The Labor Month in Review

THE KAISER STEEL CORP's long-range sharing plan agreement with the United Steelworkers, which Kaiser workers ratified by a vote of 3 to 1 on January 11, illustrates several concepts that are currently engaging the attention of students and practitioners of industrial relations. Developed during more than 2 years of study and negotiations, the agreement represents an attempt to eliminate the pressures of crisis bargaining at contract expiration time. The nine-man committee that prepared the plan under the Commission of the 1959 collective bargaining agreement included three neutral members, one of whom was the chairman. Finally, the objective of the plan is stated in the following terms:

In order to achieve, through cooperative effort, the greatest possible increase in productivity as rapidly as improvements can be made, it is necessary not only to provide that the result of such increase in productivity will be shared appropriately between the company and the employees, but also to provide appropriate protection against the loss of employment or of income for individual employees which might otherwise result from such action.

TO ACCOMPLISH THIS OBJECTIVE, the committee evolved a rather complicated series of proposals. Basically, workers will receive 32.5 percent of any savings resulting from increased labor productivity and more efficient use of materials-whether through direct effort of employees, by use of better equipment, newer processes, or better materials, or through improved yields. This percentage is based on the ratio of labor costs to total manufacturing costs at Kaiser Steel in 1961; it is also the historical ratio of these factors. The plan guarantees, as provided by the 1961 agreement extending the 1959 contract that, as a minimum, workers will get any wage increase or other economic improvement negotiated with other basic steel producers in the future. Sharing will be on a monthly basis; however, the parties may agree to use part of the money to liberalize insurance, pension, vacation, holiday, or other benefits. In describing the agreement at the time it was announced, Steel

worker President David J. McDonald emphasized that it made no change in the controversial section 2B of the basic contract, which regulates changes in local working rules.

Cost savings will be measured against the laborplus-material costs of Kaiser steel products sold in 1961. While the current wage incentive structure is being eliminated, as discussed later, the cost of the lump-sum payments to those who elect to drop the incentive program (which will equal what the employees would have received as incentive payments) will be included in labor costs. The cost base will be adjusted in the future to compensate for changes in prices of purchased materials and in the cost of living and for the addition of new products.

Thus, sharing is to be based on the production value of Kaiser products, not, as in other sharing plans (the current UAW-American Motors plan, for example), on profits. The plan's provisions for cost sharing based on production value and monthly sharing payments and the emphasis on the necessity for the understanding and cooperation engendered by a mature labor-management relationship closely resemble the definitive aspects of the Scanlon plan as adopted by many firms during the last two decades.

WORKERS ARE GUARANTEED against loss of employment or disruption of normal income which might result from productivity increases due to technological change, new or improved work methods, or any other change in operations not resulting from a decrease in man-hour requirements caused by a decrease in finished steel production, or a change in product or production requirements." A worker who would otherwise be displaced goes into a plant-wide employment reserve for retraining or assignment to new jobs. The pool is expected to remain small because attrition rates at Kaiser have historically exceeded the rate of employee displacement due to technological change and other causes related to improved productivity. Workers on short workweeks will receive pay for a 40-hour week. A worker who would be upgraded but for the effects of changes covered by the plan, or who is downgraded as a result of such changes, will receive a displacement differential for 52 weeks unless he is promoted. sooner. The differential will equal the differential between his regular rate and that to which he

would have been entitled. The cost of these provisions will be deducted from the cost savings generated under the plan.

Along with the cost saving and income guarantee features of the plan, the committee developed some provisions designed to encourage employees to drop their current individual or group wage incentive plan for coverage of the company-wide sharing plan. The committee attempted to develop an "integrated equitable system of compensation" to replace the current incentive plans of various types under which approximately 40 percent of the company's employees now work.

The plan is to be effective for 4 years, beginning March 1, 1963, and is subject to annual review. It can be terminated after the fourth year on 4 months' notice. The February issue of the Monthly Labor Review will carry the plan itself.

THE PHILOSOPHY underlying the plan is described in the committee's report accompanying the plan-some of the major theses are presented in the following excerpts.

The plan developed by the long range committee has been conceived in the light of: (1) the objectives of the parties; (2) the type of industry of which the company is a part; (3) the nature of the collective bargaining relationships involved; (4) the methods of wage payment and their relationship to production which have evolved in the basic steel industry; (5) the desirability of establishing a means by which all the parties at interest can achieve their objectives without imparing the vital function of free collective bargaining; and (6) giving due consideration to the public interest.

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Formulation of a sharing ratio will not, of itself, generate gains to be shared. A vital key to such progress is the relationship between labor and management at all levels, and especially at the plant level. Work practices exist in every industrial establishment. In fact, specific practices which take on the character of rules governing or guiding conduct exist everywhere. Practices are neither "good" nor "bad" in themselves. Moreover, they cannot be evaluated outside of the context in which they arose and in which they exist. Only those who know intimately the meaning which particular ways of doing things have for the people involved, can hope to be constructive in this area, thus making it possible to bring about the improvements which may be necessary to achieve a proper balance between the goal of the lowest possible product cost and the human factors involved. And even where the objective solution can be clearly seen, habits, customs, ways of

doing things change but slowly even in the best circumstances.

A sharing plan can contribute greatly to the elimination of the obstacles to progress in this area. Under a sharing plan there are mutual advantages in putting into practice the best methods available.

Accelerated progress toward additional productivity will be encouraged by providing additional employment and income security to the employees. The interests of all concerned will also be furthered by a thorough study of the types of training and retraining programs which may be required and the means through which such programs can be instituted.

