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servants within recent times which sought to distin-


The Wages of Labour

guish in the matter of allowance between persons of
different ages, giving more to those who had depen-
dants to maintain than to those who had not.

In the ten years since 1910 the cost of food in the
Union of South Africa has more than doubled, with
a corresponding demand for the steady improvement
of remuneration, achieved in some cases by arbitra-
tion, in some by the power of labour organization,
as in the case of engineers, shop assistants and others,
and in the case of tailors in several districts through
the agency of wage boards. In Australia and New
Zealand arbitration courts have fixed basic rates of
wages for many grades of workers, with a cost of
living bonus, adjustable on the principle of sliding
scale in keeping with the index numbers of Govern-
ment statisticians. In view of the controversy over
grades of labour in this country, and the undoubted
gain of the semi-skilled and unskilled workers com-
pared with skilled men and women during the war, it
may be observed that the New Zealand Arbitration
Court in 1919 and 1920 differentiated between the
skilled, semi-skilled and unskilled, and issued an
award providing for three separate hourly rates of
remuneration, giving the semi-skilled two or three
pence less per hour than the skilled, with a similar
difference between the semi-skilled and the unskilled.
In Australasia movements for shorter hours, especi-
ally in the constructional trades, failed in 1920 largely
because of the effective organization of the employers,

Minimum Rate and Standard Wage

who warned the weaker or more timid firms that if
they did not stand fast they would be deprived of
their supplies of material, a form of pressure which
they could hardly ignore. Similar action was taken
by the Steel Corporations in support of metal trades
employers on the Pacific coast of the United States.
It is well known that in many of the new countries
labour has gained occasionally not merely by shortage
but also because of a willingness on the part of em-
ployers to offer more than basic rates in contracts
which held out the hope of substantial return, if not
of monopoly, in the areas in which they were rapidly
overtaken. The control of materials appears, there-
fore, as an important factor in what we should prob-
ably describe here as jumping the district or the
national rate. Even the improved allowances which
politicians sometimes secure are not without influence,
for the miners at the Collie coalfield in Western
Australia in 1920 demanded a 60 per cent, increase
in wages because of the increased cost of living and
because the Federal politicians had increased their
own salaries from ;6oo to ^"1,000 a year.

If for the moment a reduction in the number of
working hours is regarded as an improvement in the
incomings of labour, as distinguished from the purely
monetary return, some of the recent industrial in-
vestigations of the United States of America will be
found to yield interesting conclusions. The National
Industrial Conference Board, an organization of em-


The Wages of Labour

ployers, after an inquiry covering nearly two thousand
establishments in the cotton, woollen, silk, boot and
shoe and metal trades, concluded, from the standpoint
of production, that no single schedule of hours was
equally adaptable for all industries, and that as a rule,
with shorter hours, production could be maintained
only where work was done by hand rather than by
machinery. In the cotton factories in the north and
in the woollen industry the reduction of hours to 56
and 54 a week respectively resulted in. a loss of out-
put, but in the silk industry and in the boot and shoe
trade production was maintained when hours were
reduced to less than 54 a week. In the metal industry
it was found that in many establishments reduction
to a 50 or 48 hours' week had not resulted in any
serious loss, but it was thought that a general reduc-
tion could not be effected without loss of output. It
should be remembered that these conclusions were
reached in industrial circumstances where organiza-
tion and the adoption of scientific management are
much more complete than they are in Great Britain.
It is often suggested that, in the establishment of a
minimum rate, labour would be better advised to think
less of merely increased monetary return and con-
centrate upon the demand for a reduced number of
working hours at the same rate of wages. In this
connexion it is clear that unless output is maintained,
or improved, as a result of the beneficial change in
working conditions, there cannot be any gain in real


