lem more acute. Except in times of great prosperity, there
is probably an excess of the supply of labor of the lowest
grade. This is known as the casual labor force, or the
labor reserve. During the World War there was little
unemployment, for production was increased and wages
were high. Reconstruction of industry in the post-war
period, however, brought a serious problem of unemploy-
ment. Prices began to fall and the production of a number
of commodities was curtailed.
The costs of unemployment are heavy to the employee,
to the employer, and to society. To the employee it means
loss of wages and a lower standard of living. It
Social cost. . , .
injures the worker's morale and unfits him for
the discipline of steady work. It also breaks up the
organization of the employer. Efficiency is lowered by a
changing staff of workers. The cost of "breaking in" a
new man has been estimated at from twenty-five to one
hundred dollars. The cost to society of unemployment
may be read in an increased rate of poverty and crime.
Industrial Risks and Social Insurance 405
The causes of unemployment suggest the remedies.
Philanthropy is a mere temporary expedient. To effect
a permanent remedy, changes must be made in Remedial
the economic environment. Scientific manage- measures -
ment has done much in this regard. Personnel depart-
ments have been established within an industry and
employment managers trained. Scientific studies of the
causes of the great labor "turnover," and of absenteeism in
industry, have been attempted. Improved working con-
ditions, welfare work, and such democratic innovations as
workers' councils have been found helpful. In certain
cases it is also possible to dovetail seasonal industries so
that constant employment is provided. Slack seasons may
be used for taking inventories and for providing necessary
stock. Education of the public, and of the manufacturer,
to the necessity of a stable demand will tend to reduce
sudden and extreme changes. A sound monetary and
banking system is necessary to stabilize prices and to ward
off the cycle of business depression. Too extreme speciali-
zation in industry may well be avoided. Industrial edu-
cation should seek not only to teach a man a trade, but
also to make him an adaptable worker. Wherever pos-
sible, the government should reserve its building and con-
struction work for periods of economic depression. Such
a plan will not only give employment when it is most
needed, but it will also stimulate related industries which
furnish necessary supplies. A system of public labor
exchanges has been established in some states, whereby
helpful information is secured for both the worker and the
employer. Thus an attempt is made to adjust the labor
force to industrial conditions, and to direct it from localities
of oversupply to where it is needed. Unfortunately, in the
406 Problems of American Democracy
United States, most of the labor exchanges are privately
managed. What is imperatively needed is a national
system of public labor exchanges which will avoid duplica-
tion and guarantee correlation of labor information.
Occupations of Risk. — The name dangerous trades is
applied to certain occupations because their very nature is
Causes of fetal to the health and safety of the worker,
danger: These may be conveniently considered from the
point of view of the chief sources of danger
inherent in such trades. One source of danger lies in the
poisonous character of the materials used in certain
branches of industry. The effect of such work upon the
individual is frequently seen in the disease known as lead
poisoning, which often occurs in the manufacture of white
lead. This substance enters the system through the skin,
or by way of the alimentary canal when the worker is not
careful to wash his hands before eating. Paralysis, insan-
ity, and finally death may result. Several European
countries have greatly reduced the mortality in this trade
by forbidding such practices as dry rubbing, and by insist-
ing upon the necessity of certain precautionary measures.
Workers with phosphorus frequently contract a char-
acteristic disease, singularly fatal, known as phosphorus
jaw. This is one of the few dangerous trades against which
our government has legislated.
A second source of danger lies in those industries which
expose the lungs to an excessive amount of dust. Nature
has furnished protection for occasional exposure
to a normal amount of dust, but continual
exposure to this irritant is extremely dangerous. The
lungs become spotted with foreign particles which make
fearful ravages upon the delicate membrane. Tuber-
Industrial Risks and Social Insurance 407
culosis and other diseases of the lungs and bronchial tubes
affect the respiratory organs. This dust danger is well
illustrated in coal mining. By screening the coal wet, the
amount of coal dust in the air may be reduced. A similar
pernicious effect often results from the dust generated by
stone cutting, by metal grinding, and from the lint in tex-
tile mills. Suction tubes and blowers should be used to
draw off this vitiated air from the atmosphere. Certain
gases and fumes may also be both dangerous and poisonous.
