranteed full
weekly wages throughout the year.
The last of the well-known plans, that of the
Nunn-Bush Co., was established in 1935. This
plan early in 1946 guaranteed a continuous em­
ployment relation to workers with the greatest
seniority, and provided that the total earnings
o f all workers with 2 years’ service (including,
but generally exceeding, the number of workers
who had the employment relation guarantee)
should be a predetermined proportion, no less
than 20 percent o f the wholesale value of the
company’s product. Workers shared in this
amount in proportions determined by rates which
reflected job differences.
By the beginning of 1946, according to the in­
formation which has been compiled by the Bu­
reau, a total of 347 plans which met the definition
used in this study had been introduced. A year-




by-year tabulation o f the time of their initiation
is shown in table 1.
1.— Number of guaranteed wage or employment
plans in Bureau of Labor Statistics survey, by year of
initiation

T able

Year of initiation

Number of
plans

Total.
Prior to 1900_____

1905_____________
1912 ___________
1913 ___________
1914 ___________
1916 ___________
1917 ___________
1918 ___________
1919 ___________
1920 ___________
1921 ___________
1922 ___________
1923 ___________
1924 ___________
1925 ___________
1926 ___________
1927 ___________
1928 ___________
1929 ___________
1930 ___________
1931 ___________
1932 ___________
1933 ___________
1934 ___________
1935 ___________
1936 ___________
1937 ___________
1938 ___________
1939 ___________
1940 ___________
1941 ___________
1942 ___________
1943 ___________
1944 ___________
1945 _____ _____
Data not available

347
3

1

1

1
1

1
1
1

1
4
3

1

4
3

2
2
2

1

4

2
5

6

6

i 102

17

11

10

23

20
19

21
19

8

21
9

11

1Includes 96 plans initiated in 1934 under the encouragement of the tax
exemption provisions of the Wisconsin unemployment compensation law.

DISCONTINUANCE OF PLANS
O f the plans known to the Bureau of Labor Sta­
tistics that had been introduced up to the begin­
ning of 1946,196 were still in existence at that time.
The remainder, a group including all of the 96
plans introduced in 1934 under the Wisconsin un­
employment compensation law and 55 others, had
been discontinued before the end of 1945.
In the case o f the 96 Wisconsin plans and a small
number of others, discontinuance resulted from the
circumstances surrounding the introduction of
compulsory unemployment insurance legislation.
In the case o f the Wisconsin plans, amendment of
the State law to conform with the requirements
o f the Federal Social Security Act removed the
5

tax exemption which the companies had enjoyed
under the former statute, and the employers there­
after individually elected not to come under the
guaranteed account provisions of the legislation.
In a few other cases, plans that had been instituted
prior to the passage of compulsory unemployment
compensation legislation were discontinued upon
the passage o f such laws because it was believed
that the objective which the plans were designed
to meet was met by those laws.
In the remainder of the cases, discontinuance
was largely the result of special individual circum­
stance, in a number o f cases related to the general
state of business conditions at the time the plans
were discontinued, but on the whole the result of
problems facing the individual employer.
Two o f the earliest plans abandoned were those
of the American Cast Iron Pipe Co., discontinued
in 1926, and the Consolidated Water Power &
Paper Co., discontinued in 1929. Only incom­
plete information is available on the reasons for
their discontinuance: The former was discontinued
on the eve of a major technological change in the
industry, the latter during a period of relatively
full employment. The wallpaper plan—one of the
earliest begun—was discontinued in 1930, after a
considerable amount of dispute over the plan’s ad­
ministration, and in a period when depression
conditions and the rise of substitute materials
were seriously affecting the industry.
The plan of the United Diamond Works, under
which benefits had been paid for almost a full year
during the 1921-22 depression, ended in 1931, fol­
lowing a period of uncertainty in the industry to
which international tariff problems contributed.
In the same year the unemployment benefit plans
of the Brown & Bailey Co. and the Cleveland gar­
ment manufacturers were discontinued; in the lat­
ter case the reason is reported to have been the
long-range decline of the local market and the
shift in the character of the industry. The plans
of the Leeds & Northrup Co. and the Dennison
Manufacturing Co. were discontinued in 1932
when their unemployment benefit reserves were
exhausted. The depression years also saw the dis­
appearance o f many of the unemployment benefit
plans not included in this study (those that could
not meet the test of a 3-month guarantee), result­
ing chiefly from depletion of their individual
unemployment compensation reserves.

6




O f the plans discontinued after the depression
of the early 1930’s, 15 were studied in detail by
the Bureau, and information is available concern­
ing the circumstances of their discontinuance. The
effects of the depression seem to have been an im­
portant contributory cause of abandonment in only
one case, where the guarantee was substantially
modified to provide less than 50 percent o f the
earnings originally guaranteed, and the plan was
finally abandoned in 1937. Four of the plans were
abandoned during World War II, largely as a
result of wartime business uncertainties. Four
were abandoned after management had come to
the conclusion that the plans were not needed, be­
cause the employer was able to provide substan­
tially more work than the guarantee assured. All
but one of these plans had been in existence for
3 years or less, and all were abandoned between the
years 1939 and 1942. Three plans—two of which
were introduced to avoid overtime compensation
and one o f which was introduced as an alternative
to a wage increase—were abandoned as a result of
employee dissatisfaction with the plan and union
opposition. One of the remaining three plans was
abandoned following the passage of unemploy­
ment compensation legislation; another was ended
during W orld War I I when management became
worried about possible conflict between its obliga­
tions under the plan and its obligations to return­
ing veterans, and when a newly organized union
showed indifference to the plan’s continued exist­
ence. Finally, the plan of the Columbia Conserve
Co., which had operated successfully over a period
of 25 years and through three periods of business
depression, was abandoned as the aftermath of a
labor dispute. Wages and union organization had
arisen as issues among the employee-owners, re­
sulting in a National War Labor Board dispute
case and a court suit. The employee-ownership
feature of the plan was ended by court order as a
result of the suit, and the management of the com­
pany simultaneously ended the guarantee. In this
case, as in a number of other cases where plans
were discontinued, management and union repre­
sentatives expressed great interest in possible fu ­
ture attempts at guaranteeing employment or
wages.
As can be seen from table 2, guarantee plans
were discontinued from time to time during the
entire span of years over which plans have been

in existence. With the exception of the year 1935,
when the 96 Wisconsin plans were discontinued,
there is no significant concentration. It is notice­
able, too, that the discontinued group includes
plans which had been in existence for varying
lengths of time. Some, like the wallpaper plan and
the plan of the Columbia Conserve Co., were
among the oldest plans on record, while others had
been in operation for only a few years when they
were dropped.
T able 2.— Number of discontinued guaranteed wage or em­
ployment plans in Bureau of Labor Statistics survey, by
year of discontinuation and number of years of existence
at time of discontinuation

