VI. The Gross Inadequacy of the American Wage The American wage is grossly inadequate. Examined from any point of view, it fails to provide a sufficient return to the wageearner who is carrying the burden of a young family. American industry pays to the overwhelming majority of wageearners, a wage of less than $1,000 a year. Even where no allowance is made for unemployment, the wage rates of three-quarters of the men fall below $750 a year. Perhaps three wage-earners in each hundred are paid over $25 per week (a yearly rate of $1,300). Compared with the sums which are met with in the business world, the wage of the workers is small. The wage rates paid by industry, placed side by side with the cost of family health and decency, reveal an appalling situation. In great numbers of cases, the wages paid by industry to its adult. male workers are insufficient to provide for the health and decency of a moderate-sized family. American wages, as a business proposition, are even less adequate than they are for the provision of health and decency. The ordinary principles of sound American business practice are all violated in the financing of the worker's family. There are certain well-recognized principles of social expediency: that industry shall pay a wage that will maintain the efficiency of its workers; that wages must prevent poverty and dependence; and that families must be able to live as self-respecting units in the community. These principles underlie the sane conduct of society. Each of them is violated by the present American wage scale. American wages are inadequate, grossly inadequate, when viewed from any point of vantage afforded by the available social facts. In a small percentage of the cases, and for individual families, this is not true. Speaking generally, however, and in terms of family living, the present American wage scale is pathetically, grotesquely, viciously inadequate. INDUSTRIAL OUTPUT AND SOCIAL EFFICIENCY BY CHARLES ERVIN REITZEL, Instructor in Economics, Wharton School of Finance and Commerce, University of Pennsylvania. Industrial efficiency has been defined as a maximum of output with a minimum of outlay and effort. To this standard the progressive employer has been so fully converted during the last decade that back-sliding into slipshod methods of production need little be feared. Industry has learned well its scientific lesson on reducing costs. Meanwhile, however, with a zeal almost religious, labor has organized and become united so as to bring into its activities stringent demands for better working conditions and higher wages. Herein, then, we see a basis of conflict. The employer in his efforts to obtain, through so-called efficiency, a lower cost per unit of production, must of necessity condemn, and combat vigorously, programs which make for higher returns to employees. In contrast, labor in order to realize its goal, must push upwards its sources of economic welfare-higher wages and steadier work. This "cuttingdown" process on one side opposed to this "pushing-up" process on the other must in the final outcome lead not to efficiency but to inefficiency, not to a maximum of output but to a minimum of output. Conflict results in a curtailing not a creating of product. But more important! The enlightened laborer is beginning to see, and see clearly, that as a member of an economic class it is to his direct advantage to handicap production. Why should he hurry through a job only to find himself jobless? When a group of workers in California a month ago saw that, with the tin binding straps cut, it required twenty times the amount of work to unload shingles than would otherwise have been necessary, behold, by some unknown mysterious power the binding straps were cut. It meant more work and more work was what they wanted. The bricklayers from their unionist standpoint are justified when they agree to lay eight hundred bricks per day in lieu of a possible two thousand. Such regulations are intended to give steady employment. There is this conscious aversion on the part of labor to unemployment in all lines of industry. In the 1912 investigation into the irregularity of employment in the steel industry, the workers objected more strongly to enforced idleness than to any other evil. Quoting from the report: There was no complaint so frequently made or so strongly expressed as that regarding unemployment. There were many points on which the workmen did not agree; many complained of low wages, others felt they were being paid at a fair rate; but in all parts of the country in all occupations practically all the workmen considered questions affecting hours of labor and rates of wages less important than the constant recurring periods of unemployment, and the uncertainty which attended work at all times.1 Such views are to be expected. It is most difficult for a workingman to associate the idea of increased output with the idea of personal benefit; but the connection is close between retarded work and continuous employment. Let us be honest and admit that the worker from his point of view is right. Work first! The amount