Chapter 46 Chapter III Labor Wages

The scope of Chapter 3 to Chapter 10 of Section 1. When we discussed the general equilibrium theory of demand and supply in the previous part and the central issues of distribution and exchange in the first two chapters of this part, we tried not to consider the special properties of the factors of production and their side issues.We have not examined at length how far the general theory of the relation between the value of the means of production and the value of the product produced by it applies to the knowledge and skill acquired by the employer, the worker, or the freelance class, either through innate abilities or acquired knowledge and skill. those incomes.In order to avoid the difficulties connected with the analysis of profit, we ignore the many different uses of the word profit in the market, and even the more primitive term interest.We do not estimate the impact of various types of tenancy on the form of land demand.All these deficiencies will be analyzed and supplemented in detail in the following chapters dealing with labour, capital and business capacity, and the supply and demand of land.This chapter deals with the method of calculating wages, which mainly belongs to arithmetic or book-keeping, but many errors are caused by carelessness in calculation.

Section 2 Competition has a tendency to unequal weekly wages in the same occupation, but tends to make weekly wages proportional to worker efficiency.hourly wages.piece rate wages. efficiency wages.Hourly wages do not tend to be equal, while efficiency wages do. When we observe the operation of supply and demand for material commodities, we are often confronted with the difficulty that two things sold in the same market under the same name are actually of different qualities, and have different values ​​to the respective buyers.Or if the quality is really the same, they may be sold at different nominal prices because of the different conditions of sale even where competition is extremely acute.For example, the cost or risk of delivery is sometimes borne by the seller and sometimes by the buyer.But this difficulty is much greater in the case of labor than in the case of material commodities.The real price paid for labour, often varies widely, and this difference is not easily accounted for by the nominal price paid.

Difficulty in interpreting the term "efficiency" was encountered at the outset.If it is said that, in the long run, persons with approximately equal efficiency in different branches receive approximately equal wages (or approximately equal "net benefits," see Part II, Chapter IV, Section II), the term efficiency must be interpreted in a broad sense. Explain that it must refer to general industrial efficiency (as described in Part IV, Chapter V, Section I).But if what is meant is the difference in the productive capacity of individuals in the same sector, efficiency must be estimated in terms of those particular efficiency factors required by that sector.

It is often said that competition tends to equalize the wages of persons in the same trade, or trades with the same difficulties; but this statement requires careful interpretation.Because competition makes the wages of two people with different efficiencies not tend to be equal, but tend to be unequal within a certain period of time, such as a day or a year.In the same way competition tends not to equal but to unequal average weekly wages in two districts of unequal average efficiency.If the average strength and energy of the working classes in the North of England is higher than in the South, it may be asserted that the more thoroughly "competition brings things to their own level," the more certain will be the wages in the North than in the South.

Cliff Leslie and certain economists have naively emphasized regional differences in wages as evidence of little mobility among the working class and the futility of their competition for jobs.But the greater part of the material they cite relates only to daily or weekly wages: they are only part of the material, and if another part is added that is missing, the whole of the material generally supports the opposite conclusion.Because we find that the regional differences in weekly wages and the regional differences in efficiency are roughly the same.Therefore, the material (insofar as it is relevant to the issue) often proves that the competition is valid.We soon learned, however, that adequately interpreting this material is an extremely difficult and daunting task.

The wages earned by a person during a certain period of time, such as a day, a week, or a year, are called hourly wages. Therefore, we may say that the example of hourly wages given by Cliff Leslie is sufficient to prove rather than weaken this hypothesis: competition makes Wages in all trades of equal difficulty in the neighborhood correspond to the efficiency of the workers. However, the term "worker's efficiency" is ambiguous and needs to be thoroughly clarified.clear.The wages paid according to the quantity and quality of a certain work completed are called piece-rate wages. If two people use the same suitable tools and work under the same conditions, if the piece-rate wages they receive are based on the same wages for each kind of work. Unit price calculation, their wages are proportional to their efficiency.But where tools are not of equal quality, a uniform piece rate has consequences that are disproportionate to the efficiency of the worker.