In such cases the work should be done in a helmet, or under
a hood with a forced draft. In many of the chemical trades
the work is of a similar dangerous character.
A third source of danger lies in sudden changes of tem-
perature and air pressure. When steel workers, or those
employed near hot furnaces, feel the outside
contact of the cold blast of winter, they become f**pâ„¢atu/e.
an easy prey to pneumonia. Workers under-
ground in mines, tunnels, and subways often develop
peculiar diseases due to changes of air pressure. Although
higher wages are sometimes paid to such workers and
to those in similar positions because of their dangerous
character, society must still further protect them from the
unusual strains of industry. The law must prescribe pre-
cautionary measures and insist upon their enforcement.
Shorter hours with frequent periods of rest, are absolutely
essential to the health and safety of such workers.
The industrial accident, impairing if not altogether
destroying the efficiency of the worker, is another product
of the factory system. The report of the first Cooperative
Safety Congress showed that on the average, in certain
occupations, one worker was killed in every sixteen minutes,
and one injured in every sixteen seconds. This is the price
408 Problems of American Democracy
in human life that America has paid for speed. The respon-
sibility for this condition rests upon both the employer and
the worker. The worker is sometimes careless,
accidents: indifferent, and ignorant; while the employer is
£hamcter d often negligent in supplying safety devices and
in rigidly enforcing the law. Of recent years
a campaign of popular education has been inaugurated
with the slogan "Safety First." A national organization
for the safety of the worker uses the "white cross" to stand
for prevention, in the same way that the "red cross " stands
for first aid to the injured. Industrial accidents may be
commonly classified according to occupation, as railroad,
mining, factory, and building accidents.
The Interstate Commerce Commission carefully com-
piles the statistics relating to railroad accidents. It would
Railroad seem that, in an average year, one employee is
accidents. ^flied for every four hundred employed by the
railroad. This, of course, does not include thousands of
passengers who have been killed or inju :ed in wrecks. A
comparison with certain European coul tries, like England
and Germany, shows that there is no justification for such
an appalling loss of life. Remedial measures should apply
to company and workman alike. The corporation should
not only install the latest and most approved signal devices,
but should also use steel coaches wherever possible. Unfor-
tunately, the financial condition of some railroads has pre-
vented an expenditure of funds for such purposes. A fed-
eral law requiring automatic couplers has reduced markedly
the number of casualties among trainmen. The employee,
however, cannot be relieved of his individual responsibility.
He must be constantly on the alert for his own safety and
for that of others. From the railroad point of view, as
Industrial Risks and Social Insurance 409
well as from that of the public, it is an absolute waste to
employ ignorant, careless, or unsteady workmen. On the
other hand, hours of work should not be so continuous as
to produce fatigue and lowered efficiency.
Statistics regarding mining accidents are compiled by
state inspectors and are neither so complete nor accurate
as those regarding railroads. Of mining acci- other
dents, those in coal mines are the most numer- accidents -
ous.' In the coal-producing countries of Europe the out-
put has increased greatly, but the number of deaths per
thousand has decreased. This is due to legislation con-
cerning the operation of mines and to the establishment of
testing stations for the study of problems relating to safety
in mines. Much has been accomplished by government
regulations concerning the use of safety lamps, explosives,
and the proper support of small passageways. In regard to
manufacturing, we find the same incompleteness of statis-
tics because of the system of state inspection of factories.
The chief source of danger here lies in the frequent use of
unguarded machinery. Safety appliances are often dis-
carded in the "speeding up " process. Inefficient labor and
long-continued work upon the same monotonous operation
frequently results in careless accidents. The effects of
industrial accidents and dangerous trades are more than
an impairment of personal efficiency or an individual sacri-
fice of life and limb. They also represent an enormous loss
of productive power. Again, the burden of such injuries
falls not only upon the worker himself, but also upon his
family and the community. Loss of the services of the
bread winner may make the family destitute of proper
support and thus dependent upon society.
