(Great Britain), pages 110-111. See for similar view, 4th
Report of N. Y. State Factory Investigating Commission, Vol.
V (1915), testimony of Miss Van Kleeck.
[80] D. A. McCabe, "The Standard Rate in American Trade
Unions," page 14.
[81] P. S. Collier, "Minimum Wage Legislation in
Australasia," Fourth Report of the Factory Investigation
Commission, N. Y. State, 1915, page 8243.
[82] See pages 172-5, Chapter VIII.
[83] See for examples, the reports of the Minimum Wage
Commissions of The District of Columbia, Massachusetts and
Oregon. Also the studies by R. H. Tawney and M. E. Bulkely
on the English experience. Those of P. S. Collier and M. B.
Hammond, on the Australasian experience.
[84] Decision as to wages, etc., in North Atlantic & Hudson
River Shipyards, Shipbuilding Adjustment Board, reported in
_U. S. Monthly Labor Review_, May, 1918, page 136. See in
same issue of the review, "Decision for Shipyards of San
Francisco Bay and Columbia River, and Puget Sound
Districts," pages 68-78. Also report of Benjamin M. Squires
in the _Monthly Labor Review_, 1918, Sept., on the "New York
Harbor Wage Adjustments."
CHAPTER VIII--THE STANDARD WAGE (_Continued_)
Section 1. What variations or limitations should be introduced into
the principle of standardization in view of the great area and
economic diversity of the United States?--Section 2. Differences in
natural or acquired advantage between different enterprises as a
reason for modification and limitation of the principle.--Section
3. Differences in the character of the work performed by any large
group of wage earners as a reason.--Section 4. Differences in the
cost of living at different points within the area of
standardization as a reason.--Section 5. The grounds for "nominal
variations" in standard wage rates. The policy to be pursued in
regard to payment for irregular employment.--Section 6. The
possibility of maintaining standard wage rates over a large and
diversified area considered.--Section 7. Up to the present, the
progress of standardization has not proceeded in accordance with
reasoned conclusions as to the results produced.--Section 8. Where
should level of standardization be set? The doctrine of
"standardization upward."--Section 9. The importance of the
principle of standardization in wage settlement.
1.--We have now completed our analysis of the general effects to be
expected from the enforcement of wage standardization throughout
industry. That analysis was carried out on the underlying assumption
that the general economic position of the industrial enterprises which
would be included within any area of standardization was substantially
alike. That assumption must now be given up. A further question must be
faced. That is whether the principle of standardization, as put forward
up to this point, should be limited or varied in any way because it
would have to apply, as a matter of fact, to an area so great and so
diversified in economic character as the United States, and to an
industrial situation which is the product of a great number of separate
impulses, and which is made up of a vast number of separate interests.
2.--We will consider in order the grounds upon which limitation or
variation of the principle of standardization has been argued for in the
past--limiting ourselves, as we must, to the most important. The first
that may be taken up has arisen almost every time that wage
standardization has been introduced into a craft or industry. It is the
contention that, due to differences in natural or acquired advantage
possessed by different enterprises in the same industry, certain going
enterprises will be forced to cease production, if all are compelled to
pay the same wage rates for the same work.[85]
The weight of this contention must be decided in each case by the facts
which support it. In some instances it may be clear that the vigorous
and summary application of wage standardization would cause men to be
thrown out of work, who could not easily find work elsewhere, and would
make a considerable amount of fixed capital valueless or almost so. In
those instances there would be reason for considering the extent to
which the standardization should be carried out, and also what
variations should be introduced into its application. That such cases
are not infrequent is borne out by the Australasian experience of which
Mr. Collier writes, "In regard to the practicability of the common rule,
opinion differs. In some staple industries such as coal mining, it has
been said to operate fairly. But its application to small industries and
retail stores, where conditions vary more widely, is fraught with
considerable risk and is proceeded with slowly.... While the power to
enforce industrial conditions throughout a state or given territory is
of unquestionable value, experience shows it must be exercised with
caution."[86]
The test to be applied in each instance should be the balance of
interest involved, including a strong public interest in standardization
as one of the elements in a policy of wage settlement. When weighing the
facts for or against the limitation or variation for the reason under
discussion, several distinctions should be made. Firstly, in regard to
the nature of the difference in advantage possessed by the various units
of the industry in question. Secondly, in regard to the way in which the
differences in advantage are distributed among the various units of the
industry.
The case for limitation or variation is apt to be stronger when the
difference in advantage is a natural difference than when it is an
acquired difference. In either case, the decision must rest upon the
balance of good and harm to be anticipated from a straightforward and
unmodified application of the principle. But when the difference in
advantage is a natural difference, such as exists between different
mining areas, there is greater reason for deliberate procedure than
otherwise. For the possibility that an abrupt suspension of certain
enterprises be caused without compensating extension of other
enterprises, is the more genuine. Such a situation was recognized, for
example, in the case of the living wage legislation for agriculture in
England; and thus instead of applying one standard wage throughout all
districts, standardization was carried out by districts.[87] Even in
this case, however, the various district advisory boards are under a
strong and constant pressure (under the terms of the act) to bring the
rates in the various districts to the same level. Such, also, to take
another example was the situation recognized in the course of the
attempt during the war to standardize the wages of the stevedores and
longshoremen employed in the South Atlantic ports. Here straightforward
and unmodified standardization would have caused, it was judged, the
diversion of certain freight carrying steamship lines from ports in
which they now operate.
If the differences in advantage are in the nature of acquired
differences, only convincing evidence of the permanent harm likely to
result from general standardization would justify limitation or
variation. For in this case, the necessity of paying standard wage rates
is itself a powerful force towards overcoming conditions that have been
declared a definite competitive disadvantage. Probably no extension of
wage standardization in industry has ever taken place without injuring
some individuals. It is the net balance of gain or loss that is
significant. In most past instances when standardization has been
enforced in an industry, marked by an unequal distribution of acquired
advantages, the consequences have not verified the predictions of those
who believed it would cause great disturbance and unemployment. On the
contrary, it has frequently resulted in the development of better
organization within the industry.
Again, the case for the limitation or variation is apt to be the
stronger, when the difference in advantage is between concentrated but
widely separated areas, such as might exist between two ports, for
example, than when the differences are between different units in the
same industrial area or field. For in the second case, the possibility
of causing lasting unemployment would be less. The distinction, however,
is entirely one of degree.
Whatever limitations or variations are admitted should not be settled
arbitrarily; they should correspond to the facts which make them
advisable. The union attitude in respect to the extension of wage
standardization is sometimes as cautious as that of the employers. That
is because those workers employed at the points which are supposed to
possess the smaller advantages, natural or acquired, are not likely to
support an unmodified application of the principle of standardization,
unless they believe the consequent industrial changes will be
beneficial, or at least not harmful, to themselves. The advice, if not
the concurrence, of all interested parties is of the greatest value in
arriving at a satisfactory determination. A good example of such an
arrangement is to be found in the agricultural living wage legislation
in Great Britain. It is provided therein that "When a district committee
has been established for any area, it shall be the duty of the Committee
to recommend to the Agricultural Wages Board, minimum rates of wages
fixed under this act, and no variation or cancellation of such a rate
shall have effect within that area unless ... recommended by the
district wages committee."[88]
3.--Another possible ground for limitation or variation of the principle
of standardization is set forth often in the contention that the
character of the work performed by any large group of wage earners is
not the same throughout the field of its employment. Such, for example,
was the argument of the directors of the American railways, as
summarized by Mr. Stockett: "... The railways oppose district
standardization on the ground that rates cannot be disassociated from
conditions and since conditions vary widely on different roads in such
extensive territories as the railway districts they maintain that rates
cannot be made uniformly applicable on all the roads. The amount of
compensation, the roads hold, is governed by the labor performed, the
skill and efficiency required, the responsibility and hazard involved,
the discipline necessary, the rapidity of promotion, and the cost of
living."[89]
It is plain that the point of view which inspires the above argument is
at variance with the beliefs that are behind the movement for wage
standardization. The argument accords no validity to the belief that
group unity and group aims deserve recognition in the settlement of
wages. The doctrine of standardization on the contrary represents this
belief, and sets groups standards above the existence of minor
difference in the work performed by the group. The practical
consequences of any wage policy which gave full recognition to these
minor differences must also be weighed. These have been vigorously
stated, for the case of railway labor, by Mr. Stockett. "... The
employees maintain that the varying physical and traffic conditions in
the different roads should not constitute a basis for the payment of
various rates. It may be true, they hold, that physical conditions and
traffic peculiarities differ as between different roads, but it would
be impossible to determine a separate rate of pay for each special
condition. In the course of development of the railways conditions are
always changing. Grades may be leveled, additional tracks laid, curves
straightened, passenger and freight densities may differ from year to
year and from day to day. The attempt to determine the proper rates for
each different condition and to change them as conditions change, the
employees assert, is obviously absurd. The plan of fixing a standard
rate governing an entire district may be illogical and its basis
arbitrary, but it is deemed the best devised and does substantial
justice in a broader sense than any other system."[90]
Cases may arise, indeed, where the difference in the character of the
work performed really means that the same name covers two relatively
distinct occupations, and two or more quite different classes of wage
earners. Such cases are probably rare. In circumstances where the
constant differences between the character of the work performed by
workers is relatively great, it will usually be found that they are
distinguished into different groups.[91] It is a question of degree, of
course. And if the existing distinctions do not fit the facts, those
distinctions should be changed.[92]
In unorganized industries, it will sometimes be found that the
classification of occupations is very defective. If wage standardization
were to be introduced into those industries, it would be found necessary
to standardize occupations first. Such was the task undertaken, for
example, by the War Labor Board in the Worthington Pump and Machinery
case.[93]
4.--A third possible ground for limitation or variation of the principle
of standardization is the existence of differences in the cost of living
in the various main centers or regions to which a standard rate might be
applied. Such variation would be represented, for example, by a
collective agreement in accordance with which the wage scale at
different points was varied in accordance with the relative cost of
living at these points. Up to the present there has been a tendency to
disregard differences in the cost of living when wage standardization
has been extended. No constant tendency, for example, can be found in
the agreements made by different local branches of the same national
trade union to build up a wage scale in accordance with differences in
the cost of living at different points.[94]
The most complete body of material on the subject is contained in the
report of the Investigating Commission of the Board of Trade (Great
Britain) on Working Class Rents, etc., in the United States (1911). This
commission studied the wage schedules of skilled men in the building,
engineering and printing trades in twenty-eight of the large cities of
the United States and compared these wage schedules with the calculated
cost of food and rent in these towns--weighing food three times as
heavily as rent. The results are presented by single cities, by
geographical groups, and by population groups--i.e., cities grouped in
accordance with size of population. _Real_ wages tended to be more equal
as between population groups than between geographical groups. The range
of the index number between geographical groups is from 85 to 104 (New
York is taken as 100); between population groups from 89 to 100 (New
York, 100). They reveal a tendency for money wages and living costs to
be high in the largest cities, and for both money wages and living costs
to decline in the cities making up the smaller population groups. No
correlation can be found between living costs and money wages as between
individual cities, however.