Minimum Rate and Standard Wage

income. Similar investigation in Great Britain has
indicated almost precisely the same conclusions,
namely, that in response to the improvement in
working hours there are industries in which output
increases, some in which it remains stationary, and
others in which it falls. Generally speaking, the re-
sponse in improvement of output is slow ; the explana-
tion may be that insufficient attention has been paid to
technical skill in the industry, or to the latest develop-
ments in machinery, or, as far as the workers are
concerned, to the healthy use of the increased leisure.
An investigation conducted by the Federal Bureau
of Labour Statistics into the wages of more than
12,000 women workers in New York showed that
only in the ladies' garment industry, where in
point of fact the workers were highly organized,
was there an average living wage. It amounted
to slightly more than twenty-one dollars weekly.
Among other weekly averages confectionery workers
received less than ten dollars, cigar workers a
little less and white paper box-makers a little more
than eleven dollars, while the State Industrial Com-
mission reported that 68 per cent, of the women, both
in factories and in mercantile establishments, received
less than fourteen dollars a week. About the same
time, basing their calculations on official statistics,
the Consumers' League fixed 16.13 dollars weekly as
a living wage for a woman in New York State in 1919.
The Minimum Wage Conference recommended to the
G 87

The Wages of Labour

Washington State Industrial Welfare Commission the
establishment of a minimum wage of eighteen dollars
a week for all women over eighteen years of age in
any manufacturing industry, with a further recom-
mendation that work should hot exceed six days a
week, except in case of perishable foodstuffs, or five
hours a day without rest interval. A similar investi-
gation in the State of Texas showed that the average
wage for women and minors in mercantile establish-
ments, telephone exchanges, factories and laundries
was twelve dollars a week. In the case of women
workers and the indifferently organized, therefore, it
is beyond doubt that the minimum wage campaign
has ample ground to cover, even in the highly organ-
ized and nominally progressive countries, before it
can be suggested that there is world-wide recognition
of a genuine subsistence rate.

Again, the share of labour in the gains accruing
from recent rises in prices is often disproportionately
small. In the important case of unbleached cotton,
whereas between 1910 and 1920 factory profits in-
creased by 748 per cent., the increase in labour cost
was only 115 per cent.; the labour cost of canning
corn increased 22 per cent, between 1916 and 1917,
while in the same period the profit of the canners
increased 256 per cent. ; and Mr. John Williams,
controller of the currency and formerly director of
finances of railroad administration, is reported to
have declared that in 1918 the United States Steel


Minimum Rate and Standard Wage

Corporation could have doubled the wages of all its
employees and still have earned 7 per cent, on its
common stock. No doubt these fa'cts reflect abnormal
war experience. But in the main they indicate that
even in favourable industrial conditions and it is
mainly because of this consideration that statistics
from the United States have been chosen there are
large numbers of people who for all practical purposes
may still be regarded as sweated ; that unfortunately,
as many of them are women, future generations are
penalized and grave social consequences immediately
suggested; and, further, that there can be little hope
of labour's acceptance of an industrial system which,
especially in times of crisis, and when the note of
general sacrifice is emphasized, confers such unfair
advantage on the proprietors or users of capital to the
detriment of hundreds of thousands of their fellow



IN the preceding chapter it was suggested that for
the purposes of this argument no unnecessary
distinction would be drawn between the minimum
wage now usually associated with trade boards and
sweated industries and the standard rate of more fully
organized trades. Any distinction is, in point of fact,
unreal. The case for the standard rate, which Mr.
and Mrs. Webb summarized in their "Industrial
Democracy " a quarter of a century ago, still holds
good. They pointed out that it was only a minimum,
never a maximum, and that in many industries there
were employers who, with the cognisance of the trade
unions, paid more than the standard rate. As a rule
labour welcomes such a step, mainly because it is then
able to quote the remuneration given by such firms
when making efforts to raise others to a similar level.
It may be recalled, however, that towards the end of
last century sacrifices were made by certain workers
in highly-paid districts in order to secure a general
minimum which would protect their less favoured
brethren elsewhere. In order to secure a satis-
factory piece-work list, which meant for the majority
of their members an increase in remuneration,

cotton-weavers in several areas consented to reduc-


Minimum Rate and Standard Wage

tion of wages. No doubt, as in the case of the
flint glass makers, there were temporary protests,
but when the workmen understood the value of uni-
formity of rate they were practically always willing to
make sacrifices in the interests of their membership
as a whole.

