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    "source_title": "Encyclopaedia Britannica (1926)",
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    "title": "WAGES",
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    "verified_text": "in the following section, which should be read in connection with the articles on cost of livine and prices, the movements of wages in the period 1914-26 are con- sidered. during the 10 years preceding 1914 average money wages had risen about 10%, a rise which was completely neutral- ised by the synchronous rise of prices, and in 1914 there were agitations for increases of wages which were discontinued at the outbreak of war. (see also insurance, social.) i. in great britain rates of wages and earnings in the movement of wages it is specially important to distinguish between rates of wages and earnings. rates of wages are time rates, sums payable for work in a definite time (an hour, a week consisting of a recognised number of hours or, rarely, a longer period), or piece-rates (sums payable for the performance of a definite task, or as additions to or in combination with time-rates, when the rate depends both on the quantity produced and the time taken in producing it). earnings are the sums actually received by anemployee, generally computed for a week or a year; the term is used specifically when the amount received on piece rates is in question, and is also used to include payments for overtime in the case of time workers. time rates are generally stated for the normal week, or, if the rate is an hourly one, as in the building trades, both for the hour and for the normal week; to get a comparable statement for piece- rates it is necessary to compute the average earnings of a number of men who worked normal hours. in modern times a statement of time rates generally relates to rates agreed to by associations of employers and employces, often as the result of arbitration; these are frequently minimum rates, and the relation between minimum rates and the average of those actually paid to a group of workpeople can only be ascertained by special inquiries such as those undertaken by the board of trade in 1886 and 1906. wi ies johannes diderik van der (1837-1923), waals—wages the assumption has to be made that between such inquiries average rates have kept the same proportion to minimum rates, which is only true over a short period and in the absence of dis- turbing causes. for piece payments the assumption that earnings move by the same percentage as the rates can never yield more than an approximation to the facts, and during the war such an assump- tion would be completely invalid even if reference was only made to earnings in a normal week, since there were very im- portant changes in facilities for production, in the effort put into the work and in the nature of the work. in the absence of any general information about earnings, statistics in the war period must be confined to statements of time and picce-rates, which do not give a true picture of the economic position of the working class in that time; in 1920, however, industry was more nearly normal and overtime was relatively uncommon, so that a comparison of rates between 1914 and 1920 or more recently is not altogether misleading. in making such a comparison the general reduction of hours in 1918 and 1919 must be borne in mind; usually at the dates of reduction piece-rates and hourly rates were raised so as to give approximately the same earnings for the reduced as for the longer week, and weckly rates were the same before and after the reduction, but in some industries an increase for the week was arranged at the same time. movement of \\wages.—from early in rg2t till the end of 1925 unemployment was serious, especially in the engineering and shipbuilding industries, and after the middle of 1924 in coal- mining, and therefore average earnings of all workpeople had increased less than is shown by the index numbers given below. the movement of wages is shown in the following table, where it is illustrated by the changes in eleven important industrial groups. up till 1919 the general average given is the simple average of the lines above; afterwards it is that stated from time to time in the ministry of labour gazetie, where it is roughly computed on the basis of all changes known to the ministry. it is important to realise that the table deals only with changes in rates, except in the case of miners, where the average carnings per shift of all employed is the basis, and these rates refer to whatever was the recognised normal week at the time of record. rates rose very gradually in the first two years of the war, then more rapidly to the date of the armistice. after a slight pause there was a great increase during the boom period of 1g19~20; the maximum was attained at the end of 1920, after the general recession of prices had begun, and the subsequent fall only be- came marked at the date of the coal strike in april 1921. re- ductions were very rapid for about 18 months, till at the end of 1922 stability was attained at about 70% above the pre-war estimate of movements of time-rates or piece-earnings (for the normal week at each date) in the united kingdom, 1914 to 1926 (expressed as percentages of rates in 1914 for each industry.) 1914 | i915 | 1916 | 1917 july | july | july | july bric klayers | . 100 103 108 12 bricklayers’ labourers 100 | 103 1l3 133 printers (compositors) 100 | 100 105 120 railwaymen 100 | tio | 120 | i55 dock labourers 100 | ioi 130 | i50 cotton operatives : i0o | 105 110 110 woollen and worsted operatives ; 100 | 115 | 126 | 144 engineering artisans : 100 | iio iii 134 engineering labourers 100 si aa 154 coalmining 100 | 113 129 136 agriculture, england and wales . 