A strike is imminent at the Sleep-Tite Pajama Factory. A new superintendent, Sid Sorokin, has come from out of town to work in the factory. The union is seeking a wage raise of seven and a half cents an hour. Sid and Babe, who is the head of the Grievance Committee, are in opposite camps; yet romantic interest is sparked at their first encounter. Meanwhile, Hines, the popular efficiency expert, is in love with Gladys, the company president's secretary, but is pushing her away with his jealous behaviour.
At the annual company picnic, much mayhem ensues; include a knife-throwing act! At Babe's home, Sid's romantic overtures are deflected by Babe, but eventually the walls come down between the two, who admit their love for one another. Their different viewpoints are reinforced, however, when they return to the factory. A slow-down is staged by the union, strongly supported by Babe. Sid, as factory superintendent, demands an "honest day's work" and threatens to fire slackers. Babe, however, is still determined to fight for their cause, and kicks her foot into the machinery, causes a general breakdown and Sid reluctantly fires her.
After some consideration, Sid becomes convinced that Babe's championship of the union is justified, and accesses the firm's books and discovers that the boss, Hasler, has already tacked on the extra seven and one-half cents to the production cost, but has kept all the extra profits for himself. Sid brings about Hasler's consent to a pay raise and rushes to bring the news to the Union Rally, already in progress. This news brings peace to the factory and to his love life. Everyone goes out to celebrate — at Hernando's Hideaway.