WAGES, NOMINAL AND REAL all, that it is only for convenience sake that they [The following works, including those mentioned W. A. Sr. WAGES, NOMINAL AND REAL.* In the term nominal wages is included the present value of all money wages, regular or occasional, and perquisites and expectations, reckoned over a given period, say one year, in the currency of a given time and place. weekly wage, whether time or piece; a fair The ordinary estimate of special earnings, from overtime or occasional work, as harvesting; the money value of all payments in kind, whether in the shape of actual receipts, or of reduced rent, or of facilities for cheap purchase of goods; a suitable estimate for residence, board, or clothing; and interest on the capital present 639 value of the expectation of deferred pay or pen- When comparisons are made between the Hence comparison of nominal the divergence of currency from gold during A more recent example may be obtained from figures are compiled from the Senate report on 1861-78 in the United States. The following 1893, and the table is in the main the same as that given by Edward ATKINSON in his wholesale prices, wages, and transportation, pamphlet The Battle of Standards and the Fall of Prices. This shows that the course of nominal wages, measured in currency, is entirely different in the period 1860-80 from that of real wages, measured by purchasing power-so different that no change in the method of computation could make them similar. Even when wages are measured in gold, the courses of nominal and real wages possess only a rough similarity. A third example may be found in the earnings of gold-diggers. When gold is plentiful and provisions are scarce, an immense nominal wage is necessary for a bare subsistence. It may be noticed in passing that the cycle of commercial inflation and depression affects nominal more than real wages; for in time of inflation prices rise and wages follow, and in depression prices fall, and wages are, at any rate, hindered from rising if they do not actually fall. Thus wages measured by purchasing power fluctuate less violently than wages measured in currency. We have then to determine the best method of comparing purchasing power at different times or places. For different times the obvious method is to use index-numbers (see INDEX NUMBERS; TABULAR STANDARD). Those formed on a consumption basis and dealing with retail prices (p. 385, col. 2 b), are theoretically the best, but in practice cannot be accurately evaluated. For approximation index-numbers like Sauerbeck's can be used, but the theoretical objections stated in the article referred to have their greatest weight when dealing with retail purchases by a special class. Numbers representing the ratio of the purchasing powers of money in different places at the same time could be compiled by similar methods, but since we should then be measuring accidental variations due to the peculiarities of a single place, and not a general movement of price due to general changes, we could no longer expect our number to be independent of the errors of weighting. The mere rate of exchange of currency between two countries is of course determined by quite other considerations than that of purchasing power (see EXCHANGE, FOREIGN). For times separated by long intervals writers are generally contented with a rough statement of the following nature : Purchase value of the Sovereign. Thorold Rogers, op. cit. p. 427. (Compare also table on pp. 634-637, Wages and Prices, and see Cunningham, Growth of English Industry, vol. ii., app.). If we attempt to combine such statements we are confronted with the difficulty of weighting the numbers representing the different commodities; this is usually done by means of budgets (see WORKMEN'S BUDGETS), the following being the most important methods. (i) A standard budget, having no close relation to any time or place, is formed (a) of the commodities generally purchased by the working classes, corresponding to a LIVING WAGE (q.v.), or (8) of the minimum necessary for subsistence (Atkinson, Distribution of Products, p. 158 seq., Carnegie, Contemporary Review, 1894). This standard budget is priced for any two places or times. The ratio of the two prices is inversely proportional to the two purchasing powers. The ratio of the nominal wages, multiplied by the ratio of the purchasing powers, gives the ratio of the real wages. (ii) A similar method is to make a typical budget for one place or time, and value the budget at the prices of the place or time with which comparison is to be made. Then procedure is as in (i) (Toynbee, Industrial Revolu tion, pp. 139, 140; Leone Levi, Wages and Earnings, 2nd ed. p. 34; Purdy, Stat. Soc. Journal, 1861, and many others, v. infra ; Porter, Progress of the Nation, 1851, esp. p. 583). The objections to (i) are that the standard both of living and minimum wages varies immensely from country to country (e.g. China and U.S.A.), and rapidly even in the same country. The grave objection