T able 3.— Total number of guaranteed wage or employment
plans in Bureau of Labor Statistics survey that were in
operation each year, 1893-1945

Year

1893______________
1894-95___________
1896-1904_________
1905-11___________
1912______________
1913______________
1914-15___________
1916______________
1917______________
1918______________
1919______________
1920______________
1921______________
1922._____________
1923______________
. _
1924_______
1925______________
1926______________
1927______________
1928______________

Number
of plans
in oper­
ation at
the end
of each
year

1
2
3
4
5
6
7
8
9
10
11
15
18
19
23
26
28
29
31
32

Year

Number
of plans
in oper­
ation at
the end
of each
year

1929______________
1930___________ - _
1931_____
1932______________
1933____ ___ _ _
1934______________
1935______________
1936______________
1937______________
1938______________
1939______________
1940______________
1941______________
1942______________
1943______________
1944 ___
1945______________

35
36
38
41
46
1 148
68
79
87
107
125
138
154
166
167
183
185

(Data not avail­
able— 11 plans) _ _

196

1 Includes 96 plans initiated under the encouragement of the tax exemption
provisions of the Wisconsin unemployment compensation law in 1934 and
discontinued in 1935 when the tax exemption was eliminated.

one of constant growth of the number of plans
in existence, at an accelerated rate during the pe­
riod since 1934.
The plans that are now in existence, as shown in
table 4, have been in operation over varying pe­
riods of years. Approximately one-third have
been in operation for 10 years or longer, and 11
plans have been in operation for 25 years or more.
T able 4.— Number of currently operating guaranteed wage
or employment plans in Bureau of Labor Statistics survey,
by number of years in existence {as of January 1946)

1 Includes 96 plans initiated in 1934 under the encouragement of the tax
exemption provisions of the Wisconsin unemployment compensation law,
and discontinued in 1935 when the tax exemption was eliminated.

TH E NET STATU S OF PLANS
As has already been shown, the net result of the
continued inauguration of new plans and the dis­
continuance o f others was a total of 196 during
the early part of 1946. With the exception of the
year 1935, when the 96 plans adopted under the
Wisconsin unemployment compensation law were
discontinued, the picture, as shown in table 3, is

744704—47----- 2




Number of years in exist­
ence

Total____
Less than 1 year___
1 year_______ __ _
2 years___ __ __ . .
3 years_____ ____
4 years___
_ .
5 years. _____
6 years___ _ _ _____
7 years _ - . __
8 years.
_
9 years___
_____

Number
of plans
still in
opera­
tion

196
7
2
19
7
17
13
17
14
11
8

Number
Number of years in exist­ of plans
still in
ence
opera­
tion

10 years _ _____
11 years ____
12 years_____
13 y ears.. __
14 years _ ______
15 to 19 years____
20 to 24 years___
25 to 29 years___
30 to 34 years_____
35 years and over. _
Not available_____

9
17
6
6
5
8
8
4
4
3
11

7

TH E EX TEN T A N D N A TU R E O F G U A R A N T E E D
W A G E O R E M P LO Y M E N T P LA N S IN THE
U N ITED STA TES
CU RREN TLY O PERATIN G PLANS
Prevalence
In January 1946, the 196 guaranteed wage or
employment plans known by the Bureau of Labor
Statistics to be in operation in the United States
covered a total o f approximately 61,000 workers.
Some o f the plans were master contract arrange­
ments, involving a number of employers and
unions in the same industry and community, and
others were plans which covered several plants of
the same company. As a consequence, the number
o f establishments was, of course, considerably
greater than the number of plans. There were, in
all probability, additional bona fide plans that
were not included in the study. Compared with
the total number of establishments or wage earners
in the United States, the coverage of all guaranteed
wage or employment plans is small. It is esti­
mated to be less than 1 percent of the total number
of wage earners employed in nonagricultural, non­
governmental establishments. The significance
of the plans lies, however, in their provisions and
accomplishments, rather than in their prevalence.
The 196 plans were found in a great many in­
dustries. Almost 40 percent of them, involving
38 percent of total employment covered, were in
manufacturing industries. Within the manufac­
turing group, the plans were most frequently found
in industries which have substantial seasonal
variations, and those which produce for consumer
demand. The greatest numbers of plans occurred
in establishments manufacturing food products—
brewing, meat packing, grain and flour; in textile
mills— primarily in dyeing and finishing establish­
ments ; and in apparel companies. Relatively few
plans were found in heavy or basic manufacturing
industries, which are subject to much wider cycli­
cal fluctuations, but often to less marked seasonal
variation (table 5).

8




T able 5.— Number of currently operating guaranteed wage
or employment plans in the Bureau of Labor Statistics
survey, by industry group

Industry group

Number of
currently
operating
plans

Total plans_________

196

Manufacturing, total

75

Food and kindred products_________________
Textile-mill products_______________________
Apparel and other finished products made
from fabrics and similar materials_______
Lumber and timber basic products_________
Paper and allied products__________________
Printing, publishing, and allied industries. Chemical and allied products_______________
Leather and leather products_______________
Stone, clay, and glass products_____________
Iron and steel and their products__________
Nonferrous metals and their products______
Machinery (except electrical)______________
Electrical machinery_______________________
Transportation equipment (except auto­
mobiles) __________________________________
Miscellaneous manufacturing industries____
Nonmanufacturing, total
Nonmetallic mining and quarrying. _
Construction— general contractors...
Wholesale trade_____________________
Retail trade_________________________
Real estate__________________________
Railroads____________________________
Water transportation_______________
Warehousing and storage___________
Services incidental to transportation.
Communication_____________________
Heat, light, and power______________
Services_____________________________
Nonprofit membership organizations.

