I. SHIFTS WITHIN THE WORKING POPULATION

Since the establishment of the first factories in America, industry has exhibited its capacity to absorb large amounts of labor in gainful employment. Barring the interruptions of business depression, when large portions 004803of the employed population temporarily lose their jobs, and the influence of such factors as changes in the age structure of the population or laws restricting the employment of labor, which act to reduce the numbers available for employment, the opportunities for work have increased at a rate much faster than that of the total population. There is an informed body of opinion at the present time which believes that American industry has reached the saturation point and will henceforth be unable to add to its labor force at anything like the rate prevailing in the past, but the evidence in support of this view is far from conclusive. Owing to the prevailing business depression some 10,000,000 workers normally attached to industry are now unemployed. But if the present depression shouldered with the traditional processes of business recovery and the return to industry of the unemployed, we may reasonably anticipate the continued absorption into all categories of employment of a slowly increasing portion of our adult population.

More important than the variations in the size of the working population are the vast and rapid changes in the structure and functions of that populations.2 From the beginning of the rise of manufacturing industries, modern transportation and highly developed instrumentalities of trade and commerce, the relative position of the agricultural workers in the total occupied population has steadily declined. Until 1910, the decline of agriculture reflected only the faster growth of other industries, but in the past two decades the numbers engaged in agriculture have suffered an absolute as well as a relative decrease and the best estimates indicate that the numbers gainfully engaged in agriculture were about 630,000 fewer in 1930 than in 1910. Concurrently the working population flowed at an accelerated rate from all sources into manufacturing, the building trades and into the various transportation industries. The progressive industrialization of the United States, as of other countries, was accompanied by a considerable elaboration of the facilities of commerce and trade, with the result that clerical and selling occupations shared in the growth of manufacturing and transportation and in the later decades grew even more rapidly. Between 1880 and 1920, therefore, those at work in agriculture had declined from 50 percent of the total working population to a little more than 26 percent, while the manufacturing and mechanical occupations had increased in the same period from 24 to 30 percent and those in trade and transportation from 12 to 25 percent.

2 The detailed data regarding these occupational shifts are presented in Chap. VI. See also the monograph in this series entitled, Labor in the National Life.

These trends prevailing in the earlier decades continued from 1920 to 1929, but for the first time in the history of American industry the labor force of the manufacturing and rail transportation industries actually declined. At the same time that the aggregate numbers gainfully 005804occupied had increased from 41,600,000 to 48,800,000 the sources of the gain in the past were dried up, for the time at least, and the substantial advances in opportunities for employment originated in the occupations of trade, professional service and a variety of mechanical and personal services associated with far reaching changes in the structure of American industry and the character of its output. Thus from 1910 to 1930, when agricultural employment had been reduced by 11 percent, the numbers attached to mining rose 2 percent; to manufacturing and mechanical pursuits 22 percent; and to transportation 38 percent. But in the same period employment in trade and in the combined professional services rose 75 and 80 percent respectively.

Within each of the large categories of industry, the component parts disclose equally rapid and substantial shifts in employment opportunities. The decline in employment in the rail transportation industry has been accompanied by increasing demands for labor in the utilization of other forms of transport. The expansion of the public utility industry during the last ten years and the growth of government services since the war have made possible the absorption of labor displaced from agriculture and other industries and the employment of additional new labor. Among the manufacturing industries rates of growth and decline in available employment have varied during the last twenty years from increases in the numbers employed ranging from 300 to 500 percent in the electrical machinery, chemical and automobile industries to actual reductions in the labor force in branches of the tobacco, leather and wood manufacturing industries.

Continuous expansion in the work force and in the product of industry in the magnitude in which it has taken place in the United States was made possible by the availability of unexploited sources of labor supply and by the progressive increase in the output of labor resulting from the mechanization of industry, the improvements in factory technique, the better interrelation of operations and other technical and managerial advances. The subdivision and simplification of the processes of labor characteristic of machine industry and the improvement in the facilities for industrial training enabled American industry to absorb into all types of work an increasing proportion of the supplies of untrained and unskilled labor. The expanding labor force was recruited from the vast immigration to the United States before the World War, from women seeking gainful work and from hitherto unexploited areas of the country. Of these sources, European immigration constituted the largest single source of new labor before the war, but with the virtual suspension of immigration during the war and the adoption of restrictions on immigration after 1920, this source became much less important and is likely to remain so in the future. On the other hand, the absorption of 006805women into gainful occupations has continued without interruption.4 From 1880 to 1930 the number of working women increased from 14.7 to 22.1 percent of the total female population ten years of age and over. The penetration of industry into new territory has not only had the effect of shifting labor from agriculture into industry, trade and service, but the more important consequence of drawing into gainful occupations many who before had not worked for wages or salaries at all.

4 On women workers, see Chap. XIV.

Part of the tremendous increase in the total production of industry, illustrated in the 60 percent rise in the output of manufacturing industries from 1914 to 1927 at the same time that the total number of employees grew only 21 percent, is plainly attributable to the rising per capita output of labor. In all branches of production, the growth in the amount of the total product of industry has been the combined effect of the increase in the working population and the rising productivity of labor. While there have been short periods in the history of American industry when the per capita output of labor has failed to grow, the long trend has been steadily upward. From 1899 to 1925, the increase was 53 percent in agriculture; 99 percent in mining; 42.5 percent in manufactures; and 56 percent in railway transportation. While the complete data on the trend since 1925 are not yet available, the character of prevailing economic events as well as the estimated recorded advance in the output of manufacturing labor make it reasonable to anticipate that the increase in the productivity of labor during the last six years has continued in all divisions of industry.

YearPersons engagedVolume of productionOutput per person192396.3122.0126.7192488.9114.1128.4192592.4127.9138.3192694.0131.4139.8192792.4128.7139.31928a90.9135.9149.51929b94.5144.7153.1

Table 1.—Index of Productivity in Manufactures, 1925-1929(1919-100)

a Joy. Aryness, “Index of Production of Manufactures Derived from Census Data, 1927,” Journal of the American Statistical Association, December, 1830, vol. XXV, New Series, p. 457.b Preliminary.

II. EFFECTS OF INDUSTRIAL CHANGES ON THE POSITION OF LABOR

Basic trends so far described in American industry have had their most far reaching consequences in making the bulk of labor directly dependent for a livelihood on wages and salaries. It is now almost universally 007806the case that making provision for one's self and family is possible only through the receipt of money income. So far as the essentials of life are concerned, the majority of workingmen are now farther removed from what may be regarded as the sources of their supplies and from their immediate power to secure them. Any considerable and sustained interruption in their money income exposes them to hardships which they were in better position to mitigate when they were members of an agricultural or rural community. While it is true that the food and other products available for distribution exist in greater amount now than ever before, the lack of orderly machinery for their equitable use in times of stress, such as is to be found periods of unemployment, makes them of little practical use to those who them most.

In addition to this fundamental suspect of the relation of the contemporary worker to his job and to his income derived from it, human labor in all of modern industry is confronted with the continual necessity of adjusting itself to rapid and revolutionary changes. The most serious of these adjustments is to the mechanization of industry. It is the belief of many students that the widespread introduction of machinery is having the general effect of replacing skilled with semi-skilled and unskilled labors and is thus reducing the status of the trained and skilled worker, if, in fact, it is not tending to eliminate him entirely from many industries. Depending as it does upon the refined definition of terms and exhaustive knowledge of industrial processes, statistical verification of this view is impossible. One of the best qualified of American students of the problem of mechanization, Harry Jerome, found in a recent survey of a sample of machine producing establishments that 10 percent of the wag earners were unskilled, 59 percent semi-skilled and 31 percent skilled. Combining these data with another study of the distribution of skill among employees of machine shops, made by the United States Bureau of Labor Statistics, Jerome concludes, by rough approximation, that the percentage of common or unskilled labor in the machinery industry is 20, of semi-skilled 55 and of skilled 25.5 In a study of the automobile industry another student of much the same type of problem included less than 15 percent of the workers in the category of the skilled and concluded that, in this industry between 1912 and 1923, the number of semi-skilled machine tenders and assemblers has been increasing, while skilled workers and laborers and have decreased in importance.6

5 From an unpublished study of the mechanization of industry by Harry Jerome of the National Bureau of Economic Research.6 Reitell, Charles, “Machinery and Its Effects upon Workers in the Automotive Industry,” American Academy of Political Science, Awards, November, 1994, vol CXVI, p. 40.

Whatever the effect on skill, the fact remains that the swift and universal changes in industry require constant adjustments by the workers. Major shifts in the constitution of industry mean that a varying 008807number of workers must discard their old skills and crafts and learn new methods of work. If these derangements were slow developments they could be easily absorbed into the habits of labor. But they are rapid and continual and assume on occasion, as did the changes in industry during the decade of the 1920's, almost a revolutionary character. More important than the need for adjustment to new conditions is the disturbing fact that technological changes in industries lead often to the total displacement of labor for varying periods of time. In the railroad industry the decline in employment from all causes between 1920 and 1930 amounted to the displacement of some 535,000 workers, many of whom were bound, in the process of finding new jobs, to suffer considerable periods of unemployment. How much of displacement was due to technological factors it is not possible to say, but the striking gains in railway operating efficiency during the same period lead to the conclusion that unemployment from this cause was substantial.

Such studies as we have of this phenomenon of technological unemployment throw considerable light on the whole problem of adjustment. Thus in one sample of displaced workers from numerous trades, of those who found jobs, less than a third returned to their old industries, while the rest found work in new industries. A small portion did a similar type of work in the new industries in which they were employed. Another study in the clothing industry disclosed that only one-fifth of the displaced cutters were able to find work in their former occupations. In both cases, also, a substantial proportion of the workers studied suffered long periods of unemployment, exceeding in some instances one year's duration.7 Aside from the possibility that the pace of the future mechanization of industry may make the permanent displacement of labor a problem not encountered in this form in the past, temporary displacement involving both unemployment and absorption into new industries is already a problem of increasing gravity.

The dislocation produced by technological developments are aggravated by changes originating in prevailing economic or business conditions. These conditions in so far as they touch our present problems may be described as the influence of comparative practices and consequences on the position and problems of labor. In addition to the risks due to accidents of nature, the workman in present day industry is more than ever exposed to risks and instabilities associated with competitive business7 Lubin, Isador, The Absorption of the Unemployed by American Industry. The Bookings Institution, Pamphlet Series vol. 1, no. S; and Robert J. Myers. “Occupational Readjustment of Displaced Skilled Workmen,” Journal of Political Economy, August, 1929, vol. XXXVII, p. 473. See also Ewan Clague and W. J. Couper, “The Readjustment of Workers Displaced by Plant Shutdowns, Quarterly Journal Economics, February, 1931 vol. XLV. pp. 302-347, and “When Shutdown Came,” Survey February 1, 1931, vol LXV, p. 477.009808enterprise. Whether ultimately soluble or not, it is clear that the small and large irregularities in the operation of industry and business are, if not more frequent than in the past, at least persistent and recurrent. The majority of the workers are threatened with either the total loss of income through unemployment at frequent intervals or with unpredictable fluctuations in the value of their income arising out of changes in the general level of prices. Thus, three times in the last fifteen years incomes were affected by large fluctuations in prices and on four different occasions the working population was exposed to minor and major waves of widespread unemployment leading on the average to the unemployment of more than 10 percent of the wage and salaried worker of the country.8

8 For a discussion of the volume of unemployment, see Chap.VI.

A categorical answer to the question as to whether industry is becoming more or less stable and the risks of unemployment greater or less is impossible to give in the present state of our knowledge. Unemployment is not a single, uniform phenomenon. Much attention has been devoted by management to the problem of labor turnover and to ways of reducing losses of work arising out of shifts from job to job, shortage of materials and the like, and measurable progress has been made in the regulation of such irregularities in employment. But of the three major form of unemployment—the displacement of labor by machinery, seasonal unemployment and the unemployment of depression—none can be said to have been brought under control. The striking increase in the output of labor following the recovery from the depression of 1921 would warrant the inference that displacement leading to technological unemployment has been greater in this last decade than in earlier periods. Seasonal unemployment, likewise, under the influence of competitive business conditions which depend for sales upon frequent changes in styles and fashions may be said to have grown during the past year.9 Measurement of the total volume of unemployment in the United States is still beset with insoluble difficulties, but such estimates of the rate of unemployment as there are fail to disclose any progress in the stabilization of average employment. Even in the prosperous years, 1923 to 1926, the estimated annual rate of unemployment in the manufacturing, transportation, building and mining industries exceeded 9 percent,10and statistical indexes of the state of business in 1930, 1931 ad 1932 show that the average rate of unemployment of these years is much greater than the rate prevailing during the preceding major depression of 1921-1922.

9 See Kunnets, Simon S., Seasonal Variation in Industry and Trade, the National Bureau of Economic Research, New York, 1992.10 Douglas, Paul H., Real Wages in the United States, 1890-1926, Boston and New York, 1930, p.400.

The conditions of competitive business produce instability and difficult problems of adjustment in still another way. The growth of American 010809industry and the changes in its composition have made necessary radical and constant change in the type of labor employed in industry. The entrance into industry of immigrants, Negroes, Mexicans11 and women constitutes in this sense not only an addition to the total labor supply, but the substitution of new labor for old. Moved principally by the desire and necessity for adjustments in cost, industry has constantly sought new sources of cheaper labor and when it has found them has proceeded with the task of replacing one type with another. This has been a continuous process in which first one and then another of available supplies of labor have been tapped. The process can be seen in its most striking manifestations in changes in the localization of industry in the United States, particularly during periods of business depression when the pressure for lower costs of production is strongest. While the process is often accentuated by the existence of great disparities in labor cost among various geographical areas, due to trade unionism, varying degrees of modernization of plant, incompetent management and the like, it is common in greater or lesser degree to nearly all industries.

