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THE PRACTICAL CASE FOR A LEGAL MINIMUM WAGE
FIFTY years ago if you went to a doctor with an ailment, you took for granted that he would prescribe a medicine. To-day, the better the doctor and the more careful his diagnosis, the less likely he will be to do so, save perhaps as a concession to what the patient expects. He himself will oftenest mainly rely not on physicking the symptoms, but on reforming the patient's general way of life-his diet, his exercise, the hours that he keeps, the drains of his house, the sun and air of his working office, or other premises which he inhabits or frequents. The indirect efficacy of hygiene more and more supersedes the direct efficacy of drugs.
If the labour unrest of these days indicates a disease in society-and among thinking people there cannot be much doubt that it does then it will not be enough to prescribe merely for the surface symptoms. Many people talk about strikes as if the matter began and ended with some flaw in the machinery of collective bargaining or some supposed weakness of the police in dealing with pickets. One physician wants trade unions strengthened, another wants them smashed; one advises compulsory arbitration, another that voluntary agreements be given the force of law; a fifth longs to repeal the Trade Disputes Act; a sixth has still faith in the elixir of rifles and bayonets. All of these prescriptions cannot be beneficial and valuable alike, though some may be so to a high degree. But it is important to go behind them and consider the hygiene of the patient. It is as part of such a policy of social hygiene, not tinkering directly with the symptoms of labour disputes, but strengthening broadly the forces which make for social peace and stability, that the policy of a legally enforced minimum wage has to-day a special claim on the attention of moderate and farseeing statesmen.
Anyone who inquires seriously into the present discontents must be struck by an emphatic and remarkable coincidence between the testimony of the social investigator and that of the insurgent workman upon a single point. That point is the under-payment of the lower-paid workers. The coal-strike of
last spring was typical of the workmen's attitude towards this; the whole body of men in our largest trade organisation left work, not to secure any general advance of wages or alteration of hours for their members, but solely that the worst-paid men and grades (quite a minority of the whole) should be benefited, and that no one employed should, from no fault of his own, earn less than a fixed minimum wage. The same idea prompts the demand, which the Labour Party has urged on Parliament, for a ‘national minimum wage of 30s. a week for all workers,' a demand perhaps crude and impracticable enough when stated in those terms, but probably only so stated in order to strike the eye, and, at any rate, containing an interesting kernel of principle. It may be affirmed with confidence that throughout the world of labour at present the emphasis is on this same point; and the results of social investigation show plenty of reason why it should be. We all know the findings of Mr. Booth and Mr. Seebohm Rowntree-how in London in 1891 30.7 per cent. of the people were calculated, and in York in 1902 27.84 per cent. were actually ascertained, to be living on incomes below a physiological minimum. These figures would probably understate the case to-day; for the last ten years have witnessed a steep rise in the cost of working-class living, and scarcely any rise of wages, except some that in the last fifteen months have been obtained by striking. The thirteen millions of whom the late Sir Henry Campbell-Bannerman said seven or eight years ago that they were constantly on the verge of hunger,' are almost certainly more numerous and hungrier now than they were then.
Now, forgetting for a moment the part which this underpayment may play in generating a blind and destructive type of social discontent, let us look purely at its economics, and ask what happens, when wages are paid too low to sustain physical efficiency, at least after the minimum demands of civilised custom 1 have been satisfied. One of two things happens: either physical efficiency is not sustained, and the underpaying industry is actually eating into the capital value of the worker; or else it is sustained, but only because to make up the deficiency in the wages of the underpaid worker part of the wages paid by some other industry is brought in (as when an underpaid tailoress is housed for nothing by her parents, or an underpaid carman relies on the earnings of his daughters in a cotton-mill), or relatives are
1 For instance, a workman has to wear and pay for boots; though in very many cases he might be better off physiologically, if he wore none at all, rather than wear those which alone he can afford. Some ways of 'crank' living are very cheap, but most would be impossible for a workman even if he appreciated them, because they would prevent him from getting employment.
diverted from non-industrial duties to wage-earning (as when the underpaid carman's wife neglects her children to go out laundering, or his children of school age sell newspapers in the streets). In either case the underpaying industry is, in the strict economic sense, parasitic. In the first and last cases it levies a tax on the community at large; in the second case it levies one on some other special industry or industries. Neither way is it any less a bounty-fed, unfairly advantaged industry than one to which State bounties are paid over in hard cash, as to the beet-sugar industry of the Continent. Indeed, a system of State bounties is far less objectionable; for the amount of the bounty is definite and visible, and it comes from general taxation, whose burdens may be distributed as equitably as the nation chooses; whereas the bounty received by an industry which pays less than subsistence wages is indefinite and elusive, its burdens are laid at random, largely on the weakest shoulders, and the nation foots the bill, not in money only, but in physical deterioration, moral degradation, and social catastrophe.