21

15

12

1

3

8
5

1
1

2

1

2
1

1
1
121

1
3
23
56

2

1

10

1
1
1

2

19

1

Outside manufacturing industry, the greatest
number of plans was in the retail trade group.
As in the ease of the manufacturing industries
which produced consumer products, the estab­
lishments in retail trade were in many instances
in lines of activity that were subject to significant
seasonal variation: mail order houses, clothing
stores, department stores. The same was true of
establishments in wholesale trade, which con­
tained the next most numerous group.
The detailed studies of experience with guar­
anteed wage or employment plans in 62 cases
demonstrated about as wide a variety of month-

to-month employment variations as exists in all
American industry. Within individual industries
or groups of plants, the studies did not point to
the existence o f special situations or exclusive
processes that might have led to greater employ­
ment stability or served to give competitive ad­
vantage among the companies which had guaran­
tees in effect. An overwhelming majority of the
guarantees, in fact, were introduced by firms
which faced employment stabilization problems
of the same kind that are faced by employers
generally.
The majority o f the establishments that guar­
anteed employment or wages were located in the
industrial regions of the country. More than 70
percent o f the 196 were in the Middle Atlantic
and Great Lakes regions, and almost 45 percent
were in the cities of New York, Chicago, Cleve­
land, and Philadelphia. Very few were found
in the Southeast, Southwest, or West. The fol­
lowing cities had the largest numbers o f plans i
Chicago, 111____________________________________ 10
Cleveland, Ohio------------------------------------------------- 10
Detroit, Mich_________________________________ 6
Milwaukee, W is_______________________________ 5
New York, N. Y -------------------------------------------------61
Philadelphia, Pa---------------------------------------------- 5

Plans were found in establishments of all sizes,
although most of them were in small establish­
ments. Table 6 contains a distribution of the
total number o f wage earners in establishments
covered by the plans in 172 cases for which such
information was available. While in several cases
the employment data for individual plans group
together the employment of a number of estab­
lishments, as in the cases of master contracts and
companies with more than one establishment un­
der the same plan, the table gives a fairly good
picture o f the size o f the establishments involved.
About 55 percent of the plans were in employing
units o f less than 50 persons; an additional 10 per­
cent o f the plans were in employing units of 50
to 100 persons. Ten percent of the plans were in
employing units o f 1,000 persons or more.




T able 6.— Number of currently operating guaranteed wage
or employment plans in Bureau of Labor Statistics survey,
by total number of wage earners
Total number of wage earners in establishment or establish­
ments covered by plan

_________

1 196

Less than 25____
_ _
_______
25 to 49_________________________________________
50 to 74_________________________________________
75 to 99_ _______________________________________
100 to 249_______________________________________
250 to 499_________
___ __ __ ___ ______
500 to 749. ____________________________________
750 to 999_______________________________________
1,000 to 2,499___________________________________
2,500 to 4,999___________________________________
5,000 to 7,499__ _______________________________
7,500 to 9,999___________________________________
10,000 and over_ _ _
__
___ _ _ _

64
29
13

T o t a l___

__

_ ___

Number of
currently
operating
plans

Total employment not available. ______

5
23
2 14
3
3
26
26
2
1
3
a 24

1 A guaranteed wage or employment plan embodied in a master contract
between a trade association and a union is counted as a single plan, and is
classified according to the total number of wage earners in all of the covered
establishments. There are 10 such cases.
2 Includes 1 master contract plan,
s Includes 7 master contract plans.

In 130 of the 196 plans, unions represented the
employees covered by the guarantees in general
collective bargaining relations (table 7). Where
one union was involved, the unions were A. F. of
L. affiliates in 36 cases, C. I. O. affiliates in 64 cases,
and were unaffiliated in 13 cases. In 17 cases there
were 2 or more unions of different affiliation rep­
resenting the workers. In a majority of the cases
where unions represented the workers, the plans
were subjects of collective bargaining. In a num­
ber of cases, however, the plans were introduced
prior to unionization and have not since been in­
cluded within the scope of collective bargaining.
Table 7.— Number of currently operating guaranteed wage
or employment plans in Bureau of Labor Statistics survey, by representation of covered workers
Eepresentation of covered workers

Total_________ ____

_____

_____

Nonunion__________
________ _______
Union__________ __________ ______________________
A. F. of L. affiliate._ ___________
______
C. I. O. affiliate_____ __________ _ __
Unaffiliated union_____________________
Two or more unions wdth different affilia­
tions____________________________ _

Number of
currently
operating
plans

196
66
130
36
64
13
17

9

Characteristics
The basic features of the guarantee plans may
be characterized best in terms of the kinds of
workers eligible for coverage and the require­
ments which workers must meet before they are
eligible for benefits, the proportions of workers
actually covered, and the amounts o f wages or
employment guaranteed.
In 101 o f the 196 plans, as indicated in table 8,
coverage under the plan was open to all or nearly
all workers (in some cases to all production
workers, and in others to some or all other wage
earners as well, including office workers, super­
visory force, salesmen, etc.). In 68 of these cases,
employees automatically became eligible upon hir­
ing or within 30 days thereafter. Service require­
ments ranged from 3 months to more than 5 }^ears
in all but 4 cases; in these the duration of the re­
quirement was indefinite, depending upon the
employer’s judgment concerning the necessary
probationary period. In a large number of cases,
especially where there were union contracts, the
eligibility period coincided with the probationary
period provided in the contract for the attainment
o f permanent status or a place upon the seniority
rolls.
T

8 . — Eligibility requirements in currently operating
guaranteed wage or employment plans in Bureau of Labor
Statistics survey, by representation of covered workers

able

Eligibility requirement

Number of currently
operating plans
Non­
union

Total

_____ __ — -----TotalCoverage open to all employees____
Upon hiring or after service of
30 days or less _ _
_____ __
Upon service of 3 months___
Upon service of 6 months___
Upon service of 1 y e a r _____ _
Upon service of 1% to 5 years__
Upon service of 5 years or more.
Upon selection by employer___
Coverage includes only employees
in “ regular” j o b s ------------Coverage open only to employees
in specific departments or occu­
pations_____ ________
_________
Upon hiring or after service of
30 days or less_____________
Upon service of 3 months or
____
more. __________
Upon selection by employer___
Employees in “ regular” jobs
only___________ ____ _____
Unknown__________ _____ __
Coverage confined to key employees.

