Monday, September 7, 2015

For Labor Day: Another Way of Working

While on a trip a few weeks ago, I picked up a historical artifact about the road not taken in American industry. Published in early 1927, the 80-page booklet tells the story of the Endicott-Johnson company and its workers.

Starting with the title, “WE” — including those quotation marks and that capitalization — it is a relentlessly positive portrayal of the company and its 17,000 workers, all located in a small geographic area in central New York state: the Triple Cities (Binghamton, Johnson City, and Endicott).

As you can tell, two of the cities got their names from the founders of the company. They grew up together, after the company formed in 1890. Binghamton, the largest of the Triple Cities, was founded in the late 18th century, but the adjacent Johnson City was originally a tiny bedroom community with a different name, and Endicott, further west, was still farmland.

Endicott-Johnson made shoes at an affordable price, part of the industrialization of clothing manufacturing that happened after sizes were standardized following the Civil War. This allowed people to buy off the rack or shelf, rather than hire a tailor or cobbler.

The company’s founders, developing it during our country’s era of strong unionization and the Russian Revolution, tried a different tack: give the workers most of what they would have gotten by unionizing, but leave out the union.

The “WE” booklet describes all of those things in loving detail, beginning with the booklet’s subtitle: “The Story of an Industrial Democracy Unique in Business History.” I didn’t see evidence in the booklet of a democracy in the company, but it definitely is a company that spent years sharing the wealth with its workers far beyond the usual.

Endicott-Johnson [believes in] the broad humanitarian assumption that every life is worth living — that hope, happiness and contentment should and can exist for those who toil in factories as well as for those who manage them — that human relationship between employer and employee is the greatest factor underlaying business success — and that true business success is something which belongs not to the employer alone, but to all who have a part in its making.
The company made much of the concept of “the Square Deal” — going so far as building stone arches across the main streets proclaiming the towns to be the “Home of the Square Deal.”

The arches -- built and paid for by the workers -- stand over the streets of Endicott and Johnson City to this day.

The booklet goes on to proclaim:
Here is found a democratic spirit, an air of good fellowship and pride of mutual achievement not paralleled in any similar organization or industrial community. There are no class barriers. No pretentiousness. No high-and-mighty exclusiveness.

We call our president by his first name and he calls us by ours. He is our neighbor. So are all of the other officials of the Company. We swap yarns with them over back yard hedges and rub elbows in the movies.
All this while tanning 20,500 sides of leather and making 130,000 pairs of shoes every single day.

The company provided libraries, homes, hospitals, free health care, pensions and sick relief, parks and pools. And annual profit-sharing. Plus:
We have factory restaurants where more than 12,000 wholesome meals are served to us daily, at an average cost of about 20 cents ($2.65 in 2014 dollars). We make good wages the year round. We have reasonable working hours. We share in the profits of our Company.

We fill all our good jobs from the inside by advancement. We have never had a strike.
Now for some details on those good wages, houses, pensions, and profit-sharing.


Homes worth living in were sold, it says, at cost or less, and available in a variety of sizes to fit different families.

These are not “Company Houses” crudely designed, monotonously alike and cheaply constructed, in quantities — like many commonly found in mining and other industrial localities where housing is so often regarded purely in the light of commercial expediency.

Each Endicott-Johnson house is planned to be a home, pleasing in design, substantial in construction, complete in detail, cozy, warm, easy to furnish and economical to maintain.
The houses still stand and are as good as any other houses from the era, so this part is definitely true. Their lots were at least 50 x 150 feet (a standard size in many cities, including St. Paul), with room for a lawn and garden.
  • A four-room (plus bathroom) house was $2,100 ($28,000 today).
  • A five-room (plus bath) bungalow was $3,000 ($40,000 today)
  • A seven-room, two-and-a-half story four-square went for $4,000 ($53,000 today).
Clearly, these were bargain prices for houses with hardwood floors, porches, heating, plumbing, and bathrooms.

Wages and Profit-Sharing

EJ’s workers, it says, “receive the highest wages of any leather and shoe workers in the world.” The average yearly wage reported for 1925 is $1,309.88. This works out to $17,500 in 2014 dollars, or $8.50 an hour — just about our current minimum wage, if the workers were putting in only 40 hours a week. But the average number of hours worked a week is not given; just that general statement, “We have reasonable working hours.” (The Wikipedia page for EJ president George F. Johnson says, though, "Endicott-Johnson was the first company in the shoe industry to introduce the 8-hour workday, 40-hour workweek..." This started in 1916.)

The booklet doesn't mention that the workers were paid under a piece-work system, but that was the case. According to the Wikipedia, Johnson "saw the hourly-wage-system as a form of mental slavery."

Profit-sharing is described in glowing terms. In 1925, the Workers’ Share was $1,153,824 — or $68 per worker ($908 in 2014 dollars), which is a bit under three weeks’ pay.

Pensions, Disability, and Vacation (Not)
When time at last begins to take its toll in physical decline, our Endicott-Johnson pension system offers the faithful worker a kindly helping hand. And this aid is not an arbitrary, fixed sum, but is determined by the actual need of the worker — according to his ability to continue in part time or less arduous duties. When complete retirement is finally necessary his needs and the comfort-giving needs of his family are provided for as long as needed.
Which is pretty vague.

