Sec. 7. #Piece work.# Piece work of the simpler, or ordinary kind, is that where the payment varies just according to the amount of the product, by some physical measurement, as yards of cloth woven, number of pieces turned on a lathe, or amount of type set by a printer.  Usually careful inspection by some agent of the employer serves to keep the quality up to a certain standard.  The rejected pieces are not paid for, and sometimes also the workmen are required to pay for the materials wasted by their poor work.  Piece payment is convenient for home work, such as that of rural peasants weaving cloth for commission merchants or as that of tenement workers in cities.  It is also employed very widely in the larger factories in textile and mechanical industries.  Selling on commission is a form of piece work.

In piece work the motive to activity is ever present to the worker, and almost always the worker turns out a larger product when paid by the piece than when paid by time.  The employer benefits by the more efficient use of his machinery and equipment even when the price per piece is not reduced with the larger output per worker.  The worker’s earnings may increase rapidly under this plan, but as the manual dexterity acquired is usually of a very special kind which can be used only on one particular machine, the worker has little opportunity to resist a cut in his wages.  For this reason and because of the undue strain upon the worker that often occurs, piece work is in many trades not favored by the workers.[3]

Sec. 8. #Premium plans.# Various modifications of piece work have been developed of late, all involving the features of a minimum task and of a premium for performance beyond that point.  These plans are called “premium plans,” “progressive wage systems,” and “gain sharing.”  One of the first of these, Halsey’s premium plan, fixes a standard time for a job and if the worker falls short of, or merely attains to, that standard he gets the regular pay; but if he takes less than the standard time he receives a fixed premium per hour for the time saved.  For example, if the standard time is 10 hours for a $3.00 job and the premium for speed is ten cents per hour, the worker would receive 20 cents premium if he did the work in 8 hours ($2.40 +.20, total $2.60), and 50 cents premium if he did it in 5 hours ($1.50 + 50, total $2.00).  His average wage per hour thus rises as his speed increases; it becomes 32.5 cents per hour when the job is done in 8 hours, and 40 cents per hour when the job is done in 5 hours.  The reduction of cost per job to the employer evidently would be 40 cents in the first case, and $1.00 in the second.  This is Halsey’s plan, by which the worker gets one-third and the employer two-thirds of the time saved.