11 On Negroes and Mexicans in industry, see Chap.XI.

Evidences of shifts of this nature are contained in the data on the geographical distribution of the work force in such a variety of industries as slaughtering and meat packing, iron and steel, the many branches of the textile industry, bituminous coal, boots and shoes and clothing. Under the stress of rapidly changing competitive conditions shifts in the centers of industry take place with amazing swiftness. In the bituminous coal industry, for example, the output of coal in the Illinois fields shrank to half the earlier levels in less than ten years, partly as a result of the general depression in the industry but more on account of the diversion of business to competing coal producing areas. In the men's clothing industry, the numbers employed in the state of Illinois dropped from 33,000 in 1919 to 24,000 in 1927, while in the same period the work force of the industry in Pennsylvania increased from 12,800 to 19,400. The boot and shoe industry in Massachusetts shrank from 80,000 wage earners in 1919 to 57,000 in 1925 and the relative position of Massachusetts in the whole industry, measured by the number of wage earners, declined during these years from 38 to 28 percent of the total. Given a growing population and the dependence of that population on established industries, it is clear how much havoc is wrought by the movement of industries, from one area to another. Much indeed of the problem of the work forces of the so-called “sick” industries is a direct outcome of this phenomenon. The decline of an entire industrial area like New England is a more striking illustration of the same process. While this shifting goes on work is given to the wive and daughters of coal miners in Pennsylvania, or to the families living in the small tows of New Jersey, 011810Wisconsin, Michigan and Illinois, and to the extent that this happens the aggregate volume of employment in the country may be sustained; but, at the same time, laborers in the old established centers face total unemployment or greatly reduced employment lasting for many years, as in the soft coal industry, and the necessity of finally attaching themselves to other industries if they are to work at all.

Another important problem resulting from technological changes is their effect upon the age limits within which the worker is thought to be useful in industry. During the last period of general business prosperity there were innumerable complaints that the middle aged worker was finding increasing difficulty in locating a place in industry, once he had lost his job for any reason. Unlike the younger worker, who has less responsibility and can often depend upon his family for support, the older worker generally has full family responsibility. The tragic elements of this situation aroused general sympathy and within a short time the problem became the subject of wide discussion.

There is as yet little statistical evidence but an abundance of isolated material and considerable presumptive evidence that older workers are meeting great difficulties in competition with younger men. Older workers are more likely to posses a type of skill which is being made useless by changes in demand and in industrial technique. In addition, many men beyond their prime cannot meet the specifications required for the job. Industry requires speed and nimbleness in its labor even more than experience and judgment and in these respects the younger man is to be preferred to the older. Recognizing that the opportunities for older workers are not as wide as for younger men, many companies are constrained to retain whatever jobs there are for men growing old in their service. Even some of the devices which are being introduced in the interests of labor, like group insurance and pension plans, are said to work in favor of the younger men, since both insurance and pension premiums are much lower for younger than for older employees. But this influence may well greatly exaggerated.

If the foregoing factors continue to operate to the disadvantage of older men and if at the same time the opportunities for employment do not increase more rapidly, society will have to face this very grave problem. Already the problem of old age dependency is increasing in urgency. Owing to declining birth dates the proportion of the population which is over 45 years of age is increasing. That proportion is now 23 percent and thompson and Whelpton estimate that it will be about 30 percent in 1950.12 The male population over 45 years of age is already 33 percent of the total male population over 15 years. The difficulties encountered by men over 45 in finding new employment, coupled with12 See Chap. I, pp. 26-36.012811the certainty that wages during a shorter working life will not be adequate to provide for the later years, especially in view of that fact that there is a general decline in earnings of workers over 40,13 will force a solution which makes possible an increase in opportunities for employment or in social provision for their maintenance.

13 See Solomon Barkin, “The Employment of the Older Workers—The Economically Middle Aged and Aged” in Papers and Proceedings of the American Statistical Association, March, 1932, Supplement, vol. XXVII, New Series no. 177A, pp. 102-108.

The available statistical information is conflicting, but there is much evidence to support the growing belief that industry is honey combed with strict hiring age rules. Many employers impose hiring age limits as low as 40 and some low as 35. The more common limit, where one exists, is 45 years. In a classification of the placements by age groups in four Massachusetts public employment officers in 1928 there was no evidence of any discrimination up to the age of 55.14 A report published by the American Management Association covering 239 companies employing more than 3,000,000 workers shows that 95 companies, or over 40 percent of the total, employing 61 percent of the persons covered, either refuse or require high executive sanction to engage men for their service who are over specified ages. The report also notes that the largest companies reporting in each industry were those which maintained hiring age limits.15 Similar conclusions were reached by the Department of Industrial Relations of the State of California which studied the problem in that state16 and by William M. Leiserson, who made a study of conditions in Dayton, Ohio for the local Chamber of Commerce. In addition, Leiserson found hiring age limits much more common when a high degree of skill is not required. Indeed, he concluded that where skill is required, older men are likely to be preferred.17 In a study made by the American Women's Association of the experience of trained women in New York City in the present depression it was found that the proportion of unemployed decreased in each successive age group up to 45 years, after which it showed an increase.18 In a study by Clague and Couper of the readjustment of workers displaced by the shutdown of plants it was discovered that 71 percent of those under 45 found work within three months while only 43 percent of those over 45 were able to find work within that time. Twenty-two of the 28 workers who failed to find employment were 45 years of age or over.19 In this as in the Dayton study14 “Employment Age Limitations,” Taylor Society, Bulletin, October, 1929, vol. XIV, pp. 222-226.15 Personnel Series, no. 3, 1930, pp. 5, 6. See also forthcoming book on pensions in industry by Murray W. Latimer of the Industrial Relations Counselors.16 Middle-Aged and Older Workers in California, Special Bulletin no. 2, pp. 11, 28.17 Older Worker in Dayton Industries (1990) pp. 8, 13.18 The Trained Woman and the Economic Crisis. Employment and Unemployment Among a Selected Group of Business and Professional Women in New York, New York, 1931, p. iv.19 Quarterly Journal of Economics, February, 1931, op. cit., pp. 326-7.013812it was found that skilled workers found less difficulty in securing employment than semi-skilled and unskilled workers. The gravity of the problem was recognized by the study made by the Department of Industrial Relations of California and in the elaborate investigation now being made by a legislative committee of the State of New York.

Uninterrupted mechanization and the changes in the organization of business associated with the conduct of machine industry have another fundamental consequence of an entirely different nature. With rare exceptions, the vast capital requirements of contemporary industry have led everywhere to the growing concentration of ownership and to an increase in the scale of individual business enterprise.

How far centralization in business control has produced proportionate growth in the size of typical industrial shops and plants is impossible to say. Revisions in definition and difficulties of classification limit the utility and relevance of census data on this point. Comparable figures between 1909 and 1923, however, show that the smallest establishments, employing from 1 to 50 wage earners, employed 26 percent of the total number of wage earners in 1909 and 19 percent in 1923, whereas establishments with over 1,000 wage earners employed 15 percent of the total in the earlier and 24 percent in the later year. In 1925, moreover, 10,583 establishments, or 5.6 percent of the total, employed 4,780,000 workers in manufacturing industries, or 56.8 percent of the total there employed. Thus while the small establishment persists, the trend in the increase in the size of the average plant or factory, which has been under way for many years, has unquestionably been accelerated in the 1920's and has spread to all forms of employment under the influence of the vast movement toward business combination.20 As a result, American workingmen have in an increasing number of industries ceased to work in small groups and have become members of one of many armies of employees working under the same roof.

20 For a full discussion of this movement, see Chap. V.

These developments in business and industry have had profound effects on the position of labor. Even before the fact is recognized by the individual workingmen, association in the shop and factory of large aggregations of labor may, in a democratic country, be considered an inevitable step toward unified and combined action. The factory employing several thousand workers establishes by its mere existence a community of interest and the recognitions of the existence of common problems. During the nineteenth century and first decades and first decades of the twentieth the rapidly changing character of the typical American labor force, due to the introduction of successive groups of immigrants, Negroes, women and other labor not easily amalgamated into a cohesive group, militated against the rise of group consciousness and unity in action. Such forces are, 014813indeed, still active in the American scene and may be expected to exert somewhat the same disrupting influence in the near future, but the Americanization of our immigrant population and the approaching absorption of these new supplies of labor may finally result in the solidarity of labor aided by such contributing factors as the larger aggregations of workers and the narrowing of skills among various types of labor. On the part of the owners and managers of industry there are signs, however feeble, that the cooperative and democratic nature of industrial relations are being increasingly recognized. At the same time that trade unions in American industry have remained surprisingly weak and inarticulate, there is accumulating evidence that the safe and successful conduct of large scale industry involves the creation of machinery for enlisting the cooperation and winning the consent of labor. Whether labor representation in this country will operate through traditional trade unionism, typical of systems of industrial relations in Europe and in several American industries, or whether new agencies will be created to perform similar functions for labor, is at this time not clear. But it may reasonably be anticipated that a continuation of the trend toward centralization of ownership and management will lead to the multiplication of measures designed to widen the area of labor representation in the management of industry.21

III. STANDARDS OF LIVING

Determination of the extent to which any class of the population has shared in the morning output of industry and productivity of labor is a puzzling and, to some degree, an insoluble problem. While much is known regarding the aggregate volume of goods and services bought and sold, the statistics of consumption are not so gathered as to disclose the proportions of the output of industry which are taken off by the socio-economic classes. The movement of wages and income furnishes considerable presumptive evidence of probable trends in consumption and in standards of living but the meaning of these findings is frequently obscured by the inadequacy of the data on income or earnings and by the more troublesome problem of adjusting money incomes to the short and long time swings in the level of prices. Income and wage data represent, moreover, with rate exceptions, the incomes and earnings of individuals and, therefore, throw too little light on the purchasing power of the family, which still remains by all odds the most important unit of consumption.

Money Wages and Salaries.—Money income is the most fruitful starting point for the study of changes in the purchasing power and hence 015814standards of living of all economic classes. In the case of wage-earners and salary workers, the problem of measuring even money income, let alone the correction of money income for changes in the cost of living, is complicated by the existence of serious gaps in the available raw data and by the difficulty of making a choice from among the many units of measurements. In general the most useful measure of the earning power of a working man is the rate of wages he receives while working. Depending upon the kind of work he does and the type of industry in which he is employed, his rate of wages may be quoted as an hourly, daily, weekly, monthly or annual rate. For workers paid by the time they put in, these statistics of rates are simple measures of the earning power of labor. Where labor is paid by the piece, or by output, such rates do not exist and hourly or full time weekly, monthly and annual earnings are as a rule computed from the data on the actual earnings of these types of workers and are treated as analogous to the rates of wages of time workers. Neither of these units, however, measures the actual receipts of workingmen in wages or salaries. They only show the amount working men would earn while working, so long as they specified rates or full time earnings remained in force and they are widely used, partly because they are, in industries like building, the only available measures of wages, and partly because their simplicity and comparability make them a sensitive index of the influence of economic conditions on the prices paid for the various classes of labor.

For gauging the income available for spending and saving, actual earnings by the year are, in their turn, the best measures. In some categories of industry, notably manufacturing and rail transportation, such data can be obtained for many years from public records. For the rest, actual annual earnings must be derived by processes of estimate from statistics of wage rates and full time earnings and of fluctuations in the volume of employment. Even when this is done, the resulting data represent only the annual earnings of employed persons. If, accordingly, the income of all labor, employed and unemployed, attached to industry is desired, the annual earnings of employed workers must be further corrected by allowing for annual changes in the total rate of unemployment.

In the long run money wages have steadily risen in the United States. Disregarding for the moment the effects of movements in the general levels of prices which strongly influence movements in average wages, the rise in money wages is often interrupted and indeed temporarily reversed during periods of business depression, but, with rare exception is a few specific occupations subjects either to important technological changes or to an increase in the proportion of women to men in the occupation, the trend is unmistakably upward. Both the short and long time movements, however, vary within wide limits as between different 016815categories of industry and between different occupations within the same industry. The magnitude of the long trend of wages and their varying rate of advance is illustrated in Table 2, which shows the hourly rates of wages and earnings in 5 selected occupations. Among these occupations, all of which are followed by men, not only do the increases vary from nearly a four- to a six-fold rise but the rates of wages at the end of the period covered a range, in the case of the largest discrepancy between the wages of spinners and bricklayers, of $1.24 an hour.

YearMule spinners, cotton textileBricklayers, New York CityMachinists, printingPaintersCompositors, newspaper1880$0.16$0.31$0.18$0.18$0.2118850.150.440.250.200.2518900.160.440.250.210.2519020.220.6519100.220.700.470.5319160.350.750.610.570.5319200.831.060.741.040.9219240.751.501.091.171.081929b0.631.871.051.371.20

Table 2.—Hourly Wage Rates or Earnings in Five Selected Occupations, 1880-1929a

a Figures from 1880-1890 from Aldrich Report in Wholesale Prices, Wages and Transportation, 1895, U. S. Congress, 52 Cong. 2 Sess., Senate Report no. 1304, Part I; from 1902-1929 from special bulletins of the United States Bureau of Labor Statistics. The data represent earnings for all occupations prior to 1910 and for mule spinners throughout the period. For the other occupations the data represent rates per hour for the year 1910-1920.b 1928.