For example, if there are two spinning mills, one using old-style machines and the other using new-style machines, the unit price of piece-rate wages used by them is the same, although they appear to be equal, they are actually different.For the more effective the competition, the more fully the development of economic liberty and enterprise, the higher the unit price charged by the spinning mill with the old machinery than the others. Therefore, in order to properly understand the assertion that economic freedom and enterprise tend to equalize wages in industries with similar difficulties in the neighborhood, we need to use a new term, efficiency wages, or, in a broader sense, efficiency pay.That is to say, unlike hourly wages, which are measured according to the time consumed to obtain wages, or piecework wages, which are measured according to the quantity of products, they are measured according to the efficiency and utilization of workers' abilities.

The tendency, therefore, of economic freedom and enterprise (competition as it is generally referred to) to make the wages of each individual find its own level, is a tendency to equalize the wages of efficiency in the same area.The greater the mobility of labor, the less intensive the specialization of labor, the greater the desire of parents to find the most profitable occupations for their children, and the faster the ability to adapt to changes in economic conditions, and the slower and less violent changes in these conditions , this trend will become stronger. However, the discussion of this trend still needs to be slightly revised.For what we have hitherto assumed is that, provided that the total wages paid for doing a job remain the same, it makes no difference to the employer whether a few or a large number of persons are employed to do that work.But that's not the case.The workmen who are paid at a given rate, and who make the most in a week, are the cheapest to their employer, and to the society, unless they grow prematurely old by overwork.For they employ the same amount of fixed capital as their slower fellow workers, and as they perform more work, they bear less fixed capital per part of the work.

Although the direct costs are equal in both cases, the total cost of the work done by the more efficient workers earning more hourly wages is lower than that of less efficient workers earning less hourly wages (paid at the same wage rate) did. The above argument is of little importance for work outside the workshop, where there is much vacant space and less use of expensive machinery.It makes no difference, therefore, to the employer whether he divides the total wages of £100 employed in a particular job among twenty efficient workmen, or among thirty less efficient ones, except by supervising the work.But where expensive machinery is employed, and the machinery must be kept in proportion to the number of laborers, the employer often finds that what he could do at fifty pounds with twenty men could have been done at forty pounds with thirty men. The work performed by an individual reduces his total cost of goods.In this regard, the United States is in a leading position in the world, and there is a saying there that whoever strives to pay the highest wages is the best entrepreneur.

It can be seen that the revised law is that economic freedom and enterprise tend, generally speaking, to equalize efficiency wages in the same area.Where a great quantity of costly fixed capital is employed, it is bound to be advantageous to employers to raise the hourly wages of the more efficient workers more than in proportion to the efficiency.This tendency is, of course, liable to be opposed by peculiar customs and institutions, and in some cases by trade union statutes. The third section is about real wages and nominal wages.The purchasing power of money (especially as regards the consumption of this class of labor) must be weighed: occupational costs and added conveniences and inconveniences must also be considered.