10




Union

196
101

130
54

66
47

63
4
9
9
7
5
4

37
2
4
5
4
2

26
2
5
4
3
3
4

35

29

6

51

45

6

36

32

4

9
2

7

2

3
1
9

3
1
2

2

7

Coverage was open only to employees in “reg­
ular” jobs in 35 of the 196 plans. The limits of
this kind of coverage were in some cases estab­
lished by “ basic crew” contract provisions that
specified the numbers of workers who were to be
covered, and in other cases were established by
specific elimination of “ temporary,” “ extra,” or
other similar groups of workers. Limitation of
the guarantee to regular workers occurred chiefly
in retail and wholesale establishments, and addi­
tional length-of-service requirements were either
nonexistent or brief.
In 51 cases, coverage was confined to employees
in certain departments or occupations: For exam­
ple, to machine printers in textile finishing and
dyeing mills, to pressmen in a newspaper plant.
More than two-thirds of these cases had length-ofservice requirements of 30 days or less.
Coverage in nine cases was confined to key em­
ployees, usually selected upon an individual basis
with an eye to the importance of the job and the
service record of the individual. Plans of this va­
riety included one which covered a small group of
key production and nonproduction workers in a
garment plant but excluded the bulk of the pro­
duction workers, and another in an ice-cream fac­
tory which covered a small selected group o f em­
ployees in a number of key skilled jobs during the
dull season.
The proportions of workers covered were, of
course, highest in the group of plans which per­
mitted all employees to be eligible, and lowest in
the plans restricting coverage to employees in
specific departments or occupations and to key em­
ployees (table 9). Among the 101 plans where all
the employees were eligible for coverage, there
were 38 where every employee in the establishment
was actually covered by the guarantee; in the re­
mainder of these plans, the minor exclusions of
small groups of workers and the length of service
provisions reduced the proportions of workers ac­
tually covered, but only in a small number of cases
to less than 60 percent. Among the 60 plans re­
stricting coverage to specific departments or occu­
pations or to key employees, generally less than 30
percent of the total number of workers in the es­
tablishment were actually covered by the guaran­

tee. A tabulation of proportions of workers cov­
ered showing union and nonunion establishments
separately indicates a great range in both groups,
but with more restricted coverage in the case of
the plans in unionized establishments (table 10).
This reflects to some extent the influence of the
“ basic crew” contracts, and the fact that the plans
were limited to those parts of the establishments
over which the unions had jurisdiction.

T able 10.— Proportion of wage earners covered in currently
operating guaranteed wage or employment plans in Bureau
of Labor Statistics surveyf by representation of *
covered
workers
Percentage of total wage earners covered
by guarantee

Total
Under 5 percent. . __
5 and under 10 percent___
10 and under 20 percent___
20 and under 30 percent___
30 and under 40 percent____
40 and under 50 percent____
50 and under 60 percent _____
60 and under 70 percent___
70 and under 80 percent____
80 and under 90 percent____
90 and under 100 percent___
100 percent_ _ _ _ _ _
____
Data not available. _
_
_ __

T able 9.— Proportion of wage earners covered in currently
operating guaranteed wage or employment plans in Bureau
of Labor Statistics survey, by eligibility provisions

Percentage of total wage earn­
ers covered by guarantee

Number of currently operating
plans with eligibility open to—
Num­
ber of
cur­
Employ­
rently
Em­
ees in
oper­
All
ploy­
Key
specific
ating employ­ ees in
depart­ employ­
regular ments or
plans
ees
ees
jobs
occupa­
tions

T o t a l ___ ____ ________

196

Under 5 percent_____________
5 and under 10 percent__ ____
10 and under 20 percent _____
20 and under 30 percent______
30 and under 40 percent _____
40 and under 50 percent _____
50 and under 60 percent _____
60 and under 70 percent_____
70 and under 80 percent______
80 and under 90 percent______
90 and under 100 percent_____
100 percent_________________
Data not available...................

12
13
7
12
10
10
11
17
15
14
9
38
28

101

3
5
2
4
13
11
12
8
38
5

35

51

4
2
3
4
2
1
18

1
2
1
2
1
1

4

1

196
12
13
7
12
10
10
11
17
15
14
9
38
28

130
11
12
5
10
5
7
7
14
10
9
5
17
18

66
1
1
2
2
5
3
4
3
5
5
4
21
10

The proportion of coverage was highest in plans
in small employing units, as shown in table 11.
Thus, 34 of the 38 plans in which 100 percent cov­
erage was reported were in establishments
employing less than 50 workers. There were, how­
ever, a small number of plans covering 70 percent
or more of the total workforce in establishments
or employing units with several hundred or more
than one thousand workers. In absolute figures
respecting numbers of covered wage earners, 149
of the 188 plans for which information was avail­
able covered less than 100 wage earners, 18 cov­
ered from 100 to 500 wage earners, 7 covered from
500 to 1,000, and 14, or 7 percent of the total num­
ber, covered 1,000 workers or more (table 12).

9

12
12
5
7
3
3
4
1

Number of currently
operating plans
Non­
Total
Union
union

1

T able 11.— Proportion of wage earners covered in currently operating guaranteed wage or employment plans included in Bureau
of Labor Statistics survey, by total number of wage earners
Number of currently operating plans by tota lnumber of wage earners
Percentage of total wage earners covered
by guarantee

Total _________________________
Under 5 percent______ __ _____ ________
5 and under 10 percent_ ______________
_
10 and under 20 percent
20 and under 30 percent __
_ __
30 and under 40 percent. ._ _ _
40 and under 50 percent_______ ______
50 and under 60 p erce n t._____
60 and under 70 percent______________
70 and under 80 percent_________ ______
80 and under 90 percent _____ _
90 and under 100 percent_____ ________
100 percent
______
Data not available___ ____