to (ii) is that the proportion of income spent on different commodities changes, and depends to a great extent on the cost of those commodities. Thus & comparison between budgets of agricultural labourers in 1800 and 1890 would be most misleading, whichever budget was taken to be priced at the other period. M. de Foville (Journal de la société de statistique, WAGES, PURCHASING POWER OF 1888, p. 333) discusses a paper by M. GuyotEssai sur l'aisance relative du paysan lorrain, Nancy, 1889. M. Guyot's method at first was to assume that the same proportion of income was always spent on the same commodities, giving impossible figures. M. de Foville applies method (ii) with better results (v. infra). The word "aisance" used by Guyot (loc. cit.) represents well the quantity we wish to measure. (iii) The best method theoretically for measuring "aisance relative" appears to be as follows: calculate the quantity by method (ii) twice, taking first a budget typical of the earlier, then of the later year, valuing them at the prices of both years and obtaining two ratios. The average (possibly the geometric rather than the arithmetic) of these ratios measures the relative "aisance." ... Let a, a,... an units of n commodities be bought at prices P1, P2, Pa at one date, and by, ba... b units at prices 91, 92, ... In at another, where any of the a's or b's may be zero. "aisance relative" by method two is By the method suggested it is √(x). Σας Στα Then the Zap Zbp. or Σbq Σαπ 'Zap Zbp' + or Σας 2bq [For materials for making comparisons of real wages, or for results of such comparisons, see all books mentioned under WORKMEN'S BUDGETS; -Leroy - Beaulieu, Répartition des richesses, ch. xvi.; and Traité théorique et pratique d'économie politique, ii. p. 302 seq.-Booth, Life and Labour, i. 138. - Brassey, Foreign Work and English Wages, p. 116.-Giffen, Journal of Royal Stat. Soc., 1888. Higgs, Journal of Royal Stat. Soc., 1893.-Kebbel, The Agricultural Labourer. Rogers, Thorold, Work and Wages (passim). Sauerbeck, in Journal of Royal Stat. Society (passim).-Schoenhof, the Economy of High Wages, p. 161 seq.-Wright, Carroll D., Industrial Evolution of the United States, 1895.-Young, A., Northern Tour; Enquiry into Progressive Value of Money in England; Travels in France. Reports of American Labour Bureaux. Comparative (numbers refer to years)-Cal., 1883-84; Ill., 1884; Mass., 1872, '74, 1884-85; Mich., 1893; N. J., 1885; Wisc., 1884. Local-Col., 188788; Md., 1884-5, '90-1; Mass., 1879, '82; Mich., 1886; N. J., 1882, 1886; Ohio, 1887; Pa., 187980; Wisc., 1883. See also Ill., 1879-80; Me. 1889; Minn., 1889-90; Ohio, 1879-80, 85, '86; R. I., 1887-88, and Index published by Washington Central Bureau in 1893.-Foreign Office Misc. Series, 1892, No. 258.] A. L. B. In com WAGES, PURCHASING POWER of. paring records of wages paid in various occupa VOL. III 641 tions in the past, especially in the distant past, all sense of the proportion between the degree of well-being procured by the wages of labour at different epochs is lost, if the variations in the prices of the commodities entering into the labourer's daily consumption are not brought into the comparison. But the modes of expenditure of wages change considerably from period to period, and are by no means similar for the majority of individuals in any given class of labourers at any one time. The variations in the general purchasing power of money cannot be appropriately applied to determine the variations in the purchasing power of money wages whose varying amounts are known. Satisfactory records of prices are, from the nature of the case, records of wholesale prices, while the labourer's expenditure is a retail expenditure. Only in so far as we can assume that the variations of wholesale and of retail prices are the same in direction and similar in amount, can we regard with satisfaction any judgment on the course of the purchasing power of wages based on comparisons of wholesale prices. We cannot, therefore, pretend to any precision in the measurement of changes in the purchasing power of wages. Retail prices vary in very arbitrary fashion, and no two families will purchase the same commodities even if their incomes be the same. Even taken in large groups, no great degree of regularity in the apportionment of expenditure under different heads manifests itself in WORKMEN'S BUDGETS (q.v.). Recognising that it is better to know part of the facts, than to ignore them entirely on the ground that a degree of knowledge which is satisfactory is not to be attained, estimates have been framed to indicate the changes in real wages which are bound up in recorded changes of nominal wages. So long ance. as we recognise the limits of the applicability of the conclusions, it will be a gain to have partial knowledge; were we to ignore the fact that the limits exist and are rather narrow, such partial knowledge would perhaps be worse than ignorIn the articles PRICES, HISTORY OF, and WAGES AND PRICES OF COMMODITIES, a certain