In view of these marked effects of dangerous trades and
41 o Problems of American Democracy
industrial accidents upon society, it is important that the
individual affected be provided with legal machinery, where-
by he may be reimbursed for injuries suffered at
remedies : the hands of his f ellowmen. That is, society must
Compensation °^ er som e means of protection to the workman,
or to his family, for social injuries. The first
step toward social insurance was found in the Employers'
Liability Act, under which the injured workmen might bring
suit against the employer to recover damages for wrong" suf-
fered. However, because of the doctrine of contributory
negligence, it was often impossible for the workman to
receive any recompense for his injury, if it could be proved
that such injury was partly caused by his own carelessness
or by that of his fellow workers. It, therefore, marked a
great step in advance for the workman when society evolved
the idea of a Workmen's Compensation Act, whereby the
expense of law suits is generally eliminated. According to
this act, the workman, for his injury, receives automatically
a percentage of his wages or a certain sum in proportion
to the injury sustained. Even though the fault may be
largely that of the workman, the employer must bear the
brunt of the financial burden and in this way accept finan-
cially the risk which the laborer assumes physically. Hence
the employer is more apt to consider the safety of his
employees. In 1897, to supersede the older Employers'
Liability Act, England passed a Workmen's Compensa tion
Act. In the United States, this legislation is largely a
matter of state action, and several commonwealths, includ-
ing Pennsylvania, have enacted such laws. Finally, Con-
gress in 1908, enacted a law providing a system of com-
pensation for accidents suffered by industrial employees of
the federal government.
Industrial Risks and Social Insurance 411
Another form of social insurance is known as compul-
sory state insurance. Germany was the pioneer in this
movement. In 1884. a law was enacted requiring _
^ . Compulsory
employees to become members of mutual acci- state
. , insurance.
dent insurance companies. These are privately
managed, but are supervised by the Central Insurance
Office. The insurance associations levy assessments upon
the member companies to provide funds from which to pay
compensation. The injured workman, or his dependents,
receive payment in accordance with a legally prescribed
scale of rates. The accident insurance is correlated with
a plan of compulsory sickness insurance. For the first
thirteen weeks, the payment to the worker comes from the
latter fund. Hence the burden upon the employer is not
so heavy. Like other forms of social insurance, the tend-
ency is to shift the cost upon the general public. Since
industrial insurance premiums are part of the cost of pro-
duction, the price of the product is correspondingly higher.
The products of dangerous trades become expensive, and
their use is thus discouraged. Industrial insurance takes
another form in Norway, where employers are required to
pay premiums into a state insurance fund from which
injured workers receive compensation. The rate of premium
which each employer pays depends upon the number and
wages of his employees, and upon the hazard of the occu-
pation.
Sickness Insurance. — The examinations for military
service during the World War afforded an interesting study
of the physical fitness of the nation. According „ .
^ J ° National
to a report of the Provost Marshal General, cost of m
, .„. . , . ' health.
over three million men were examined in the
period from December, 191 7, to September, 1918. Approx-
412 Problems of American Democracy
imately sixty-five per cent of the men between the ages of
twenty-one and thirty-one were found fully qualified for
military service. A greater number of rejections were made
from the urban population than from the rural. Again, a
slightly greater percentage of rejections occurred with the
negro than with the white applicants, and with the foreign
born as compared with the native. The amount of national
sickness is equally important, although there are no such
significant statistics. A committee of experts, however,
estimated that there are annually two hundred and fifty
million days of sickness among the workmen of the United
States. Expressed in terms of money, this means an annual
cost of perhaps a billion dollars. The United States Bureau
of Labor reports that every workman in the steel industry
has an expectation of nine days lost by sickness each year,
as against four days lost by accident.
Many industrial firms have inaugurated plans by which
their employees receive partial wages during sickness.
