One-Year Plans

George A. Hormel was an industrial nonconformist. Practically ostracized industrially by other meat packers for stumping for a 30-hour week, he retired to California in 1927 and turned his business over to his son, Jay Catherwood Hormel.

One day in 1929 handsome, heavy-browed young Jay C. was walking through his Austin, Minn, plant, laying off employes. Suddenly one of his men turned on him and said:

"You can't do that to me."

"Can't do what to you?"

"You couldn't turn a horse out in the street," said the workman. "You can't do it to me."

The workman's protest jelled into an idea and in 1931 Geo. A. Hormel & Co. tried an experiment, offered its smokehouse employes a guaranteed annual wage to ease the shock of layoffs, the strain of rushes. Since then the company has made industrial history with a "straight-time" annual wage plan, under which workers in Hormel's big main plant at Austin are paid a stated wage for a stated amount of work, regardless of the time it takes them to do it.

Hormel was not the first to guarantee wages or employment. Procter & Gamble has guaranteed 48 weeks of work to some employes since 1923 and the National Association of Manufacturers has listed seven other companies in which similar annual plans were in effect last year.* But the guaranteed-wage idea got its biggest boost when General Motors adopted it last fall (TIME, Nov. 21). Last week it looked as if guaranteeing wages might become a major business trend for 1939/- three more concerns jumped aboard the bandwagon and Jay Hormel announced a new scheme.

Spiegel, Inc., Chicago mail-order house, started a guaranteed annual wage program for 3,500 employes. Men were assured pay for 40 hours a week, women for 36. If they work less, they will make it up in rush periods.

The Namm (department) Store of Brooklyn, N. Y., announced that beginning February 1 all employes with one year's continuous service or more would be given minimum work guarantees. Affecting 90% of Namm's 1,300 workers, the plan will guarantee 40 weeks' work to employes of one year's standing, 52 weeks' work to five-year veterans.

Armstrong Cork Co., manufacturer of linoleum, insulation and bottle stoppers, offered employes a "makeup pay" plan to bring their wages up to 24 hours a week if actual employment falls below that minimum. Its workers, depending on length of service, will be able to draw 54 to 120 hours' pay to make up below-minimum employment. Armstrong's President Henning Webb Prentis Jr., one of the more vociferous U. S. Big Businessmen, said the plan was "experimental," would be tried out at least through 1939.

Hormel & Co., still in the van of the parade, last week came out with something brand-new, a "joint earnings plan." During the current fiscal year (ending October 1939) the total of all profits and wages of Hormers Austin plant will be reckoned up. At year's end this theoretical kitty will go 80% to employes, 20% to stockholders. If the employes' 80% fails to cover the pay they have already received, they will get no more. If it more than covers their pay, the surplus will be divided 80-20 until the workers have been given four weeks' additional pay. After that, if there is any money left, it will be split 50-50.

Hormel's new scheme, an adaptation of the profit-sharing idea, was worked out after Jay Hormel figured that 80% of his Austin plant's income went to employes in wages, 20% to stockholders in dividends. Although last year's $1,031,000 net income would have given workers no extra money under the plan, Packer Hormel thinks his program may inspire efficiencies, hence increase profits.

That Hormel executives are classed as employes and will share in the plan is altogether logical. For Jay Hormers executives go to work at the same time as his packers--7:30 in summer--and President Hormel works at a steel desk that is exactly like 250 other steel desks in Hormel's single vast executive office.

* The seven: Columbia Conserve Co.: Nunn-Bush Shoe Co.; Welsh Co. (St. Louis baby carriage manufacturer): Berkshire Knitting Mills; Northwest Metal Products Co.: Wm. Wrigley Jr. Co.; Western States Envelope Co. -)

/-If enough of U. S. industry followed this trend, it might effectively level the peaks and valleys in public buying power and also, therefore, in industrial production. This would help prevent any inventory gluts such as brought on Depression II.

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