The argument for variation or limitation because of differences in the
cost of living is a two-fold one. Firstly, it may be argued that such a
policy is calculated to maintain industrial activity in the smaller
centers, where the cost of living is usually lower, in the face of the
competition of the larger centers, in which the cost of living is
usually higher. Secondly, it may be argued, that variations in the cost
of living at different places are indications of the fact that at some
places the economic essentials can be procured with a smaller
expenditure of human labor and capital than at other places (since labor
and capital can move between them) and, therefore, it is to the general
interest to encourage industrial development at the points where the
cost of living is relatively low.
As to the first argument, it seems to me that there is considerable
wisdom in the wish to encourage a diffusion of industrial development,
rather than concentration at a few points. The strain on the social and
political structure of the nation would be less, to-day, if our
industrial population were more widely distributed; and our problems of
civic and economic life would be simpler. That I believe to be true,
although it is probable that the wage earners in New York City are
better governed, have more freedom, and enjoy a healthier and more
stimulating environment than the wage earners in the smaller industrial
towns of Massachusetts or Pennsylvania, for example.
As to the second argument, it is true that differences in the cost of
living do indicate that the essentials of economic life can be procured
with a smaller expenditure of human labor and capital at some places
than at others. There is a further question, however. Does not the
ability of the enterprises established at the places where the cost of
living is relatively high, to compete with the others, denote a
compensating advantage in another stage of production? The answer
depends on two conditions. Are the enterprises in genuine competition
with each other? And secondly, do wages at the several places differ in
correspondence with the differences in the cost of living? To the extent
that these conditions hold true, any shift of industry away from the
points where the cost of living is low, as a result of wage
standardization, would not be uneconomical--in the sense of this
argument. For then, the ability of the enterprises established at the
points where the cost of living was relatively high to compete with the
others would indicate that they benefited by some compensating advantage
in their location.
Still another matter to be noted is that if differences in the cost of
living are recognized in the enforcement of standardization, there will
be some tendency for the abler and more energetic workmen to drift to
the points where money wages are higher. This movement is likely to
occur even though real wages are the same at the different places.
In addition to these theoretical considerations, one practical matter
should be called to mind. The relative scale of the cost of living at
the different points to which a standard wage might be applied does not
usually remain fixed over a considerable period. Small changes and
shifts in the relative scale occur constantly, and even large changes
may take place within a short time. Experience has shown that wage
differences which rest upon a fluctuating basis are apt to give rise to
misunderstanding, and to be provocative of unrest. At best, only the
relatively permanent and great differences in the cost of living between
different points could be taken into consideration. Even then a great
deal of arbitrary calculation might be involved.
In view of the variety of considerations that bear upon the problem,
only a tentative conclusion will be ventured. Namely, that when in any
industry the wage scales prior to standardization do reflect the
differences in the cost of living at the different centers in which the
industry is carried on, such differences should be maintained. As has
been remarked, only the relatively large and permanent differences could
be taken into account. When, however, no such differences in wage scales
is found prior to standardization, it will probably be inadvisable to
introduce them, in order to encourage a wider geographical diffusion of
industry.[95]
5.--There is yet another ground for limitation or variation of the
principle of standardization. It is of a somewhat different character
than those already considered. It is that in order to carry out the
underlying idea of standardization--equal remuneration for the same type
of work despite minor differences in conditions under which it is
performed--it is necessary to introduce variations into the hourly or
daily time rates (or equivalent piece-work schedules) paid in various
sections of the industry. Such variations have been designated as
"nominal variations" in the Australian courts.
Distinctions may be drawn between different types of these so-called
"nominal variations" according to the cause by which they are
occasioned. The first type is that which rests on the fact that in
certain trades or industries, it is extremely difficult or impossible to
make the conditions of work even approximately uniform throughout the
trade or industry. Agricultural work and coal mining may be cited as
examples. In such trades or industries it is usually found that the
principle of standardization can only be carried out satisfactorily
under a system of time payment. For under a piece-work system a uniform
scale of rates yields widely different earnings for labor of
approximately the same type and quality. It may be, however, that a
time-work system is ill suited to the trades or industries in question.
In which case, the only alternative is to draw up different piece-work
scales for different conditions of work. Different scales of this sort
are to be found in the American coal mines for example. Such "nominal
variations" between piece-work scales would appear to be justified when
the differences of conditions upon which they rest are judged to be not
subject to standardization. To be really practicable the differences of
conditions should also be relatively great, fixed and measureable.[96]
The second type is that which rests upon some difference in the "net
advantages" of the same work carried on in different sections of the
industry or occupation. For the purpose in hand, three sorts of
difference in net advantage may be noted. The first sort would be
represented by a claim for a higher rate than that stipulated in the
general scale, because the work in question was carried on under
conditions involving an _unusual_ degree of disagreeableness or risk. In
my opinion, "nominal variations" based on such differences as these can
safely be left to voluntary bargaining rather than enforced as a matter
of policy. The conduct of almost any occupation involves differences in
the conditions under which it is performed. Nobody entrusted with the
duty of enforcing a policy of wage settlement would find it easy to
define the conditions which warranted an addition to the standard rate.
It would run the risk of being involved in a process of refined
definition which would probably be futile. Justice Higgins stated this
view aptly in a claim for "dirt" money. "My view," he writes, "is that
the minimum rate of wages is not to be made to depend upon the degree of
dirtiness of the work. A man must accept the conditions of the work to
which he has devoted himself; and the court cannot be expected to define
degrees of dirt or to express them in terms of money wages. If the
employer puts the employee to work which is unnecessarily dirty, the
remedy is in prohibition or in regulation--not in increase of wages. My
decision in no way prevents the employer and employee from making a
voluntary stipulation for dirt money in any particular case."[97]
A second sort of difference in net advantage would be represented by a
request on the part of an employer that certain payments in kind should
be considered as part of the wage. An example of this would be the
provision of meals. Such variations would seem to be permissible when
the acceptance of the payment in kind is left optional with the workmen.
A third sort of difference in net advantage, and possibly the most
important, is that represented by differences in the regularity of
employment in different sections of a trade or industry. This type of
difference is exemplified in the work of longshoremen and lumbermen;
some men being engaged on one type of work are employed regularly,
while men engaged on other jobs are employed irregularly or casually. It
is frequently claimed that irregular or casual work should be paid at
higher rates than regular work. The justice of this claim seems
apparent. Irregularity of work is undoubtedly a great handicap to the
workman who seeks to maintain a well ordered life. Extra payment for
irregularity of employment is a burden which can fairly be put upon an
industry, or section of an industry--even if the irregularity is
unavoidable. Yet the consequences of such a policy of "nominal
variation" may be undesirable. It has been revealed by experience that
there are some workmen who prefer irregular or casual work to regular
work. And if higher wage rates are paid for irregular work this
preference--an undesirable one, from the point of view of the
community--is apt to be strengthened. On the other hand, it is usually
true that only a small percentage of workmen prefer casual work to
regular work. Most men engage in casual work because they cannot secure
regular work.
As was well established in the Court of Enquiry on the work and wages of
transport workers (Great Britain) held early in 1920, the only real
solution of the difficulty is the reorganization of the occupation so
that the irregular and casual work is reduced to a minimum. Until that
is accomplished, it is probable that the most advisable policy is to
grant "nominal variations" for casual and irregular employment. These
variations should not be so great as to influence the run of workmen to
prefer casual work. The total earnings from regular work should be
higher. Another policy that may be practicable, in many cases, is to
define a minimum period of employment for all workmen engaged.[98] Such
a policy puts strong pressure upon the industry to cut down irregularity
of employment. Against such a policy stand the practical difficulties
involved in determining the basis of any scheme of "nominal variations."
The whole question is well surveyed in a decision of the Commonwealth
Court of Australia which reads in part as follows: "The casual hand, I
propose to define as an employee who is not employed for a fortnight
continuously and who is not entitled to a week's notice before his
employment is determined. A new light was thrown by the evidence in this
case on the growing tendency of some men to depend on the high rates for
casual work only, to enable them to work when they thought fit, and idle
when they felt inclined.... The yearly return of so many seasonal hands
for the wool and grain season, year after year, who look for casual
work elsewhere in the meantime in shearing sheds--on the wharfs--in
other industries and even in the Government temporary service--and
prefer casual work is not an encouraging sign. The higher rates paid for
casual work do, and will, encourage many men to rely on that class of
labor. I do not think that is good for the community or for the
employee. I have been asked not to encourage the tendency to prefer
casual labor by granting high rates for casual labor.