amount of material is presented which permits the variations of prices of leading commodities to be compared with those of wages. So far as England is concerned, we proceed to make some more detailed comparisons. The investigations of Thorold ROGERS supply us with the most abundant material, and the modes of comparison adopted by Rogers may be abbreviated for the purpose of summary view of the results. The amount of food necessary for the support of a family of four persons for a year is, in some of Rogers' comparisons, given at 3 quarters of wheat, 3 quarters of malt, and 2 of oatmeal (cp. Six Centuries of Work and Wages, ch. xiv.), while in others a provision of 4 quarters of wheat, 2 quarters of malt, and 800 lbs. of 2 T 642 WAGES, PURCHASING POWER OF meat (cp. History of Agriculture and Prices, vol. i. ch. xxix.) is considered suitable for purposes of estimating the relation of wages to necessaries of life. Referring to these as "grain diet" and "meat diet" respectively, we obtain the following comparative table :— Cost of grain diet interval, while prices were increased to two and a half times their old level or more. The purchasing power of wages, therefore, fell about 20 per cent, and the fall took place in the period 1767-89, but little further loss of wages relative to prices coming later according to 1261-1350 1351-1400 1401-1540 1541-1582 1583-1642 1643-1702 8. d. 135 6 8. d. 285 8 166 9 327 7 235 0 292 9 Yearly wages of labourer Number of weeks' labour 176 3 227 2 s. d. 360 0 409 8 480 9 300 7 (a) Carpenter (b) Labourer. Note.-In calculating the cost of malt, the prices for the first quality have been taken. Rogers takes second quality, but his tables do not give continuous records for second quality from which to form the above averages. For meat, in the first three periods the cost is based on Rogers' estimates, the prices being quoted for whole animals. In the last three periods the price per 14 lbs. is taken as basis. As in the article on PRICES, HISTORY OF, the wages for a labourer before 1400 are those of a thatcher, which are somewhat higher than those of common agricultural labour, the wages of which are quoted after 1400. Hence the relative change in the labourer's position is not truly shown, the actual position being less favourable in the first two periods than is here represented. Fractions of pence and fractions of weeks have been ignored in the table. The yearly wages have been calculated at the rate of 47 weeks in the year at the daily or weekly rates given in the article PRICES, HISTORY OF. The fact is clear that at some periods the amount available for clothing, etc., and other purposes was adequate, while at others the provision was necessarily more stinted than that which has formed the basis of these calculations. To carry on the comparison, we may take advantage of the results stated by Rogers so far as concerns the relative position in the time of Arthur YOUNG and at various periods during preceding centuries. Compared with the fourth of the above periods for example, the case is stated (Rogers, History of Agriculture and Prices, vol. iv. p. 758) thus: the necessaries of life had become three to four times as dear, while the wages of labour were not much more than double. The purchasing power of wages had therefore decreased from 33 to 50 per cent. The course of the relation of wages to prices during the 18th century is shown in the table quoted from Arthur Young in the article to which reference has already been made several times (see PRICES, HISTORY OF). It there appears that agricultural wages during the 18th century did not advance as rapidly as prices. Comparing the first twothirds of the 18th century with the first decade of the 19th, wages were doubled in the Young's records. The first half of the 18th century was a time when the purchasing power of wages rose to a higher level than that of the preceding century. By the beginning of the 19th century, the movement had been so unfavourable to the labourer that his command over commodities was probably not greater than in the worst period (1583-1642) of those shown in the preceding table. It may be added that the necessaries of life in the matter of clothing and shelter were much dearer, and needed certainly as large a share of the wages to be devoted to them as in the 16th or 17th centuries, probably more. The table in WAGES AND PRICES OF COMMODITIES shows the amounts of wages and the cost of a working man's board at short intervals from 1720 till recent times, and affords more than as much information on the relation of wages to the cost of living for these later times as the tables of this article afford for earlier times. Mr. Bowley, in a paper read before the Royal Statistical Society in 1895, adopted an ingenious method of making comparisons of wage-levels at different periods. Comparing these with the movements of prices shown by Mr. Sauerbeck's Index Number, Mr. Bowley points out the resultant changes in average real wages, that is, in the