The Settlement of Wage Disputes Part 10

[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 a.s.sistant 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 cla.s.s 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 a.s.sume 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 Sh.o.r.emen & 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 a.s.sumptions) 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 ent.i.tled 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--a.s.sert a goal sufficiently indefinite to permit, and indeed necessitate interpretation according to the circ.u.mstances 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 pa.s.sage 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 a.s.sists 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 cla.s.ses 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 cla.s.ses of the community is of great a.s.sistance 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 a.s.sessed on different bases for men and women. The basis of a.s.sessment for each has been the subject for much controversy. The most generally upheld basis of a.s.sessment is, in the case of the male wage earner, to a.s.sess 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 a.s.sess 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 a.s.sessment 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 a.s.sessment for men and women entirely free of difficulty.[120]

The reasoning, which has been used ordinarily in support of the suggested basis of a.s.sessment 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 a.s.sessment. 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 a.s.sessment 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 const.i.tuted 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 const.i.tuted agency. Allowance should be made in each occupation for a small percentage of sub-ordinary workers.

Secondly, as to the basis of a.s.sessment 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 cla.s.ses. 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 a.s.sessment 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 const.i.tutional and the economic. On the const.i.tutional 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 const.i.tutionality of these proposals should be the balance of good or harm they promise. The const.i.tution 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 const.i.tution.

These living wage proposals do not, it seems to me, offend against any of the fundamental ideas which the const.i.tution 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 pa.s.s 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 circ.u.mstances 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 a.n.a.lysis 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 a.s.sertions 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 leaders.h.i.+p 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 subst.i.tution into their occupations of other cla.s.ses 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 subst.i.tution 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 cla.s.ses. All are elastic. Some can be created and all merge by imperceptible degrees into the cla.s.ses 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.