"Although the rates for casual labor ought not be so high as to induce
men to become casual laborers, a higher rate must in fairness be
allowed, where as in this industry, men, however anxious they may be to
get permanent work, are not employed for the whole season without a
break, and many of them are only employed a short broken part of the
season, and some are employed for a day or a few days only."[99]
6.--In the examination of the reasons for and against limitation or
variation of the principle of standardization, note must be taken of
still one other argument of a somewhat different nature than those
already dealt with. That argument is that it will prove impossible to
maintain uniform standard wage rates throughout an industry in which the
various enterprises are distributed over a wide area; in the several
parts of which area the cost of living, the general conditions of labor,
and the demand and supply situation for labor differ considerably.
This contention is supported by two different lines of reasoning. The
first is that, because of these differences, there will tend to be a
flow of labor away from the less favorable points of employment within
the area of standardization towards the more favorable. This flow, it is
said, will cause a reappearance of the differentials which existed
before standardization. The first comment to be made on this line of
reasoning is explanatory, rather than contradictory. It is true that
there may be some tendency for labor to flow from the less favorable
points to the more favorable. But it must be remembered that the
standard wage is intended only as a minimum. If differentials over the
standard wage did arise in enterprises where the conditions of labor
were worse than the average, or in regions where the cost of living was
higher than the average, such differentials would not be incompatible
with the ends sought, when standardization is enforced. Secondly, it may
be commented that the experience of the past does not, in general,
support the contention. In many industries the same standard wage scale
applies over an area in which there are real differences of the kind set
forth above, and no differentials as between the different points within
the area have arisen--as, for example, on the railroads. This is to be
accounted for, firstly, by the influence of the idea of standardization
over trade union activity and policy; secondly, by the fact that
relative money wages tend to govern, in a great measure, the
calculations and movements of the wage earners; thirdly, by the fact
that the application of the principle of standardization is in itself a
strong force toward bringing about a leveling in the conditions of
employment throughout an industry.
The second line of reasoning with which this contention is supported is
that the trade unions themselves will not long support any policy of
standardization which does not make explicit allowances for such
differences as are in question. It is said that the organization of the
workers at the points where the cost of living was relatively high would
insist upon a differential over other places for that reason.
Such, for example, was the argument of the employers' counsel before the
Court of Inquiry on the wages of transport workers (Great Britain), "...
He submitted that one of the foundations of his argument was that in
fixing wages they must have regard to the class of work. Having regard
to the very great diversity of conditions and of methods in the
different ports, and to the class of work done, he submitted that they
could not standardize. They must do in the case of the ports as they did
in the case of the coal mines."[100]
There is but one pertinent comment to be made upon this opinion. If the
wage earners' organizations, themselves, demand that variation be
introduced into the policy of standardization, that demand should be
granted. But it must be observed that these organizations must not give
lip service to the application of the principle of standardization
without variation, and once having secured it, make such a course
impossible by demands for differentials over the uniform standard wage.
In the face of such tactics, it will be impossible to maintain any
definite policy of wage standardization. If the labor organizations
desire the application of the principle of wage standardization without
qualifications, they must be loyal to that desire, and they must not be
swayed by small temporary advantages or by sectional interests. And, on
the other hand, if they desire that the principle of standardization be
applied with qualifications, they must not attempt to disguise demands
for general wage increases as standardization movements. Such a policy
is calculated to perpetuate industrial conflict. Such is the bearing of
the pledge given by the representatives of the transport workers (Great
Britain) incidental to their claim for a 16 shilling national minimum
daily wage. "I am conscious that whatever your decision may be, if the
principle of the minimum be established, some people in some ports are
going to get more on the first settlement than others. We have faced
that, and we have discussed it with the whole of our men. It was assumed
by the chairman of the employers at the previous meeting, to take a
striking illustration, that if Liverpool received 12 shillings per day
and Glasgow 14 shillings, if you decided on 16 shilling a day, Glasgow
would say 18 shilling, 'because I was above Liverpool before.' That is
not so, my Lord. That is clearly understood by every member of the
federation in every port in the country."[101]
7.--It may be hardly necessary to say, that up to the present, the
various questions involved in the application of the principle of
standardization in industry have not been settled by a careful study of
the results produced. At the present time the manner in which the
principle is applied is governed in the first instance, by the economic
characteristics of the industry in question, and in the second instance
by the area of influence of the various labor organizations, and by the
degree of centralized control within each of them.[102]
One of the circumstances which has played a part in determining the area
of standardization in any industry is that success in the enforcement
of collective agreements has depended largely upon whether all or most
of the enterprises in competition with each other have been included in
the same agreement. This circumstance has been sometimes decisive of the
degree of centralized authority in the various trade unions. It has also
tended to govern the attitude of particular trade unions towards the
application of the principle of standardization without variation or
modification.[103] The history of trade unionism is full of instances of
organizations which have striven in vain to maintain uniform
standardized wage rates throughout imperfectly organized areas.[104]
Even when wage disputes have been settled by public agency, the usual
procedure in the past has been to make the area covered by the agreement
entirely dependent upon the area of dispute.[105]
For all of that there has been in recent years a steady drift towards an
extension of the area of standardization. In various industries careful
thought has been given to the possibility of standardization on a
national scale, though at present very few unions enforce such a
scale.[106] On the railroads there are at present nation-wide wage
scales. In Great Britain, to-day this is one of the most vexed of
questions. Indeed Great Britain just has gone through a great coal
strike in which it was one of the two great issues. The miners asked
that "a levy be made upon each colliery company on every ton of coal
raised to the surface to be used for ensuring the payment of wages
agreed upon in a national wages settlement." The miners argue, and
correctly, that district settlements would give unequal reward to men
doing precisely the same work, and called upon for the same
service.[107]
8.--The introduction of standardization into crafts or industries in
which a variety of wage rates for substantially the same tasks exist
gives rise to one other difficult problem. That is the determination of
the level of standardization for each occupation.
It will be argued, at a later point, that under any economic system in
which labor organization is an accepted part of the economic structure,
the wage levels established in different industries or occupations will
have to be brought into relation with each other.[108] If that is so,
the level of standardization of any industry or occupation would be
determined in accordance with these principles, after they had been in
operation for some time. As a matter of fact, however, under any policy
of wage settlement, the enforcement of standardization will be something
of an independent and prior process--prior, that is, to the application
of any other principles intended to keep the wage levels in different
industries or occupations in relation to each other. Standardization
will be, so to speak, an initial stage of policy to be gone through
before any other stages are entered upon. In this initial stage, the
principal data that should be taken into consideration when fixing the
level of standardization for any occupation is the actually existing
variety of wage rates for that occupation. Where in the scale of
actually existing rates the level of standardization is set must be a
matter of judgment and compromise. That level of standardization should
be chosen, which it is believed will produce more good and less harm
than any other level that might be chosen. Or in other words, the level
of standardization should be determined by a balance of the interests
involved--that point being chosen at which, it is judged, the most
favorable balance is established.
There is current, indeed, one doctrine of standardization which holds
that there is but one satisfactory level of standardization for an
occupation in which wages have been hitherto unstandardized. That
doctrine, crudely stated, is that the standard wage for the work in
question should be the highest of the unstandardized wages.[109] That
doctrine is called "standardization upward."
If the suggested test is sound, it cannot be admitted that the doctrine
of standardization upward is always valid. For there is no reason to
believe that the level of the highest of the hitherto unstandardized
rates is, of necessity, the one at which the most favorable balance of
interests is established. In many cases there may be a presumption to
that effect--if the doctrine is reasonably interpreted. That is to say,
if it is taken to mean the higher range of wages, rather than the
highest single wage. That presumption arises from the fact that, unless
there is evidence to the contrary, the higher range of unstandardized
wages indicates what wages may be enforced throughout the occupation
without causing great disturbance and unemployment. The circumstances
which would govern the correctness of this presumption are many and have
already been discussed.[110] The actual range of difference between the
various wage rates being paid for the same occupation in different
enterprises should be given importance in the judgment as to whether
standardization should take place at the level of the higher range of
wages.
Furthermore, in many cases where wages are standardized at a level lower
than some of the wage rates already paid for the work in question, it
would usually be sound to provide that these higher-wage rates should
not be reduced at once. This ruling was adopted in the decisions of the
War Labor Board and it has also been embodied in the so-called "saving
clauses" in the American railway wage decisions.[111]
9.--The principle of standardization may be considered basic in any wage
policy for industrial peace. This is not because the existence of
various wage rates for the same work is the greatest source of
industrial conflict. But because the establishment of clearly known wage
rates for each type of labor, extending over the field of its employment
(with whatever limitations or variations are admitted to the principle)
is often essential to the operation of any other principles of wage
settlement. The establishment of standard wage rates makes possible a
clear knowledge of the economic position of the various classes of wage
earners. Likewise, it makes possible the accurate measurement of wage
change; and also makes for simplicity and uniformity in the application
of changes. Lastly, it tends to produce a careful classification of the
different kinds of work, in which the minor and local differences in the
nature of the work are gradually eliminated. These are the reasons for
the "strong public interest in standardization" which was spoken of
above.[112]
FOOTNOTES:
[85] Thus, take the cautionary warning in the Report of
Commission of Enquiry into Industrial Agreements (Great
Britain) upon the proposal to make collective agreements
entered into by joint industrial councils compulsory upon
all enterprises engaged in the industry providing a certain
majority (75 per cent. was the suggestion) of work people
and employers in the industry or craft in question were
represented in the council. "51--Attention has been drawn to
the fact that, in the establishment of a scheme for dealing
with proposals for extension of agreements, it would be
necessary to provide for exceptions to be made in regard to
individual firms or work people whose conditions of trade or
employment were such as to differentiate them from the
remainder of the trade to such an extent as to make the
application of the agreement to them an inequitable
proceeding." CD 6953, 1913, page 14.
