The Settlement of Wage Disputes Part 8

For, as was observed above, if the philosophy of unionism is deeply implanted in the minds of the workers, the productive results under all methods of wage payment tend to be controlled in the end by the same influences. The views and motives of the wage earners and of the employers are likely to remain constant under different systems of wage payment--and thus the outcome is not likely to differ greatly. No matter what the method of wage payment, the question of output will be largely one of mutual confidence, of tact, and of fair dealing. It must be so in any arrangement, by which two or more groups mutually regulate their claims and desires.

The conclusion that may be drawn as to the effect upon production of the enforcement of wage standardization is as follows. That its results may depend to some extent upon the success with which the principle can be adopted to those methods of wage payment under which wages are varied in accordance with small differences in in-unionism, and act accordingly, the system of wage earners believe heartily in the ideals and aims of unionism, and act accordingly, the system of wage payment adopted will be a factor of secondary importance in determining the effectiveness with which the wage earners perform their work. The motives and sentiments of the various organized groups will govern the action of the wage earners, and produce almost the same result under any system of wage payment. The state of industrial relations, the satisfaction the workers feel in their position, the reasonableness shown by the different groups, the intelligence or ignorance of labor leadership--these and similar other factors will, at bottom, govern the effort put forth by the wage earners. These are the matters to which all who realize the need for steady and willing effort in production will have to attend.

The problem of maintaining a high level of production will be primarily one of developing the practice of open-handed and thoroughly understood negotiation between the directors of industry and the workmen. Barring the development of the practice of successful negotiation either industrial chaos or a return to individual bargaining must result.

9.--There is one other possible result of the enforcement of wage standardization which requires brief notice, because it was displayed prominently during the war. The demand during the war for certain essentials of warfare was abnormally great, and the result was a steady bidding up of wages for the supply of labor which could a.s.sist in the production of these essentials. This led to a constant shifting about of the wage earners from plant to plant. This movement not only hindered the effective organization of production, but also caused a considerable loss of working time, and fostered a continuous pre-occupation with the question of wages and related questions. In view of these facts, the various governmental agencies of wage settlement undertook to introduce into all wage contracts the principle of standardization throughout large areas. Witness, for example, the conclusion of the Shipbuilding Adjustment Board on the matter. "One of the most serious influences r.e.t.a.r.ding the progress of the shipbuilding industry according to the unanimous testimony of the yard owners, and of the district officers of the Fleet Corporation who have come before us, is the shifting of men from yard to yard.... The only effective way to stop it is to remove its inciting cause, the variable wage rates paid by different yards in the same compet.i.tive region. With this purpose in view, we have sought in all our hearings to determine with accuracy the limits of each compet.i.tive region, so that we might extend over it a uniform wage scale for shipyard employees...."[84]

The enforcement of wage standardization may serve to prevent wasteful shifting of the labor supply even in normal times. Theoretically, it should serve to limit the shifting of the labor supply to movement between different industries and occupations, and to cases which represent movement of unemployed wage earners to points where work exists. There would be, of course, innumerable cases of change based upon personal motives.

FOOTNOTES:

[68] An attempt to cla.s.sify systematically and a.n.a.lyze the various theories of wages that have been used in attempts to settle wage controversies in accordance with defined principle has been made by Mr. Wilson Comption in an article ent.i.tled "Wage Theories in Industrial Arbitration." In its enumeration and discussion of the difficulties to be met in the application of principles, and of the att.i.tude of most agencies of wage settlement it is particularly interesting.

_American Economic Review_, June, 1916.

[69] J. N. Stockett, "Arbitral Determination of Railway Wages," page 75.

[70] See Webb's "Industrial Democracy," Chapter 5, Part II.

[71] Resolution No. 18 offered to 1920 Convention, _Cigar Makers Official Journal_, May 15, 1920.

[72] P. S. Collier, "Minimum Wage Legislation in Australasia," Appendix VIII, Fourth Report of the Factory Investigating Commission, New York State (1915). See also R.

H. Tawney's investigations of Retail Tailoring and Chainmaking Trades (Great Britain).

[73] D. A. McCabe in his book, "The Standard Rate in American Trade Unions," calls attention to two aspects of the subject that are frequently overlooked. Firstly, that "in any attempt to estimate the extent to which men receive wages above the minimum on account of superior efficiency, it is important to bear in mind that the minimum in different scales may stand in very different relation to the modal or predominant wage. The proportion of men receiving more than the union minimum is frequently large because the compet.i.tive wage has increased since the minimum was established" (page 116); and secondly, that "the extent to which differential wages are paid above the union minimum, when that rate is the rate actually paid to the men whose efficiency is about the average, varies widely in different trades.... Standardization of workmen and of work and the practice of dealing with large bodies of men as cla.s.ses tend to standardize the wages paid in the railway service more than in trades calling for similar grades of skill in other industries" (page 117); so, too, "the tendency towards uniform rates for men engaged in the same kind of work is stronger in large establishments than in small establishments for the same reason" (page 117 ff.).

Prominent among the factors which tend to make standard time rates actual rates he mentions: firstly, that the variations in efficiency within the membership of a time working union are not as likely to be as wide as among the men outside the union in the same trade, because the mere insistence on a standard rate tends to exclude some men much below the standard of competency. Secondly, practically all of the skilled trades unions require candidates for membership to prove their competency or be vouched for as competent by members who have worked with them. And thirdly, because the standard rate is the center of attention in negotiations and thus is made the presumptive rate (page 114-119).

[74] D. A. McCabe, "The Standard Rate in American Trade Unions," page 105.

[75] Report signed by Commissioners Manly, Walsh, Lennon, O'Connell, and Garrettson. Vol. I, "Final Report of the Commission on Industrial Relations" (1912-16), page 132.

[76] Report on Collective Agreements in the United Kingdom (1910) (CD 5366), page xiv.

[77] A. C. Pigou, "Economics of Welfare," page 441.

[78] A. Marshall, "Principles of Economics" (7th Ed.), page 548.

[79] R. H. Tawney, "Minimum Rates in the Tailoring Industry"

(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, Ma.s.sachusetts 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 Francis...o...b..y 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 a.n.a.lysis of the general effects to be expected from the enforcement of wage standardization throughout industry. That a.n.a.lysis was carried out on the underlying a.s.sumption that the general economic position of the industrial enterprises which would be included within any area of standardization was substantially alike. That a.s.sumption 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 antic.i.p.ated 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 longsh.o.r.emen 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 compet.i.tive 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 att.i.tude 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 disa.s.sociated 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 const.i.tute 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, pa.s.senger 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 a.s.sert, 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 cla.s.ses of wage earners. Such cases are probably rare. In circ.u.mstances 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 cla.s.sification 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 Cla.s.s 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 compet.i.tion 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 Ma.s.sachusetts 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 compet.i.tion 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.