If a worker died while employed, the company continued his paychecks
for a year, or two, three or five years if there is need. There is no mechanical limitation on this insurance. It does not stop at some arbitrary fixed sum. The needs of each case are separately considered and conscientiously met. This is the most equitable form of insurance we know — insurance paid for from the profits of those who can spare it…
I wonder what the actuaries thought of that!

Sick relief (short-term disability insurance) was available but not required for sale at 20 cents a week. That’s $10.40 a year ($136 in 2014 dollars) to a worker who made $1,300 a year--so pretty affordable. In exchange, the worker got:
After the first week’s illness we pay to members in good standing $10.50 per week during illness; maximum payment not to be over 13 weeks.
That means the yearly cost would be paid off in a single week out of work (after one week), with another three months covered as well. But the sick relief payment of $10.50 was about 40 percent of regular weekly wages, so this benefit must have left families struggling.

No mention is made of paid vacations. I guess the workers and their families were supposed to take advantage of the parks and pools for their down time.

Public Markets

One of my favorite parts of the booklet is the description of the towns’ public markets.

There were two large public markets, I assume one in Johnson City and one in Endicott.
…as many as 1,670 farmers’ trucks and wagons have gathered over the period of one month and served between 15,000 and 20,000 people, the sales totaling $86,320.10.
From the photos, it appears the markets were open on Tuesdays, Thursdays, and Saturdays.

This was in an era well before supermarkets, when there were only small corner stores. Having a large public market would have been an enormous benefit in towns of this size.

The Value of the EJ Dollar

A summary page attempts to find the worth of all the company did for its workers.
No monetary standard can measure the value of happiness, human friendship and the serenity which comes from knowing that every reasonable contingency of one’s future is thoughtfully provided for. Yet those are some of the precious possessions of those who live in “The Valley of Fair Play” and under the benefaction of “The Square Deal.”

Our parks, playgrounds, libraries and social centers hold limitless measures of enjoyable recreation and entertainment. Our community system promotes mutual friendship that is priceless. Our hospitals, medical services, pension, insurance and other relief systems, and our home-establishing plan makes us rich in contentment.

We cannot begin to estimate the value of these assets. But we can to a degree, estimate the material value of those benefits which may be classified as direct (omitting such as are factors for pleasure, recreation and entertainment…). We can thus arrive at some sort of tangible value of the Endicott-Johnson Dollar to the Endicott-Johnson Worker.

Based on estimated cost, the value of direct Endicott-Johnson Benefits received in one year (1924 estimate) is approximately as follows:

EJ Medical Expense: $1,293,379
Outside Medical Expense: $191,647
Accident relief not covered by state: $70,035
General Relief [payments to dead workers’ families?]: $185,376
Sick Relief [disability]: $114,078
Pensions: $92,470
Ambulance and funeral car service: $50,720
Public Markets (saving as compared with current public retail prices): $600,000
Workers’ Homes (saving as compared with public cost): $250,000
Legal Services and Miscellaneous Benefits: $250,000
Which totals to $3,087,705. Divided by 17,000 workers, that's $182 each ($2,431 in 2014 dollars).

Here's one bit of info from the EJ Wikipedia page:
...labor organizer Samuel Gompers visited E-J on several occasions, and spent time with both rank and file employees and with the Johnsons. When asked why no attempt had been made to organize E-J workers, Gompers said that E-J already gave workers more than unions had achieved elsewhere, and that the Federation of Labor was working to bring other workforces to the pay and benefits levels E-J provided on its own initiative.
A Snapshot

The “WE” booklet is a glimpse of the company in middle of the 1920s, after a success-filled run since the 1890s. They grew from one factory with 200 workers to 17,000 workers, 22 factories, and seven tanneries over 35 years.

What happened to the company during the Depression? Sales must have fallen. How did that affect their commitment to workers? Did they share the losses together? (Some of the answers are in this NPR story from 2010).

The company boomed again during World War II, under contract to the military. But in the 1950s management didn't catch the wave of changing fashion in shoe styles and fell behind other companies. I know from personal knowledge that Endicott-Johnson was a declining business by the 1960s, but I don’t know how company policies changed during the rise of globalization.

One legacy of EJ was its effect on the employment policies of IBM, which was founded across the street from EJ's Endicott factories. As the Wikipedia puts it,
IBM, due at least in part to the influence of E-J's example, became one of the earliest and most important providers of employee benefits. Although they didn't provide free medical and hospital care or build houses for employees they recognized that good pay and benefits were key to remaining non-union.
All of that later history is something to look into the next time I’m out that way. Or maybe I'll read the book Life and Labor in a Corporate Community: An On-Line History of the Endicott Johnson Corporation (available online!) by George Zahavi of SUNY Albany.

Either way, the "WE" booklet was quite a find for a history buff like me.


martunee said...

My father worked EJ for many years. In that time I was hospitize many times including a 16 month and 8 month periods, as well as clinic and dental visits. None of this cost my family anthing. I owe my life to those benifits,
Anthony Menichelli

Daughter Number Three said...

Thanks for commenting, Anthony. That is good to hear (and actually brought tears to my eyes).