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told that the only prerequisite is that he deserve more. Each laborer is said to deserve just about what he gets.

This popular view suffers from the loose assumptions found in most popular views. If men working in the same shop or the same trade are involved, it is often true that the men who have shown superior ability gain more pay than their inferiors. But this comparison is strictly limited to different men in the same group. Now, relatively to the poorest men in the group, the best men may receive superior pay. But relatively to the pay in another trade, all laborers in the first trade may be underpaid. And relatively to the shares of profit or interest, both trades may be receiving less than they should.

In brief, the proposal to pay every man according to his ability means nothing if it is applied to any field larger than the single group of workers. Who can measure comparative abilities in diverse fields of work? A brilliant preacher may receive less pay per hour than a bricklayer. A veteran teacher may receive less reward than a plumber. An artist may receive less remuneration than a common laborer. A coal miner may receive less pay than a printer. Who shall say in any of these cases that one man has earned more than the other? Who can find any common measuring rod by which to measure the relative abilities of a man who preaches a sermon and a man who builds a house ? Shall we say that the laborer in an automobile factory is more efficient than the postal clerk? In all these cases, ability, efficiency, worth, are futile terms. They are meaningless. The worker in each grade receives a wage in proportion to the marginal productivity of the worker. His scarcity, and the marginal demand for his product, will shape his wage. ability in some abstract sense cannot be used as a unit of calculation of the wage to which he is entitled.

The reward of ability within a given field is the only ability wage which can be clearly recognized. The best workers are in greatest demand in their trade. The best teachers are promoted to the best jobs in education. The best laborers become foremen. The best foremen become superintendents. But when we compare the return of the best teachers and the best plumbers, of the best machinists and the best nurses, we can find no common measure of ability. At that point the ability explanation of wages is empty and useless.

Education.-Education has often been looked upon as a source of increased wages. The worker is urged to acquire education, to the end that he may receive higher pay. The assumption is that education will be a direct cause of greater income, that a trained mind will command more pay than an untrained mind, that knowledge will be worth money to its possessor.

This assumption is sound, if it is applied strictly to two workmen of the same kind. The clerk who goes to night school, reads good books, and studies the intricacies of his work, will tend to receive more pay than the ignorant and indifferent clerk.

But the educated clerk may receive less than the uneducated

plasterer. The teacher who has taken graduate work in college may receive less than the plumber who has never been in high school. As between different kinds of labor, education is no measure of different degrees of remuneration.

For the mass of labor, education is a source of gain for the reason that educated labor is capable of turning out a greater national product of goods and services. The greater the output, the greater the possibility of added consumption. If labor scarcity is maintained, this possibility may become a reality. Wages may tangibly increase. But if labor supply is excessive, the educated mass will raise their physical product without raising their real income proportionately.

In comparing the different effects of education upon wages in individual trades, distinction must be drawn between education as such, and the scarcity of educated workmen. Educated labor does not receive relatively high wages because it is educated, but because there is a scarcity of the educated workmen. The effort and persistence necessary to obtain education weeds out the majority early in the race. Only the few survive the rigors of continued application, examinations and tests. The obstacles to education are so severe that a scarcity of educated workers prevails. Now, it is this scarcity factor which accounts for the inequalities of the wage return on education in different occupations. The teachers in secondary schools receive very moderate pay in spite of their education, the reason being that an oversupply of teachers is usually available. If labor is oversupplied, no matter how much education it may have, its wage will be low. If labor is scarce, no matter how . little education it may have, its wage will be high. Education is remunerative only when it is used as a means of entrance to those pursuits where ability is very scarce.

Numerous corporations provide educational facilities for their employees. “Americanization” subjects and English have been common objects of study, where alien labor has been largely employed. Company libraries are frequently maintained. Technical instruction is often provided, with a view to affording ambitious and intelligent employees an opportunity to advance themselves as rapidly as possible. Such instruction is one branch of employee welfare work, but a branch which is largely free of the objections commonly raised to welfare activities.

Hazards and Unattractiveness.-From the standpoint of abstract justice, it would seem that those who do the most unattractive or most dangerous work should receive the highest pay. But such an assumption would not square with the economic facts. Laborers who are unqualified to do anything else can do the most unattractive forms of common labor. The field swarms with such laborers. As long as the field is oversupplied, it will be under-paid, no matter how unattractive the work is. It has been found that many of the workers who toil under conditions which are hazardous to life and limb, which are unsanitary or even poisonous, which shorten the length of life from ten to twenty years, nevertheless receive a pittance as their reward. The employer can step

out to the factory gate, and find a long line of unhappy applicants hoping that they may be taken onto the pay roll. He, therefore, cuts down the scale of pay to the minimum of bare physical subsistence.

The movement to recognize the human element in labor has led many industrial interests to be more considerate of laborers in dangerous and unpleasant lines of work. Personnel managers, in classifying work, have taken into account as one element in classification the hazardous and unattractive features of it. Arbitration boards, labor unions, regulating commissions, have endeavored to make some allowance for these aspects of work. This progress in recognizing the human factor is an important social gain.