A bill embodying a clause providing for such a scheme for
extension was proposed by the government in 1919 in return
for certain concessions from the trade unions, but was
withdrawn when the parliamentary labor leaders would not
agree to the concessions.
[86] P. S. Collier, Appendix VIII, 4th Report New York State
Factory Investigating Commission, 1915, page 2113.
[87] Much interesting material bearing on the question of
district vs. national standardization is to be found in the
report of the Commission on "Wages and Conditions of
Employment in Agriculture" (Great Britain), 1919. An
interesting bit of evidence was given by a farmer from
Devonshire who was of the opinion "that the sticky nature of
the ground in Essex induced a slow habit of moving, and he
thought the Essex workmen did as much as could be expected
in view of the labor involved in walking on wet land, during
a large part of the year." Page 73. There is also much
interesting material on the subject in the report of the
Court of Inquiry into the "Wages and Conditions of
Employment of Dock Labor" (Great Britain), 1920. The same
problem has arisen, of course, many times in the course of
trade union negotiations--for example, in the coal mines and
railroads of the United States.
[88] Section 12 (4), Trades Board Act, 1909, Restated in the
Corn Production Act, 1917.
[89] J. N. Stockett, Jr., "Arbitral Determination of Railway
Wages," page 23.
[90] J. N. Stockett, Jr., "The Arbitral Determination of
Railway Wages," page 21.
[91] See D. A. McCabe, "The Standard Rate in American Trade
Unions," pages 82-91.
[92] For example, see the recommendations of the Interstate
Commission regarding classification of railroad employees.
_U. S. Monthly Bulletin of Labor_, Nov., 1915.
[93] Decision in Re Employees vs. Worthington Pump and
Machinery Corp., Docket No. 163, National War Labor Board;
see also decision in the Corn Products Case.
[94] For a recent statistical study of the subject see an
article by Ogburn and Kelley in the _Journal of the American
Statistical Ass'n._ for September, 1916.
[95] The Commonwealth Court of Australia, while setting up
as an ideal "uniform rates all around Australia" (see The
Case of the Federated Storemen and Packers' Union, page 150,
Vol. X, Commonwealth Arbitration Reports), has frequently
awarded a different basic minimum wage for different cities
within the commonwealth.
[96] See D. A. McCabe, page 54, and 162-3 for a review of
trade union policy in this matter, "The Standard Rate in
American Trade Unions."
[97] Case of the Broken Hill Proprietary Company vs.
Federated Engine Drivers' and Foremen's Association of
Australia. Pages 196-7 (Vol. X, Commonwealth Arbitration
Reports).
[98] Thus in one of its opinions the Kansas Court of
Industrial Relations recommended that the flour mills in the
state should pay their skilled men a monthly wage whether
the mill is running or not, Docket 3803, Opinion regarding
"continuity of production in the flour-milling industry,"
1920. In another case, however, the Court refused to order
the packing industries to guarantee a minimum amount of
employment each week to its employees. Docket 3926, Wolff
Packing Co., Case 1921.
[99] Case of "Federated Storemen and Packers' Union of
Australia vs. Skin & Hide Merchants' Association of
Brisbane," page 651, Vol. X, Commonwealth Arbitration
Reports. For an example of difficulties to be expected, see
the attempt made to set up such a scheme of nominal
variations in the Salt Case, No. 1, "South Australian
Industrial Reports," Vol. I, page 16.
[100] London _Times_, Feb. 12, 1920.
[101] Court of Inquiry into Wages of Dock Labour, etc., as
reported in the _Monthly Labor Review_, U. S. Dept. of
Labor, May, 1920, page 57.
[102] See D. A. McCabe, "The Standard Rate in American Trade
Unions," page 143.
[103] See D. A. McCabe, "The Standard Rate in American Trade
Unions," page 183.
[104] For example, see "The Standard Rate in American Trade
Unions," page 159.
[105] Such now seems to be the policy of the most recent
experiment in wage settlement in the United States--the
Court of Industrial Relations of Kansas.
[106] For a study of the influences which have governed the
area of standardization in the United States, see Chapter
III, especially page 120, etc., "The Standard Rate in
American Trade Unions," by D. A. McCabe; also article in the
_Quarterly Journal of Economics_ for 1912, pages 425-443.
[107] See the statement of Frank Hodges, Secretary of the
Miners' Federation, in the London _Observer_, April 17,
1921.
[108] See Chapters X and XI.
[109] An interesting statement of the doctrine of
"standardization upward" is to be found in the evidence of
Mr. J. H. Thomas (then Assistant Secretary of the
Amalgamated Society of Railway Servants) before the
"Commission of Inquiry into Industrial Agreements" (Great
Britain), CD 6953, 1910, Q 13902. Chairman: I think there
are eight railways running into Manchester. You were talking
about uniformity in such a case. Supposing that five out of
the eight railways had a particular rate for a particular
class of labor, would you apply that rate to the other three
railways? A: It may be that the five should be lower than
the three, and in that case, I certainly would not apply the
lower to the others. I would apply the higher rate as being
the uniform rate; but think that would be got over by the
suggestion that I have made whereby the rate would be
determined for Manchester, for example, by one authority. Q
13903--I will assume for the moment that the three are less
than the five. Would you then make the rate that the five
are paying a minimum rate? A: Yes, if the three were less
than the five, then the rate of the five would be the rate,
but if one was higher than the seven, then the other seven
would come up to the one quite naturally. For another good
example, see the claim of the Unions in the Engineering and
Foundry Trades (Special District Cases), Committee on
Production Reports (Great Britain), Vol. II, New Series
(545).
[110] See pages 138-9, Chapter VII, also pages 192-5,
Chapter IX.
[111] Justice Higgins of the Commonwealth Court of Australia
has dissented from the saving clause idea simply on the
ground that if the unions desire standardization and
uniformity, they "must take the rough with the smooth," Case
of the Federated Shoremen & Packers' Union, page 150, Vol.
X, "Commonwealth Arbitration Reports."
[112] Compare J. N. Stockett, Jr., "Arbitral Determination
of Railway Wages," pages 46-47.
CHAPTER IX--THE LIVING WAGE
Section 1. The reasons for seeking separate principles for the
settlement of the wages of the lowest paid groups.--Section 2. Wage
statistics of these groups a matter of familiar knowledge.--Section
3. The definition of the living wage idea. An inescapable element
of indefiniteness contained in it.--Section 4. The living wage
principle put in the form of applied policy.--Section 5. Should the
living wage principle be applied to male labor? The arguments for
and against.--Section 6. The theoretical case for the living wage
principle. The verdict of past experience favorable to its
extension.--Section 7. The dangers which must be guarded against in
applying it.--Section 8. It should be administered through
machinery which makes possible careful study of facts of each
industry. This machinery discussed.--Section 9. The question of the
relation to be established between living wage for men and women
difficult. Alternatives considered.--Section 10. A plan for the
adjustment of the living wage to price changes. The basis of
adjustment.--Section 11. The policy of adjustment--already
discussed.--Section 12. The hope of the living wage policy.
1.--In the brief survey earlier in this book of the present industrial
situation in the United States, it was concluded that the improvement of
the economic position of the lowest paid groups of wage earners was one
of the chief objects to be borne in mind when striving to work out a
policy of wage settlement for industrial peace. In the following
chapters a study was made of the causes of the formation and existence
of relatively separate groups of wage earners, and of the forces which
determine the level of earnings for the various groups. It was observed
that the lowest paid groups of wage earners tended to be separated from
the more fortunate groups; they have relatively independent economic
fortunes. Two reasons exist, therefore, for giving separate treatment to
the question of the principles by which the wages of these least
favorably placed groups of wage earners should be settled--as part of
the policy of wage settlement for industrial peace. Firstly, because
their economic position is a matter of special concern; secondly,
because the wage incomes of these groups are determined, in part, by
forces which do not affect equally, or in the same way, the wages of the
other groups.
The living wage principle as put forth in this chapter is the principle
suggested for use in the settlement of wages for these least favorably
placed groups of workers. It is the second of the measures, intended to
form a policy of wage settlement for industrial peace.
2.--It is not necessary to give here the wage statistics for the groups
of wage earners who are lowest in the industrial scale. They form the
record of the fact that a considerable percentage of all female
industrial wage earners, and some groups of male wage earners who
perform unskilled work, are in receipt of wages insufficient to enable
them to live according to those conceptions of the minimum level of
satisfactory economic existence which have been formulated by public
agencies from time to time.[113]
3.--The general idea of the living wage is not a new one. It has been
the subject of many definitions. A comparison of a few of the best
attempts to express the idea shows, on the one hand, the definite
purpose which is its inspiration and, on the other hand, an inescapable
element of indefiniteness which persists in all instances where the idea
has been enacted into policy.