That's all there is to say about pay for work.Next, we have to discuss carefully that in calculating the real wages of a certain industry, on the one hand, besides monetary income, many other circumstances must be taken into account, and on the other hand, besides the immediate inconvenience caused by the heavy work, we must also take into account Many attendant inconveniences. As Adam Smith said, "The real wages of the worker are those quantities which are furnished to him with the necessaries and comforts of life, and the nominal wages are the quantities of money . . . Whether the worker is rich or poor, or whether his remuneration is high or low, is not in proportion to the nominal price of labour, but to the actual price of labour". The necessaries and comforts of life directly provided by the product of labor or labour; for those benefits incidental to occupation, which require no special expense from him, must also be reckoned. In ascertaining the real wages of a trade in a certain place or time, the changes in the purchasing power of the money (in which nominal wages are expressed) are first taken into account.This point cannot be thoroughly analyzed before discussing the general theory of money.We may, however, remark in passing that, even if we had perfectly accurate statistics for the entire history of prices, this estimation is not merely an arithmetical calculation.For if we compare distant regions or longer periods of time, we find that people have different wants and different means of satisfying them.Even when we focus on the same time and place, we find that different classes spend their income differently.The prices of velvets, operas, and scientific books, for instance, are of little importance to the lower classes of workmen; but the reduction in the price of bread and shoes affects them much more than the higher classes.This difference must be kept in mind, and it is generally possible to make a rough estimate of these differences. The fourth quarter continues. We have seen that a man's total income minus his production costs is his total real income.But gross income includes many things that are not monetary remuneration, and thus risks being overlooked. First of all, in terms of fees, we do not count the general education fees and special education fees used in learning a certain industry.Nor do we count the health and physical strength that someone expends at work, which are best measured in other ways.However, we must deduct all professional expenses, whether freelance or artisan.For example, in the total income of a lawyer, we must deduct the rent of the firm and the salary of the staff; in the total income of a carpenter, the cost of purchasing tools must be deducted; Whether the cost of custom, tools and explosives is at the mason's own expense, or by the employer.These are some relatively simple examples.However, it is more difficult to decide how much of the rent, travel expenses and social expenses that doctors need to use should be regarded as professional expenses. Section 5 Wages are partially paid in kind.Kind wage system. Moreover, the servants or clerks are obliged to purchase expensive garments at their own expense, which they would probably not buy if left to their own devices, and by this compulsion the value of their wages is lessened to them.If a master furnishes his servants with expensive uniforms, housing, and food, these things are generally worth less to the servant than to the master.It is therefore a mistake, as some statisticians do, to add to the money wages of the servant the equivalent of everything that the master supplies to his servant, in order to calculate his real wages. Conversely, if a farmer hauls coal to his hired hands at no charge, and of course he chooses his horses to have leisure time, this increases the actual income of these hired hands by far more than it costs the farmer.The above argument applies equally to rewards and perks of every kind, for example, when the employer presents to the worker a stock of goods which, though useful to the worker, are of little value to the employer, because of the high cost of marketing them.Or he allows workers to buy at wholesale prices goods they help produce for their own use.But when this permission becomes an obligation, serious disadvantages ensue.The old farmer used to force his other hired hands to buy his bad corn at the wholesale price of the good corn, which meant that he actually paid less wages than he nominally paid.When this so-called system of wages in kind is practiced in any industry in an ancient country, we may generally affirm that the real rate of wages is lower than the nominal rate. Section 6 The uncertainty of success and the impermanence of employment. Next we must take into account the effect of the uncertainty of success and failure and the vagaries of employment on the real rate of return in an industry. Obviously, at the beginning, we should take an average of the rewards of the successful and unfortunate in this industry as the reward of this industry; but we should pay attention to the calculation of the real average. If the average annual remuneration of the successful is £2,000, and that of the unlucky £400, if there are an equal number of them, their average will be £1,200 a year.But if there are ten times as many unfortunates as successful (perhaps as in the case of lawyers), the real average is £550.In addition, many of those who failed utterly may have left the profession long ago and thus were not counted. Moreover, although by taking such an average we no longer have to individually discount the premium for risk insurance, the calamity of success or failure still has to be taken into account.For there are many persons, sound-tempered and sober-minded, who like to face reality, and prefer some employment which affords a certain income, say, four hundred a year, to another which sometimes seems to afford six hundred. , but sometimes they can only provide two hundred pounds.Uncertainty, therefore, does not inspire great ambition and grand purpose, it is especially attractive to a minority indeed, and it acts as a deterrent to many who choose a career for life.Generally speaking, more people will be attracted by the usual certainty of success than by the probability of success, although the latter are also of equal value in the insurance calculation. Conversely, if there are a few very high prizes available for a certain industry, its attractiveness far exceeds the total value of the prizes.There are two reasons.The first reason is that the adventurous youth is far more attracted by the hope of great success than by the fear of failure. The second reason is that the social status of a certain profession depends more on the highest honor and status that can be obtained in this profession, but less on the general luck of those who engage in this profession.There used to be an adage in politics that the government should have a small number of superior prizes in various government departments.In feudal aristocratic countries, the salaries of high-ranking officials are very high, while the salaries of low-ranking officials are mostly