Regarding minimum wage and standard rate for
the time being as synonymous terms it is compara-
tively easy to summarize the contention of current
criticism and submit it to the test of experience.
Trade boards, as we have seen, are very young. That
the results of their work have been beneficial is not
seriously disputed, but they are already the object
of concerted attack in both productive and distributive
trades. The attack usually suggests that they are
inapplicable to the conditions of the industry,
although these conditions must have been care-
fully considered by both sides when they were estab-
lished. In the second place, it is generally contended
that in certain industries they have fixed a minimum
rate which makes it impossible for employers to com-
pete successfully with other nations. Towards the
end of 1920 French, Belgian and British flax-spinners
arrived at agreement on a minimum price for their
yarn, the object being to stabilize the market. At
the same time it was indicated that there was a
great scarcity of flax, and that to meet the needs
of the coming year perhaps only one-third of the
normal supply would be available. A little later

9 1

The Wages of Labour

French, Belgian, British and Irish flax producers
formed a federation to fix minimum prices per ton
for their flax, and at that date it was suggested that
reduced output was necessary. In January, 1921,
the chairman of one of the leading firms of Scottish
flax spinners stated that, if they were going to compete
successfully with France, Belgium, Japan, Germany
and Austria, the cost of production must come down,
and that could only be done by lowering wages. [On
this point it must be observed that with some of
the so-called competitors trade agreement has been
reached, and at the present time the competition of
the Central Powers of Europe can hardly be con-
sidered a serious factor; indeed, for the sake of
common economic recovery, it is desirable that it
should be a serious factor at the earliest possible
moment.] The flax spinners thereupon demanded the
abolition of the trade board which had been applied
to their industry. Now the terms of the Acts govern-
ing the constitution and the work of these boards
expressly provide for the variation of minimum rates.
If the employers or the employed are dissatisfied, if
either of them feel that the rates are artificially high
or low, they have a remedy within the limits of the
kind of industrial constitution under which they work.
Instead of seeking that remedy, or accepting the re-
sults of re-investigation, the employers proposed that
the whole machinery should be scrapped. The real
reason for recent attacks on trade boards is that


Minimum Rate and Standard Wage

the trade boards have made for a measure of in-
dustrial organization among the workers which prob-
ably would not have been achieved on other lines.
In many phases of the Scottish textile industry in
particular, organization has been remarkably slow.
For years the employers enjoyed large profits on rates
of remuneration which are now admitted to have
been thoroughly inadequate. They had little experi-
ence of collective bargaining, and even now they have
not become accustomed to it. The abolition of the
trade board is to many of them a first step back to
old times, with the relative weakness of the

The other arguments will hardly bear examination.
In effect the alleged foreign competition does not exist,
and even if it did exist, there are important considera-
tions which go far to modify its effects on wage levels
in the industries which are now under review. There
is, in the first place, the development of international
agreement among business concerns; the agreement
among British and Continental producers of flax is
a case in point. Such agreements must always be
made with wage-levels more or less fully understood,
and they are of the nature of that international trust,
combine or syndicate activity which is one of the pro-
nounced features of present-day economic organiza-
tion. The presumption is that they will make for
economy, for enhanced profit, if not for virtual mono-
poly. When the manufacturers themselves have the