Forms of There are also unions and fraternal organizations
insurance. wn i cn p a y s { c ^ benefits. Germany, however,
was the first nation to make sickness insurance compulsory.
In 1885 a law was passed for this purpose, which applied to
all wage earners receiving less than two thousand marks a
year, totaling almost twenty million persons. The employer
pays one-third, and the employee two-thirds, of the cost.
Insurance cards are carried by the worker, and both
employer and employee purchase sickness insurance stamps
at the post office. Thus the government receives money
premiums from which the insurance office pays sick benefits.
In 191 2, Great Britain passed the National Insurance Act.
Sickness insurance became compulsory for all wage earners
receiving less than one hundred and sixty pounds annually,
Industrial Risks and Social Insurance 413
about fourteen million workers. A similar system of stamps
and cards was inaugurated, but the employer's contri-
bution was relatively larger. The whole insurance system
of Germany was codified in 191 1. Among the benefits
provided for were not only money compensation, but also
provision for medical attendance and necessary appliances,
such as spectacles and artificial limbs. Free admission to
the hospital was provided, when necessary, as well as pro-
vision for maternity cases.
Old Age Insurance. — Germany was also the first
nation to administer compulsory old-age insurance. Because
of the paternalistic nature of the government, i n
such schemes have originated and flourished in German y-
that country. This particular scheme compels the employer
to see that each employee has an old-age insurance card
with the proper amount of stamps affixed. These stamps
represent small premiums of from three to nine cents a
week, varying with the wages paid. The employer affixes
the stamps which he has purchased from the government,
paying half himself and deducting the other half from the
employee's wages. The annuities granted are correspond-
ingly small, and averaged before the War about forty
dollars. The government itself added twelve dollars
and fifty cents out of the imperial treasury for each pen-
sioner.
In 1908 Great Britain passed the Old Age Pension Law.
This is a gratuitous payment by the government as com-
pared with the compulsory old-age insurance i n Great
plan of Germany, in which employer, employee, Bntain -
and government all contribute. At the age of seventy, a
pension will be paid to any individual whose income does
not exceed one hundred and fifty dollars a year, provided
414 Problems of American Democracy
he has been a British citizen for twenty years and has
never been either a pauper or a criminal. The maximum
pension is five shillings a week.
Thus, social insurance covers the different hazards of
industry, and each type must be considered on its own
merits. Industrial accident insurance, however,
has passed the experimental stage and should be
included within the legislative program of every enlightened
State. On the other hand, most students of social insur-
ance feel that the difficulties of unemployment insurance
are insurmountable, and that such schemes should be left
to private associations like labor unions. No nation has as
yet provided unemployment insurance. Sickness and old-
age insurance are still in the experimental stage. It is
here that the advocates of social insurance are planning
their campaign in the United States. Sickness insurance
is feared by some because it represents another extension
of governmental activities. It is also contended that it
would offer many administrative difficulties. Old-age insur-
ance is denounced by many writers as socialism in disguise.
It might discourage thrift in the young, and it would
undoubtedly increase both the expense and the functions of
the national or state government.
QUESTIONS FOR DISCUSSION
1. Enumerate some of the risks of labor and contrast them with
the risks of capital.
2. Explain what you understand by social insurance and name
the leading types.
3. What elements in the economic environment make for unem-
ployment?
4. How can these be changed to minimize unemployment?
5. Discuss the amount of unemployment, chronic and temporary.
Industrial Risks and Social Insurance 415
6. Show the social cost of unemployment.
7. Show why several -dangerous trades are so called.
8. Can you name any others besides those in the text?
9. Show that the rate of industrial accidents is alarming.
10. What occupations lead in this respect and how may conditions
in each be improved?
11. Show the social effects of industrial accidents.
12. Compare American and European conditions in respect to
accidents.
13. Compare the Employers' Liability Act with the Workmen's
Compensation Act.
14. Contrast the latter with Germany's plan.
15. Show the industrial cost of sickness.
16. Do you think sickness insurance should be introduced, or
should be made compulsory, in the United States?