Total

Less
than
25

25-49

50-74

75-99

196

64

29

13

5

23

14

3

12
13
7
12
10
10
11
17
15
14
9
38
28

1
1
5
1
5
4
7
9
4
2
25

2

4
3
2

6
1

1
1

1
1
2
2

1
3
1

1
3
1
4
4
9
1

3
2
1
1
1

100-249

250-499

500-749

1,000
and
over

Total
employ­
ment
not
avail­
able

3

18

24

1

4
2
1
1
3

750-999

1
5
1
1
1
1
1

2
2
1
1
1

1
1
2

1
1

1
1

1

2
3
1
1
1
24

11

T

12.— Distribution of number of wage earners covered
by currently operating guaranteed wage or employment
plans in Bureau of Labor Statistics survey

able

13.— Duration of guarantee in currently operating
guaranteed wage or employment plans covered by Bureau of
Labor Statistics survey, by representation of covered workers

T able

Number of
currently
operating
plans

Number of wage earners covered

Number of currently
operating plans
Duration of guarantee
Non­
union

Total

Total

_

____

__

_

___

Less than 5 _ __ _
_
_____
_______ ____
5 to 9_______ __ _ _ ___________ _ _ _ _____
10 to 24_____
___ _ ___ ________
__ ___ .
25 to 49__ _______ __________ ______ __
__
50 to 99_____ __
_______ __
_________ __
100 to 499__ ________
_____
_ . ________
500 to 999 _ ______
__________ _______ __
1,000 to 4,999 _______ __
__
_________
5,000 and over __ __ ___ ____ ______________
Covered employment not available____________

33
32
41
30
13
2 18
27
3 13
1
28

For purposes of comparative analysis of the
duration of the guarantees, the Bureau has classi­
fied the plans in accordance with the amount of
wages or employment guaranteed or advanced, in
terms of weeks of full-time or part-time hours or
pay. In the few cases in which the duration of the
guarantee was adjusted according to a sliding
scale on the basis of such factors as wage rate or
length of service, the maximum duration of the
guarantee was used for the tabulation. The num­
ber of weeks of employment guaranteed was cho­
sen as the means of expressing the common
denominator because guarantees in terms of num­
ber of weeks of employment per year occurred
most frequently. The actual wording of the guar­
antees reflected a wide range of plan and contract
terminology. The variety of language used is il­
lustrated by a listing (on p. 13) of extracts from
the texts of plans which guarantee substantially
the same employment— a full year, at full-time
wages.
Almost two-thirds of the plans (128 out of 196)
guaranteed employment for a full year at full­
time hours or pay (table 13). Most o f these ar­
rangements were guarantees of 52 full weeks of
employment or pay in the absence of employment;
very few were expressed in terms of an annual
wage. Eighty-five percent of the plans (166)
guaranteed full-time pay for 40 weeks or more.
The total of 61,000 workers covered by the 196
plans was distributed in approximately the same
manner as the number of plans (table 14).




196

130

66

140
128

80
69

60
59

12
9
7
4
8
10
11
7
3

11
9
5
4
8
9
10
5
2

1

1
1
2
1

4

3

1

1 196

1 A guaranteed wage or employment plan embodied in a master contract
between a trade association and a union is counted as a single plan, and is
classified according to the total number of wage earners in all of the covered
establishments. There are 10 such cases.
2 Includes 2 master contract plans.
3 Includes 4 master contract plans.

12

Union

Total__________________

__

Full year (52 weeks, 2,080 hours,
etc.)___________________
_ ___
At full-time hours or p a y _ _
_
At Less than full-time hours or
pay---------------------------------------50 weeks’ full-time hours or pay____
48 weeks’ full-time hours or pay____
47 weeks’ full-time hours or pay____
46 weeks’ full-time hours or pay____
40-45 weeks’ full-time hours or pay.
38-39 weeks’ full-time hours or pay.
13-37 w eeks___________ _ ______
At full-time hours or p a y _____
At less than full-time hours or
pay---------------------------------------T

2

14.— Duration of guarantee in currently^operating
guaranteed wage or employment plans covered by Bureau of
Labor Statistics survey, by number of workers covered by
guarantee

able

Duration of guarantee

Total_________________ _ ___ .
Full vear (52 weeks, 2, 080 hours, etc.)______
At full-time hours or pay
At less than full-time hours or pay_____
50 weeks’ full-time hours or pay_ _ __
_ _
48 weeks’ full-time hours or pav___
47 weeks’ full-time hours or pay___
46 weeks’ full-time hours or pay______ __
40 to 45 weeks' full-time hours or pav _
38 to 39 weeks’ full-time hours or pay___
13 to 37 weeks- ______ __ __ _________
At full-time hours or p a v ______ _______
At less than full-time hours or pay- _

Total number
of workers
covered in
currently
operating
plans

1 61, 229
2 51,
2 41,
9,
1,
3 4,

250
529
721
465
176
41
20
745
4 138
3, 394
1,206
2, 188

1 Data not available for 8 plans.
2 Data not available for 5 plans.
8 Data not available for 2 plans.
* Data not available for 1 plan.

Most of the guarantees were expressed in terms
of employment rather than in terms of wages.
The detailed studies made by the Bureau in 62
cases indicated that this manner of expression
arose largely from the employer’s confidence that
he could provide the stated amount of work, and
where the worker failed to make himself available
for work, no pay was generally given.
Thus far, it has appeared that a major propor­
tion of the guarantees provided full-time pay for
an entire year, and that a large group provided

coverage for all employees upon hiring or after
a relatively short period of time. A cross-tabula­
tion of these two characteristics provides a method
of determining the extent to which full-year guar­
antees and guarantees to all employees after a
short period of time coincided. Table 15 shows
the multiplicity of combinations of guarantee and
eligibility provisions that were embodied in the

plans. For example, of the group of 128 plans
which guaranteed full-time employment for an
entire year, 39 afforded coverage to all employees
upon hiring or within 30 days thereafter. The
remainder had additional length-of-service re­
quirements, or restricted coverage to employees in
“regular” jobs, to employees in specific depart­
ments or occupations, or to key employees.