This being so, such underpayment tends clearly to the loss of the nation; and it is difficult on any ground of pure logic to see why the State, as trustee of the national interests, should not interfere with it, just as it has interfered with other features in competitive industry which appeared destructive of the nation's human capital. For about a century a long and everlengthening series of Factory Acts, Mines Acts, &c., has been developed, and it now minutely regulates industry, fixing the kind of people (as to sex or age) who may be employed in the various trades, the hours they may work, the conditions (as to sanitation, ventilation, fencing of machinery, humidity, &c.) under which they may work, and even in some measure (as by the Truck Acts) the conditions under which they may receive their wages. All these regulations, be it noted, have been imposed on the various industries from the outside, by Parliament acting in what it has conceived to be the general public interest. They have had nothing to do with the bargains made inside any trade by employers and employed. Save that the parties may not contract out of the provisions of the Acts, they are left just as free to bargain as they were before. The principle adopted has been to lay down certain minimum requirements, below which no one may bargain to go, because they are thought to represent the lowest point consistent with national interests. Above these minima anyone may go who can and cares to; it is a matter which is left to the bargainers. For instance, the law prescribes a nine hours' day for women and young persons in factories. That fixes the maximum of work or (as the prin
ciple rather shapes itself) the minimum of leisure per day. No one may infringe this minimum, but anyone may improve on it. If an employer, from philanthropy or self-interest, fixes eight hours instead of nine, thereby improving on the law's requirement, he may do so. Similarly, if a trade union put forward a demand for an eight instead of a nine hours' day the law interposes no obstacle.
It is difficult, as has been said, upon any ground of pure logic to explain why underpayment did not become an orthodox subject of factory legislation just as much as over-long hours, inadequate sanitation, or dangerous machinery. Whether you put State interference on the ground of humanitarian sentiment, or on the more scientific ground of conserving the nation's capital resources, makes no difference. It is just as cruel to underpay people as to overwork them, and just as wasteful from a national standpoint. Yet until the Trade Boards Act, 1909, the British State, which has prescribed minima for nearly everything else about which employers and employed bargain, had never in modern times prescribed minima for wages. Why was this? The reasons were several-some worse, some better. To begin with there was a shibboleth. At the beginning of the nineteenth century the political theorists starting from Bentham, and the economic theorists starting from Adam Smith and Ricardo, were at one in regarding all such State interference as mischievous. They fought step by step against the rapid advance of a contrary opinion based on practical experience. They fell back from entrenchment to entrenchment, and the wage-question was their last. If it failed them, they were defenceless, and they invented a shibboleth to fortify it. This was that between wages and the other elements in a labour contract a mysterious difference existed. Other points might be resigned to the maw of the State-ogre; this never. It was not a logical shibboleth, but it attained considerable success, as illogical shibboleths often do.
But the chief reason why the State fixed no minima for wages was the crop of practical difficulties. It took the simplest things first-broad prohibitions of obviously excessive hours in factories and of the employment of women and children underground in mines. It went on to the more complicated things— cubic air-space, sanitation, humidity-percentages, and the rest. Wages would naturally come last, as being probably under modern conditions the most complicated question of all. It is important not to underrate their complication. They do need elasticity of handling in an exceptional degree. Changes in industrial processes; changes in factory organisation; changes in the value of money-to all these they must be delicately responsive.
Contrast for illustration the question of hours. Nearly forty years ago the State fixed for women in factories (and consequently, though indirectly, for a large proportion of the men in factories also) the Nine Hours Day. This has been the law ever since, and whether adequate or not is no more and no less adequate now than then. Nine hours in 1912 is the same thing as nine hours in 1874, and in a broad sense it is the same whether in one factory or another. But if in 1874 Parliament, pursuing an idea like the cruder among the Labour ideas to-day, had enacted not only one minimum working-day for factories, but one minimum wage, where should we stand? Two things may be taken as certain; first, that any such rigid minimum wage would be too high for the employers to bear in many trades, unless it were too low to benefit the employed in all the others; secondly, that no minimum wage which was right in 1874 could possibly be right to-day. Industries are different; machinery is different; jobs are different; prices are different; standards of living are different; by no possibility could the old bottles of 1874 contain the new wine of 1912.
We will therefore assume here, without further argument, that if the State is to prescribe minima for wages, Parliament must not fix figures itself, but delegate to appropriate bodies the task of fixing them in detail, simply giving to the awards of these bodies the force of law. This is not a matter of high principle but of obvious practical expediency; in a particular emergency, with due cause shown, Parliament might act otherwise 2; but ordinarily the best method must be that stated.
But is a legal minimum wage practicable even on these terms, and on what principle and by what bodies should it be fixed? Here we come to an important parting of the ways-between the conception of a physiological minimum wage and that of a trade minimum wage. A physiological minimum wage is based on the cost of living, and means the lowest wage that wageearners can decently subsist on. A trade minimum wage is
based on the balance sheets of each trade, and means the highest minimum wage that any particular trade can bear. Evidently there is no necessary relation between the two things. A physiological minimum ignores trade differences. It will be above the trade minimum in some trades; below it in others. In the former case it will tend to kill out the trades; in the latter case it will not benefit, and may even prejudice, the workers concerned.
2 The question of including the Miners' '5 and 2' in the Coal Mines Bill last spring was of this character. It was one, as I conceive, to be decided wholly on a balance of practical expediencies.