below the market level. attention of personnel.This deployment is beneficial to certain dignitaries.This is part of the reason why democracies do not adopt this approach.But democracies tend to go to the other extreme, paying above-market rates of return for the services of low-ranking public servants and below the market rate of return for the services of high-ranking public servants.But this method, whatever its other advantages, is certainly a very wasteful one. Next, let's discuss the impact of employment volatility on wages.It is evident that in those branches of employment in which the work is infrequent, wages must be high in proportion to the work performed; and doctors and shoe shiners must be paid while they are working to maintain their expenses while they are not working.Let the other interests of the trade be equal, and the difficulties of the work equal, a plasterer will earn more wages at work than a carpenter; and a carpenter will earn more than a railway man.For the work on the railways continued almost all the year round, and the carpenters and masons were often in danger of being idle because of the lack of business, and the masons were interrupted by frost and rain.A common way of estimating such job interruptions is to sum up long-term compensation and then take the average.But this method, too, is not entirely satisfactory, unless we assume that a man is not benefited, directly or indirectly, by the rest and ease which he obtains in unemployment. In some cases, it is quite possible to make such an assumption.For waiting for work is often so restless that it may create more tension than the work itself.But this is not a frequent phenomenon.The interruption of work during the normal course of the business, so that there is no worry about the future, it is an opportunity to adjust and accumulate strength for future use.For example, a lawyer is very tense for several months of the year, and being nervous is a bad thing in itself.But when we take this into account, it did him little harm to keep him out of the proceeds during the interdiction. Section VII Supplementary Income.family income. Next we must take account of the chances of a person's circumstances for supplementing his remuneration, that is, remuneration from other employments than that of his principal occupation.At the same time, this environment must also be considered for the job opportunities offered by his family members. Many economists even advocate a family's compensation as their suggested unit of compensation.Much can be said in this respect of agriculture and old-fashioned cottage industries, in which the whole family works together, and it is stipulated that the loss caused by the neglect of the wife should be reduced.In modern Britain, however, such handicrafts are rare.The parent's occupation rarely has much direct influence on other members of the family, except that it enables his son to learn it.Of course, if his place of work is fixed, it will be convenient for his family members to participate in the industry, but the amount of employment is limited by the resources of the neighborhood. Section 8. The attractiveness of a business depends not only on its monetary income, but also on its net benefits.The influence of individual and national character; the special circumstances of the lowest classes of workers. It can be seen that the attractiveness of a profession depends on many other reasons besides the difficulty and tension of the work on the one hand, and the monetary rewards in the work on the other.When the remuneration of an industry is regarded as acting on the supply of its labour, or as the supply price of labour, we have always understood it in such a way that the term remuneration is only used as a substitute for the "pure interest" of labour.We must take account of the fact that one occupation is cleaner and more hygienic than another, that its workplaces are healthier or more pleasant; or that it has a higher social status.It is well known that Adam Smith said that many men detest the work of butchery, and so do butchers to some extent, and this makes butchery more rewarding than other occupations of equal difficulty. There are, of course, sensible differences in estimates of special interests.Some, for example, are so fond of country houses that they would rather live on low wages in the country than earn much higher wages in the city; If you consider yourself a luxury of life, even if you don't have the comforts of life, you don't care.For example, one family told the Royal Working-Class Housing Inquiry Commission in 1884 that their total income was £7 a week, but that they preferred to live in one room so that the money could be saved for travel and various expenses. kind of entertainment. Personal characteristics such as these prevent us from determining the behavior of individual individuals with certainty.However, if the various advantages and disadvantages can be calculated in terms of monetary values ​​(that is, the monetary value of those who enter the industry or send their children to the industry in the future), it can be roughly estimated that the value we are discussing The relative strength of those forces tending to increase or decrease the supply of labor in the time and place.Applying such an estimate based on the situation at a certain time and place to the situation at another time and place will inevitably lead to serious mistakes, which need not be often pointed out. It is therefore interesting to examine the influence of differences in national temperament in our time.For example, in the United States, the Swedes and Norwegians are engaged in agriculture in the northwest; while the Irish, if they come to the United States, choose to buy farms in the old eastern states; the Germans are mostly engaged in the furniture industry and brewing industry; people, meatpacking and some coal mining, Irish and French Canadians, some American textiles; London Jews preferred clothing and retail trade.All this is due partly to differences in the tastes of nations, and partly to differences in the estimation of the additional advantages and disadvantages of various trades. Finally, unsatisfactory work does not seem to have much effect on raising wages if the work is one that low-ranking workers can do.For the progress of science has rendered many men unfit for any employment but the lowest.They are all vying for the lesser number of jobs for which they are qualified, and in times of emergency they think only of the wages they can earn, and have no time to attend to the unpleasantness of work.Indeed, because of the influence of their circumstances, many of them consider the filth of a profession to be insignificant. Hence the curious result that the squalor of a trade is the cause of low wages in that trade.For the employer thinks that the filth and squalor of his work, if it is done with the best skilled labor and good tools, must add much to his wages; Any butcher is of little value and thus can be hired for low wages (hourly wages).It can be seen that how to reduce such workers and thus increase wages is a problem that society needs to solve most urgently.