The Settlement of Wage Disputes Part 11

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 const.i.tuted 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 a.s.sessed 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 cla.s.ses 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 a.s.sessment, 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. .h.i.therto 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 a.s.sessment 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 a.s.sessment, 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 cla.s.ses 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 circ.u.mstance, 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 a.n.a.lysis 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 circ.u.mspection 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 cla.s.ses 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 cla.s.ses 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 princ.i.p.al 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 cla.s.ses to acc.u.mulate 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 cla.s.s 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 Ma.s.sachusetts, 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.