Although the wage rates of American labor rose after the business depression of the 1890's, the striking upward trend began after the opening of the World War in 1914 and continued until it reached its peak in the early months of 1920. The levels then attained broke violently during the depression of 1921, but part of the losses were soon recovered and the prevailing level of money wages has since remained much higher than it was before the war. Thus between 1914 and 1920 hourly wages in all but one of the industries and occupations included in Table 3 more than doubled. I each case, the losses suffered in the depression of 1921 were partly recovered and by 1930 and 1931 wages remained still nearly twice as high as before the war. It must be remembered, however, that the general and severe reductions in wages associated with this latest depression did not under way until after the middle of 1931 and have continued into 1932; the reduction of railroad wages was not made effective until early in 1932. These later influences on wages, therefore, will not be fully seen until the complete figures for the year 1932 are at hand.

017816YearManufacturinga (hourly earnings)Rail transportationb (hourly earnings)Buildingc (union hourly rate)Bituminous coald (hourly earnings)Common labor on roadse (hourly rate)1914f$0.25$0.53$0.3119150.530.32$0.2019160.550.350.2319170.37$0.320.580.450.2819180.460.650.610.3619190.570.750.640.4119200.620.681.020.830.4919210.520.671.030.900.3619220.470.610.960.900.5219230.549.611.070.900.8819240.540.620.150.830.3819250.540.631.200.700.3819260.530.631.280.740.3919270.530.641.320.730.3919280.540.661.330.730.4019290.560.671.350.690.3919300.51g0.681.410.640.3919310.46g0.69c0.600.36

Table 3.—Wages and Earnings in Manufacturing, Rail Transportation, BuildingBituminous Coal Mining, and Common Labor, 1914-1931

a Unpublished data of the National Bureau of Economic Research.b Interstate Commerce Commission, series published each year under title, Wage Statistics, Class I, Steam Railroads.c U. S. Bureau of Labor Statistics.d Computed from Reports of U. S. Geological Survey.e U. S. Bureau of Public Roads, Department of Agriculture.f Reports of the National Industrial Conference Board.g Preliminary.

The annual earnings of labor reflect not only the variations in rates of wages but also fluctuations in the volume of employment. They show, as do the rates, the influence of general business conditions, changes in the price level and the prevailing state of employment. In 1928 the annual earnings of employed persons in the leading categories all stood far above the levels prevailing in the years before the war. The data on annual money earnings, summarized in Table 4, reveal not only the extent of the war time advance in annual earnings and the part of that advance retained during the early post-war years, but also important similarities and contrasts in the movement and level of earnings among all the groups. The employees of all industries obviously suffer severe losses in income through bad business but workers in the highly competitive industries suffer the most. During the depression of 1921, for instance, when the annual earnings of manufacturing employees dropped more than $200 or about 15 percent, those of coal miners were reduced by $470 or more than 30 percent, and of farm labor by $302 or 37 percent, the annual earnings of government employees declined only $50 or about 3 percent and of the clerical and salary employees in manufacturing and rail transportation 018817not much more. The earning, moreover, of both government and clerical and salary employees exceeded in 1926 the peak of wages reached in all other industries in 1920. Thus while the rise in wages of these salaried workers, particularly the government employees, was much slower during the war years than the increase in earnings of the manual workers or wage earners in industry and agriculture, the course of their earnings has been marked by much greater certainty and stability.

YearManufacturingaPublic utilitiesbCoal miningcGovernment employeesdClerical and salary, manufacturing and railroadeFarm laborf1910$558$655$556$1,108$1,156$33619115376555561,1161,21333819125506916001,1281,20034819135787256211,1361,26636019145807555491,1401,25735119155687745911,1521,26736519166518217251,2111,85938819177749309661,2951,47748119189801,2021,2271,3801,69760419191,1581,4151,1501,5201,91470619201,3581,6021,4351,6482,16081019211,1801,5231,1371,5932,13452219221,1491,4869651,6252,06750819231,2541,4951,3591,6582,12657219241,2401,5001,2511,7082,19657419251,2801,5201,1731,7762,23958719261,3071,5251,3391,8232,31059619271,2991,5421,1971,850g59119281,3251,5581,2391.940g587

Table 4.—Average Annual Earnings of Employed Workers in Specified Industriesand Occupations, 1910-1928

a Douglas, op. cit., p. 246; data for 1926-1928 from P.H. Douglas and F.T. Jennison, The Movement of Money and Real Earnings in the United States, 1926-1928, University of Chicago, School of Commerce and Administration, Studies in Business Administration, vol. I, no. 5.b Douglas op. cit., pp. 634-40.c Ibid., p. 350.d Ibid., p. 375.e Ibid., p. 381.f Ibid., p. 392.g Not available.

The great divergencies in the absolute amount of annual income earned by these groups are, of course, explained in part by the heterogeneity of the groups themselves. Each represents large numbers of workers, differing in age, sex, experience and nature of occupation. In manufacturing, women constitute about 20 percent of the total employees, while mining and public utilities, with the exception of telephones, are almost exclusively male industries. The wages of women are notoriously lower than those of men. But, making all allowance for 019818the influence of such factors, it is clear from only a cursory examination of these data on annual earnings and others like them, that the economic character of the industry and occupation in which people work, more than any other single factor, helps to account for the level of wages it yields. Because of the highly competitive nature of the coal industry and its steady decline sine 1920, the average earnings of employed miners, which were $192 more than the earnings of factory employees in 1917, declined until they were $86 less than factory earnings in 1928. The continued decline in the output and prosperity of the coal industry since 1928 has probably increased the differential in favor of factory workers. Employees in the coal industry, almost exclusively male, earned $700 a year less in 1923 than the men and women working in the government service. Similar evidence of wage difference arising out of the condition of the industry is furnished by the railroad and building industries, where wages have been maintained at relatively high levels—in the one case through the influence of trade unionism and government control and in the other through trade unionism also and, in addition, the more potent factor of the essentially localized character of the industry.

Wide divergencies in wages of this sort have been characteristic of the American labor situation for a long time. These difference are to be found not alone among the various industries but within the same industry between the skilled and unskilled, men and women, and between occupations in a specified located in several parts of the country. The substantial differentials between wages in the northern and southern cotton mills is a matter of common observation. In a great range of other industries, as was pointed out earlier in this chapter, substantial disparities in wages have probably been the most potent factor in facilitating the continuous shifts in the localization of industry. So far as wage differentials based upon skill are concerned, they vary so greatly in American industry that it is impossible to present a general statement of their trend. During the war, the sudden cessation of immigration and the growing scarcity of common labor narrowed the margins between the wages of skilled and unskilled labor; but with the rapid displacement of labor by machinery, the continued entrance of women into industry and the growing industrial employment of Negroes and Mexicans after the war, this trend was apparently reversed and the differential again became greater. Thus in 1914 the wages rate of building laborers was roughly 47 percent of the rate of bricklayers; by 1920 the percentage had increased to 64, but by 1927 it had been reduced to 53. There is, then, no general American level of wages, common to a majority of workers in the United States, but many levels, varying widely as between sections of the country, industries and occupations.

020819

Prices and the Cost of Living.—Fluctuations in wage rates and in annual earnings as great as those just recorded are associated with equally marked variations in the prices of commodities and services. The unprecedented rise in wages during the war and their maintenance at high levels after the war were accompanied by an unusual rise in wholesale and retail prices until 1920 and the continuance of a high level of prices, substantially in excess of the pre-war, during the first post-war decade.22 Measuring the capacity of income recipients to buy the multifarious goods and services available for purchase involves, therefore, the correction, or deflation as it is technically known, of money earnings by appropriate measures of changes in prices. For the purpose of correcting the money income of wages earners in this respect students of the problem have long used measures of the changes in the retail prices of the goods and services commonly bought by typical workingmen's families. Such measures are in general use and are knows as index numbers of the cost of living. Since these index numbers purport to show the average changes in the prices of the many goods and services bought by families—food, shelter, clothing, heat and light, furniture, insurance, automobiles, domestic service, medical service, education and the like— their utility and reliability depend largely upon the extent to which they reflect the prices of the things families are actually purchasing and the distribution of the expenditures of families among the various categories of commodities and services. As long as prices change only moderately and slowly and families continue to buy the same kinds of goods, a carefully index number of the cost of living may be regarded as a satisfactory measure of the cost of supplying the budgets of typical families. But when the market is flooded with increasing volumes of new commodities, consumption habits are undergoing universal transformation, and, at the same time, prices are rapidly changing, the available measures of the cost of living cannot keep pace with revisions in budgets and their value is to that extent considerably impaired. In the United States, where living and spending habits are even in normal times in flux, the vast development in the variety and number of new industries and products in the last twenty years, and especially in the last ten, must have been followed by so radical a revision in the budgets of the common run of families as to make the ordinary index number of the cost of living less reliable it has ever been.

22 See discussion of prices Chap. V.

Such defects as characterize the index numbers now in use can only be remedied by frequent and extensive inquiries into the incomes and expenditures of adequate samples of consumers's families. Meanwhile the essential simplicity and convenience of the index number of the cost of living, which reduces the multiple prices of the purchases of consumers 021820to a single number, make it an indispensable instrument in estimating the changing purchasing power of income. Used with caution and supplemented by evidences of modifications in consumption from other and independent sources, these index numbers can yield valuable information not otherwise obtainable.

For the period since 1890 in the United States, the most ambitious attempt to measure the movement of the cost of living was made by Paul H. Douglas in the construction of a continuous index number of the cost of living for year from 1890 to 1928. Although the indexes derived by Douglas are open to the weaknesses just stated, they represent a careful and informed attack on the problem. Combined with the statistics of the earnings of workers, the Douglas measures of the cost of living help to reveal the probable variations in the purchasing power of wages.

Real Earnings.—Indexes of real earnings are obtained through the process of dividing money earnings by the measures of the cost of living. Douglas has made such computations for 15 important classes of workers,

YearAverage annual earnings (dollars)Index numbers (1914 = 100)Money earningsReal earnings18904387196189144172991892448731001893436719918944116796189542870100189642469971897427709718984347198189944573991900454749719014687698190248078981903497819719044988198190551083101190652385100190754288981908519859719095448910219105739310119115719398191258395991913608991001914613100100191561310010219166811111041917794130101191899716310419191,14418710519201,33721810619211,17119110819221,14418711319231,22820011919241,22520011819251,25520511919261,37521912619271,37521912819281,405224132

Table 6.—Average Annual Earnings of Employed Wage Earners and IndexNumbers of Annual Money and Real Earnings, 1890-1828a

a Douglas, op. cit. p. 991, and for 1925-1928, Douglas and Jennison, op. cit., The industries and occupations covered in this table are as follows: manufacturing steam and street railroads, telephone, telegraph, gas and electric, clerical and salary workers in manufacturing and rail transportation, coal, postal and federal employees, teachers, ministers and farm laborers.022821

amounting altogether to some 22,000,000 persons. The most striking features of this record of the movement of money and real earnings in the past 39 years are the unchanging level of real earnings in all the years prior to 1919, the great influence exerted on real earnings by major changes in prices, and the very unusual rise in real earnings in the brief span of years between 1919 and 1928. During the whole period from 1890 to 1918, the index numbers of real earnings moved within a range of only 8 points. After the beginning of the war, when money wages started precipitately upward and were by 1919 more than 80 percent higher than in 1914, real wages, because of the steep rise in prices, had increased by no more than 5 percent. Only when prices had begun their large decline during and after the depression of 1921 did wages outstrip the cost of living and real earnings register a substantial advance. During only 9 years of this third of a century do the available records of the wages and cost of living of 22,000,000 employed workers show a radical improvement in position attributable to a rise in their real earnings.

The foregoing estimates of money and real earnings, moreover, depict the status of employed labor and do not take into consideration the losses in income of wage earners and salaried workers still attached to their respective occupations but in a state of total unemployment and without any income from their jobs. The estimating of the average volume of unemployment in this country is a task of even greater difficulty than that of constructing adequate indexes of the cost of living. Here again, drawing on a variety of sources, Douglas has constructed for a limited number of industries estimates of the annual rate of unemployment from 1899 to 1926, and by applying these rates to the data on earnings has derived measures of the annual money and real earnings of all workers, employed and unemployed, attached to manufacturing, transportation and coal mining. The course of the earnings of all attached workers is shown in Table 6. It is clear that including in the measures of real earnings allowance for the dropping of employees from the payroll and for their reemployment has the effect increasing the range of fluctuations in the real earnings of all workers. Part of this discrepancy in range is no doubt due to the greater stability in both earnings and employment in several of the industries included in the measures of real earnings of employed workers given in Table 5 and excluded from the present measures; but the dominant factor is the great loss in the earnings of all workers following the lay off of a substantial percentage of them and the proportionate gain in earnings following the return of the unemployed to work. So far, finally, as the record between 1918 and 1926 is concerned, the advance in real earnings to a level 38 percent higher in 1926 than in 1914 is to be ascribed to a reduction in the rate of unemployment in the 023822last year, as well as to the maintenance of wages and the decline in the cost of living.

YearEarnings (dollars)Index numbers (1914 = 100)Money earningsReal earnings1890434801071891431791091892446821121893401741021894340639018953797010018963586692189736367931898370689418994127610319004277910319014538310819024718710919034929010819044698610419054959111019065119411019075379910919084548496190951695109191056110311219115419910419125661041091913537108109191454410010019155441001021916671123115191779514611419181,02718912019191,16721512019201,37925312319211,00818510519221,02718911419231,25623113719241,19622013019251,26223213419261,304240138

Table 6.—Average Annual Earnings of Those Attached to Manufacturing,Transportation and Coal Mining after Allowance for Unemployment, 1890-1926a

a Douglas, op. cit., p. 463.

