3. It lessens but does not obviate the necessity of changing rates.
4. It lessens but does not wholly remove the inclination to limit output.
It is in one respect a step backward, since it substitutes uncertainty for definiteness as to wage costs. Nevertheless, the Halsey system was an admirable step in advance. Usually the worker is given either one-half or one-third the time he saves. Psychologically it is much better than piece rate, since most workers are more inclined to lessen their time than to increase the number of pieces turned out. A man will deliberately decide that he ought not to turn out more than five pieces a day, but he will not feel the same desire to avoid breaking his own record of two hours per piece.
Under the Halsey system, no limit is placed on a man's earning power per hour, and also a minimum piece rate of one-half or one-third the initial rate per piece is allowed, so that if a man worked on his own time, he would at least receive per piece one-half or one-third standard pay.
Fig. 1. Diagram of the Halsey Premium Wage System
TAYLOR SYSTEM
A fundamental departure was made by Mr. Fred W. Taylor, in his differential piece-rate system, a diagram of which is shown in Fig. 2. Mr. Taylor does not establish an initial time by guess or by assuming a more rapid gait than on day work, nor does he appropriate other unscientifically determined times. His method is to standardize all conditions in the shop, to make them as perfect and smoothly acting as circumstances will permit, and then to determine a reasonable minimum time in which the job can be done. As a result, Taylor's standard times are very much lower and also very much more carefully and accurately determined than any system hitherto considered. Mr. Taylor scorns the suggestion that by any chance the worker could earn excessive wages. Any wages that an unusually efficient worker can earn are legitimately his own. Assuming that under the Taylor system a worker should do four pieces in four hours, his wages for the time would be $1.00, but Mr. Taylor allows an increase of 20 per cent, 25 per cent, 30 per cent, or even more, according to the class of work, for ascertaining standard time. Let us assume 20 per cent increase. The worker then receives for four pieces in four hours, $1.20, a rate of $0.30 each. For less than four pieces the maximum hourly rate is $0.25, therefore $0.25 each. If the worker only delivers three pieces in four hours, his earnings are only $0.75, or $0.1875 per hour. Mr. Taylor's system awards, therefore, a heavy and increasing premium for high efficiency, a heavy penalty for low efficiency.
The method of standard time determination is so rigorous that the worker cannot figure on curtailing his output. He has to hustle to make wages even at the low piece rate, and if he succeeds in this, a very little extra effort will give him a higher piece rate.