100 | i¥2 es general average (labour gazette after oe a 135 i9i9) ; : : : . : oats aan cost of living 100 | 125 147 180 1918 | 1919 | 1920 | 1921 | 1922 | 1923 | 1924 | 192 1926 july | july | july | july | july uly | july | july {| jan. 160 188 228 222 168 161 165 170 170 180 225 284 265 185 7 183 iqi ig! 157 196 246 265 237 em ek 213 213 213 195 22 280 257 213 203 203 203 203 193 209 266 265 200 167 200 200 200 157 202 259 210 169 160 160 160 160 164 196 239 243 183 180 180 180 180 173 199 231 229 188 146 146 146 146 213 255 309 309 249 17 178 17 17 187 224 260 : 147 152 170 164 ie 189' | 210 260! | 260 175 156 156 174 174 250 245 185 165 175 210 to to to to 170 175 175 255 255 190 170 205 | 200-210] 252 219 184 169 170 173 175 index number (labour gazette). 1 august. * strike. wages rates; the movements during the three years from 1923 to the end of 1925 were almost insignificant. real wages.—comparison with the cost of living index sug- gests at first sight that real wages (7.e., wages measured by their purchasing power) fell in the years 1914-7 and rose from 10917 to 1920; actually it is probable that the effective rise in the cost of living was less than measured by the index number till perhaps 1921, and that the reduction of unemployment and prevalence of overtime maintained real earnings from soon after the begin- ning of the war till the armistice, and that they were substantial- ly increased during the subsequent boom. for a short period during and after the winter of 1920-1 wages maintained their advantage, but from the middle of 1922 onwards the wage index is practically identical with that of the cost of living. (see cost of living: diagram.) the general gain during 10 years was a reduction of hours of work by about 10%, with no change in the real wages received. the average of the particular industries included in the table, however, shows a gain of 5% of weekly wage rates over prices. it is evident that there are important divergences from the aver- age. these are due to two causes: the upward movement of unskilled relative to skilled wages, and the failure to maintain high rates in industries specially dependent on foreign markets. the bonuses granted during the war (especially in the earlier years) were generally in the form of flat increases to all operatives to meet the increased cost of food, which gave a greater relative increase to the unskilled man. thus in 1914 the hourly wage of a bricklayer and his labourer was 113d. and 8d. respectively, but in 1920 was 28d. and 25d., so that the bricklayer’s hourly wage had increased 143% and the labourer’s 212°; further, whereas before the war (and indeed during practically the whole of the roth century) the labourer’s wage had been two-thirds of the artisan’s, it was for a short period in 1920 89/100 of it; subsequent reductions were greater in the labourer’s wage, and at 213d. and 163d. in 1925 respectively the proportion four to three had been nearly reached. meanwhile, summer weekly working hours were reduced from §0 in 1914 to 44 in 1920. this example is illuminating, because the nature of the work done has not changed. a similar contrast, originating in the same way, is found between the increases in the engineering artisan’s and labourer’s rate. unskilled labour.—rates for other unskilled labour, if naturally sheltered from foreign competition, such as work for local authorities, at docks and on railways, increased to about the same extent as those of builders’ labourers. part of the optimistic programme after the armistice was to give a permanent lift to wages in industries which were regarded as underpaid be- fore the war; notably to railwaymen, agricultural labourers and women in the less organised trades; and generally there was an attempt to determine wages according to needs as well as ac- cording to the market value of the work. railway wages were fixed at the beginning of 1920 at a level well above that com- mensurate with the cost of living, and it was arranged that they should rise and fall in proportion to that cost on the basis of the higher standard established. in agriculture minimum wages were established in the summer of 1918, and raised step by step, till in aug. 1920 they averaged at least 160% above the pre-war level. subsequently, in face of the great fall in the world’s prices of food, the legal minimum was abolished in sept. 1921, and wages in 1923 and 1924 fell to a low level; in the summer of 1924 the agricultural wages act re-established minima with a county organisation and wages rose early in 1925. women’s wages in 1926 appeared to be at about double the rates of 1914. engineering, textiles and coal—the most conspicuous example of a fall in real wages is that of engineering artisans, whose weekly time-rates show a net rise from about 30s. in 1914 to 56s. or 57s. in 1923; the standard rates in all towns have been increased by 7s. or 8s. and by a bonus, reduced to ros. in 1923, amounts which apply to labourers and machine-men as well as to fully skilled men. piece-workers have done better. as a con- trast to this the skilled men in the “sheltered ” trade of printing have more than doubled their time-rates. 