The definition given to the living wage idea by the South Australian
Industrial Court (an agency which has made searching efforts to explain
its underlying assumptions) is that all wage earners should receive "a
wage that will meet the reasonable and normal needs of the average
citizen in a particular locality."[114] In the declaration of the war
labor policy of the Dominion of Canada one can read that "all workers,
including common laborers shall be entitled to a wage ample to enable
them with thrift to maintain themselves and families in decency and
comfort, and to make reasonable provision for old age."[115] And
contained among those principles laid down for the guidance of the
United States War Labor Board is the following, "In fixing wages,
minimum rates of pay shall be established which will insure the
subsistence of the worker and his family in health and comfort."[116]
These definitions reveal clearly the aim which inspires them. They
express a determination to secure for the least favorably placed members
of the industrial community wages sufficient to enable them to share
with the rest of the community prospects of an active and happy life, as
the run of men understand that idea at any time and place. Still all
these definitions--including the one just given--assert a goal
sufficiently indefinite to permit, and indeed necessitate interpretation
according to the circumstances under which the idea is translated into
policy. The clarity of the idea arises from a simple belief. That belief
is that any body of individuals of average honesty, though they disagree
in many things, can reach a large measure of agreement as to the minimum
income which will enable the ordinary wage earner to live a life which
satisfies, in a minimum measure, the ideals of life current in the
community. The indefiniteness of the idea arises out of the fact that it
is not likely that this body of men will be in complete agreement as to
this minimum income; and therefore the wage finally settled upon is
likely to represent a compromise between conflicting opinions. This is
well brought out in a passage contained in one of the reports of the
Minimum Wage Board of the District of Columbia. "... Cost of living is
such an unstandardized subject that a mathematically accurate
determination is impossible. In each conference there are as many
different opinions as there are members. In general, the employers want
a wage sufficient to maintain existing standards of living in the
industry, while the employees contend that the standard of living should
be improved. The wage finally agreed upon is not a scientific
determination based solely on facts, but rather a compromise of opinion
between the two groups, modified as it may be, by the opinion of the
public."[117]
The reference contained in practically all definitions of the living
wage principle to the standards of a particular time and place assists
greatly in interpreting the principle into policy.[118] For this
reference is tantamount to saying that the standard of economic life
which shall be deemed to satisfy the principle, should be fixed
primarily by comparison with the standard of life of the wage earning
and middle classes in the community at the given time. This comparison
tends to govern the content of the living wage idea. It brings the
living wage determination into direct relation with--or makes it
relative to--the productive capacity of the industrial system at the
time and place in question. For a study of the standard of life of the
wage earners and the middle classes of the community is of great
assistance in indicating the standard of life to which it may be
possible to raise even the worst paid industrial groups, by those
adjustments in production and distribution which it is the object of a
living wage policy to produce. This essential relativity of the living
wage idea is well pointed out in a decision of Justice Brown of the
South Australian Industrial Court. "... The statutory definition of the
living wage is a wage adequate to meet the normal and reasonable needs
of the worker. In other words, the conception is ethical rather than
economic. The Court has not to determine the value of the services
rendered, but to determine what is necessary to meet normal and relative
needs. It should be obvious that in the interpretation of reasonable
needs the court cannot be wholly indifferent to the national income. The
reasonable needs of the worker in a community where national income is
high are greater than the reasonable needs of the worker in a community
where the national income is low."[119]
The living wage has ordinarily been assessed on different bases for men
and women. The basis of assessment for each has been the subject for
much controversy. The most generally upheld basis of assessment is, in
the case of the male wage earner, to assess his needs on the supposition
that he is the supporter of a family consisting of himself, wife, and
two or three small children; and in the case of the female wage earner,
to assess her needs on the supposition that she is living alone, and is
dependent upon her own earnings for her support, and that she has no
other obligations. These bases of assessment do not meet all of the
demands of logic--applied to the living wage idea--nor, as will be seen,
is the choice of different bases of assessment for men and women
entirely free of difficulty.[120]
The reasoning, which has been used ordinarily in support of the
suggested basis of assessment for men is well set forth in another
decision of Justice Brown, "I look upon the maintenance of home life as
of supreme importance to the community. I regard the wage paid to the
adult male as essentially and in substance a family wage. True, so far
as single men are concerned, it has long been settled that the minimum
(living) wage should not be less than that of the married man. In other
words, in discussing the needs of the male worker, a man with a family
to support has been taken as a basis of assessment. Any other conclusion
would prejudice the married man in search of employment and would tend
to produce sterility of the population, and would place the industrial
court in the invidious position of fixing wages at a rate which would
make it difficult, if not impossible, for single men to save something
for the time when they may have the felicity to become supporters of a
family."[121] The argument in support of the suggested basis of
assessment for women rests upon a sentiment to the effect that every
worker should earn, at least, enough to enable her to support herself,
even though the actual necessity does not exist in many cases, and
though in many other cases the female wage earner has obligations beyond
self-support.
4.--After these preliminaries, it is possible to make more definite
recommendations concerning living wage policy--with a view towards the
adoption of the living wage principle as part of a policy of wage
settlement.
Firstly, as to scope. It should apply to all groups of workers whose
average annual earnings fall below the sum settled upon by the
constituted agency as the minimum necessary for the fulfillment of the
living wage idea. The statistical definition of the term "average" as
just used should also be left to the constituted agency. Allowance
should be made in each occupation for a small percentage of sub-ordinary
workers.
Secondly, as to the basis of assessment of the living wage, and the
procedure by which it should be fixed. There should be an extensive and
(so far as it is possible) impartial investigation of the cost of that
minimum standard of economic life which it is the intention of living
wage policy to secure for all industrial wage earners. In the
determination of what should be included in the minimum standard,
attention should be paid to the income levels of the wage earners in
general, and of the middle classes. The wages now received by the lowest
paid groups would also be an important consideration.
The living wage settled upon by this process of investigation should be
in the form of a weekly standard wage. It should be considered as a
minimum only for any occupation to which it is applied. Like other
standard wage rates, it should be subject to limitation or variation in
accordance with the conclusions reached on that subject in the preceding
chapters.[122] The questions which arise out of the fact that it would
have to be enforced in a number of different industries, and under
widely different conditions will be considered at a later point.[123]
The bases of assessment for men and women should be those discussed and
approved in the preceding section. The living wage that is fixed should
be subject to reconsideration and revision at definite periods; aside
from the revisions which may be called for as the result of price
movement,[124] or under the profits test which is suggested later in the
book.[125]
5.--So much then for the central features of the living wage proposals.
We have now to consider the probable result of their enforcement; and
any criticisms to which they may be fairly subject in their proposed
form. Thus we will be enabled to discover what modifications, large or
small, are advisable.
Objection may be taken, first of all, against the scope of these
proposals. So far living wage legislation in the United States has been
applied to female industrial workers only. The argument against the
extension of the principle to male wage earners is put on two
grounds--the constitutional and the economic. On the constitutional
argument, only the briefest comment will be attempted; and that without
any intention to dogmatize upon a most complicated subject. That is that
the test of the constitutionality of these proposals should be the
balance of good or harm they promise. The constitution is at bottom but
a very wise guide as to what public good and harm consists of. But as
the conditions and facts which determine good and harm change, these
changes should be reflected in the interpretation of the constitution.
These living wage proposals do not, it seems to me, offend against any
of the fundamental ideas which the constitution contains.
The economic argument against the extension of the living wage policy to
male wage earners is usually based on the contention that it is
unnecessary, or that it has a bad effect upon the spirit and character
of the male wage earners concerned, or upon both these contentions. As
to its necessity, the statistics of wages for the least favorably placed
groups of male wage earners, and observation of their economic handicaps
offer sufficient evidence. As to the belief that the extension would be
destructive of the spirit or character of the male wage earners
concerned, there is little or no factual support for that view, and much
to refute it. A minimum level of economic existence is requisite to the
growth and development of personal initiative and of a spirit of
self-confidence. Vigor and independence of temper and action is not bred
in a position of extreme economic dependence. One does not have to be
blind to the dangers of paternalistic legislation to believe that living
wage policy for male wage earners is justified, under modern industrial
conditions. All the more so, since experience with living wage
legislation proves that it encourages voluntary organization among the
wage earners. And this fact, indeed, is also a fair answer to the tough
dislike of the American labor unions for all other methods of settling
the wages of male workers than that of collective bargaining.
6.--We may now pass from the possible objections to the scope of these
proposals, to those which may be fairly leveled against their substance.
Although the living wage principle has been used in wage settlement
throughout the Australian Dominions, in many English industries, and in
a limited number of industries in some of the American states, the
controversy which arose over it, when first it was introduced, is far
from quieted. This is explained, in part, by the extreme difficulty of
getting evidence as to its results which is beyond the shadow of doubt.
That is due, in part, to the great variety of conditions under which it
has operated. Its results are always complicated by circumstances which
differ from place to place. Again, there is the fact that such
experiments as that of the living wage are apt to be judged from a
rapidly changing viewpoint.
The very conscientious efforts which have been made, however, to measure
the effect of the various experiments with living wage legislation
furnish us with much valuable material on most of the debated matters.
No attempt can be made here to reproduce the various sides of the
controversy, or to summarize the evidence which has been collected upon
the disputed aspects of the subject.[126] Much of it covers the same
matters which were treated in our analysis of the principle of wage
standardization. In my opinion, the existing evidence warrants the
advocacy of an extension of the living wage policy in the United States.
It furnishes us also with valuable instruction as to the form in which
the policy is likely to work out most satisfactorily.
The value of the living wage principle as an instrument for bringing
about an improvement in the economic condition of the lowest grades of
industrial workers, without producing equivalent harm in any other
direction, is also supported by general theoretical reasoning; that is,
by a study of the forces which govern wages in general, and the wages of
these lowest groups in particular. In the study of these forces, earlier
in the book, it was pointed out that the outcome of distribution may be
affected by just such assertions of purpose as that represented by the
living wage policy. If labor organization has been able to increase the
wages of certain groups of wage earners without doing equivalent harm in
any other direction, there is reason for believing that a living wage
policy can accomplish something of the same result for the lowest grades
of industrial labor, which have been up to the present practically
without organization. And, indeed, in England, the Trades Boards, which
are the machinery of the living wage policy, are ordinarily regarded as
fulfilling practically the same functions as organization does for the
more favorably placed groups.[127]
Furthermore, the nature of certain of the forces which account for the
low wage levels of the groups that would be affected by the living wage
policy, give the above argument special force. For among those forces
are these: that their wages have been, at times, less than the amount
necessary to enable them to do as efficient work as they were capable of
doing; and so low, frequently, as to make the struggle for
self-improvement and advancement, for members of these groups, a very
difficult matter. Thus the numbers in these groups have been kept
greater than they would have been otherwise. Furthermore, their wages
have been, at times so low that efficient industrial management counted
little in success. Furthermore, these groups have had practically no
organization or leadership to prevent their employment under conditions
most unfavorable to their health, energy, and general welfare. And
lastly, that the present industrial system has a tendency to take
advantage of economic weakness wherever it exists. Against these
considerations must be put, perhaps, the submission shown by these
groups to the course of industrial development, and the constant service
they have given, in their position of dependence, in monotonous and
wearisome work.