of output is of secondary consideration. Capital likewise is guilty of the same malefficiency. But again we must see justifications. Why grind out product only to find a lowering of prices? After a certain point has been reached, an in- ́ crease in the volume of output is bound to lessen its unit value. In 1905-6 it will be recalled that the cotton acreage had fallen off 3,900,000 acres as compared with the previous year. This result has been directly attributed to the actions of the Southern Cotton Association and the Farmers Union, who were determined to raise the price to fifteen cents.2 Like curtailments of tobacco, lumber, vegetables and fruit, in fact, in all lines of production are matters of common knowledge and experience. With capitalistic concentration comes a corresponding increase of price advantage through the checking of output. To those interested in social welfare, both this industrial class conflict and this willful limitation of output by both labor and capital, are of vital importance. But of still greater import is the idle capacity becoming more and more tied up on account of such situations. Consider the result. As more and more capital and labor become stagnated the higher must be the costs to the consumer and the worse the spirit of unrest in our social order. Carried to its 1 United States Report-Conditions of Employment in the Iron and Steel Industry, Vol, 111, p. 205. 2 Report of Commissioner of Corporations on Cotton Exchanges, Part V, p. 342. it natural conclusion we see that it must lead to a complete stagnation in our industrial system. As labor becomes further awakened and establishes a consciousness of its own interests, just so must come defying demands which will hinder and curtail the productive processes. And with the monopolistic growth of capital the more will be its tendency to juggle output so as to enhance prices. Viewing as the consuming public must, the whole system is becoming cumbersome, chaotic and unworkable. There is no greater condemnation of modern industry than the travesty of an able competent idle worker standing beside a huge magnificent idle plant. Here is social inefficiency raised to the nth power. We shall have made great strides in social progress when we admit that such an industrial situation is essentially anarchistic. A complete measurement of this enormous waste due to idle capacity is well nigh impossible. However, sufficient data are available to show in a measure the ratio between the full capacity of industry and its actual operation. If we here can but obtain an intelligent interest in the problem of this wasted capacity, then we have gone far in seeing the importance of obtaining more complete data on the question. An illuminating New Jersey reports for 1912 gives us a fact portrayal of at least one state. Here is shown the relation between "full capacity" and "actual operation" not only for all industry but for each specific kind of manufacturing. The exact "purpose of this investigation," to quote from the report, "is to show how nearly the actual operation of industry during the year approached its full productive capacity. The 'proportion of business done,' as reported by the establishments considered, represents their actual output of goods for the year, compared with what it might be if all the existing facilities of the plant had been brought into use." What do the facts show? During the year, 2,556 establishments with invested capital amounting to $849,000,000 and a labor supply of 323,400 employees, created $1,050,000,000 worth of goods. Deducting Sundays and holidays, the report considered 306 working days as a "full capacity" year. On this basis the aggregate proportion of business done The thirty-sixth Annual Report of The Bureau of Statistics of Labor and Industry, 1913. is shown to be 74 per cent; or 26 per cent below the full productive capacity. In terms of output then, we have: Possible output. Actual output. Lost output. $1,413,000,000 $ 363,000,000 The same represented by graph would appear as follows: To the capitalist this 26 per cent "lost efficiency" looms up as a greater possible return on money invested-shall we say, an additional two or three per cent. To the wage-earner it is a life and death proposition. Without any change whatsoever in the ratio of economic distribution, the additional returns that would result to the worker if the industries were running "full capacity" are sufficient to pull the average wage-earner quite a distance away from the pangs of poverty. Considering the wage-earner in two of the largest industries of the state the machine industry and the silk industry-which employ 21,194 and 15,775 workers, respectively, we can show clearly his "full time" wage in contrast with his "actual wage." In these industries the operation was in both cases slightly over 70 per cent of their "full capacity." The average wage actually received in the machine industry for the year was $684; in the silk industry, $509. The possible "full time" wages were $977 for the machine worker and $726 for the silk employee. Charted as follows we have: |