Proposal to reduce wages 1976

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The craftsman’s share of the sale price, called here the wage rate, became important in 1971 when the commune became a co-operative. Previously there had been no connection between productivity and pay. The change from a communal system to a co-operative system forced lazy craftsmen to make something that could be sold in the leather shop at a profit. The change also allowed the more industrious people to control how they used their time. The result of the change was that the lazy craftsmen left the leather shop immediately. Thereafter the main benefit of the policy was to allow the members of the co-operative to schedule their time based upon their income needs.

After 1971, four of the craftsmen lived on the group’s rural property near South River, Ontario. Mary Rauton and Philip Mullins formed one couple and Colleen Anderson and George Mullins formed the other. The two couples were each assigned four or four and one-half months during which they were expected to run the leather shop in Toronto. The rest of the year they were free to do what they wanted. (They were also expected to be in Toronto for the Christmas season but this was not mandatory.) Randy Rauton was in Toronto year-round. He lived above the leather shop. He filled in at the leather shop as needed. Bie Engelen also took her turn running the shop. In this way the shop was manned all year.

An unpleasant result of this inattentive and uneven management style was that the wage rate declined steadily between 1970 and 1980. The wage rate had to be adjusted every two or three years. This was always a democratic decision made by those working in the shop at the time. It was done after an analysis of the books showed that otherwise the shop would not be able to meet its obligations. Usually the wage rate was reduced in conjunction with other changes that were designed to increase sales or productivity.

The following is a proposal from the Christmas Meeting held in December 1976. It was circulated and signed by the six individuals who were considered to be members of the co-operative at the time. The proposal was written by Philip Mullins.


Proposal #1: To reduce the labour share of the retail selling price of all co-op made goods from 40% to 35%, beginning January 1, 1978.

Rational for this Proposal: Beginning in 1974, Ragnarokr began to lose money. According to our Profit and Loss Statements we have lost over $5600.00 over the last three years. In 1971 Ragnarokr (the retail store) made a profit of $1185.00. Information for Ragnarokr is missing for 1972 but in 1972 Cow Products (the wholesaler) had a profit of $3168.00 and Crow Goods (the manufacturer) had a profit of $1288.00. In 1973 Ragnarokr had a profit of $742.00 while Crow Goods lost $83.00. After 1973 all of our business was done under the name of Ragnarokr. In 1974 Ragnarokr lost $954.00. In 1975 Ragnarokr lost $3196.00 and in 1976 Ragnarokr lost $1450.00.

It can not be argued that these losses are the result of an increase in our inventories of either co-op or jobbed goods. These inventories have not really increased at all. In 1974 the value of inventory at the retail sale price was $4803.00, in 1975 the value of inventory at the retail sale price was $2903.00, in 1976 the value of inventory at the retail sale price was $4927.00 and in 1977 the value of inventory at the retail sale price was $5261.00. Neither have our inventories of supplied and materials increased nor have we made large capital acquisitions. In my opinion, the only reasonable explanation is that our operating expenses now exceed 60% of the retail selling price of our leather goods.

Given the fact that during the period 1974-1976 our total sales were $67,500 and our total losses were $5,600, we can calculate that if the shop percentage had been 68% throughout the period (1974-1976), instead of 60%, then the shop would have lost very little capital ($200). On the other hand, Ragnarokr’s indebtedness does not at present exceed $2,000 ($1,200 is owed to craftsmen). This figure, not $5,600, may be the actual amount of capital lost during the period. If this is so then we can say that if the shop portion had been 63%, instead of 60%, then we would not have lost money during the last three-year period. Whichever way it is figured, it is obvious that 60% of the retail sale price is not sufficient to meet the operating expenses and that a figure between 63% and 68% would be.

For this reason I propose that the labour share of the retail selling price be decreased to somewhere between 32% and 37%. I propose an intermediate figure of 35% for a trial period of two years, beginning in a year’s time. If all of us are willing to leave a certain amount of our earnings in the shop account, I see no reason why we can not continue to operate on a 40% basis for 1977.

If you vote in favor of this option, please sign here:

(signed by) Philip Mullins, Mary Rauton, R. Rauton, Colleen Anderson, G. Mullins

If you vote against this option, please sign here:

(signed by) B. Engelen

If you have read this proposal but can not vote either for or against if, please sign here:

(no signatures are shown on this line)

January 14, 1977

Use this link to return to the narrative, The Shop's Business: Decline of the wholesale trade, 1972-1978

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