T able 15.— Duration of guarantee in currently operating guaranteed wage or employment plans covered by Bureau of Labor
Statistics survey, by eligibility requirements

Total

Upon service of 3
months

Upon service of 6
months
j

[ Upon service of 1
year
j

Upon service of 1^
to 5 years
|

Upon service of 5
years or more

j Upon selection by
1
employer

| Coverage includes only em- .
j
ployees in regular jobs

Upon service of 3
months or more

Upon selection by
employer

Employees in regu­
lar jobs only

196

101

63

4

9

9

7

5

4

35

51

36

9

2

3

140
128
12
9
7
4
8
10
11
7
3
4

70
67
3
4
4
4
8
4
4
3
2
1

40
39
1
3
1
4
8
3
4

4
4

6
6

8
7
1
1

5
4
1

3
3

4
4

32
27
5
2

29
25
4
3
3

19
16
3
1
3

6
5
1
1

1
1

3
3

1

5
7
4
1
3

4
7
2
1
1

1

Full year (52 weeks, 2,080 hours, etc.)______
At full-time hours or pay__ _________ __
At less than full-time hours or pay
50 wp.eks’ full-time hours or pay
48 weeks’ full-time hours or pay

47 weeks’ full-time hours or pay
46 weeks’ full-time hours or pay

40-45 weeks’ full-time hours or pay
88-89 weeks’ full-time hours or pay
18-87 weeks
A t full-time hours or pav
At less than full-time hours or pay

LISTING OF GUARANTEED WAGE OR EMPLOY­
MENT PLAN CLAUSES, ILLUSTRATING THE
VARIETY OF METHODS EMPLOYED TO EXPRESS
GUARANTEES OF FULL-TIME ANNUAL EMPLOY­
MENT
1. The employer agrees to continuously employ---------------union persons * * *. These shall constitute the
basic staff and shall not be subject to lay-offs at any
time.
2. The tenure of employment of permanent employees
shall be 52 weeks in each year without any lay-off
whatsoever.
3. For each full year of service after the first year, 2
months of indemnity in case of complete lack-ofwork lay-off, or 346% hours of straight time pay in
case of partial lack-of-work lay-off, will be added
to the indemnity or guarantee until, after 6 full
years of service, a maximum of 1 year or 2,080 hours’
indemnity or guarantee is provided.
4. All employees shall receive 12 months of uninterrupted
employment.




1

2

1
2
1
1

1
1

Unknown

Upon hiring or
after 30 days or
less

Total

Coverage open only to employees in
specific departments or occupations

j

Duration of guarantee

1 Upon hiring or
| after 30 days or
| less

Coverage open to all employees

Total______________________________

Coverage confined to key j
employees
|

Grand total

Number of currently operating plans

1

9
9
9

1

1

1

1

1

5. All steady employees who come under the scope of this
agreement shall be guaranteed steady employment
throughout the life of this contract.
6. The basic gang employed by the employer hereunder
shall consist of 3 mechanics, 2 helpers and 1 car
washer. Each of such men shall be employed by
the employer for 2,000 hours during the period of
1 year covered by this agreement * * *.
7. All skilled employees covered by this agreement who
have passed their probationary period as herein­
before set forth, shall be paid on the basis of 52
weeks per year.
8. * * * each of the said members of the said associ­
ation in the employ of the company * * * shall
* * * work not more than 2,000 hours during
50 calendar weeks of the period covered by this
contract. It is the intent of the parties hereto that
the members of the association shall have 2 weeks’
vacation with full pay.
9. Each employee * * * will be offered 2,000 hours
of work during the calendar year. In addition
to offering each employee 2.000 hours of work, each

13

10.

11.
12.

13.

14.

employee will be given paid time off at times to be
designated by the employer to make this agreement
conform to the 40-hour provision in the regular
contract.
The employer guarantees to the 5 maintenance men
named in the contract between the parties, dated
November 1, 1941, not less than 48 hours of work,
or the monetary equivalent thereof, in every week
during the 52-week period which is the term of this
contract.
It is further agreed that regular employees be em­
ployed 52 weeks per year.
Whenever the term “steady employee” or “steady
employees” shall be used in this agreement, it shall
refer to such employees of the employer who are
guaranteed under this agreement 12 months work
in each year during the period of the contract.
A salesman may be discharged upon 2 weeks’ written
notice by the employer to the union * * *
(slack season, however, shall not be deemed a cause
or a reason for the discharge of a regular salesman).
Said employer agrees to employ said employee as
------------- for a term of 1 year from the date hereof,
at a weekly salary o f ___________

Further examination of the group of cases which
provided the most substantial guarantees to the
broadest groups of workers shows that they were
for the most part cases that involved small or me­
dium-sized groups of workers (table 16), and that
more than half of them occurred in wholesale and
retail trade (table 17). The proportion of union­
ized establishments was substantially less in this
group than in the entire group of 196 plans.
T

16.— Distribution of 56 currently operating plans
guaranteeing full-time employment or wages for 52 weeks
a year to all workers upon hiring or upon service of 1 year
or less, by number of covered workers

able

Number of plans
Upon hir­
ing or after Upon serv­
30 days or ice of 1 year
less
or less

Number of wage earners covered

39

56

Less than 5 ____________________ _
__________ __________ _
5 to 9__ _
10 to 24_____________________________
25 to 49 __ _
_______________ ____
50 to 99_____________________________
100 to 499_____________________________
500 to 999___________________________
1,000 to 4,999_________ _ __________
5,000 and o v e r _____
_ __

5
9
9
10
1

5
12
10
15

3

5

1

3

Covered employment not available___

1

1
2

Total____ ____ _ ___________

14




_

3

T

17.— Distribution of 56 currently operating plans,
guaranteeing full-time employment or wages for 52 weeks
a year to all workers upon hiring or upon service of one
year or less, by industry

able

Number of plans
Industry group

Total___________________________

Upon hir­
serv­
ing or after Uponof 1
ice
30 days, year, or less
or less

39

56

7

14

3

7
1

Manufacturing, totalFood and kindred products. _
Textile-mill products.
Apparel and other finished products
made from fabrics and similar
materials._
_ _
Printing, publishing, and allied in­
dustries _ _
Chemicals and allied products.
Nonmanufacturing, total___
Construction— general contractors____
Wholesale trade _
Retail trade__ _ _
Real estate _ _
Communication
Heat, light, and power
Services.