The case of the living wage policy rests upon the opinion that the
introduction of living wage standards will give rise to a series of
adjustments in production and distribution. And that the net sum of the
results of these adjustments, perhaps only after a temporary period of
dislocation in some instances, will be to increase the wages of the
lowest grades of wage earners--without doing equivalent harm in any
other direction. It also rests on the opinion that the permanent
economic advancement of these lowest groups of wage earners is a
practicable ideal--though fate seems to take a special delight in
dealing harshly with this particular ideal.
7.--Among the adjustments, however, which general reasoning suggests as
a possible consequence of the enforcement of a living wage policy are
some which it is the part of policy to guard against. Existing evidence
shows that they have not often followed upon previous enforcements of
living wage policy; yet they must be borne in mind. They are firstly:
the possibility that employment of the wage earners who are affected by
the living wage policy may be permanently reduced. This may result
either because of price increase in the commodities produced by these
wage earners, or because of substitution into their occupations of other
classes of labor or of machinery. And secondly: the possibility that the
enforcement of the living wage policy will bring about a concentration
of employment upon the more efficient members of the groups affected,
and thus throw out of employment the very individuals who are most in
need of help. And thirdly: the possibility that there will be an
increase in the numbers of those groups which the living wage principle
is designed to aid, with consequences similar to those suggested under
the second heading.
In my opinion, the chances that any of these things will result from the
enforcement of a living wage policy in the United States to-day are
small. Yet to put the matter summarily,--these are the dangers which
those entrusted with the administration of a living wage policy would
have to be alive to; and if they become real, seek to overcome, by
shaping their policy according to the facts that confront them. The
factors which will determine whether any or all of these undesirable
results will ensue are many. They cannot be balanced in the abstract.
Yet general reasoning enables us to discern those which will make that
likelihood greater or smaller in any occupation or industry.
We may start by enumerating those factors which enter into the
likelihood that a reduction of employment will result from the
enforcement of a living wage policy. They are: Firstly, the amount of
wage increase undertaken; secondly, the importance of the wages received
by the groups in question in the total expenses of production; thirdly,
the shape of the demand curve for the products of the groups; fourthly,
the chances for improvements in the methods of production; fifthly, the
chances of encouraging better business management by enforcing living
wage standards; sixthly, the effect of the wage increases upon the
efficiency of the groups affected, and their fitness for advancement to
more skilled work; seventhly, upon the opportunities for substitution
of machinery; and lastly upon the ultimate effects of the introduction
of machinery on the employment of these groups.
Turning now to the second possibility, that the enforcement of living
wage standards will cause a concentration of employment upon the more
efficient workmen, thus throwing out of employment those most in need of
help, here, too, a great number of factors have to be reckoned with.
They, however, have already been dealt with in the previous discussion
of the effect of standardization upon the distribution of employment.
There is no need of enumerating them again in this place. One point of
difference should be observed, however. The differences of individual
efficiency among the workers that would be affected by the living wage
policy are more substantial than the differences of individual
efficiency among the members of the more skilled wage earners. And,
therefore, while it would be unnecessary to make any special provision
for the least efficient members of the more skilled groups upon the
introduction of standardization, it might at the start be decidedly good
policy to make special provision for the least efficient members of the
unskilled groups. Under practically all living wage legislation special
provision is made for them.
It should also be remarked in this connection, that the probable greater
range of individual efficiency among the unskilled as compared with the
skilled is in some measure to be attributed to their present low wage
levels. Inefficiency is likely to grow upon itself. Mr. Aves has
remarked pertinently in this regard, "As with the 'unemployed' or the
'unfair employer' so with the 'incompetent' and the 'slow,' none of
these represent well defined classes. All are elastic. Some can be
created and all merge by imperceptible degrees into the classes
above."[128] The enforcement of a living wage policy, it may be hoped,
would in itself reduce the range of individual efficiency among the
unskilled. For it would keep from the ranks of the "incompetent" and
"slow" some who might have found place elsewhere had their chances been
somewhat better.
We turn to the third possibility--that as a result of enforcement of a
living wage policy there will be an increase in numbers in those groups
who fall within its scope. Here the pertinent factors are: Firstly, the
movement out of the lowest paid groups into those more favorably placed,
owing to the effect of increased wages upon individual capacity and the
use of individual opportunity; secondly, upon the movement from other
groups into the groups affected by the living wage policy, due to the
wage increases brought about by the policy, and thirdly, upon the effect
of these wage increases upon the frequency of family labor, and upon
the age of entry into and retirement from industry.
8.--So much, then, for the possible undesirable consequences of the
application of the living wage principle. It is evident that the policy
must be put in such a form as will make possible a careful study of the
facts of each industry or occupation and adaptation to these facts. The
following proposals are made primarily with the view that they will
permit this flexibility. They are also designed, however, to fit into
the other requirements of the general policy of wage settlement for
industrial peace, which is under study.
It is proposed that there should be in every industry which is included
within the general scheme of wage settlement a joint council or board.
There might also be occupational boards or councils. These councils or
boards should consist of representatives of the workers and of the
employers. Representatives of the public might act upon these boards or
councils in advisory capacity. There might be both a central board or
council, and various district boards or councils in each industry. These
joint boards could be given other duties outside of the administration
of the living wage policy. That matter will be taken up at a later
point. Here, note will be taken only of the part they could play in the
administration of the living wage policy.
The joint boards or councils should be advisory to the central authority
which is constituted to administer the policy of wage settlement as a
whole. The functions of this central authority in regard to the
formulation and declaration of the living wage for men and women have
already been discussed. It should be provided, however, that the central
authority should make no living wage declaration or hand down any order
until it has received the report of the joint boards or councils in the
industries or occupations in question upon the subject of such decisions
or orders. The report of the joint boards or councils should be given
great weight by the central authority in arriving at decisions. The
joint boards or councils should be permitted to submit both majority and
minority reports to the central authority.
Among the matters arising in the course of the administration of the
living wage policy, upon which the joint boards or councils should be
called upon to advise the central authority, are the following: Firstly,
upon the wage to be prescribed in that industry or occupation. Each
joint council should be free to recommend a wage less than the wage
declared to be a living wage by the central authority, giving its
reasons for the same. It should also be free to recommend a wage more
than the declared living wage, giving its reasons in this case also. The
conclusions reached in regard to "nominal variations" as between
different sections of an industry are equally valid as between
industries or occupations.[129] Secondly, upon questions connected with
the form of wage payment, and the arrangement of piece-work lists
designed to yield the prescribed living wage. Thirdly, upon the question
of sub-ordinary workers in an occupation or industry, and upon the
issuance of permits for the same to work for less than the prescribed
wage. Fourthly, as to whether the wage fixed for any industry or
occupation should be varied or limited. Fifthly, upon any difficulties
that may present themselves because of the fact that the living wages
for men and women are assessed on different bases. Lastly, upon these
boards or councils should rest the duty of observing how well the
declarations or orders of the central authority are observed; and of
studying the effect of the prescribed wages upon these classes of wage
earners that the living wage policy is designed to help, and upon the
industry in general; and of reporting periodically to the central
authority upon the same.
It is true that the procedure of these councils would consist largely of
the compromise of conflicting opinions. It will be the duty of the
central authority, however, to prevent them from settling down to that
regime--nor should the central authority consider itself bound to accept
the advice of these joint councils or boards.
9.--The determination of the relation between the living wage for men
and women is one of the difficult questions that will have to be met in
the course of the enforcement of any living wage policy. The position of
women, both in industry and in society is at present undergoing change.
The limit and direction of this change cannot be marked out with
certainty. Therefore, the presuppositions upon which present policy may
be constructed may become invalid in a comparatively short time. The
unsatisfactoriness of leaving the question to be settled by the decision
of the market has become increasingly plain. That policy produces, on
the one hand, a constant effort on the part of the employers to so
modify their processes of production as to take advantage of the low
range of women's wages, irrespective of the effect on men's wages and of
the suitability of the occupation in question for women; and, on the
other hand, a constant effort on the part of the men to keep the women
out of all new employments.
The best advised foundation for present policy, in my opinion, is the
two separate bases of assessment, suggested above.[130] In its favor, it
may be pointed out that it corresponds to a certain extent to the
existing relation between the wages of men and women in industry, and it
would not, therefore, produce any violent change. Its unsatisfactoriness
lies in the possibility that it may gradually lead to a displacement of
men by women in many employments. On the question of whether such
displacement is to be desired, there is room for the very deepest
differences of opinion. It seems to me, however, that the industrial
history of the nineteenth century proves the supreme importance of the
wage of the head of the family to the general welfare of the family. For
that reason, it is, in my opinion, wise to protect the wage of the male
head of the family; and thus to provide that when men and women are
employed upon the same work or when women are introduced into
employments hitherto filled by men, the wage rates for men should be
enforced throughout the employment. This ruling could be interpreted in
some cases in terms of the relative efficiency of men and women, if
there was a clear difference of efficiency. Of course, if the term
"relative efficiency" is construed to include the difference in the
indirect or overhead expense involved in the employment of male or
female labor in any occupation, such a policy would amount to throwing
open every field of employment to women.
There are a number of alternative policies that might be pursued in
order to ensure that the use of different bases of assessment for the
living wage for men and women should not lead to haphazard displacement
of men by women. Justice Brown in the Printing Trades Case has called
attention to the most important of them. "... I suggest," he writes,
"that with respect to any industry or grade, where the prima facie
formula above (that is, a different living wage for men and women) is
challenged, evidence should be given to show that it is desirable,
having in view the interests of all parties and of the community, that
men should be retained in that industry or grade even though such
retention might involve some departure from the formula in question.