975 in the woollen industries the wage changes have been very complex, and it is doubtful what the exact average effect has been. cotton wages afford an example of the changes in an industry where piece-rates are general. in july 1914 the piece-rates were 5% above the standard list; by may 1920 rates were 215% above the standard, 30 points of the rise being awarded to compensate the reduction of hours from 553 to 48 weekly; by march 1923 they had fallen to 95 above standard. if the output per hour before and after the reduction of hours had been exactly the same, the earnings at the maximum date would have been ans by 100= 259° of those in r914, and from march 1923 ios) 6552 105.040 i a. onwards oe ea 160%; the numbers in the table are 2 calculated on this basis. in fact, the output per hour has proba- bly increased and full time earnings increased by about 80%, but earnings have been very seriously affected by short time. the history of coal wages is too complicated for treatment here, and must be studied in the various royal commissions that have recommended regulations and rates. earnings per shift, as officially computed, have increased more than nominal piece-rates, owing to the existence of a minimum wage and other circumstances; but their change differs greatly from district to district, so that in 1925 in some districts the increase over 1914 in money earnings was somewhat greater than the rise in prices, and in others much less than that rise. (sce coal.) standardisation of rates.—alongside the wage changes now discussed there has been a movement towards standardisation of rates throughout great britain, in which wages in the worse paid districts have been raised the most—the effect of which is not completely shown in the table—and towards wage bargaining on a national basis in which the relative standards are nominally preserved; but with each flat change (e.g., an increase of 3s. to compositors in all districts) the relative rates are disturbed. further, there is a continual shifting of the relative numbers en- gaged in the various occupations and industries, and over the pertod a definite change in the proportions of men to women, boys and girls. the result of these movements, combined with alterations in picce-rate systems, is to make an accurate measurement of the change in average full time earnings of all workers impossible, at least until an adequate wage census has been taken. brptrograpiy.—a. l. bowley, wages and prices in the united kingdom, 1914 to 1920 (1921); see also the ministry of labour gazette (london, monthly). (a, l. bo.) : ii. in the united states the beginning of the second decade of this century found the wages of working people lower, both in dollars and cents and in purchasing power, than they arein 1926. the wages of unorgan- ised and unskilled workers were considerably lower than the wages of unionised and skilled workers and the wages of women workers were particularly low. a study made in 1914 of women’s wages in the united states concluded that 75% of the female wage-earners received less than $8 weekly and 50% received less than $6 and that these wages were further reduced some 20% by lost time and unem- ployment. the new york state factory investigating commit- tee examined the payrolls of over 2,000 stores and factories dur- ing 1913 and ror4 and found that out of 57,000 women and girls, 60% earned less than $8 a week. of 14,000 married men, 7,000 earned less than $15 a week. the causes of these low wages were numerous: there were no strong labour organisations among this group of wage-earners; unmarried women wage-earners felt that their work was only temporary and married women usually had other sources of income; employers failed to recognise a rela- tion between wages and productivity; the constant stream of immigrants furnished an abundant supply of labour willing to work for low wages and made unionisation of them difficult be- cause of their divergent languages and customs. during the world war wage rates and money earnings rose appreciably, but owing to the great rise in prices the real earnings 976 expressed in purchasing power did not materially gain and some studies show that it actually declined. during the period follow- ing the war and especially after 1920 a material improvement seems to have taken place in real earnings. during this post-war period the cost of living has been declining, while, in some indus- tries, wages have advanced and in most industries they have not shown any marked decrease from their war-time level. mr. ethelbert stewart, u.s. commissioner of labor statis- tics has recently prepared some figures which indicate this course of real earnings. table i is adapted from his study. table 1. union wage rates and cost of living iqi0-25 {1913 = 100) relative purchas- index number ing power of wages index number year of union rates of cost of as measured in cost of wages per hr. living of living 1910 94°4 93:0 ioi-5 iqit 96-0 92:0 104-3 i9i2 97°6 97°6 100-0 i9i3 100-0 100:0 100-0 iqt4 ioi -9 103-0 98-9 1915 102°8 105-1 97°8 1916 107°2 118°3 90:6 i9i7 114-1 142-4 80-1 1918 132'7 174'4 76-1 i9i9q 154°5 188°3 82-0 1920 199°0 208-5 95:4 1921 205°3 177-3 115-8 1922 193°1 167-3 115-4 1923 210-6 171-0 123:2 1924 228-1 170-7 133°6 1925 2379 173'5 137-1 it will be noted that this table is based on hourly rates of wages in unionised industries. since it is constructed on hourly rates it does not take unemployment into account. it indicates what workers would receive if their employment were constant. as yet no study of american wages has been made which takes into account unemployment. in1918a canvass of some 12,000 families living in 92 localities in the united states was made and a typical wage-earner’s family budget was drawn up. the index number of cost of living in table i shows the fluctuations in price of commodities included in this budget. in order to have some idea of the trend of real earnings in un- organised industries, mr. stewart prepared similar figures for three unorganised or only partly organised industries. table ii. indicates the trend in these industries. table ij. real earnings in three unorganised industries | 1910-25 (1913 =100) relative purchasing power of wages measured in cost of living ae boot and shoe woollen cotton factories mills mills i9io 98-9 96:8 94°6 iqii 102-2 98-9 97°8 i9i2 95°3 104°5 ioi -4 1913 i00:0 100-0 100-0 1914 98-1 100-0 i00-0 1915 im a: £ 1916 91°3 107-4 ioi-4 1917 ie oa is i918 80-3 110°7 102°6 i9iq en m4 oe 1920 ili-3 170°3 155°4 ig2i as - fs 1922 124°3 160-2 132°7 1923. ad i os | 1924. 