1
3
1

4
1

32

42

2
9
14
1
1

2
13
18
2
1
1
5

5

DISCONTINUED PLANS
A total of 151 plans are known to have operated
in the United States and to have been discontinued
prior to 1946, including the 96 which were in ex­
istence for slightly more than 1 year under the
provisions of the Wisconsin unemployment com­
pensation law during 1934 and 1935. The discon­
tinued plans involved total employment of nearly
180,000, of which approximately 3 percent in­
volved the 96 Wisconsin plans and more than 85
percent the plan of 1 large manufacturing concern.
The reasons for their discontinuance have already
been discussed in an earlier section.
The plans that have been discontinued exhibit
no characteristics essentially different from those
of the plans which are still operating. Informa­
tion concerning the number of wage earners cov­
ered under the plans (table 18), the coverage
provisions and eligibility requirements of the
plans (table 19), and the duration of the guaran­
tees provided (table 20), show the same general
picture that has already been presented with re-

spect to the plans that are still in operation. As
far as industry distribution is concerned, the dis­
continued plans show a substantial scattering
among virtually all of the same industries in which
guaranteed wage or employment plans continue to
exist (table 21). Aside from the 96 Wisconsin
plans, it appears that plans in retail and wholesale
trade were discontinued to a lesser extent than in
other industries.
T able 18.— Discontinued guaranteed wage or employment
plans covered in Bureau of Labor Statistics survey, by
number of covered workers

Number of wage earners covered

Total___________ — _ - __ -------------Total, excluding 96 plans which operated
under Wisconsin unemployment com­
pensation law, 1934-35-_ ------------ --Less than 5 _
_____- _____
_ _ - - __
5 to 9_____________ __ _
_______
10 to 2 4 _____ __
_____
25 to 49
_
_
_
__
50 to 9 9 - ____
___
______________
100 to 499 ____ _____
_ _ - _ _______ _______ __
500 to 999
___
__
_ _ _
1 000 to 4,999_____ __
5,000 and over__ __
___
_ _ _ --------Covered employment not available------- --- _ _

Number
of discon­
tinued
plans

1 151
55
11
2
6

6
6
13
3
2
2
1 100

T a b l e 20.— Discontinued guaranteed wage or employment

plans covered in Bureau of Labor Statistics survey, by
duration of guarantee

Duration of guarantee

Total______________ _ _ _______________
Total, excluding 96 plans that operated
under the Wisconsin unemployment
compensation law, 1934-35__________
Full year (52 weeks, 2,080 hours, etc.)_
__ _
At full-time hours or pay____
_ _
At less than full-time hours or pay_____ _
50 weeks’ full-time hours or pay____
_____
48 weeks’ full-time hours or pay____
________
47 weeks’ full-time hours or pay____
46 weeks’ full-time hours or pay______
___
40 to 45 weeks____ _____ ______
At full-time hours or pay____
_
_ _
At less than full-time hours or p a y -- ___
38 to 39 weeks’ full-time hours or pay___
13 to 37 weeks___ __ __
______
______
At full-time hours or pay_______
_______
At less than full-time hours or p a y - - _____

plans covered in Bureau of Labor Statistics survey, by
eligibility requirements

Eligibility requirements

Number of
discon­
tinued
plans

Total____________________________________
Total, excluding 96 plans that operated
under the W iscon sin unemployment
compensation law, 1934-35---------------Coverage open to all employees-------------------------Upon hiring or after service of 30 days or
less_______________________________________
Upon service of 3 months----------------------------Upon service of 6 months---------------------------Upon service of 1 year--------------------------------Upon service of 1% to 5 years--------------------Upon service of 5 years or more-----------------Upon selection by employer---------------------- ^
Coverage includes only employees in “ regular”
jobs___________________________________________
Coverage open only to employees in specific
departments or occupations---------------------------Upon hiring or after service of 30 days or
less_______________________________________
Upon service of 3 months or more--------------Coverage confined to key employees------------------

1 151

55
36
16

2

5

8
3

2

3

12
11

1

4

i Includes the 96 Wisconsin plans, which are not shown in the body of the
table.




1151

55
31
23
8
2
3
_
1 103
1 102
1
3
9
2
7

i Includes 96 Wisconsin plans operating from 1934 to 1935 under State unem­
ployment compensation law which set a minimum standard of 42 weeks’
guarantee (at 36 hours per week in 1934 and two-thirds of full-time hours
in 1935).
T a b l e 21.— Discontinued guaranteed wage or employment

plans in the Bureau of Labor Statistics survey, by industry
group
Industry group

1 Includes 96 Wisconsin plans for which data are not available.

T able 19.— Discontinued guaranteed wage or employment

Number of
discon­
tinued
plans

Total_____________________________________
Total, excluding 96 plans that operated
under Wisconsin State unemployment
compensation law, 1934-35____________
Manufacturing, total____________________________
Food and kindred products_________________
Textile-mill products_______________________
Apparel and other finished products made
from fabrics and similar materials________
Furniture and finished lumber products____
Paper and allied products__________________
Chemical and allied products______________
Rubber products___________________________
Stone, clay, and glass products_____________
Iron and steel and their products__________
Nonferrous metals and their products_______
Machinery (except electrical)_______________
Electrical machinery________________________
Automobiles and automobile equipment____
Miscellaneous manufacturing industries____

Number of
discon­
tinued
plans

1 151

55

44

12
3

4

1

6
3

1

2

1

2

2

3

1

3

i Total includes 96 plans in Wisconsin for which industry data are avail­
able only on the basis of broad industry groupings, and by establishments,
rather than plans, as follows:
Number of
Industry group:
establishments
176
Total....................... .............. ...............................................
Manufacturing______________
Transportation, communication, and public utilities............
Wholesale and retail trade....................... ................. ............
Finance, insurance, and real estate........................................
Miscellaneous services_____________________________
Educational, religious, medical,etc., services.........................
Municipal............................ ........................... _................ ......