Where such evidence is satisfactory there are several alternatives open
to an industrial court. (1) To fix the same wage for women as for men.
(2) To fix a ratio wage where it is proved to the satisfaction of the
Court that the average woman is not of equal value to the employer. (3)
To exclude women. (4) To accept the prima facie mode of assessment, but
to limit the proportion of women who may be employed by any particular
employer in any particular industry or grade.... The task of choosing
may often be one of extreme difficulty and delicacy."[131] The task of
fixing the relation between men's wages and women's wages will be even
more delicate when the introduction of women into a field of employment
follows upon a modification of the processes of production
involved.[132]
As was said above, to give advice upon the question of the relation
between men's wages and women's wages, should be one of the duties of
the joint boards or councils in the various industries. The course to be
pursued should be decided upon by balancing all of the interests
involved. It is to be desired that the same policy be pursued throughout
all industries or occupations rather than divergent ones, and the
central authority should strive to attain unity of policy.
10.--The complications introduced into the administration of the living
wage principle by changes in the general price level have yet to be
dealt with. It has been seen that changes in the general price level
affect the outcome of distribution and, for that reason, any policy of
wage settlement must include provision for the adjustment of wages to
price changes. We have now to consider how this adjustment can best be
carried out.
The central authority is obviously the most suitable body to supervise
the process of adjustment. The adjustment to price change should be
expressed as a percentage addition to or subtraction from the existing
wage. The central authority should be charged with the collection of
all necessary price data. This body should then proceed upon the advice
of the joint boards or councils in the industries concerned. Unless some
strong reason to the contrary exists, however, a uniform policy of
adjustment should be pursued--resting upon the following principles.
11.--The conclusions reached in Chapter V in regard to the policy to be
pursued in the adjustment of wages to changes in the price level fall
into two groups. Firstly, those which have to do with the choice of the
basis of calculation of wage adjustments. Secondly, those which have to
do with the choice of the actual policy of adjustment during times of
rising and falling prices. The same division and order is maintained in
the following attempt to sketch out a good plan of adjustment of living
wage rates.
First, then, these wage rates should be varied in accordance with the
movement of a price index number. This index number should represent the
prices of all the important commodities produced within the country, but
so weighted as to give a defined importance (50 per cent. was suggested)
to the prices of those classes of foodstuffs, clothing, housing
accommodations, and other commodities upon which the wage earners tend
to spend the bulk of their income. It was sufficiently emphasized in the
earlier discussion of this subject that this basis of calculation was in
the nature of a compromise, and was not beyond criticism. Adjustments
should not be undertaken unless the index number of prices has moved at
least 5 per cent. (the figure is meant to be merely a suggestion) and
adjustment should not be more frequent than twice a year (again a
suggestion, only).
Secondly, as to the policy of adjustment to be pursued in times of
rising and falling price levels, respectively. The policy for a period
of rising prices can be very briefly stated. All wage rates prescribed
under the living wage policy should be increased by the same percentage
as the index number of prices moves upward. There is one case in which
this policy cannot be justified theoretically. That is when the increase
of prices can be wholly or mainly accounted for by a falling off in the
general level of industrial productivity. However, in my opinion, it
will be hardly practicable to attempt to distinguish this case from
other cases of price increase,--save in an entirely exceptional
circumstance, such as a period of war invasion.
The policy to be pursued during a period of falling prices cannot be
stated so briefly. The difficulties involved have already been discussed
at length.[133] The following policy based upon that analysis is
tentatively suggested. The complexities of the subject are too great to
permit of dogmatism. Firstly, the occasion for the price decline may be
such as was termed "natural," as for example when it is brought about
by a general advance in the arts of production, or by the development of
the means of transport. In this case, it will be satisfactory to keep
wage rates unchanged, though prices decline. It is in these periods that
chance is afforded of bringing about genuine improvement in the economic
position of the least favorably placed groups of wage earners.
Secondly, the price decline may be a sign of reaction from a previous
period of rapid price increase, and of a general tendency on the part of
entrepreneurs to keep down production costs and to proceed with
circumspection throughout. Nevertheless if little forced liquidation
occurs; if there has been no serious overextension of credit during the
previous period; if the maintenance of the existing price level, or of a
slightly lowered one, would not impose too great a strain upon the
banking system--there would be no good cause to reduce wages. This
judgment rests on the supposition that the facts of the industrial
situation give promise that industrial recovery will take place even if
prices do not drop greatly, and drop gradually rather than sharply.
Thirdly, the price decline may be caused--at the beginning at all
events--by much forced liquidation of a character that is disastrous to
the enterprises compelled to liquidate. It may have been preceded by a
great over-expansion of credit; and the maintenance of the existing
price level might mean a steady source of danger to the banking and
commercial system. Then the soundest policy is to reduce wages as prices
fall. To the extent that the trouble may be due to special causes such
as over-investment in particular directions, this reduction of wages may
be unnecessary. But it will probably be found that the recovery from a
genuine industrial crisis will be facilitated if a heavy price decline
is stimulated by wage reduction.
No wage reductions should be undertaken unless conditions making the
case are clearly present. The central authority could avail itself of
the advice of the Federal Reserve Board. The lowering of wage rates
might be put off until the price decline has reached, say, eight or ten
per cent. And the percentage of the reduction of wages might be smaller
than the percentage of price decline; say, a three per cent. reduction
of wages for every four per cent. reduction in prices. Lastly, when it
is judged that the pressure on the financial system is definitely at an
end, no further reduction in wages should be ordered even though the
price decline continues.[134]
In concluding this discussion one general reflection may be permitted.
That is to the effect that no policy of wage settlement will, in itself,
suffice to protect the standard of life of the lowest industrial classes
during critical industrial times; whether such a time be one of rapidly
rising prices of foodstuffs due to poor harvests, or to war, or whether
it be a period of industrial panic and precipitate price decline. Much
can be done to protect the standard of life of these classes by measures
outside of the scope of any policy of wage settlement. The suggestion
made by Professor Taussig that it may be possible to regularize the
supplies of the principal agricultural products from year to year
deserves careful consideration.[135] The best policy, undoubtedly, is
one which would enable and encourage the lowest paid industrial classes
to accumulate something for hard times.
12.--The design of the living wage policy is to procure for all members
of the industrial community the economic essentials of a hopeful and
active life. Ultimate success in the maintenance of any conceived
standard of life, will, in the long run, depend upon those general
relationships which were examined in the earlier chapters. The more
productive the industrial organization as a whole is, the better are the
chances for the least favored industrial groups to improve their
economic condition. The less the economic waste, due to maldistribution
and to other causes, the greater the product of industry will be. The
greater the economic capacity of the lowest grades of wage earners, the
more general their intelligence and the steadier their spirit, the more
determined their organization, the better will be their chances of
increasing their share of the total product. And lastly, the smaller in
numbers these are compared with the need of the economic system for
them, the stronger their economic position will be.
This is but to restate some of the important influences governing the
wages of the lowest groups of industrial workers. But to restate them is
to emphasize the fact that the living wage policy must be looked upon
merely as one agency among many, directed to the same end. In economic
affairs, as in political affairs, to bring about a change in one place
it is necessary to bring about a change in many places.
FOOTNOTES:
[113] The best short summaries of the pre-war wage situation
are--"The Standard of Living among the Industrial People of
America" (1911), by F. H. Streightoff, and an article by C.
E. Persons in the February, 1915, issue of _The Quarterly
Journal of Economics_. For a more extensive study see the
Report of the Commission of Enquiry of the Board of Trade
(Great Britain) into working class rents, etc., which
contains material of great value. A recent comprehensive
survey of wages in the United States, undertaken by the
Bureau of Labor Statistics for the War Industries Board was
published in May, 1920. It is Bulletin No. 265, U. S. Bureau
of Labor Statistics, "Industrial Survey in Selected
Industries in the United States, 1919."
[114] South Australian Ind. Reports. Vol. 2-3--1919. Page
6--Submission by Employees in Cardboard Box Industry. Quoted
from Printing Trades Case.
[115] _Labor Gazette of the Dominion of Canada_, August,
1918, page 617.
[116] As reported in the _Survey_, April 6, 1918.
[117] Second Annual Report of the Minimum Wage Board,
District of Columbia (1919), page 18.
[118] An excellent study of the technique of measurement of
the cost of living is that by W. F. Ogburn, "Measurement of
the Cost of Living and Wages." No. 170, _Annals of the
American Academy of Political and Social Science_ (1919).
The article helps to put much firm ground under the feet of
those engaged in cost of living investigations for the
United States. For a description of the methods pursued in
official cost of living investigations in Great Britain, see
the account by F. H. McLeod in the June, 1919, issue of the
_U. S. Monthly Labor Bulletin_, page 119.
[119] The Plumber's Case, South Australian Industrial
Reports (Volume I, 1916-18), page 122.
[120] See pages 199-202, this chapter, for further
discussion of this question.
[121] The Printing Trades Case, South Australian Industrial
Reports, Vol. II, 1918-19, page 35.
[122] See Chapters VII-VIII.
[123] See pages 192-6, this chapter.
[124] See pages 202-7, this chapter.
[125] See Chapter XII.
[126] A valuable collection of evidence in support of living
wage legislation is contained in the briefs presented in the
cases of Stettler v. O'Hara (The Oregon Minimum Wage Case)
published by the National Consumers' League. This collection
of evidence is brought up to date in the new brief just
published in defense of the Minimum Wage
Commission--District of Columbia (Children's Hospital vs.