125-4 176-3 147-0 from these figures it appears that non-union wages have gained more proportionately than have union rates, but it must be re- membered that they started from a considerably lower level, e.g., the average union wage rate in 1913 was 45-9c. per hour and $1.09 in 1925; the average wage rate in cotton mills in 1913 was wages 14:8c. per hour and 37-2c. in 1924; the average rate in woollen mills in 1913 was 17°7c. and §3-3¢. in 1924; the average wage rate in the boot and shoe industry was 24c. in 1913 and 51-6c. in 1924. it should also be noted that in the unionised occupa- tions there are practically no women, while in these three indus- tries both women and men are employed. mr. stewart’s calculations are based upon wage rates. an- other method of approaching this problem of the trend of pur- chasing power of wages is to study annual earnings of employed workers. this has been done recently by prof. paul h. douglas of the university of chicago. prof. douglas has calculated the average yearly earnings of employed workers in several industries and deflated these figures by a cost of living index so as to get at the purchasing power of money wages. his study, like that of mr. stewart, docs not take unemployment into account. table iil.summarises his findings: — table hi. afoney value and purchasing power of average annual earnings of employed workers in manufacturing and trans portation (1914 = 100) relative purchasing average annual power of average annual index of earnings of em- eens , lrg ; ee : gs as mcasured year reune ployed workers in cost of living manuf’g | transp. manuf'g | transp. 1910 92-0 $ 558 $ 678 104 93 iort 94°9 537 702 97 94 ioi2 95-6 550 714 99 95 1913 98°5 57 752 10! 97 i9i4 100 580 737 100 100 1915 98 568 806 100 104 1916 107 651 858 105 102 iqi7 129 774 972 104 96 1918 157 980 1379 108 1t2 1919 179 1158 1492 ii! 106 1920 205 1358 1785 ii4 ili 1921 176 1180 1619 116 117 1922 166 1149 1567 120 120 192 169 1254 1575 128 119 192 169 _ 1256 1572 128 118 the wages of transportation workers have been higher than the wages of manufacturing workers throughout the entire period. but the lower paid manufacturing workers have made greater proportional gains than have the transportation workers. the transportation workers are still better off, but their differential over the manufacturing group is smaller than before the war. this is the same devclopment which was observed above in the comparison of union and non-union rates. neither the manufac- turing nor the transportation workers gained in purchasing power during the war. the first gain came during the closing year of the war and considerable improvement has occurred during the post-war years. a number of factors have probably contributed to this increase in purchasing power of wages. there has been a great increase in the total annual production of the country. not only has the total production of the country increased, but the amount per wage-earner has increased. technological improvements have been made, processes perfected and efficiency increased. in 1909 the index of output per wage-earner stood at 140 while in 1923 it had reached 152. this increased product has made the pay- ment of higher money wages possible and has tended to lower the cost of living. in addition to this, there has been a marked de- cline in the value of farm products in recent years and this has made for a lower cost of living. in 1919 the purchasing power of farm products has been calculated at 102. by 1923 it had de- clined to 87. the lower farm products go in value the more of them the worker’s wages will purchase and the greater the real earnings of the worker will be. another major factor which has increased the well-being of the working class is the declinein immigration. theimmigrant has al- ways underbid the american worker, depressed the wage level and been difficult to unionise. this leads one to ask if trade unionism has had anything to do with this recent increase in earnings. wagner—wales the proportional gains have probably been greater in the unor- ganised than in the organised trades and in addition to this the membership and funds of trade unions have declined during the period of the wage increases. but this is not conclusive evidence that trade unionism has been of no value. in the first place, a rise in wages in the unionised industries is bound to increase the wages in non-union industries unless a great surplus of labour prevents it. further, there is a growing practice among employ- ers, in unorganised industries, of paying higher wages in an effort to keep the union out of their industries and we must not over- look, as was explained above, that the non-union wage increases began at a much lower level than union wages. in the second place, the decline of union membership and funds largely repre- sents a partial contraction of the inflated war-time membership. if these developments are taken into consideration, it would seem more accurate to place trade unionism along with the other factors as one of the causes of the recent increase in real earnings. (j. r. co.) wagner, adolf (1835-1917), german economist (sce 28.235), died in berlin nov. 8 1017.",
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