21
37
57
25
23
12
1

15

T a b l e 21.— Discontinued guaranteed wage or employment

plans in the Bureau of Labor Statistics survey, by industry
group— Continued

Industry group

Number of
discon­
tinued
plans

Nonmamifacturing, total.
Bituminous and other soft-coal mining____
Nonmetallic mining and quarrying_________
Construction— special trade contractors
(subcontractors)_________________________
Wholesale trade____________________________
Retail trade________________________________
Highway freight transportation____________
W ater transportation______________________
Heat, light and power______________________

11

1
1
1
1
4

1
1
1

E X P E R IEN C ES W ITH G O V E R N M E N T
LE G ISLA T IO N
Reference has already been made to the 96 plans
which operated for approximately 1y2 years un­
der the Wisconsin Unemployment Act of 1932,
and the fact that no plans at all have come into
existence under the guaranteed-account provisions
of the Federal Social Security Act of 1935. The
provisions o f the Fair Labor Standards Act relat­
ing to guaranteed wage or employment plans in
section 7 (b) (2) have been mentioned, and the Bu­
reau’s study has included a specific exploration of
the experience with this law.
Twenty companies reported the operation of
guaranteed wage or employment plans (eight of
which are still in operation, the remainder having
been discontinued, largely during the war years)
under section 7 (b) (2) of the Fair Labor Stand­
ards Act.2 The number o f plans that have fully
met the requirements o f the law is unknown; none
has been the subject of final court determination.
In some of the 20 cases, however, there was some
question whether the full requirements of the law
or regulations had actually been met, (a) because
of apparent failure to meet the requirement that
the union representing the employees be certified
2 Employers who had filed contracts with the W age and Hour
and Public Contracts Divisions under the provisions of sec.
7 (b) (2 ) were included in the Bureau’s canvass; the Adminis­
trator’s regulations under the Fair Labor Standards Act require
that contracts under sec. 7 (b) (2 ) be filed with the W age and
Hour and Public Contracts Divisions.
Five of the twenty firms which reported operation under sec. 7
(b) ( 2 ), however, were not included in the list of companies that
had filed with the W age and Hour and Public Contracts
Divisions.

16




as bona fide by the National Labor Relations
Board, (b) because of contract provisions that may
not have met the full requirements of the law (a
matter which could not be finally determined be­
cause the plans had not been officially commented
upon by the Wage and Hour and Public Contracts
Divisions or ruled upon by the courts), or (c) be­
cause o f failure (in five cases) to file contracts as
required by regulation.
Eight of the companies which took advantage
of the provisions of section 7 (b) (2) were in­
cluded in the Bureau’s detailed study of 62 cases.
In one case the inducement of the overtime exemp­
tion was reported to have been responsible for in­
itiation of the plan, which was sponsored by man­
agement. In two, the overtime exemption was re­
ported to have been important in determining man­
agement’s acceptance of union proposals for guar­
antee plans. In another, management’s desire for
overtime exemption and labor’s desire for security
w ere reported as equally important motives. In
T
the remaining 4 cases, guarantee plans were al­
ready in effect or about to be put into effect in
October 1938, the effective date of the Fair Labor
Standards Act, and were modified to conform to
its provisions.
Of the eight guarantees studied, five are still in
operation (inonly four cases under 7 (b) (2 ), how­
ever). One of the former 7 (b) (2) plans was
abandoned because of employee dissatisfaction fol­
lowing a drop in annual earnings during the 2
years after the plan’s inauguration. The earn­
ings’ decline had resulted from operation of the
annual hours ceiling, some employees having to
be laid off as early as the first week in November.
The second was abandoned because of the diffi­
culty of adhering to the annual hours limit under
wartime conditions. The third was abandoned
because of the general uncertainty of operating
any guarantee under wartime conditions. In the
latter two cases, some sentiment was reported for
eventual, reinstatement of a guarantee, although
in both cases union representatives were lukewarm
about the possibility of the plans again taking the
shape of 7 (b) (2) arrangements because of the
elimination of premium overtime pay and the
absolute ceiling on annual hours of work. In an
additional case, where a guarantee is still in oper­
ation, 7 (b) (2) provisions were eliminated in
1942 because of longer wartime working hours.

The best-known of the guarantee plans which
has continued to operate under section 7 (b) (2),
and the one which covered more wage-earners than
any other 7 (b) (2) plan, has been that of Geo.
A. Hormel & Co., whose plan* antedated the Fair
Labor Standards Act. A t the congressional hear­
ings on that act, representatives of the firm ap­
peared, to urge the inclusion o f a provision which
would enable it to preserve its established guar­
antee; section 7 (b) (2) was framed to allow the
continuation o f and to encourage arrangements
o f this kind.
Six of the eight firms which operated under sec­
tion 7 (b) (2) reported some difficulty during their
experience with the plan in balancing man-hours
so that the annual limitation stipulated in the law
would not be exceeded. In two of the cases it was
necessary to lay off employees before the end of
the year.
One-third of the 54 employers (of the entire
group o f 62 studied) did not invoke the pro­
visions o f 7 (b) (2) in connection with their
guarantees because they were unable to meet re­
quirements of the section (either the guarantee
provided more or less employment than the stipu­
lated 2,080 hours, or no bargaining unit existed
in the plant) or because by the nature of its busi­
ness the firm was not subject to the Fair Labor
Standards Act. Other reasons for failure to take
advantage of the provisions o f 7 (b) (2) reported
less frequently were union opposition to elimina­

tion of premium overtime payments and the impos­
sibility of controlling employees5 annual hours to
conform to the 2,080-hour limitation. A large
proportion of the employers who did not invoke
section 7 (b) (2” w§re not acquainted with its
)
provisions.3
Chiefly because of unfamiliarity with its provi­
sions, very few of the employers or union officials
interviewed had suggestions to make for improve­
ment in the provisions or administrative inter­
pretations of section 7 (b) (2). Three employers
suggested the removal of the 2,080-hour ceiling on
hours, and the substitution of an annual overtime
penalty provision for hours beyond this point.
Four suggested that the provisions of 7 (b) (2)
be made applicable to nonunion as well as to union
employees. It was also suggested that the secur­
ing o f interpretations or rulings on the legality
of guaranteed wage proposals from the Wage and
Hour and Public Contracts Divisions be facili­
tated and that such action be taken before con­
tracts were signed or went into effect. Two em­
ployers and one union official suggested that in ad­
dition to an annual guarantee, the section provide
for a guarantee o f minimum hours per week. In
general, union officials were reluctant to consider
giving up premium overtime rates for a guaran­
teed wage or employment plan.
3 No special reasons for not utilizing 7 (b) (2) were reported
by the employers who had filed contracts with the W age and
Hour and Public Contracts Divisions but had not, in fact, oper­
ated under guaranteed wage or employment plans.

V. S. COVEBMMEHT PRINTIRC OFFICE: 1*47

For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. - Price 15 cents




17


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102