How far the course of real and money wages during the war and early post-war years reflects abnormal and temporary influences, it is even now impossible to judge. But it is already evident from what has transpired since 1929 that the real wages prevailing in the first post-war decade are now being seriously reduced. In the three years after 1926 real earnings were somewhat higher than in preceding years, except for the effects of a moderate increase in the unemployment rate in 1927. Since 1929 real earnings have been falling at an accelerated pace, in part because of the rising volume of unemployment and in part because of the widespread reductions in rates of wages. While the cost of living has at the same time been dropping, the amount of the decline in living costs is far below the losses in income from unemployment and wage reductions. The extent to which the total money incomes of wage and salary workers has declined from their peaks in recent years is shown in Table 7, which presents the estimated income of all of the important classes of labor for the years 1927 to 1931. From 1929 to 1931 the money incomes of employees in the major occupations had fallen between 35 and 40

024823Industry19271928192919301931Agriculture1,2651,2751,2931,185909Manufacturing14,31514,46615,49412,8159,727Railroads3,0812,9913,0622,0982,215Pullman38394140Express10510110495Telephone487521582585533Water transportation547551588524Telegraphs100101110110100Private electric light and power368395429441409Street railways480466437408364Construction3,4863,5323,1562,3961,647Mining1,6461,4901,4251,176325Mercantile7,7868,0468,1517,8326,969Government4,9575,1065,4295,656Banking673695762752Total39,33439,38541,05836,713

Table 7.—Wages and Salaries of Employees in Specified Industries, 1927-1931a(In million of dollars)

a Unpublished data, National Bureau of Economic Research.

percent. In 1930 the decline amounted to 13 percent and in 1931 to about 20 percent more. In the first quarter of 1932 the incomes derived from wages and salaries were still further reduced. As in all previous depressions there has been a sharp contrast in the experience of particular industries. In mining the decline began in 1928 and has continued ever since. The wages and salaries of miners in 1931 represent just half their income in 1927. The incomes of building employees started downward in 1928 and in 1931 were less than half their incomes in 1927. Employees in the telephone and electric light and power industries, on the other hand, were able to increase their annual earnings through 1930 and suffered only moderate losses in 1931. While the statistics of the earnings of government employees are not available for the second year of the depression, their increase during 1930 confirms past experience and observation which indicate that the salaries of public employees suffer

Industry1929-19301930-19311929-1931Agriculture-8.4-23.3-29.7Manufacturing-17.3-24.1-37.2Railroads-11.9-17.9-27.7Telephone+0.5-8.9-8.4Street railways-6.6-10.8-16.7Construction-24.1-31.8-47.8Mining-17.5-29.8-42.1Mercantile-3.9-11.0-14.5Electric light and power+2.8-7.3-4.7

Table 8.—Percentage Changes in Annual Wages and Salaries in Nine Industries,1920-1931a

a Unpublished data, National Bureau of Economic Research.025824

reduction late in the period of economic readjustment. During 1931 and 1932, therefore, it is to be expected that the beginnings of salary cuts and of reductions of public payrolls will be revealed in a slight shrinkage in the total income going to employees in public service. The range of these variations in the annual earnings of employees, between 1929 and 1931, varies from a decline of 48 present in the earnings of building labor to one of 5 percent in the electric light and power industry.

While wholesome prices have dropped with startling violence since the beginning of the present depression, retail prices which consumers have to pay for goods and services have lagged far behind. At the same time that the annual money earnings of American employees have been reduced by about 85 percent, the cost of living has declined by no more than 15 percent. With the consequent fall in real annual earnings between 1929 and 1931 of approximately 25 percent, not only does the present depression manifest unusual severity in comparison with recent business depressions, but evidence is piling up that much of the gain in real earnings won between 1919 and 1929 is now being dissipated.

The Adequacy of Prevailing Wages—Standards of the adequacy of wages are, of course, a relative matter, varying in time and place and with reference to prevailing customs and the nature of established economic and social institutions. In our society wages have come to be generally regarded as rather more than less adequate if they assure the worker the opportunity to live in comfort, to participate in the use of new goods and services, to lay aside savings against risks and uncertainties and to foresee the prospect of affording his family and himself ever rising standards of life in the future. While the average earnings of individual employees in the United States have increased substantially in the last 40 years, the increase in personal earnings would hardly appear to have been large enough to enable them to buy the many commodities and services known to be sold in this country and, at the same time, to maintain their standards of consumption of the staple commodities of food, clothing and the like. In the prosperous year of 1926, the average earnings of employees were $1,375 a year. Eliminating women and young persons, it is still doubtful whether the average earnings of male adult employees, allowing for the frequent losses suffered in depression, have in recent years greatly exceeded $30 a week, or $1,500 a year.

Such evidence as there is contained in the studies of American family budgets indicate, however, that workingmen's families are constantly purchasing an increasing amount of new commodities and services and apparently not at the expense of the necessaries of life. Comparisons between remote and recent studies of these budgets show a continuous and radical decline in the proportionate expenditures for food and rent for all classes of workingmen, appreciable increase in expenditures for 026825clothing and even greater increase in the relative consumption of the variety of commodities and services in the sundries or miscellaneous groups. From the government budget study made by the State of Massachusetts in 1875 to the last federal study made inn 1918-1919, the changes in the distribution of expenditures of comparable classes are remarkably similar to the changes evident in ascending income groups. The lowest income groups in the federal budget studies of 190123 and 1918-191924 with income between $300 and $400 and under $800 respectively, showed the following distribution of expenditures:

23 U. S. Department of Labor, Commodities of Labor, Eighteenth Annual Report 1903, Cost of Living and Retail Prices of Food, p. 10124 U. S. Bureau of Labor Statistics, Retail and Cost of Living Series, Bulletin No. 557, 1924.19011918-1919Foodpercent48.044.1Clothingdo10.013.2Shelterdo18.614.5Fuel and lightdo7.16.8Miscellaneousdo16.021.4

For the years since 1919, when the vast expansion in the number of new products took place, no comprehensive study of the budgets of workingmen's families has been made, but the findings of scattered and occasional sample studies indicate that expenditures for miscellaneous goods and services have risen in the past ten years to come more than one-fourth of the expenditures of workers’ families.25 In a study made by the United States Bureau of Labor Statistics of 100 families the heads of which were working for the Ford Motor Company in 1929, it was found that the miscellaneous items comprised 26.9 percent of a average income of $1,712.26

25 A full discussion of family budgets will be found to the monographs on labor. Compare also discussion in Chap. XVII.26 “Standards of Living of Employees of ford Motor Company in Detroit,” Monthly Labor Review, June, 1930, pp. 1209-52.

The ability to support a rising standard of living must have come as much from the expanding total income of families as from the increase in the earnings of the chief wage earner. In all studies of the incomes of workers’ families total available income is far in excess of the earnings of the head of the family. Thus in a study of the family incomes of textile workers in New England and the south in 1908-1909 it was found that only 40.7 percent depended exclusively upon the husband's earnings.27 While the textile industry has always been characterized by an abnormal amount of family employment, heads of families in other industries have also had auxiliary incomes to supplement the family fund. Streightoff concluded in 1912 that only from 40 to 50 percent of the industrial families of the United States were entirely supported by the27 U. S. Congress, Abstracts of Reports of the United State Immigration Commission, 61 Cong. 3 Sess, Senate Doc. 747, 1911, vol. I, pp. 414-5.027826earnings of the head of the household.28 What the trend in the relation between family and individual income has been is not a matter of established record. But the uninterrupted increase in the number of women, and married women in particular, in gainful occupations, and the widening opportunities of employment for young men and women in the rapidly growing categories of clerical, selling and professional occupations, and in local and federal government service suggest that the sources of family income have probably continued to multiply in the last fifteen years. With family, and not individual, income as the factor of paramount importance in standards of living, many of the puzzling aspects of the consumption of goods in this country will remain obscure until we have made studies of family income as comprehensive as our investigations of individual income.

28 Streightoff, F. H., The Distribution of Incomes in the United States, Columbia University, New York, 1912, p. 133.

The Services of Government and Philanthropic Agencies.—The equivalent of the systematic provision of social services and social insurance by the government, universal elements in the income of European labor, does not exist in the United States. Local, state and federal governments and the huge endowment funds and benefactions of private individuals, so peculiar to this country, do, however, bring to the masses of people an increasing variety of social and public services either free or at less than cost, which constitute substantial, but not wholly measurable, additions to income. While comparable data on the changing cost of such services are hard to obtain and all estimates of such cost are likely to under-estimate their absolute magnitude and perhaps their rate of increase, rough approximations of the principal expenditures from both private and public sources are possible for the past two decades. The expenditures for various social services which have clearly added to the income of wage earners, after making deductions for payments for these services by their beneficiaries, increased four-fold from 1915 to 1930. By 1930 the rapid increases in the total, characteristics of the whole post-war decade, had not slackened. As in earlier years, the expenditure on education in 1930 continued to be the most important single item;29 while the effect of the depression is revealed in the increase in the outlay for charity.30 In view of the prevailing burden of private donation and the pressure to reduce the expenses of government, appropriations for all free services except relief probably declined in 1931 and still more in 1932. Expenditures for relief, however, which are probably under-estimated in Table 9, increased radically in 1931 and are rising still more rapidly in 1932. The Russell Sage Foundation has estimated the relief outlays for 81 cities, containing 36,000,000 persons and representing approximately29 Compare with figures for public expenditures for schools, Chap. XXV.30 See Discussion of private relief in Chap. XXIII and of public relief in Chap. XXIV.028827one-half of the total expenditure for this purpose by the country, at $169,917,732 in 1931. On the most difficult question of the relation between available free services and the incidence of taxation, which would

ServiceExpenditure1915a1926a1930bEducation708,1642,490,0002,883,351Libraries15,40735,87450,439Recreation21,29553,96983,275Conservation of health21,95056,357110,420Hospitals58,005144,819438,686Charities34,34758,211123,319Mothers’ pensions10612,70515,824Total859,3362,860,9353,705,314

Table 9.—Estimated Expenditures for Free Social Services, 1915, 1926 and 1939(In thousands of undaflated dollars)

a President's Conference on Unemployment, Recent Economic Changes, New York, 1929, vol. I, p. 10.b The data in this table were compiled by Dr. Isador Lubin of the Brooking Institution. Their composition will be fully discussed in the monograph.

reveal how much the consumers of public free services pay for what they get, there is no adequate information. But that these services are not wholly without cost to wage earners must be conceded since an appreciable portion of total tax receipts comes from indirect sources which all consumers pay from local real estate taxes.31

31 For data on distribution of tax burden, see Chap. XXVI.

Clues to Rising Standards of Living.—In addition to the evidence of increasing wages and family income, there is considerable indirect or presumptive evidence of advance in the living standards of nearly all grades of American labor. Probably the most important of these is to be found in our health and mortality experience. For several decades now we have had a striking and almost continuous decline in the death rate from pulmonary tuberculosis, long regarded as an economic disease, and in infant mortality, which is closely correlated with the economic status of families. Toward the achievement of these gains both improvement in living conditions and the greater availability of public health and medical facilities have contributed. Although the problem of the cost of medical care is a more and more serious one for families in the moderate and low income groups in this country, the fact remains that the total medical facilities available for their use has greatly expanded, especially since 1920. Thus between 1914 and 1930, the number of beds in hospitals had increased from 532,000 to 955,000 or 79.5 percent. From 1923 to 1930, the number of patient days, a measure of the degree of use of hospital 029828facilities, increased by 38.1 percent, while the growth in out-patient service, measured by the number of patients treated, increased from 1921 to 1929 by 121 percent and, by the number of visits made, by 100 percent.32

32 Data prepared by Izedor Lubin of the Brookings Institution. See also material on health services in Chap. XXI.

Increase in school attendance and particularly in the institutions of higher learning may safely be considered another indication of improvement in standards. The mounting educational expenditures in this country have already been observed. Since 1920, while attendance in the elementary schools has grown, the striking phenomenon has been the great influx of students into the secondary schools and into colleges and universities, a trend which continued into 1930. The extent to which the fall in income due to the present depression will succeed in arresting this flow of young people into the schools is uncertain, but the problem of the reduction is established educational standards which prevailing business conditions forebode may well turn out to be among the most serious this generation has to face.

Perhaps the most reliable barometer of changes in standards is the amount and variety of goods and services sold to consumers in this country. During the past twenty years there has been an immense increase in the volume of articles of consumption. The output and sale of foodstuffs, automobiles, housing, household equipment as well as an infinite variety of services, such as electricity and the telephone, have been so great in normal times that it is inconceivable that they have not been bought in increasing quantity by a vast majority of the population.33 While many of these new products became widely marketable after their costs and prices had been considerably reduced, they are still expensive and can be purchased only by individuals and families whose income is substantial. The sale of many of these goods on time payments during the past decade, whatever its other effects, certainly made easier their purchase by wage earners.34

33 For a full discussion of this aspect of American standards see Recent Economic Changes, op. cit., vol. I, Chap. I. 34 For a discussion of consumers’ credit see Chap. V.

Leisure and Hours of Work.—Together with the long time advance in wages, there has been a considerable reduction in the hours of work of nearly all classes of labor in the United States. The long decline has been clearly related to the growth of factory industry, mechanization, and the increasing productivity of labor, although social factors of a different order have also contributed to the result. During the last fifty years, although no perfect measure of the trend is available, it is probable that the normal work week in American industry has decreased by 20 hours. Between 1890 and 1926, the standard hours of work in manufacturing 030829industries have fallen from 60 to 50 a week; and from 1902 to 1926 the work week of bituminous and anthracite coal miners has been reduced by 6 hours, from 54.5 to 48.3 hours a week. The nature of the movement toward a shorter work week and the experience of a variety of industries are shown in Table 10.