The Wages of Labour

power to limit international output, the plea of foreign
competition in such industries is absurd. And finally,
it is noteworthy that several firms which have been
loudest in the demand for the abolition of the wages
boards and the minimum rates they have established,
have declared dividends of 20 and 25 per cent., free of
tax, in the last two years. Had the business been con-
ducted with more regard to public welfare and social
well-being, less would have been distributed immedi-
ately to the shareholders, something would have been
reserved for the period in which the real test will come,
and the improved remuneration of a formerly under-
paid class would have been maintained, if only for the
purpose of providing more efficient labour and a better
standard of service. This appears to be one of the
numerous cases in which business men show much
less intelligence than the rank and file of their
workers, and reminds us that Great Britain is ex-
posed to just as great a danger from the mistaken
views of employers as it is from such mischievous
economic and social doctrine as may find acceptance
among sections of the workpeople.

Further, if the mere working conditions, as apart
from the remuneration, of the badly organized or
more poorly paid industries of the world are con-
sidered, it can hardly be disputed that in due course
the whole position should be altered by the growth
of a strong industrial code under the economic side of
the League of Nations. The very moderate Wasft-


Minimum Rate and Standard Wage

ington conventions are in process of ratification in
practically all civilized countries, and they provide a
basis in hours, nightwork, and the employment of
women and young persons, on which all countries
must work. In pre-war times the favourite argument
against better remuneration for the depressed was the
fact that the wages paid to them were rather better
than the wages which prevailed beyond these shores,
and that if they were increased the industry would
collapse before foreign competition, which had the
marked advantage of a much lower cost of production.
We have already seen that in practically every country
the demand for minimum rates is incessant, and there
are some, regarded as the industrial competitors of
Great Britain, in which the requests are much more
extreme than they have ever been here. That fact,
together with the establishment of an industrial code
in general conditions, which is to be one of the first
fruits of the League of Nations, should be sufficient
for such employers as still hold the mistaken view
that anything can be permanently gained from the
existence of inefficient and badly remunerated service.
Again, during the past quarter of a century the
general circumstances which made for the mainten-
ance and development of collective bargaining have
become remarkably stronger. This is an age of
federated capital and federated labour. The growth
of trusts, syndicates, combines, price associations and
rings of all kinds among proprietors of capital and


The Wages of Labour

employers in general has had its counterpart in the
growth of the trade unions on lines of sectional
organization, to be replaced in turn by one large
amalgamation after another. Every week records not
one but many labour fusions, mainly because the
trade unions have appreciated the ordinary economic
truth that in competition for members there is waste
of resources, overlapping, weakness in bargaining
power, and internal dissension which has often
brought their cause to defeat and despair.

At the very heart of collective bargaining there is
the trade union insistence on a standard rate. The ob-
jections commonly urged are familiar. The employer
argues that he is not opposed to a minimum rate for
good work or service, but he objects to paying the
same rate without reference to variety in skill, know-
ledge, industry and character. It is, however, no part
of the purpose of trade unionism to secure an equality
of weekly earnings. It merely stipulates that for work
actually performed there shall be a standard rate of
payment. Examination of the wages sheets of a large
part of British industry will show that this standard
rate is consistent with the greatest differences in the
aggregate amount of weekly earnings. In point of
fact, where indifferent character is concerned the
remedy is usually clear and immediate. Workpeople
of bad habits are mostly irregular time-keepers; for
them the weekly income is often habitually low. Even
the same weekly wage is not the ruthlessly uniform


Minimum Rate and Standard Wage

reward that is frequently described. Time wages of
any kind involve a certain standard of skill and a
certain amount of work, and if neither is forth-
coming it is tolerably certain that, except in times
of grave shortage of labour, the worker will either
lose his situation or be transferred to some inferior
task. Even if it is admitted that payment on time-
work basis tends to greater uniformity of weekly or
other earnings than remuneration on the basis of
piece-work, it must be remembered that the trade
unions which insist on piece-work, and those which
recognize in various departments both time-work and
piece-work, have a membership far exceeding that of
those which insist on time-work alone. In the less
highly organized trades, where complaint of inferior
service on weekly wages of a uniform character is
most frequently made, alternative labour is generally
available, and in such cases there must be a keen
desire to keep a situation because of the uncertainty
of getting another. On this point the deficiency is
usually one of training, education, or general ability,
and there are unfortunately large numbers to which
that criticism may with justice be applied. That they
find employment is due to the great quantity of
routine work, automatic and monotonous in character,
which, notwithstanding all the improvements in com-
mercial and industrial processes, is still abundant in
this country.