Conclusion.—The wide variety of wage influences is apparent. Although we may say that marginal productivity determines wages, we still have to find the forces which determine marginal productivity. This problem is the vital problem in wage study. It leads into the many and varied fields which have been briefly outlined: standards of living, standardization, ability, custom, incentives, education, scarcity, hazards, unattractiveness, etc. No one fixed, absolute principle is adequate to explain wages. An adequate theory must allow for a multiplicity of factors. The influence of each factor will vary in every new circumstance.

A wage theory should be realistic and should fit the facts of economic life. The most realistic method of wage settlement is not based on a conception of some one wage law into which wage facts of all sorts and varieties must be made to fit, as into a strait-jacket. The truly realistic method is based on a conception of the full list of wage forces, playing widely varying parts from instance to instance, combining in new and original forms, requiring in each individual case an estimate of its peculiar and unique grouping of all the forces in operation, and taking on new and differing degrees of influence in national and international wage levels at various historical stages. At the same time, this pluralistic or group theory of wages has the distinct advantage of being genuinely serviceable because it keeps close to the evolutionary and dynamic facts of economic life.

The basis of this theory of wages in actual economic conditions has been expressed with 'reference to railway wages by the Railroad Labor Board in a decision in 1920 on the wage rates of approximately 2,000,000 railway employees: “The board has been unable to find any formula which applied to the facts would work out just and reasonable wages for the many thousands of positions involved in this dispute. The determination of such wages is necessarily a matter of estimate and judgment in view of all the conditions, a matter on which individuals will differ widely as their information or lack of it, their interest, situation or bias may influence them.” The Transportation Act passed by Congress in 1920 laid down as a guide in determining what wages would be just and reasonable" the following major considerations :


(1) The scale of wages paid for similar kinds of work in other industries;

(2) The relation between wages and the cost of living;
(3) The hazards of the employment;
(4) The training and skill required;
(5) The degree of responsibility;
(6) The character and regularity of the employment; and

(7) Inequalities of increases in wages or of treatment, the result of previous wage orders or adjustments.

Marginal productivity determines wages, but these pluralistic forces determine marginal productivity.


ANDREWS, J. B., and COMMONS, J. R., Principles of Labor Legislation.
BLOOMFIELD, DANIEL, Financial Incentives.
BOWLEY, A. L., The Change in the Distribution of National Income in the

United Kingdom, 1880-1913.

Prices and Wages in the United Kingdom, 1914-1920. DOUGLAS, P. H., Wages and the Family.

Real Wages, Proceedings of the Academy of Political Science, Volume

XI, p. 95 f. Douglas, P. H., and LAMBERTON, F., Real Wages, American Economic Review,

Volume XI, pp. 404-426.
FEIS, HERBERT, Principles of Wage Settlement.
HANSEN, A. H., Real Wages, American Economic Review, Volume XV, p. 33 ff.
LUBIN, I., Miners' Wages and the Cost of Coal.

OGBURN, W. F., American Economic Review, Supplement, 1923, p. 119 ff.



The Effort to Control Wages. For the most part, labor is not satisfied with the income received. The conviction is widespread that the income ought to be larger, and can be made larger. On all sides appear schemes for control of the labor income. Labor is desirous of bringing the wage factor under deliberate and purposeful control.

The group devices for this purpose are collective bargaining and wage legislation. These have been discussed earlier. But the individual device is silent and willful restriction of output in order to make work last longer. Workmen soldier on the job, go slow, and prolong the job to the utmost in order to stay on the payroll as long as possible. The many excuses for this practice are commonly referred to under the “make work” theory of labor. When the mass of laborers are individually following the make work policy, the burden of sabotage on production is very great. The efficiency of labor is undermined, labor costs per unit of product mount upward, and acute problems of industrial management arise. Management seeks to speed up" the worker, whereas the worker slacks his effort so as “not to work himself out of a job.”

Employers are accustomed to vent upon this labor policy their bitterest denunciation. They refer to it as the make work fallacy. They scoff at its pretension to benefit labor. They fight it as a menace and a scourge in production.

The extent to which the theory is a fallacy depends upon whether we take the long or the short view. In the long view, restriction of work is an unmitigated curse to labor. It is a restriction of the total fund of commodities of the nation. Labor can not acquire more commodities than are actually produced. If labor cuts down the amount produced, automatically it cuts down the amount consumed. In the long run,

. maximum national production is the hope of the worker. The employer, in denouncing the make work fallacy, is taking the long run view. And in this view, the employer is right. But that is not by any means the whole story.

In the short view, labor is partly right. Two things may happen if labor speeds up. First, labor may be dropped from the pay roll since all the work is done, all the orders are filled, and there is nothing else to do. The immediate reward for speeding up may be unemployment. The greater the efficiency of the worker, the sooner his work is done. Instead of getting increased pay for his pains, he gets no pay at all while he is unemployed. Now, the laborer lives in the present, not in


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