The company's records of employee turnover-retirements, deaths, quits-reveal an attrition rate which has consistently exceeded the long-term rate of employees displacement due to technological change and other causes related to improved productivity. To the extent that this remains true, workers hired by the company need not suffer technological unemployment. Given an attrition rate which exceeds the rate of increase in output per man-hour, steelworkers suffer periods of unemployment because of cyclical downturns, or because of: (a) temporary lags of the attrition rate behind the rising productivity rate in a given period of time; (b) fragmented seniority units which result in displacement of senior employees from one unit while hiring of new employees is taking place in another seniority unit; and (c) inability, at a particular time, of individual workers to perform the work required by vacant jobs. Important strides will be made toward continuity of employment and income security by providing: (1) that increases in productivity will not result in loss of employment or income for the employees; (2) greater integration of seniority units; (3) training and retraining programs for employees in relation to the skills required for prospective job vacancies; and (4) conditions which will lead to improved product quality and customer service in order to earn and keep customers. Of course, any growth in the demand for steel will be of great additional aid in accomplishing this aim.

While it is practicable to move toward continuity of employment and income of present and future steelworkers, it is important to note that the larger problem of creating additional new jobs is affected by considerations which lie, at least in part, outside of collective bargaining. The steps which can be taken to resolve this problem within the sphere of collective bargaining include such measures for minimizing layoffs and income losses as noted above, actions designed to stabilize or reduce unit costs as a step toward gaining a greater product market, and development of progress on an equitably shared basis to enhance purchasing power through increased compensation. It is apparent though, that the many additional measures required to achieve greater employment opportunities are largely outside the area of collective bargaining.

Geographic Changes in U.S. Employment

From 1950 to 1960

STELLA P. MANOR*

EDITOR'S NOTE.-This is the second of two articles dealing with the changing occupational structure of the U.S. labor force. The first, in the November 1962 issue, discussed occupational changes for the country as a whole. This one discusses the effect of geographic differences in the growth of employment on the distribution of occupational groups among the regions and States and the resulting changes in regional occupational profiles. The basic data are taken from the 1950 and 1960 decennial censuses.

During the 1950's, markedly different rates of growth in employment among the regions and States resulted in a redistribution of occupational groups, as well as total employment. Inevitably, these shifts changed the occupational profiles of the regions and of many States.

Rates of total employment growth were higher in the Mountain and Pacific regions and the South Atlantic region and lower in the Northeast and the four Central regions. In most of the States In the latter regions, rates of growth were insufficient for them to retain their former share of total employment. In fact, five Central States dependent mainly upon farming experienced actual losses in numbers of employed workers. Outside of these regions, only one State and the District of Columbia had fewer workers in 1960 than in 1950.

As a result, the three fastest growing regions— South Atlantic, Mountain, and Pacific-in 1960 accounted for 29.5 percent of the total employed as compared with 26.5 percent a decade earlier. Most of the loss balancing this gain occurred in the Middle Atlantic, West North Central, and East

South Central regions. A decade earlier these three regions had accounted for 37.3 percent of the total employed; by 1960 their share had dropped to 34.8 percent.

In line with the pattern of total employment growth, most of the major nonfarm occupation groups also showed marked increases in the South and West. Because the highest rates were chiefly in the smaller States, percent changes in the geographic distribution of employed workers in the various occupations were small. The changes, however, unmistakably shifted significantly higher proportions of nonfarm workers into the South and West and higher proportions of farm workers out of the South Central regions into the North and West.

Varying rates of occupational change among the regions and States were bound to affect the occupational structure of the several regions. Structural changes in the regions, in general, followed the national pattern, in which the gains were greatest for professional and clerical groups, substantial for service and sales workers, and modest for craftsmen, whereas the declines were small for managers, substantial for operatives, and sharp (both actually and relatively) for laborers, farmers, and farm workers. However, significant deviations from this pattern of structural change occurred in many sections of the country. For example, operatives gained rather than declined in importance among occupations in the West, North Central, and South Central regions, reflecting the industrialization of these areas. Similarly, craftsmen gained more in relation to other occupations in these regions and in the South Atlantic and Mountain regions than nationally, while they lost ground or just maintained their position in areas of earlier industrialization under the impact of technological change and outward movement of industry. The share of farmers and farm managers in total employment declined markedly in every region as it did nationally, but it dropped most sharply in the three Southern regions, where agricultural activity is yielding to other industry and

Of the Division of Manpower and Employment Statistics, Bureau of Labor Statistics.

1 The national, regional, and State numbers of total employed include those with occupations not reported, and are used in the analysis of geographical changes in total employment. To insure greater accuracy, analysis of geographical changes in occupation groups is based on numbers with occupations reported only.

undergoing revolutionary change in technology, size of farm, and productivity.

These changes worked to minimize some of the differences among the regions and to bring their occupational structures somewhat closer together.

Shifts in the Total Employed 2

Many developments combined to stimulate employment in the South and West, as the pattern of employment growth (chart 1) followed the movement of industry and population growth.

For both employment and population, the 12 States with the highest rates of growth were the same, and the 5 lowest States were also the same. Many of the others had approximately the same rank.

A look at industrial growth shows that the more rapidly growing durable goods manufacturing industries, such as transportation equipment, electrical machinery, and fabricated metal products, were locating in the South and West. At the same

time, substantial defense contract awards, particularly for scientific research and development, were made to the aerospace and electronics industries argely concentrated in these areas. Moreover, many of the more rapidly growing nonmanufacturing industries (including personal services, trade, professional services, and finance, insurance, and real estate services), though more widely dispersed by virtue of serving consumers, followed population growth to the South and West. A further factor was the continued movement into these areas of some declining or slower growing nondurable industries, such as textiles, apparel, and food processing, and some durables, such as steel, frequently accompanied by the simultaneous adoption of new processes or technologies. Continuing increases in productivity in agriculture, with declining em