Minimum Wage Board), 1921. For a collection of theoretical
opinions on various aspects of the subject, see the
symposium on the Minimum Wage Problem, which is printed as
Appendix III, Vol. I, 4th Report of the New York State
Factory Investigating Commission (1915), pages 592-827. An
excellent bibliography on the subject by Miss Irene Osgood
Andrews is to be found in Appendix III, 3rd Report of the
same Commission (1913). The best studies of the Australasian
experience are those of M. B. Hammond (especially the
articles in the _Quarterly Journal of Economics_ for Nov.,
1914, and May, 1915), and P. S. Collier, Appendix VII, 4th
Report of the N. Y. State Factory Investigating Commission.
The bulletins of the Massachusetts, Oregon, and Washington
(D. C.), Minimum Wage Commissions are the best studies of
the effects of American legislation. Upon the results of the
British Trades Boards see the studies of R. H. Tawney on the
Chainmaking and Tailoring Trades and that of M. E. Bulkely
on the Box Making Industry. The Parliamentary Debates 5th
Series (Vols. 96-97, 107-108, Hansard), cover every aspect
of the English experience.
[127] The best theoretical statement of the dangers and
difficulties presented is the article by F. W. Taussig,
"Minimum Wages for Women," in the _Quarterly Journal of
Economics_, June, 1916. The evidence, however, seems to me
to stand against the skepticism expressed therein.
[128] Report on Wage Boards and Industrial and Condition
Acts of Australia and New Zealand (1908).
[129] See pages 160-6, Chapter VIII.
[130] See pages 183-4, this chapter.
[131] The Printing Trades Case, South Australian Industrial
Reports, Vol. II (1918-19), page 252.
[132] The suggestion put forward in the "Report of the War
Cabinet Committee on Women and Industry" (Great Britain),
1918, is as follows: "In such cases," the report reads, "the
time rates for the simplified process or simplified machine
should be determined as if this was to be allocated to male
labor less skilled than the male labor employed before
simplification. Only where it was definitely shown by
employers that the value of the woman's work on the
simplified process or machine was less than the value of the
unskilled man, should the woman, if her introduction is
agreed to, receive less than the unskilled man's rate in
proportion to the value of her work." Page 192.
[133] See pages 114-20, Chapter VI.
[134] A number of collective agreements in which the
arrangements for wage adjustment to price decline are
similar to those suggested here, have recently been
negotiated in England. The wage scales established in 1919
for many grades of railroad workers are an example. So also,
the agreement of the Wool Textile Industrial Council, in
October, 1919. The following agreement made for the
Yorkshire Dyeing and Finishing Industry in March, 1919, may
be given as an example.
"(7) When the index figure as defined in classes 4 and 5
hereof exceeds 107 per cent. the War Wages shall be:--
"To male and female timeworkers--107.90 per cent. of the
basis wage.
"To male and female pressworkers--85.672 per cent. of the
basis wage.
"To hand pressers--64.254 per cent. of the basis wage, and
when the index figure is 107 or less, but not less than 100,
the percentage war wages of timeworkers shall be equal to
the index figures; for every 1 per cent. decrease in the
index figure below 100 the war wages of timeworkers shall be
decreased 3/4 of 1 per cent. The ratio of percentage war
wages of timeworkers, pieceworkers and pressers
respectively, shall for all index figures, be the same as
that shown for index figures, exceeding 107."
[135] "Cost of Living and Wages," F. W. Taussig, _Collier's
Weekly_, Sept. 27, 1919.
CHAPTER X--THE REGULATION OF WAGE LEVELS
Section 1. Why there must be in industry an ordered scheme of wage
relationship between each and every group of wage earners. The
limits of collective bargaining as a factor in industrial
peace.--Section 2. In the beginning, the scheme must probably be
based on an acceptance of existing wage "differentials." The
reasons for this are of a practical kind.--Section 3. Any policy
which planned to develop a scheme of wage relationships merely by
maintaining existing differentials would be bound to fall to pieces
in the end. The difficulties that would arise.--Section 4. Two
principles proposed as the basis of the desired scheme of wage
relationship. Their meaning as applied doctrines.--Section 5. These
principles open to criticism both on practical and theoretical
grounds. The chief criticisms examined and taken into
account.--Section 6. Some notes on the best method of administering
these principles. The necessity of avoiding political interference,
if possible.
1.--We have now completed that part of this inquiry which was concerned
with the formulation of principles suitable for the regulation of the
wages of the lowest paid industrial groups. The task remains of working
out principles which could be used satisfactorily in the settlement of
wages for all other groups of wage earners.
The subject may be introduced by recalling certain matters, set forth in
the preceding analysis of wage principles. It was seen that while the
wages of each and every group of wage earners were governed, in a great
measure, by forces which acted upon them all in common, yet the wages of
each group were settled somewhat independently of all the rest. Again,
it was seen that one of the leading characteristics of the present
distributive situation is the use of the group will and group power to
serve group purposes. Wage movements in different industries or
occupations begin independently of each other; yet because of the firm
determination on the part of most groups of wage earners to maintain
their position in the industrial scale, a wage movement in one part of
the field of industry tends frequently to give rise to similar movements
throughout the field.
This tendency for the actions of one group to give rise to action on the
part of other groups arises from the existence of some "power of
interchange or close connection" as Mr. Aves has said. Before the use of
group power becomes common and the sense of group interest becomes
highly developed, that interchange or interconnection tends to exist
only between classes or groups of workmen who can easily move into each
other's field of employment. But with the extension and encouragement of
unionism, with a constantly growing volume of public discussion of wage
questions, there has arisen an interconnection between wage movements
in groups very far apart in the industrial scale.[136]
As long as wave movements in different industries and occupations are
considered independently of each other, and the claims of each group are
judged with only incidental reference to the claims of the other groups,
the use of group strength will continue to be a conspicuous
characteristic of distribution. The constant assertion of group power
will cease only if all groups are brought within some acceptable plan of
wage settlement, under which group wages are settled by principles
recognized as fair. The problem is to establish an ordered scheme of
wage relationship _between_ each and every group of wage earners--which
scheme of relationship will do justice _between_ them, and which will
also effect such a distribution of the product of industry between _all_
the wage earners and the other claimants to a share in the product, as
will justify it to the wage earners and to the community in general.
If the objection be raised that the establishment of such a scheme of
wage relationship is not practicable, doubt must be admitted. Yet it is
probably essential to industrial peace,--under our present industrial
system, or under an alternative one. It would seem to be the only
substitute for the continued reliance of each group upon group power.
There has been a strong tendency, both in the United States and England,
to believe that industrial peace could be secured by the development of
joint industrial or occupational councils throughout industry--which
councils would assure fair and complete consideration of all wage
questions which arise. It would be a serious error to underestimate the
possible value of such joint councils to the cause of industrial peace.
Indeed, throughout this study of the means of industrial peace great
reliance will be placed upon them. Yet I do not believe that their
creation will suffice to bring industrial peace.
Such joint councils are among the most satisfactory instruments yet
devised for the conduct of collective bargaining. But will collective
bargaining keep such an interdependent industrial society as our own at
work peacefully? Can the philosophy of compromise be developed to that
extent? Joint industrial councils can produce understanding between
employers and wage earners; they can foster a spirit of cooperation
between all groups engaged in a productive industry; they can stand in
the way of the creation of such intolerable conditions of labor as have,
on occasion in the past, led to a spontaneous revolt in an industry;
they can foster reasonableness and compromise. But it is difficult to
see how they can work out principles of wage settlement for any industry
which will have sufficient authority over the actions of those engaged
in it in times of stress.
Before industrial peace can be obtained, particular groups of wage
earners must forbear from pressing to the utmost the bargaining
advantages they possess. This forbearance will come only from a
knowledge of an interest larger than their own. There will have to be a
recognition by all sides of principles which represent aims to which all
subscribe, and which do justice to the interests of each.
2.--What then is required, to repeat, is a policy by which wages in
various industries and occupations are brought into relation with each
other. This policy should be calculated to result in such a distribution
of the product of industry as would justify it to the wage earners and
community in general. The scheme of wage relationship would have to rest
upon expressed principles.
In the beginning any policy which has as its aim the establishment of a
scheme of wage relationship must accept and protect the existing wage
levels of each group of wage earners. That would mean, of course,
accepting the wage relationships existing between them. The reasons for
this are practical, rather than theoretical. They are: Firstly, because
it will be impossible to win general consent for any policy of wage
settlement which does not guarantee to all wage earners at least their
existing rates of wages. Secondly, because the existing relationships
between the wage levels of the different groups of workers represent,
though only vaguely and roughly, customary relationships, and they
therefore have, on occasion, meaning to the wage earners. Thirdly, the
mere fact that they exist makes them the most convenient basis for the
very careful process of comparison and calculation involved in any
attempt to establish gradually a scheme of wage relationships based upon
principles. It should be kept in mind, however, that the reasons for
their acceptance are of a practical nature, and that no theoretical
considerations compel an unquestioning acceptance of them, as is
sometimes urged.
3.--Since, on practical grounds, it is held that any attempt to create
an ordered scheme of wage relationship must begin by accepting existing
wage levels, it may be judged by some that the scheme that is sought
could be developed merely by maintaining these relationships. That would
mean that existing differentials would be maintained as customary
differentials. That policy, it is true, would have the advantages of
simplicity and continuity. But it would be found impossible to maintain.
For the scheme of wage relationship to which it would give rise would
lack the authority of principle--without which no scheme of wage
relationship will receive voluntary and steady support from the various
groups of wage earners. The wage earners will not voluntarily accept a
place in the industrial scale, unless it is felt that the scale is the
result of the application of rules of acknowledged fairness. The
existing scale of wage relationship, however, has not been determined
either by considerations of justice or of the general interest. Nor has
it, as is sometimes claimed, the authority of being altogether
necessary. It is the product of a multitude of forces, some of which may
be given different importance in the future than they had in the past.