IndustryAverage hours per weekPercent decrease during period18901928Bakeries64.747.426.7Boot and shoe59.549.117.5Building52.043.516.3Cotton goods62.853.414.9Foundry and machine shops59.850.4b15.7Blast furnaces84.659.8c29.3Marble and stone54.744.019.6Millwork52.044.8d13.8Book and job printing56.444.321.5Newspaper printing48.245.16.5Woolen goods58.949.816.3

Table 10.—Average Hours of Labor per Week in Eleven Industries, 1890-1928a

a Teper, Lazarc, Hours of Labor, Johns Hopkins, Studies in History and Political Science, Series L, no. 1, 1932, p. 49.b 1927.c 1926.d 1924.

The record of standard hours, like that of wages, illustrates not only the improvement in conditions of labor but even more the variety of standards in American industry. By 1928, after a long period of the reduction in hours, the range in the standard work week still varied from 60 hours in blast furnaces to 43.5 in the building industry. Again the present business depression is probably resulting in an increase in the length of the work week since 1929, but how great the change has been is not a matter of record. Most of the gains in leisure made in the past will no doubt be retained and the incentive which additional leisure affords to increased consumption may be expected to be as powerful as ever.

V. THE POSITION OF LABOR IN INDUSTRY

Developments in the status of labor are not a function of economic change alone. The history of the position of labor in modern industry as been a record of interaction among social, economic and political forces. In the United States, as well as in the countries of western Europe, the meaning of the “labor problem” has been as much modified by the impact of ideas as by the force of economic events. In the prevailing 031830attitudes, for instance, toward such problems as unemployment and in equality in the distribution of income, the spread of political democracy and the rise of revolutionary doctrine during the after the war have contributed to a restatement of the responsibility of industry to its labor force and to a re-examination of the appropriate ends of business enterprise. Changes in the position of labor thus reflect, in addition to economic conditions, developments in the technique and management of industry; in establishing social, economic and political institutions; and in influential currents of opinion.

During the past twenty years the direct and indirect effects of the war have played a dominant part. Despite the occurrence of one major and two minor business depressions during the 15 years before 1930, the prevailing condition was one of prosperity. The moderated unemployment rate between 1916 and 1920 and the rise in wages and shortening of hours during the greater part of the period acted to allay the customary forces of industrial and political unrest. At the same time, changes in governmental functions arising out of the necessities of war enhanced the power and influence of organizations of labor. In the war years and in the brief period thereafter, before the elaborate war-time industrial controls could be effectively discarded, the opinions of organized labor underwent radical transformation. In addition to the traditional demands for betterment in conditions of work, in the form of higher wages, a shorter work week, limitations on woman and child labor, the right to collective bargaining, and greater security against the risks of unemployment, accident, old age and sickness, the articulate labor of the country began to think in terms of the democratic control of industry and, in practice, of greater participation by workers and their representatives in the functions of management.35 The return to “normalcy” and the scrapping of the industrial machinery of the war brought this trend to a halt. After this, the unexpected brevity of the depression of 1921 and the resumption of business activity at high levels, produced a period of comparative quiet in industrial relations. In many instances there was a reversion to older methods, in others the development of new devices in industrial relations described later in this chapter. With the rise in unemployment and reduction in wages caused by the depression of 1930, labor, the community, and economic and political agencies are again concerned with the treatment of the familiar range of labor problems which many Americans only a few years ago believed solved by the continuing prosperity of business.

35 For figures on volume of discussion in periodicals on these topics, see Chap. VIII.

In this process of revising the conditions of labor and of adjusting the status of workers to new ideas and to new forms of business and industrial organization, the initiative has come from a variety of sources. 032831In the last several decades industry itself has devised many far reaching experiments in industrial relations, designed to secure industrial peace, perhaps to counteract the claims of unionism, and at the same time to meet the peculiar problems of human relations in factories employing thousands of working men. The legislatures of local and central governments, moved either by the prevalence of acute conditions or by the political power of labor and its sympathizers, have from time to time reflected public opinion by adding to the volume of social legislation already on the statute books. Finally, organizations of labor, especially the trade union movement, employed their collective power in attempts to improve working conditions and to advance further the status of labor in industry and in society. Tracing the course of these recent changes in the position of labor and in the influence of these instrumentalities of economic and social reform is the subject of this section.

Trade Unionism.—In the United States as in other industrial countries, labor organization has been the chief instrument for improving the conditions of workers as well as the most effective medium for the expression of the discontent and aspirations of labor. In its long history in this country, the labor movement has passed through many successive phases, of which the last began around 1890 with the disintegration of the Knights of Labor and the rise of the American Federation of Labor. Although organized labor is often credited with a common purpose and program, the American labor movement is in reality made up of more than a hundred separate unions. The majority of these unions are members of a loose federation, the American Federation of Labor, and the rest, representing roughly one-fifth of the total membership of American unions, are entirely independent of one another and of the Federation. Both groups experienced slow growth in the two decades before the war so that the memberships of all labor organizations in this country increased from no more than 300,000 in 1890 to 2,700,000 in 1914. Since expansion in membership was accompanied by an increase in the numbers of labor organizations, trade unionism had by 1914 succeeded in establishing itself as the representative of labor in many industries.

With the outbreak of the World War, political and economic conditions highly favorable to the growth of organized labor were created. The flow of European orders into the United States and later the tremendous war purchases by the American government produced a state of intense business activity and demand for labor. To the influence of these powerful forces the stoppage of immigration and the withdrawal of men into the army were added factors in tightening the labor market and in strengthening the bargaining power of labor. At the same time the necessity for large and continuous production, attainable only under 033832conditions of industrial peace, induced the federal government to encourage the extension of trade unionism and collective bargaining in private as well as in public enterprise. Not only was labor treated with care but minimum standards were established in government contracts and services, and wage adjustments became more generally the subject of collective bargaining and agreement. The net effect of this unusual combination of circumstances was a considerable advance in both the size and power of the American labor movement.

YearMembership19102,184,20019112,382,80019122,483,50019132,753,40019142,716,90019152,607,70019162,808,00019173,104,60019183,508,40019194,169,10019205,110,80019214,815,00019224,059,40019233,592,50019245,536,60019253,567,70019263,504,70019273,498,20019283,449,10019293,444,00019303,407,60019313,298,000

Table 11.—Membership of American Trade Unions, 1910-1931a

a Wolman, Leo, The Growth of American Trade Unions, 1880-1925, National Bureau of Economic Research, Pub. No. 6, New York, 1924, p. 119. Estimates after 1928 derived by the same author.

The impetus supplied by the war was strengthened by the burst of industrial activity during the first post-war boom in business. In the two years from 1918 to 1920 the unions added 1,600,000 members and in the latter year had reached nearly twice their pre-war membership. More important than the increase in numbers was the penetration of organization into industries and occupations hitherto altogether unorganized. Trade unionism spread from the skilled to the unskilled; in the textile, food and clothing industries the existing unions, limited to highly skilled craftsmen, were converted into large and representative industrial unions; and in these and other organizations, the growth of unionism among women and the unskilled made them for the first time a factor in the counsels of the labor movement.

Reaction against this upward trend set in with the subsidence of business activity, the liquidation of war industries and the reversal in the labor policies of both industry and government. Although there were signs of the revival of the anti-union forces in industry immediately after the signing of the Armistice, the unexpected boom of 1919-1920 further stimulated the advance of organized labor. The business depression of 1921 became the signal for a radical revision in prevailing attitudes toward organized labor. While it is no doubt true that general unemployment and wage reductions played a large part in weakening the position of organized labor, the apparent determination of business men 034833to free themselves from union control was a factor of equal, if not of greater, importance. The two years of depression were marked by frequent conflicts between capital and labor in many important industries, and by what was generally regarded as a campaign for the restoration of the “open shop.” Employers in some industries used their associations for the promotion of open shop and anti-union campaigns. The federal and state courts in crucial strikes and lookouts issued injunctions of great severity, the effects of which seriously weakened the unions in their struggles. When, consequently, the next period of business revival was well under way, the unions had lost their post-war gains and, with rare exception, had surrendered all pretense of striving for the control of industries in which they had won recognition since the beginning of the war.

The course of trade unionism in the remaining years of the decade ran contrary to all precedent. In spite of the prevalence of good business and regular employment the organized labor movement suffered after 1923 a continuous and substantial decline in membership, probably much greater than that revealed by the statistics. In part this was due to unfavorable economic conditions peculiar to certain industries, such as coal mining, where much of the strength of organized labor was previously concentrated. In part it was due to the lack of adroitness and flexibility of labor leadership, and here too the coal mining unions furnish the chief illustration. But in the main the decline in the trade union movement is attributable to basic forces of another character.

Among the most influential of these type of the trade union organization. With few exceptions, the bulk of America trade unions have been strictly craft organizations, limiting their membership to workers pursuing well defined and separate occupations. This form of organization, appropriate to small shops and to a hand industry, rapidly became ineffective in the face of mechanization, the breakdown or modification of customary skills and the increase in the size of units of production. To these technological and industrial changes the unions were either unwilling or unable to adjust themselves. Highly mechanized industries are not unionized and the progress of mechanization, as in soft coal and textiles, has been accompanied by the weakening of existing unions. As industry after industry was so revolutionized, surviving labor organizations such as the iron molders ad the machinists were gradually eliminated from the large factories and remained only in the smaller shops.

At the same time the labor movement in many of its component parts appeared unable to resist the effects of the severe competition which characterized business operations after 1922. The displacement of labor by machinery, the availability of new female and male labor and the great shifts in the localization of industry from higher to lower 035834cost areas constituted influences which individual trade unions could not bring under control. In the soft coal industry the powerful United Mine Workers dissipated most of its strength in a vain attempt to hold the coal business in the union mines and to prevent its flowing into the non-union fields of West Virginia, Kentucky and Alabama. As a result of this process, the whole labor movement was left in 1929 with a membership presumably somewhat larger than it was before the war, but with its effective control over American industry considerably impaired. While, therefore, the percentage of the gainfully employed in trade unions had risen from roughly 6 to 7 percent between 1910 and 1930, the position of unionism in all basic industries, except building and rail transportation, had been greatly weakened.

Group1910192019251930All groups100.0100.0100.0100.0Transportation22.024.625.025.9Building21.017.423.526.5Metal, machinery and ship building9.016.85.65.9Food, liquor and tobacco5.32.32.01.7Paper, printing and bookbinding4.13.24.44.8Chemical, clay, glass and stone2.81.01.21.0Mining and quarrying12.68.211.54.6Leather2.12.21.51.3Clothing4.47.17.87.3Public service2.73,25.47.8Textile0.92.91.01.0Theaters2.81.94.65.1Restaurants and trade2.72.81.71.8Lumber and woodworking1.30.50.30.4Miscellaneous6.35.94.54.9

Table 12.—Trade Union Membership Distributed by Percentages Accordingto 15 Industry Groups, 1910-1930a

a Computed from statistics of union membership.

By 1930 union membership was more concentrated than ever in industries of a special character. The five groups of unions in transportation, building, printing, public service and theatres accounted for 70 percent of the whole membership. Trade unionism was thus established in sheltered industries and occupations like public service, newspaper printing and theatres; in industries supplying public service and under government control, like transportation; and in the altogether peculiar building industry which in each of its centers is relatively immune from competition from the outside and whose conduct, particularly in the large cities, is intimately tied up with the local political machines of both parties. In typical competitive industries, organized labor held its own only in the clothing group, whereas in both absolute and relative position the coal 036835miner's union, the dominant organization in the mining and quarrying group, was much weaker in 1930 than in 1910. As for the basic industries of iron and steel, food packing, automobiles, rubber products, chemical and electrical products, they remain free from unionism altogether.

Added to the influence of economic conditions and the internal policy of trade unions, the traditional hostility of American employers to the organization of labor continued after the World War to be a factor of prime importance in dissipating the war time gains of the union movement. The whole history of industrial relations in this country has been characterized by the violence of the conflicts between capital and labor. In the majority of these struggles, unfavorable decisions by the local and federal courts, the use of drastic injunctions, control by employers of the local and state police have often determined the issue of both strikes and lockouts. Such methods were only temporarily abandoned during the short period of the war. Soon thereafter a service injunction against the United Mine Workers was responsible for the beginning of the series of reverses suffered by the union and a few years later a similar injunction marked the end of the nationwide strike of the railroad workers. Local criminal syndicalist laws, involved against the specter of radicalism, everywhere acted to weaken labor organization. In the coal states of West Virginia, Kentucky and Alabama and in the textile areas of the south, the attitude of the local authorities has effectively put a stop to the efforts of the unions to retrieve their losses and to carry on their campaigns of organization.

But in these changes in the position and composition of the American labor movement it is impossible to overestimate the influence of powerful economic forces. There can be little question, also, that inflexible adherence to an obsolete form of craft organization, failure to adjust the economic policy of trade unions to the vicissitudes of competitive industry and the pursuit of a more enlightened policy by many employers have been contributing factors of great importance in accounting for the present situation.

The Attitudes and Policies of Organized Labor.—Revision in trade union policy and in ways of thinking has been almost exclusively a product of developments wrought in industrial relations by the war and by the course of economic and political events in this and other countries since 1920. During th period of establishment and early expansion of the contemporary trade union movement. American unions were dedicated to a straightforward labor policy, involving strikes for the recognition of organized labor, collective bargaining over wages, hours and working conditions, and the spread of trade agreements between unions and employers in an expanding industrial area. Except for extensive lobbying activities, designed in the main to strengthen the legal position 037836of trade unions, and occasional participation in political campaigns to defeat candidates for public office who were regarded as unfair to organized labor, the movement restricted its activities to the promotion of pure and simple trade unionism. In so far as the constituent unions may be said to have had a unified or common policy, it took the form of opposition to independent political action by labor, to state interference in industry and in industrial relations and to participation by organized labor in the collateral operations of cooperative enterprise. The majority regarded themselves as independent associations of wage earners, organized to pursue their own interests free from interference by the government or other associations of the same nature and more concerned with the achievement of limited particular ends than with the problems of fundamental changes in the organization of our economic and political society.

