SAVINGS THROUGH EMPLOYERS
Within the last 15 or 20 years, employers of labor have gone a long distance in matters of employe well-being. One of the most notable steps is the making possible, by systematic methods, savings which the workers would never have accumulated if left to themselves. A responsible employer who operates a carefully worked out savings plan, is a wonderful aid to thrift and accumulation. It is simplicity itself for an employer to set aside, with the consent of the employe, a certain weekly portion of earnings which will be held as a savings deposit. By this means the certainty of saving is greatly increased, because the thing works automatically, and since the employe doesn’t get the savings portion into his hands, there is no temptation to change the plan or divert the savings to other things.
Some of the largest and most benevolent corporations not only save the employe’s money, which is entrusted to them, and compound its interest, but go so far as to offer to add to workmen’s savings as an inducement. Thus, for instance, the Metropolitan Life Insurance Company deposits to the benefit of each clerk, an amount equal to one-half the deposits made in its “Staff Savings Fund” during the year.
The employe is permitted actually to earn what amounts to 50% interest on his own savings plus ordinary interest. Few men of wealth, even if owning remarkably productive businesses, could match such a return.
The United States Steel Corporation and many other large corporations have a method whereby employes are encouraged to own stock in the company. Over 60,000 of the 250,000 United States Steel Corporation employes are now stockholders. The plan operated is to give the worker the privilege of paying for stock on a monthly instalment basis to be deducted from salary or wages. Employes receiving $1,250 or less wages per year may subscribe to one share, and others of higher wage are permitted to subscribe to larger numbers of shares. Like the Metropolitan Insurance Company, the United States Steel Corporation is benevolent enough to pay a premium to the saver. Those who keep for one year the shares of stock purchased receive a special bonus of $3 per share; those who keep them two years receive $4 per share; and so on up to the fifth year, for which the bonus is $7 per share. This bonus is in additional to all regular dividends.
Furthermore, employes in many companies have been privileged to purchase stock at prices below quotations on the stock exchange. Further security is given the employe who holds the stock longer than five years by arranging a special compensation; if the subscriber dies, is disabled, or is pensioned by the company, he is given his stock in full and still enjoys its various benefits. Perhaps the most startling instance of how an employe’s resolve to save brings him profit, is the instance of 12 United States Steel Corporation employes who bought stock in 1903 (both common and preferred)—at about the same time when Mr. Munsey with all his wealth bought many thousands of steel shares. These twelve workers, who paid a total of $46,000 for their steel shares at that time, have now more than doubled their money, through the rise in value of the stock. In other words, they not only have their stock, but they have made a net speculative profit of $55,000, which is an average of about $4,800 profit per man, or about $230 per year per man, exclusive of dividends.
This sum represents interest on about $3,800; which is actually more than these workers earned in a year. To put it another way, these steel workers who purchased stock in their employer’s company, grew with the company and profited just as the rich investors in the corporation did, to the degree that they actually earned more money than the interest on their total year’s salary amounted to, each year for 21 years.
Let us take another example, that of the Proctor & Gamble Company, makers of Ivory soap. This company, which has become famous for its policy of guaranteeing employment to its workers, operates a plan permitting employes to purchase shares equal to or slightly exceeding wages or salary each year; the plan being to pay for it on 5% of wages or salary. The company agrees to pay, during the first year, twice the amount of the savings, or 10%, and for each additional share up to the eleventh year, adds 1%, so that when the eleventh year arrives the employe actually achieves 20% return on his investment for 11 years. About 65% of the employes eligible for this plan have subscribed to it and are saving in a systematic way.
Employers also frequently operate special fund savings plans for vacation time or for Christmas time—sometimes also for home ownership. The merit of this plan is also its systematic and automatic method of operation. Workers invariably save more freely when given a chance to operate in this manner through their employers.
Of course employers also operate pension systems and benefit systems for employes who become ill or die, but that is outside the scope of this book.