Even if all allowance is made for a cost of living

The Wages of Labour

much lower than that of the present day, it is beyond
dispute that during the past century remuneration in
many departments of British. industry and commerce
was quite inadequate. For the time being, therefore,
we are not merely engaged in effort to maintain or to
regain the late Victorian standard of wages; we are
suffering from a prolonged period of underpayment,
and if efficiency is not to be allowed to diminish
there must be a real improvement in remuneration.
The status of labour has been raised, but it is sug-
gested that little or nothing has been done sub-
stantially to affect the problem of distribution. In
his most recent statement in the Newmarch lectures
Sir Josiah Stamp indicated that during the past
hundred years the actual proportions in which the
total income had been distributed amongst the people
had hardly varied. In comparing the year 1801 with
the year 1920, and taking all the people with in-
comes over ^500 then and now, there were 56 per
cent, in the class from ^"500 to ^"1,000 then, as
against 55.2 per cent. now. In the class ;i,ooo to
,2,000 there were 26.3 then, against 27.3 now; in
the ^"2,000 to ^5,000 class 13.9 per cent, then, as
against 13 per cent, now; and in the class with
over ^"5,000 there were 3.8 per cent, then, against
4.5 per cent. now. The general increase of wealth
had surged up evenly through all the classes, in-
creasing the bottom incomes and the top incomes,
but leaving the slope of distribution quite unchanged.


Minimum Rate and Standard Wage

Sir Josiah Stamp proceeded to state that the average
person in 1914 had twice the money income of the
corresponding person in 1801, and each pound had
twice the purchasing power, so that practically all
classes were four times as well off in real comforts
and commodities, and the standard of living was
in 1914 four times as good as it was one hundred and
twenty years ago. He pointed out, however, that the
general conception of a living wage was to a consider-
able extent not absolute at all, but relative to the
particular age in which we lived.

/The standard of the community has risen; the
position of the wage-earning class has risen with it
but not in it. Relatively to others labour has made
no appreciable advance in material well-being. The
record of income tax and super-tax, in the latter
case since 1909, shows that large fortunes are
tending to increase at a greater rate than general
wealth. When the super-tax was instituted there
were approximately 11,000 payers. When the re-
commendations of the Royal Commission on the
Income Tax, which sat in 1919, were adopted, it was
considered that on the lower limits of income laid
down there would soon be 80,000 super-tax payers.
The increase in numbers was certainly swollen by
the introduction of the lower limit, but apart from
that there has been a steady increase in the numbers
from the time of the first application of this tax. At
the same time there has been much criticism by labour


The Wages of Labour

of the fact that of the total values created in industry
probably 30 to 35 per cent, went to employers, lenders
of capital and other people, who were not wage or
salary earners engaged in production. One-third of
the capital wealth of the country is held by 36,000
large owners, and another third by 360,000 minor

At the end of a century of remarkable material out-
put the position in summary is that for all the people,
at least up to the time of the outbreak of war, there
has been increase in nominal and real income; that
a living wage varies from period to period, but
has long remained relatively stationary; that one-
third of the total values created in industry goes to a
very small section more or less remotely engaged in
it; that the numbers of very wealthy people are in-
creasing; and that one-eleventh of the total popula-
tion holds two-thirds of the whole capital wealth of

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Online LibraryWilliam GrahamThe wages of labour → online text (page 6 of 11)