The war gave the unions their first taste of real power and their first opportunity to engage in experiments with the joint control of industry. In connection with the extensive regulation over the operations of industry exercised by the government during the war, there were established in many industries, busy with the filling of war orders, novel plans of industrial relations characterized by a wide participation by labor in the determination of the policies of management. Where, as on the railroads, the industry had come completely under public control, these experiments reached a high degree of development, but even in private industry the voice of labor was effectively raised in fixing the conditions of work. Although this whole episode lasted only a few years, experience with new power and duties had a profound effect on the minds of all concerned with the conduct of industrial relations. After the war, the term “industrial democracy” came into use in this country. In the vanguard of the movement were several unions not affiliated with the American Federation of Labor. The organized railwaymen seriously proposed the Plumb Plan, a project for the joint ownership and management of the railroad industry, as the next step in the evolution of collective bargaining.38

38 Plumb, Glenn E., Labor's Plan for Government Ownership and Democracy in the Operation of the Railroads, The Plumb Plan League, Pamphlet no. 1, Washington, D. C., 1919.

The ideas of workers’ control and industrial democracy persisted even after the depression of 1921. Under the influence of its own experience and the example contained in the advance of revolutionary labor movements in Europe, American labor entered this last decade with a keen interest in the status of labor in industry, in new forms of collective bargaining, and in the uses of additional sources of economic power and pressure. Individual unions, therefore, and on occasion the whole labor 038837movement showed a willingness to try experiments in cooperative ownership, to canvass the possibilities of new educational devices and even, in several instances, to reconsider the basic principles of the trade union movement.

The greatest advances in this direction were made by the unions in the needle and railroad industries. The Amalgamated Clothing Workers, the union of workers in the men's clothing industry, and the International Ladies Garment Workers, the organization of labor engaged in the manufacture of women's clothing, were both pioneers in the conduct of experiments not only for improving the methods of collective bargaining but in effecting fundamental reform in the methods of industrial management. The joint systems of unemployment insurance set up in their respective industries by the Ladies Garment Workers and by the Amalgamated were the first enterprises of their kind in this country. The unemployment insurance funds in the men's clothing industry of Chicago, Rochester and New York have maintained their solvency through the depression. In the processes of industrial relations, the Amalgamated has made notable advances on traditional practice by participating with employers in the detection and reduction of wastes in manufacture, by undertaking on special occasion to assist in the financing of individual manufacturers and by operating factories which were owned by the union and managed by union members and officers. The Amalgamated was also the first labor union in this country to engage in the building and management of low priced cooperative housing and has to its credit large units of cooperative apartments in New York City, inhabited by its members and the members of other labor organizations. In the matter of industrial relations, the union of full fashioned hosiery workers has in these last years pursued a similar policy. On the railroads, the unions of the shop craft workers, and principally the machinists’ union, have entered into similar cooperative arrangements with the railroad management and have achieved, under the well-known “B & O” arrangement, marked success in modifying the methods and purposes of industrial relations.37

37 These experiments in industrial relations will be fully discussed in the monograph.

The experiments which engaged the attention of labor for some time after the war was the entrance of organized labor into the business of banking. Under the leadership of the Brotherhood of Locomotive Engineers, more than 10 unions in rapid succession organized banks either owned or controlled by unions and their members. Labor banks, it was hoped, would succeed in mobilizing the financial resources of wage earners and would employ this financial power in the promotion of useful labor enterprises and in influencing the labor policy of business and industry. Although labor banking at no time enlisted the interest and support of most labor organizations and their members, the movement 039838rapidly grew to substantial proportions, particularly as a result of the multiplication of banks in the chain sponsored by the Brotherhood of Locomotive Engineers. It failed, however, to realize its first promise. In labor banking, the American labor movement has once more repeated its earlier failure with cooperative enterprise. Whether because of adverse economic conditions, culminating in the depression of 1929, which brought on the failure of thousands of banks in this country, or because of the inability to procure safe and efficient management, the number and resources of labor banks declined quickly from their peak in 1926. By the end of 1931, seven banks with resources of 830,000,000 were all that remained of the labor banking movement. The collapse of this experiment, for whose outcome there had been high hopes, was not due to the lack of important functions to be served by labor in the application of its financial resources. The achievements of a few of the labor banks in this regard furnish testimony to the contrary. This latest excursion of American labor into business failed, as did its many predecessors, through an essential lack of interest in the experiment and the traditional inability of organized labor to supply competent and disinterested management.

YearNumber of banksTotal resources19201$899,4711921412,782,17319221026,506,72319231851,496,52419242685,325,884192536115,015,273192635$126,533,542192732119,818,416192827116,307,25619291878,952,78519301362,792,4691931750,684,593

Table 13.—Labor Banks and Their Resources (as of December 31),1920-1931a

a Compiled by the authors from the returns of the individual banks.

Closely related to the changing economic views of organized labor was the revival of interest in the methods and purposes of workers’ education. Organized labor played an important role in the development of a free popular school system in this country and this interest in popular education has never been abandoned. A changing outlook on industrial problems, however, raised the question of the relevance of established educational institutions to the problems which were giving labor its greatest concern. And the movement considered the organization of strictly labor schools, institutions of adult education, which would undertake to translate the mysteries of economic theory into simple language and would perhaps reveal to students the outlines of the new order of industry in the society of the future, while at the same time it would present the great social and intellectual movements of mankind from 040839the standpoint of the workingman. Workers’ education, in a variety of forms, began to spread among many unions and through the country. Most of the courses offered in these classes were directed toward enlightening the worker regarding the functioning of the economic system and his place in it. But others have had a political or culture orientation. The Workers’ Education Bureau, at first the clearing house and coordinator of all such experiments, organized classes and managed the preparation and distribution of appropriate textbooks for labor classes and study groups. As the movement developed the Bureau was absorbed into the American Federation of Labor. It has sent educational director to New England and the south and has organized study and discussion groups, held short periodic conferences on questions of contemporary urgency to labor and has cooperated in the formation of labor chatauquas, institutes and forums. In connection with the general educational efforts of the National Advisory Committee on Education by Radio, the Workers’ Education Bureau furnished the material and the speakers for a lengthy series of lectures on labor topics over a nationwide network in the spring and summer of 1932. Radicals and conservatives, communists and socialists split to form separate institutions. A few of them in the larger cities have such vitality and interest that they are abe to attract many who are not socialists or communists but who are interested in continuing their education. Individuals associated with the labor movement and doubtful of the capacity of its leadership organized labor colleges for training the labor leaders of the next generation. As matters now stand, the movement for workers’ education has lost much of its original vitality. but the foundation for vigorous experiment in the same direction is now established and in the related movement of adult education may be found the devices most appropriate to the needs of labor. With the prolongation of the present depression, there are signs that the growth in earnestness and the attempt to fathom the present predicament have led to a revival of interest and to larger enrollments in workers’ classes.

Probably the most interesting and important development in particular economic policies of American trade unions is found in their present attitude toward wages and unemployment. Recent wage policy, which in its detail and specifications differs sharply from the wage policy of the past, is in substance a reflection of a type of economic thought which has become prominent during the last ten years. The sharp rise in the productivity of labor and the apparent relation between high American wages and the prosperity of the post-war years resulted in the formulation of the doctrine that wages should be adjusted to the rate of increase in the per capita output of labor. If, it is held, wages are kept from advancing as rapidly as productivity, the purchasing power of the masses of consumers does not keep pace with the total output of industry, industrial 041840operations must be restricted and the volume of unemployment rises. This principle of wage adjustment, which was in fact embraced by many schools of thought, has a tenacious hold on the minds of labor in spite of the universal experience with wage cutting during the past two years.

The unemployment policy of American labor has long rested on the belief that the surest cure for unemployment is the progressive reduction in the work week and that, as long as unemployment remains a risk of labor, the most effective safeguard against distress is a rate of wages high enough to allow decent standards of life in the present and adequate savings for the contingencies of the future. Committed to this policy, the majority of American unions, and in particular the American Federation of Labor, have always resisted compulsory unemployment insurance. They not only questioned its effectiveness but, animated by an individualistic outlook, they also looked upon it as constituting a harmful invasion of the rights of individual workers. More recently the opposition to compulsory unemployment insurance established by legislation and supervised by the government has been weakened by the experience of Europe with this form of insurance and by the grave problem of relief created by the unemployment of 1930 and after. During 1931 the subject was receiving more favorable attention in the councils of organized labor. Brought up in the general convention of the Federation at the end of the year, unemployment insurance was voted down after several constituent unions had gone on record in favor of the principle. But in July, 1932 the executive council of the Federation, in response to further urgings of local unions, city central labor bodies and state federations of labor, altered its attitude, declared in favor of the principle of a federal system of unemployment insurance, and instructed the President of the Federation to prepare a bill for consideration in the general convention to be held in November, 1982. On this central issue of trade union policy the American Federation of labor thus appears to be reversing its traditional attitude and to be ranging itself with the trade unions of Europe.

Of outstanding significance in interpreting trends in the recent history of organized labor is the industrial calm and quiet which has reigned since the great strikes of 1922. Although there have been frequent conflicts in the depressed industries of coal mining, textiles and clothing, the great body of workers in the remaining industries seem to have been unaffected by these disturbance and there is record of little interruption to peaceful operations. Even after three years of unusually severe depression, general unemployment and considerable wage cutting, strikes and lockouts, which have characterized all previous depressions of this magnitude, have been few and infrequent. Such strikes as have been declared since 1929 have remained localized in the clothing, coal and textile industries. Table 14 shows the course of labor disputes from 1916 to 1930, and does not

042841PeriodAverage number of disputes per yearRelative number of disputes (1916-21 = 100)Average number of workers involved per yearRelative number of workers (1916-21 = 100)1916-19213,5031001,798,8091001922-19251,30437863,051481926-193079123244,94913

Table 14—Labor Disputes and Workers Involved, 1916-1930a

a Douty, H. M., “The Trend of Industrial Disputes, 1922-1930,” Journal of the American Statistical Association, June, 1934, vol. XXVII. p. 160.

include the figures for 1931, but it is a matter of common knowledge that the number of strikes did not increase substantially in the later year.

The causes of this unprecedented phenomenon are not clear. To some extent it reflects the general prosperity of the period and efforts by the larger employers, at least, to handle industrial relations more intelligently than they use to. It is also an evidence of the weakness of trade unionism. In so brief a period as a decade, however, the manifestations of unrest are neither discernable nor measurable. Strikes are by no means an infallible index. It is reasonably certain that the dissatisfaction of labor with the prevailing order of things is immeasurably greater in 1932 than it has been in recent years, although the degree of unrest is not indicated in any of the available measures of industrial disputes. Strikes are serious undertakings which workers do not employ until they have considered alternative courses of action and the prospects of success, and until they have become convinced of the skill and resoluteness of their leaders.

But the deeper causes of this condition are probably to be found in the labor movement itself. Reaction against the extreme hopes of the war strengthened the conservative leadership of American unions. The rank and file of the unions and indeed of all American labor has been increasingly reluctant to explore the potentialities of radical political and economic action characteristic of European labor movements. More recently the apparent failure of the strong labor movements and their political parties in Germany and England to improve the lot of labor has strengthened the determination of much of the leadership of American organized labor to depend upon their traditional methods. Union leadership, therefore, has been fortified in its open hostility to the revolutionary government of Soviet Russia, to participation in the affairs of international labor organization and to the penetration of new and radical forms of organization into American industry. Trade union policy created by this attitude of mind has become more and more conservative; aggression has given way to persuasion, and the leaders have come to hope for the extension of the boundaries of labor organization by cooperating 043842with employers and by such cooperation to convince industry that its soundest interests lie in union recognition.

Organized labor, consequently, has continued to avoid alignments with radical groups and, in recent years, appears to have set out upon a definite campaign against radicalism. This is particularly true of the membership of the American Federation of Labor, which comprises about 89 percent of the total trade union membership; but it is also true of most of the activities of the other unions, with the exception of the numerically insignificant Communist segments. Whatever possibilities of larger import trade union may have in the United States, they are primarily bargaining agencies. They achieve whatever strength they possess under the present regime by working with other groups which stand to gain by their successful operation. Having a decided stake in actual improvements of the lot of labor and thus in the perfection of the present order of industry, they often work for changes which appear to radicals and socialists to be opposed to “the larger aims” of labor. Until the third year of the present depression at least, organized labor made no more exacting demands than for security of employment in a job which commands respect, some control over the conditions of employment, higher wages, shorter hours and better working conditions. The flurry in the direction of interest in control in the early post-war period was followed by the half hearted support of the LaFollette party in 1924. Since then the American Federation of Labor has followed its traditional policy of supporting its friends while refraining from a regular political alliance. Repudiating the central socialist doctrine of class warfare, the Federation has been a vociferous opponent of the program it involves. Many of the most important leaders of the American Federation of Labor and its affiliated organizations are either officers of or are in full sympathy with the activities of the National Civic Federation which in recent years has become one of the outstanding anti-radical organizations. With the onswing of the revolutionary movement abroad and its echo in this country, American trade unions have appeared as a bulwark of the present order.