17. Explain the operation of the German system.
18. Compare the English and German plans of old-age insurance.
TOPICS FOR SPECIAL REPORT
1. How the scientific management of industry may reduce
unemployment.
2. Cycles of business depression.
3. A comparison of the casualties of war and industry.
4. The Red Cross and Safety First movements.
5. Social insurance in Germany.
6. The social insurance program of your own state.
7. The social insurance program for American soldiers and
sailors during the World War.
8. The abuse of the doctrine of contributory negligence.
9. A contrast between socialism and social insurance.
10. Effects of laissez faire or individualism on industry in England
and America.
11. Objections to a program of social insurance.
REFERENCES
Bevertdge, W. H. Unemployment.
Burch, H. R. American Economic Life. Chapter XVI.
4i 6 Problems of American Democracy
Carlton, F. T. History and Problems of Organized Labor.
Hamilton, W. Current Economic Problems-. Chapter XI.
Lescohler, D. D. The Labor Market.
Oliver,~T. Dangerous Trades.
Oliver, T. Diseases of Occupation.
Seager, H. R. Principles of Economics. Chapter XXXII.
Seager, H. R. Social Insurance.
Willits, J. H. Unemployment in Philadelphia
CHAPTER XXXII
Standards of Living
I. General characteristics
i. Meaning of standard of living
2. Its relative nature
3. Nature of economic wants :
a. They vary
b. They expand
4. Real wages
II. Family budgets
1 . Component parts :
a. Chief items
b. Minor items
2. Variations:
a. Among groups
b. Among localities
III. Minimum standards
1 . Older investigations
2. Effect of World War:
a. On wages
b. On cost of living
3. The conclusion
After all, the fundamental requisite of a contented
democracy is not a highly complicated system of govern-
mental machinery for the purpose of alleviating economic
and social distress, but a sufficient participation in eco-
nomic prosperity which relieves the necessity of continued
governmental assistance in industrial life. However, great
national prosperity does not necessarily mean prosperity
upon the part of all the citizens of the republic. We have
BB 417
418 Problems of American Democracy
observed that national wealth and national welfare are not
necessarily identical. If a considerable number of people
have insufficient incomes to maintain decent standards
of living, the nation exhibits the social maladjustment of
poverty. Before investigating the problem of poverty,
however, it is necessary to consider what is meant by a
standard of living.
General Characteristics. — A standard of living may
be regarded as a measure of economic consumption, that
,. . , is, as the amount of wealth which an individual
Meaning of
standard or a family consumes. Economic goods may be
roughly divided into three groups — necessities,
comforts, and luxuries. Exact social measurements are
impossible, and standards of living gradually fade into
each other like the colors of the spectrum. The standard
of living of an unskilled laborer may include little more
than the necessities of life, while that of his employer may
be largely made up of luxuries. There is one standard of
living for Mrs. Wiggs of the Cabbage Patch and another
for her friend, the Christmas Lady. Between the two
extremes are innumerable variations involving all degrees
of comforts. Standards of living are generally estimated
in terms of money, and experts speak of the different
income groups in society. The estimate is generally based
upon the family rather than upon the individual expendi-
ture, for the family is the usual unit of economic con-
sumption.
Not only do standards of living vary between different
income groups, but also between nations. Thus, we hear
its relative of an American standard of living as compared
nature. ^^ a E ur0 p ean or a Chinese standard of living.
Finally, standards of living vary from age to age, and the
Standards of Living 419
comforts of a middle class family in England to-day are
very different from those of the Elizabethan period. In
short, a standard of living is a relative and comparative
thing. People do not miss what they have never enjoyed.
The philosopher may object to such a commodity measure-
ment of welfare and claim that happiness is a state of mind.
A poor man may be happier than a rich man. The student
of society does not deny the truth of such a possibility,
but finds it impossible to measure accurately happiness
which rests upon an intangible state of mind. Conse-
quently, he is forced to content himself with measuring