purchasing power of average wages, in the following scheme : WAGES, STANDARD RATE OF-WAGES STATISTICS 643 of real wages. The facts adduced will, how- | Royal Commission on Labour, sitting as a whole, A. W. F. WAGES, STANDARD RATE OF. See STANDARD RATE OF WAGES. T. G. S. The WAGES, STATISTICS OF (IN THE UNITED STATES OF AMERICA). The statistics of wages for the United States labour under peculiar difficulties. Any historical account of wages encounters the enormous change that has come over a country developing from an agricultural colony into a great industrial state. United States has participated with Europe in the development from hand-labour to the factory system, only the change has been in some respects even more abrupt, radical, and complete. Comparison of wages for successive periods is, therefore, difficult, because occupations have changed often in name and almost always in character. Such comparisons must be limited to a few common occupations. They cannot be carried very far back because of the lack of data, and because in early agricultural communities employments are scarcely differentiated. Particularly in the United States is this true, where originally every man owned his farm, and agricultural day labourers as a class were unknown. A second difficulty is that even at the present day there are very striking differences between different sections of the country, 80 that any statistics of wages applicable to the whole country is almost, if not altogether impracticable. WAGES STATISTICS. From figures collected and tested by the labour department of the board of trade, it appears that the normal rates of wages, plus the estimated value of allowances, such as free homes, etc., paid to the workers in thirty-eight selected occupations during 1886, were 24s. 7d. per week, or £64 per annum, for men; 12s. 8d. per week or £32: 10s. per annum, for women; 9s. 2d. per week, or £23: 8s. per annum, in the case of lads and boys; and 78. per week, or £18: 4s. per annum in the case of girls. Of the men employed in these occupations, 0.2 per cent were receiving less than 10s. per week; 2.5 per cent, from 10s. to 15s.; 20.9 per cent, from 15s. to 20s.; 354 per cent, from 20s. to 25s.; 23.6 per cent, from 25s. to 30s.; 11.2 per cent, from 30s. to 35s.; 4.4 per cent, from 35s. to 40s. ; and 1.8 per cent, above 40s. That is to say, nearly 60 per cent were receiving from 20s. to 30s. per week, or about the average rate; and of the remainder, about 25 per cent were receiving less than 20s. ; and 17 per cent, more than 30s. If to these thirty-eight occupations there be added the other important industries, as railways, building trades, etc., which it was not found possible to treat in the same way, the average annual earnings of adult males may, according to Sir R. GIFFEN, be approximately estimated at a little over £60; of women at £40; of lads and boys at £23: 8s.; and of girls at £23. According to the census returns for 1881, the total adult male working population, excluding the residuum, chiefly to be found in the large towns, of persons whose employ-presenting labour of a low degree of efficiency. ment is permanently irregular, was, in round numbers, 7,330,000; of adult female workers there were 2,900,000; of lads and boys, 1,700,000; and of girls, 1,260,000; making a total working population of 13,190,000. The aggregate earnings of the men may, therefore, be placed at £440,000,000; of the women, at £118,000,000; of the lads and boys, at £46,000,000; and of the girls, at £29,000,000; making a total annual income for the manual labourers of £633,000,000. The eastern states are industrial, with large cities and factory towns, and the population has many of the characteristics of the English factory and mining districts. Owing to immigration, there are, however, many contrasting bodies of working men, from the highly skilled American artisan down to the French Canadian factory hand, the Italian day labourer and the Russian-Hebrew sweated tailor and garment-maker. In the north-central states of the Mississippi valley we have a community still largely agricultural, with farmers owning the land-peasant proprietors on a large scale. In the extreme west we have some of the characteristics of newly-settled countries, i.e. scarcity of certain kinds of labour and a high range of wages. Finally, in the south we have the great mass of negroes, formerly slaves, unskilled, ignorant, and re An average wage even in the same employment for all these different sections is an impossibility. At least it means nothing. For historical and comparative purposes it is necessary to confine ourselves to one section. Systematic attempts to collect wage statistics are of very recent date in the United States, in fact scarcely twenty years old, and are confined for the most part to the eastern states. History of Wages.-There are scarcely any records of wages in the 18th century. The [See Minutes of Evidence taken before the Massachusetts bureau of labour statistics has |