The American Federation of Labor has also remained nationalistic in outlook, then “international” in the name of some of its constituent unions referring to Canadian branches rather than to any international outlook. Nationalistic policies like the restriction of immigration and the protective tariff find ready acceptance in their councils. In 1920 the American Federation broke with the International Federation of Trade Unions, which acts in alliance with the Socialist International. Except for its relations with the Mexican labor movement, it is not affiliated with any of the other international organizations of trade unions nor, if its present temper continues, is it likely to be.

044843

However influential this conciliatory policy may be in increasing union membership in the future, the inaction of the organized labor movement has to date been accomplished by a direct and considerable decline in its power in industry. From the climax of numbers and position achieved in 1920, the movement in this country has steadily receded. In the next phases of our industrial history, forces in industry and in labor may move in various directions. The persistence of the present depression and the resentment and unrest created by it may conceivably stimulate the organization of new craft and semi-industrial unions if the familiar type and may thus lead to the revival of our traditional labor movement. The weakening of existing craft unions in competitive industry may, on the other hand, gradually end in the disintegration of the labor movement in its present form, except in the sheltered industries, and in the rise of new labor organizations, radical in purpose and industrial in form. It is a final possibility that the numerous plant and establishment organizations of labor, created as a rule by the initiative of the employer and surviving by his consent, will be converted by the stress of conditions into independent and autonomous unions which will serve as the nucleus of the American labor movement of the future.

Industrial Relations.—As important perhaps as the policy of trade unions in its effects on methods of industrial relations has been the changing attitude of many employees toward their responsibilities in industry. While there has been no widespread radical change of policy in industrial relations in this country, it is nevertheless a fact that an increasing number of industries have begun to abandon their negative positions toward labor relations and to adopt direct and more constructive policies. Much that is being done in this new form has, no doubt, for its first purpose the prevention of the growth of trade unionism, but it has also the additional purpose of achieving better results in industrial relations and of improving conditions of labor.

The most notable advances in these directions have been made by the very large firms, although there are numerous instances of farsighted experiments in small companies owned and managed by men of liberal outlook and deep insight into the labor problems of modern industry. But in the case of industries characterized by centralized ownership and large factories, expansion in the size of factory units and the application of scientific management to the technical processes of production have made inevitable the application of more systematic and intelligent methods to the solution of the human problems.

Radical transformation in the management of factories has been the first manifestation of this tendency. The advent of personnel and employment managers was in itself a step of primary importance. The replacement of the old types of plant managers and foremen with the trained and 045844educated members of the personnel departments of industry unquestionably raised the level of industrial relations. In many instances customary practice employed in the hiring and firing of labor was abandoned for methods which exposed workers less frequently to the whim and prejudices of foremen and plant superintendents. In the fixing of piece rates and the making of working rules, favoritism and other evil practices of the same nature were brought under some measure of control, if not eliminated.

With the adoption of personnel management, there began the development of what might properly be called a rounded labor policy. Such policy led to the establishment of machinery for labor representation in the fixing of working conditions, to the adoption of measures for mitigating or reducing the risks of industry, and to the promotion of loyalty and interest in employees by encouraging their participation in the ownership of the business for which they worked. Under the more advanced systems of personnel management, methods of wage payment have been subjected to a high degree of elaborations; provisions have been made for vacations with pay; in isolated instances employers have experimented with dismissal wages or bonuses paid to employees who lost their jobs through the introduction of machinery, changes in processes, or the permanent shutdown of plant for other reasons; and in general the most progressive management in industry has occupied itself with the development of many forms of employees’ welfare services.

Plans of employee representation, variously described as company unions or works councils, have had their greatest growth in the United States during and since the World War. They are more common in the larger than in the smaller establishments. In 1926 only about 3 percent of the employees covered worked in establishments of less than 1,000 employees, while about 62 percent worked in establishments employing over 15,000 men and women. Although the individual plans differ materially, they all have many elements in common. They do not constitute organizations created by the spontaneous desire of labor. They are in the main organized by the companies themselves. They are not independent unions but carry on their affairs under the supervision of the management and are often limited in the issues they are empowered to consider and even more so in the decisions they are allowed to make. At the same time there have been isolated but important instances where the availability of the machinery of employee representation has produced an articulate labor opinion and increased labor participation in the councils of management beyond all original intentions. The number of works councils and their membership, as is shown by the following tabulation,12 has increased rapidly. Since 1926, when works councils covered12 Figures obtained from the National Industrial Conference Board.046845roughly 40 percent as many workers as were members of trade unions, the plans probably have not grown; and it is likely that the depression has greatly reduced both their number and their membership. The future of these associations is impossible to forecast, but it is bound to be influenced by the course of business conditions and by the vigor with which the labor movement prosecutes its organizing campaigns in the next decade.

YearNumber of companies with works councilsNumber of workers covered1919145403,7651922385690,00019244211,240,70419264321,369,078

The sale of common and preferred stocks and bonds to employees is an old device in American industry, but its widespread use is of very recent origin. The impetus given to the plans for employee stock ownership since 1920 was an element in the post-war labor policy of large corporations and was designed to secure the loyalty of labor, to reduce the rate of labor turnover, to stimulate thrift and in general to establish closer ties between individual firms and their employees. Specific plans of stock purchase differ widely. Most of them fix prices below prevailing market quotations at the time of sale; make provisions for the payment of stock on the installment plan; limit the amount purchaseable by the individual worker; and some make more or less liberal provisions for the repurchase of the securities. Although the volume of securities distributed under these arrangements has been large and has increased considerably during the past decade, there are not reliable data on the average holdings of securities by wage earners and by the lower salary employees. Published data, moreover, greatly exaggerate the investments of wage earners and clerical employees in their company securities since they fail to distinguish the holdings of these groups from those of higher salaried officers, who receive the bulk of such security offerings.

Much of the enthusiasm for stock purchase plans reflected the general interest in securities during a period of boom prices. The decline in security values after 1929 disclosed weaknesses which were not before apparent. Many employees, already suffering unemployment, are forced to take substantial losses in their accumulated savings. Although the problem is crucial for the unemployed or part time worker, there is little evidence that the serious nature of the risk was appreciated before the present depression and that appropriate measures have been adopted to meet it. Following the stock market crash in the winter of 1929, the National Industrial Conference Board investigated the effects of the decline in security prices on the stock purchase plans of 99 companies. It 047846found that 48 of the companies had the policy of repurchasing employee shares at cost; 27 had no plan for meeting the emergency; 15 undertook to assist employees in selling their stocks; and some pursued the practice of extending loans to keep employees from selling their holdings at a sacrifice. If the risks involved had been fully understood, no such enthusiasm for this device would have been manifested as appeared in the prosperous years before 1930. The unprecedented decline in the securities of all leading corporations is serving to cast doubt on the value of this practice in promoting better industrial relations.

Against the risks of industry for the wage earners, employers have made little voluntary provision. The pension plans of private industry still cover only a small fraction of the wage earners of the country. Insurance against sickness and the provision of medical care is made adequately in isolated cases only. The most spectacular development in the interest of industry in workers’ risks has taken place in the last ten years in the adoption by many companies of the device of group life insurance for their employees. In 1916 insurance of this type to the amount of only $150,000,000 was outstanding; but by 1931 the amount of group life insurance in force had increased to more than 10 billion dollars. For employees who hold on to their jobs, group life insurance in superior to other forms of insurance since the premium is low and the cost is often shared by the employer or entirely borne by him; for the rest its benefits are only temporary since the insurance terminates when they loose their jobs. There is, moreover, no cash surrender value or reserve to the credit of the employee, but participation in a group insurance plan usually allows him to purchase ordinary life insurance without physical examination.

Insurance against unemployment is practically never furnished by industry. The voluntary insurance plans of private companies, such as the measure adopted by the General Electric Company in 1930, cover altogether less than one percent of the working population of the country. The progress which American industry believed it had made in the regularization of employment in the prosperous years prior to 1929 failed to meet the test of depression. Against the unemployment caused by the introduction of machinery, seasonal fluctuations in business and the major depression in industry, the American workman still receives scant protection from his employment

However hopeful certain phases of recent developments in industrial relations may be, it is clear that they affect a small fraction of the industrial employees of the country. Against the major economic risks of the times—the loss of accumulated savings, unemployment, and dependent old age—industry by itself was plainly unable, even in the past period of unparalleled prosperity, to devise adequate safeguards. So far as the more constructive measures initiated by employees for securing better relations 048847in industry are concerned, critics of the practices of our large corporations deplore the persistent hostility of management to independent labor organization and the loss in individual initiative and self-respect which they believe to be associate with the administration of company unions, works councils, and similar plans of industrial relations.

The State in Relation to Labor.39—The regulation of labor conditions and industrial relations by law has in this country lagged far behind the legislative measures in force in the advanced industrial countries of Europe, notably in England and Germany. Until comparatively recent times, legislation was limited to a variety of factory and inspection laws, control over the employment of child labor, regulations of the hours of work of women, restricted regulations of wages in the form of a few state laws fixing minimum wages for women in private employment and for men and women in public employment, and a variety of regulations affecting the manner and time of wage payments. The net effect of these measures has been to raise the standards of physical conditions of work, to reduce considerable the employment of children in industry, to afford women some slight protection against the grosser forms of industrial exploitation and to assure to workers the prompt payment of their wages.

39 Compare with discussion of industrial relations and the law in Chap. XXVIII.

The most radical departure from the traditional measures of state control over the conditions of employment was made with the adoptions of the earliest workmen's compensation or industrial insurance laws only 20 years ago. The passage of these laws constituted the first stage in the development of a progressive system of social insurance in this country. By 1929 such laws were effective in all but four states of the union, namely, Florida, Mississippi, South Carolina and Arkansas. As in the case of all social legislation the terms of the law and the conditions of administration have been progressively liberalized. More occupations have been included under the acts; the rate of compensation has steadily risen; waiting periods have been reduced; more generous allowance has been made for medical care; and the adjudication of disputed cases has been more and more removed from the courts to administrative commissions created for the purpose of facilitating the settlement of claims. Progress has also been made in providing the financial and administrative machinery for the vocational rehabilitation of injured workers. This progress has been most marked since the passage of the federal Vocational Act of 1920, providing for federal grants-in-aid to states following prescribed standards.

Advance in the adoption of social insurance against sickness,40 old age and unemployment has been much slower. We do not have in this country measures for the protection of workers analogous to the elaborate compulsory

40 For the discussion of the problem of sickness, see Chap. XXI.049848

Table 15.—State Workmen's Compensation Laws in Effect in the United States, December 31, 1931a

StateEffective since—

California1911

Wisconsin1911

New Jersey1911

Washington1911

Nevada1911

Ohio1912

Illinois1912

Arizona1912

Kansas1912

New Hampshire1912

Massachusetts1912

Michigan1912

Rhode Island1912

Texas1913

Minnesota1913

West Virginia1913

New York1914

Maryland1914

Connecticut1914

Iowa1914

Oregon1914

Nebraska1914

Wyoming1915

Oklahoma1915

Louisiana1915

Montana1915

Vermont1915

Colorado1915

Indiana1915

Maine1915

Pennsylvania1916

Kentucky1916

Utah1917

South Dakota1917

New Mexico1917

Idaho1918

Delaware1918

North Dakota1919

Virginia1919

Tennessee1919

Alabama1920

Georgia1921

Missouri1926

North Carolina1929

a U.S. Bureau of Labor Statistics, Workmen's Corporation Legislation of the United States and Canada as of January 1, 1920, Bulletin no. 496. Since the publications of this bulletin, one more state, North Carolina, has passed a workmen's compensation law.

health insurance schemes of England and Germany. In 11 states, however, and in the federal government, injuries compensated under workmen's compensation laws have been defined to include occupational diseases.

Until this last decade the superannuated were left to their own resources or were supported in the public alms houses and the privately endowed homes for the aged. The belief that the proportion of old persons in the population was increasing and that the accelerated speed and mechanization of industrial processes had reduced the opportunities of employment of men and women above the age of 45 gave an impetus to the passage of many state old age pension laws. The first old age pension law was passed in 1923 and only four additional acts were adopted before 1929 but since then rapid progress has been made. By 1931, the existing retirement and pension provisions for many categories of public employees had been supplemented by mandatory and optional old age pension systems in seventeen states.41

41 Compare with Chap. XXIV.

Advocates of compulsory unemployment insurance legislation in the United States have had to overcome serious obstacles. Until recently the spokesmen for organized labor have opposed all such forms of legislation in this country. Employers, in the belief that they could solve their own unemployment problems through the achievement of business stability, have been determined to prevent government participation in handling the problem of unemployment. The general public, also, unfamiliar with

050849StateYear of adoptionAgeMaximum amount of pensionSource of fundsCounties in the stateCounties known to be paying Dec. 31Pensioners on Dec. 31, 1930Pensioners on Dec. 31, 1931Total cost 1931 (in thousands of dollars)Months pensions were paid in 1931Average monthly pension per personA. STATEWIDE MANDATORY SYSTEMSbMontana192370$25 per monthCounty56439601,11418512$15.65California192970$1 per day.½ state; ½ co.58585,6139,5962,2361223.10Wyoming192965$30 per month.County231299250281213.88Massachusetts193070No maximum½ state; 2/3 co.141410,000905625.35New York193070No maximum½ state; ½ co.626247,58511,9111226.30Colorado19316581 per dayCountyStart, 1932Delaware193165$25 per month.State531,4976769.54Idaho193165$25 per month.CountyStart, 1932New Jersey193170$1 per day.3/4 state; ¼ co.Start, 1932New Hampshire193170$7.50 per wk.County1082347417.18B. COUNTY OPTIONAL SYSTEMScWisconsind192570$1 per day.½ state; 2/3 co.7199611,48529012$19.27Nevada192565$1 per day.CountyNoneKentucky1926$250 per yr.CountyNoneMarylande192765$1 per day.County241133381230.00Minnesota192970$1 per day.County6741,093913-920.28Utah192965$25 per month.County29161,1851,252134129.00West Virginia193165$1 per day.CountyNoneTotal3,31374,24115,89224.68

Table 16.—State Old Age Pension Laws in Effect in the United States, December 31, 1931a

a American Association for Old Age Security.b Though “mandatory,” some of the state laws are, as a result of legal technicalities and administrative difficulties, not carried into effect by all the counties in the state.c An “optional” law is an enabling set which removes constitutional restrictions, if any, against the payment of old age pensions by the counties and set up regulations governing those counties which pay pensions.d Wisconsin's law becomes statewide and mandatory July 1st, 1903.e To date only the county includes the City of Baltimore has availed itself of the optional law.051850

the details of the European experience with compulsory insurance, has been hostile to the use of similar measures here and skeptical of the benefits of such insurance. This prevailing attitude has been weakened by the widespread distress occasioned by the wave of unemployment during the depression of 1921 and more particularly by the high and mounting rate of unemployment since the end of 1929. The reappearance of the difficult problems of unemployment relief and the failure or inability of industry to assume the responsibilities for unemployment has led to a revived interest in compulsory unemployment insurance and to a more favorable attitude toward it. Numerous state governments have created unemployment commissions which, among other duties, are primarily concerned with the study of alternative plans of insurance against unemployment. In January, 1932 the first statewide insurance law was passed by the legislature of the State of Wisconsin. Although prediction in this instance is hazardous, it is probable that the aggravation of insecurity by the depression will in the near future greatly advance the social insurance movement in this country.

The Legal Status of Labor Organizations.—Because of the position of trade unions as instruments of social reform, their legal status and the legality of the various devices which they employ are matters of prime importance. The numerous legislative and judicial jurisdiction in this country make it difficult to discern the trend in this regard or even to be certain of the legality of some of the common practices such as picketing and boycotting. Although the right to organize and to strike have presumably been won, collateral rights of combinations of labor in this country are by no means as securely founded as they are in England because of a variety of factors, the chief of which is the lag of judicial behind legislative opinion. Drastic injunctions are still being issued by the courts in industrial conflicts, conducted under the most variable conditions. The passage of anti-injunction legislation and the outlawing of the “yellow dog” contract by the United States Congress in 193242 as well as the issue of injunctions by several state courts to enforce collective agreements violated by employers are evidences of a more liberal interpretation of the law. What the status of organized labor and its acts really are may only be disclosed in a period of widespread strikes and lockouts in industry.

42 U.S. Congress, 73d. Cong. 1 sees., Public Act no. 65, approved March 28, 1932; cf. U.S. Bureau of Labor Statistics, Monthly Labor Review, July, 1932, vol. XXV, p. 66 f.

Public Attitudes toward Labor.—Public sentiment, difficult to gauge at all times, is especially hard to measure in matters affecting labor because of the controversial nature of the issues involved and because of the difficulty of separating opinion on the problems of labor from attitudes toward other economic issues. In a democratic society changes in the 052851legal position of organizations of labor and in the volume and character of labor legislation are one index of the prevailing state of public opinion. There is evidence in the recent shift in public opinion with regard to old age pensions and unemployment insurance that the optimism and drift of the post-war decade have been succeeded by rising interest in programs of social reform.

Many private agencies, reflecting a changed public attitude toward labor, are exerting themselves toward improving the status of labor. Such organizations as consumers’ leagues, housing associations and legal aid and charity organization societies reflect the continued interest of the general public in the problems of labor. Institutions like the Russell Sage Foundation, the American Association for Labor Legislation and the Brookings Institution devote much of their energy either to exploring the problems of labor or to the attainment of definite reforms. The organization of the Committee on the Costs of Medical Care is additional testimony to the concern of the public in the risks to which laborers are exposed and in the inadequacy of labor's income in meeting such risks. In a society of increasing wealth and democratic traditions and ideals it is hardly an occasion for surprise that a keen interest in the position of the great mass of the population can be aroused and maintained.

In a more striking way there was a changed public attitude toward the whole questions of wages and the efficiency of the economic organization during the prosperous years of the post-war period and especially after the recovery of business in 1922. Leaders of American business appeared to be increasingly willing to endorse the principle that high wages and low costs go together and what wages may continue to increase in proportion to output, as long as labor costs are not increased or profits reduced. This was reflected in a greater willingness on the part of labor to cooperate in increasing output. As output increased and sales problems became more pressing, market analysis disclosed the important role of the wage earner as a consumer of comforts, conveniences and small luxuries. Wages took on a new social importance and high wages, permitting mass consumption, began to be looked upon as a condition of mass production. It is still too early to say how seriously this whole outlook may have been destroyed by the present depression but the fact that it had a powerful influence in restraining wage cuts in the first year of the depression and that a popular explanation of the cause of the depression is the alleged inadequacy of wage disbursements in comparison with past output suggests the conclusion that the existence of the positive relationship between wages and output and hence with the entire productive mechanism is still ardently believed by articulate masses of the population.

What effects the present depression will have upon the public attitude toward the problems of labor can only be surmised. Community efforts 053852to provide jobs, stagger employment and furnish relief indicate that there is a greater realization than ever before that general unemployment is a social and not merely a personal problem. The growing belief that the care of the unemployed is a responsibility of industry and government constitutes a striking reversal in the public attitude toward the relation of labor to industry and to the state.

V. CONCLUSION

In the perspective of the past three of four decades the position of labor in the United States has been affected by a variety of interacting forces, the chief of which have been increasing mechanization, the growth of large establishments and corporate units, the general increase of wealth, and the acceptance by both business and government of the implications of the democratic outlook on life. The vast amount of machinery, power and organization placed at the disposal of labor have been chiefly instrumental in causing a radical change in the nature of the work performed by labor and in providing greater reward for effort. At the same time continued changes in the organization of industry have increased the dependence of labor upon a going concern and an economic system almost entirely beyond its control. Both in production and consumption economic progress has lessened the possibility of self-help on the part of the worker.

While the output of industry and real wages have increased substantially, universal well being and satisfaction are far from immediate consumption. Operating in an atmosphere of social democracy, an increase in income which statistical measures reveal becomes the basis for still higher expectations. The marked increase in productivity in the post-war period has added to the expectations inherent in democracy and has built up an anticipation of general well being which has been rudely shocked by the sudden breakdown of the sources of prosperity. Increasing well being and mass education have made wage earners less willing to accept the necessity for lower standards and have caused them to view with bewildered impatience conditions which were thought to be inevitable in earlier years.

Self-employment or personal contact with an employer in a small shop is becoming less characteristic. Present trends indicate the continued growth of the large establishment. For labor the larger establishment and the concentration of control means impersonal relations with management, the elaboration of a technique of control through employees’ representatives and a weakened effectiveness of individual bargaining over terms of employment.

Mechanization is only one contributing factor toward the increasing efficiency which makes it possible to produce the same output with 054853fewer workers. The elimination of small and inefficient plants, regional shifts to areas of high productivity, increasing speeds, the better planning and routing and subdividing of work, the devices of scientific management, contribute to the same result. What has come to be called technological unemployment may result from the latter of these procedures as well as from the former. Increased industrial efficiencies from all these sources may be expected to continue. The full employment of the labor force while the productivity of labor continues to increase will be possible only with the continued diversification of operations and the continued elaboration of new processes, new commodities and new services to satisfy the higher wants which increasing wealth and culture bring to the market place. Labor's powers of adjustment to changing conditions will be called for even more in the future than in the past.

The mechanization of industry and the technique of scientific management continue to affect the skill required of workers. There is a tendency for the self-sufficient skill of the worker to be subordinated to the selective requirements of the particular shop organization. The worker is ceasing to be an independent journeyman with a self-initiating skill and is taking his place in a large productive mechanism and a going organization. The selection, training and control of the workers on the job, the methods of work employed and the methods of payment for work done are all influenced by these changes.

Technological progress is rendering useless much of the traditional skill of the worker in a growing number of occupations. As skill and energy are invested in machinery there is a lessened demand for the skill and brute force of labor. The class of machine tenders, performing relatively routine operations in close association with other workers and under the continual direction and supervision of management, is already the predominant form of factory labor in many industries and promises to increase in the future. The model of factory production is being copied in occupation connected with transportation, trade and clerical work.

Money wages in the United States have shown a fairly consistent secular trend upward, the principal gains coming in the post-war period. Business depressions have continued to reverse the upward movement of wages, but up to the present depression, they have interfered seriously with the long term trend. The heaviest losses in depression are incurred by wage earners in highly competitive industries. Wide differentiation of rates and earnings characterize wage movements in different industries and occupations. The differences are due to such factors as the variation in skill required, the sec and age groups involved, the competitive position of the industry, its location, the influence of trade unionism and the extent of government control. Consequently there is no general American level of wages, but many different levels.

055854

The real earnings of employed workers showed unimportant variations from year to year from 1890 until 1914 and impressive increases up to 1929. Unemployment has resulted in sharp temporary setbacks of the average annual real earnings of those attached to industry. Since 1929 real earnings have declined at an accelerated pace as a result of unprecedented unemployment, considerable wage cutting, and the retardation in the rate of decline of the cost of living. While, as in all previous depressions, the range in the variations of the decline has been great, the total decline in the real earnings of all classes of labor suggest that much of the gain in real earnings won between 1919 and 1929 is now being wiped out.

Owing to the increase in the employment of women and in the proportion of the gainfully employed, family incomes have increased more than is indicated by the rise in real wages. An important factor in the maintenance of relatively high living standards by the families of American wage earners is the contribution of others than the chief wage earner to the family fund. Budget analyses disclose that there is a positive relation between the size of the family and the size of the family income. In workingmen's families with large incomes the contribution of the earnings of children are substantial and largely account for the increase in family funds.

The provision of free social services by government and philanthropic agencies, which add to the real income of wage earners, is increasing at a rapid rate. The largest expenditures are for education, hospitals, charities, the conservation of health and recreation. The expense of charities, which was about equal to that for the conservation of health and recreation and which had been increasing less rapidly than these, has leaped far ahead of them since the beginning of the present depression.

During the past half century the normal work week has been reduced by about 20 hours. While the range in hours among American industries is still great, the largest percentage decreases have taken place in those industries which, in the beginning of the period, worked the longest hours.

Trade union membership, including the organizations not affiliated with the American Federation of Labor, increased steadily until the United States entered the World War in 1917. Thereafter, under the most favorable conditions for growth, membership in American trade unions increased more rapidly until, in 1920, it totalled approximately 5,100,000. Since 1920 there has been a slow but uninterrupted decline, membership dropping to approximately 3,300,000 in 1931.

The “liquidation” of labor in the business depression of 1921 was followed by a prolonged period of business activity in which, for the first time in a period of prosperity, organized labor was unable to increase its membership and power. The trade unions have not been able to 056855organize effectively any of the basic industries except transportation and the building trades, which, because of government regulation in the one case and peculiar competitive conditions in the other, present situations in important industries which are not typical. These two groups now constitute more than half of the total membership in American trade unions. The inclusion of the printing, theater and public service groups accounts for 70 percent of the total membership. The decline may be attributed chiefly to technological changes and the concentration of industrial management which have weakened the relative power of labor, to the ineffectiveness of craft organization in dealing with the new situation, to the better conditions and wages offered by enlightened employers and to the persistent hostility of employers to trade unionism.

Under the influence of changing conditions the aims and policies of organized labor have undergone change. The peak of trade union membership and power coincided with ambitious aims in the direction of “industrial democracy.” These aims were discarded soon after the close of the war. Except for important experiments in industrial democracy in the garment and transportation industries, trade union practice has reverted to its traditional character. In its attitude toward wages, however, the labor movement, in face of the vast increase in the productivity of labor during the post-war years, has vigorously espoused the theory that wages should be raised in proportion to increases in output. The grave problems of this depression indicate a revision in the attitude of the American Federation of Labor and its constituents toward unemployment insurance as well as toward the relation of government to industry.

Since 1922 there has been a sharp decline in the number of strikes and the workers involved in them. This is owing to the prevailing prosperity, the growing conservatism of American trade unions, improved industrial relations and to the weakness of labor organization in the majority of American industries.

The post-war period has also seen a closer study of labor relations on the part of managements. Personnel departments were established in most of the larger companies and many of the smaller ones. Company unions have grown until they now have a total membership that is about 40 percent of trade union membership. Their restriction to a single concern, their company sponsorship and the short period in which they have been functioning leave their future in some doubt.

Added attempts were made to increase the security of wage earners by encouraging them to invest in the stocks and bounds of their companies. Enthusiasm for this provision for the future ran so high in the period between 1923 and 1929 that little provision was made for the protection of wage earners’ investments in the event of a steady market decline. The result is that despite the favorable terms upon which wage earners 057856were permitted to make purchases, the majority of the purchasers have suffered great losses at a time when savings are most needed. It is evident that industry has not yet worked out a safe means of insuring the workers’ savings and of enabling them to share continuously in the profits of their firms.

Employers have made little voluntary provision against the risks to which wage earners are exposed, and provision by law, except in the case of industrial accidents, is still far less common in this country than in Europe. The average rate of unemployment of manufacturing, railroad, building and mine workers was close to 10 percent in the unusually good years, 1923-1929. During the depression years, 1921 and 1922, it was 23 and 18 percent and in our latest depression it has exceeded even these figures. Against a risk of such magnitude even the increasing personal and family incomes of the 15 years before 1930 are altogether inadequate. Such hope for progress as there is appears still to lie in the accepted device of social insurance.