Upward tendency of wages.—It is certain that the general tendency of wages in all employments is upward rather than downward, in spite of serious disturbances from financial depression often repeated. The gradual increase of welfare among wage-earners is greater even than the increase in money wages. Those who are inclined to join in the cry that the former times were better than these can be answered as they were in Solomon's time, “Thou dost not inquire wisely concerning this.” No doubt the transition from small workshops to large ones and from small factories to great combinations [pg 249] has caused friction in adjustment to the new conditions. Many are now wage-earners who were once profit-gainers. But with the improvements in association and a clearer understanding of abilities and needs, each worker becomes a stronger factor than ever before in bringing about a fair competition and a satisfactory compensation.
There are still new difficulties in every change of method. The influence of custom often retards freedom of movement, makes more slow the natural rise of wages, and hinders a gradual adjustment to new conditions. In many cases it prevents individual enterprise among wage-earners, and crowds from the higher ranks into competition with the lower because of no natural outlet for ambition. Even laws intended to protect laborers sometimes operate against them. Thus a law restricting the terms of contract between workmen and their employer has sometimes prevented the employer from investing capital in a business which otherwise would have increased the opportunity for labor, and so would have actually increased wages.
The effect of free schools upon ability to earn is generally recognized. The best estimates place the increase resulting from common school education at fully 25 per cent. Some of the best establishments are limiting their offers of employment to young people who have had the advantage of even high school training. This more general education tends in two ways to increase the compensation of wage-earners: first, by giving a clear knowledge of abilities that makes competition fairer; and second, by increasing the general effectiveness [pg 250] of all production, which enlarges the sum to be divided.
Every movement toward greater social freedom and uniformity of opportunity contributes to the same end. Next to slavery, social caste is the chief obstacle to free and fair competition of laborers. Any barriers of race, social organizations, or even churches, which cultivate exclusiveness in any direction, in the end work hardship. If they bring temporary advantage to a few, they are sure to hamper the freedom of many. The welfare of the community is surest when social conditions favor the freest communication in all ranges of employment, whether in wage-earning or in profit-making.
The cheapening of transportation in recent years, bringing all the world nearer, has had various effects upon wages. It has destroyed, to a considerable extent, the inequality of wages between different regions of country. If laborers of any kind are scarce, a telegram will within a few hours bring numbers from some place where they are too plenty. The result is a tendency to greater uniformity throughout the world. As yet the full effects of this progress are not realized. Some hardships will undoubtedly be endured from the ready introduction of unskilled laborers from crowded countries into our less densely peopled country. But with a larger range of production opened by cheap labor, our better workmen will find more constant and more remunerative employment. If restrictions upon immigration are necessary, it must be to prevent too sudden a transition, hindering adjustment to new conditions. The danger of overcrowded population comes [pg 251] more certainly to the nation excluding itself from the great world by excluding the rest of the world from itself.
The general effect of improved machinery has been several times referred to already. Its advantages come to the wage-earner directly in multiplying employments and in multiplying the demand by cheapening products. Indirectly, the benefits are still greater, because these cheaper products form the bulk of living for the workers. It is probable that even the better living thus provided has raised the efficiency of labor so as to command better wages. It is certain that every movement of civilization which gives a clearer knowledge of human nature and the world about us adds to the power of every man, whatever his work. We may welcome every element of progress in this enlightenment as a direct help to the portion of humanity recognized as wage-earners. The better the masses of people understand each other the better each understands himself; and that understanding is the best protection against oppression of circumstances or of men.
Variation in profits.—Profits in various pursuits, like wages, are affected by limited competition. The need of special abilities and experience in any particular undertaking keeps back the timid from that enterprise, and the accumulation of experience of a peculiar kind hinders one from turning to other occupations. Even if a young man is willing to take the risk of inexperience as a manager, he can seldom gain the confidence of those who control capital. Hence competition in new and untried enterprises is slight, and [pg 252] profits are often great. Other undertakings are of such a nature as to involve great uncertainty. The risk of failure retards the cautious, and so the most enterprising win great returns. In estimating such returns, we overlook the failures and count only the great successes. Sometimes accidental opportunities open to the few a limited range of enormous profits. Legislation fostering monopoly sometimes favors such opportunities. These are usually temporary, and such advantage cannot long be maintained under the most fortunate conditions. Secret methods have sometimes controlled the market for individuals with enormous gain, and in a few instances a nation has maintained such secrecy with apparent success. But these, too, quickly yield before competing enterprise, since wage-earners under such employers must share to some extent the secret, and will have the stimulant of enormous profits to use the secret for themselves.
Profits in competition.—Profits are themselves a stimulant to competition, and competition in every pursuit tends to reduce the profits. If any circumstance apparently insures more than average profits in any undertaking, competition becomes excessive and profits vanish. The promise of a tariff on wool leads farmers to expect an advance in the profits of sheep raising. Competition begins in the purchase of flocks, by which the profits of those already in the business are greatly increased. Competition continues by multiplication in the flocks until sellers of sheep are more plenty than buyers. Thus, the stimulant to competition has operated to lessen profits in the end. A famous sheep [pg 253] raiser in New York, when asked to give a maxim for success in the business, answered, “Buy when your neighbors sell, and sell when your neighbors buy.”
Similar experience has been noted in various pursuits. The tendency, however, with wider knowledge of others' wants and efforts is toward a greater uniformity of profits. Modern methods of production and clearer perception of ways and means make it easier for competition to have its full effect between different kinds of business, as well as in the same business. The more we know of our neighbor's work through the daily press and extensive travel, the fairer is the opportunity for competition to act. This tendency brings hardship to the weaker portion of managers engaged in any particular business. This makes the power of so-called trusts and great combinations apparently harmful. In the end, however, the result is more constant profits, though smaller, and the advantage of the whole community in a more stable business. It is even conceivable that the stimulant of fair profits may finally reach a larger proportion of the community through interest in the great establishments than in the past from the unequal and uncertain returns of independent managers.
Even among professional men, whose fees for services have somewhat the nature of profits, the same law of competition, dependent upon supply and demand, holds sway. The compensation of an author for his publications, though protected by copyright, is dependent upon conditions limiting competition or stimulating it. It is customary for surgeons, physicians and dentists to make a fee proportional to the demand for their services. [pg 254] Thus the skilled dentist, who is wanted by ten times as many people as he can serve, raises his price till the demand is limited to meet his strength. This enables younger men at smaller prices to gain the opportunity to establish like reputations by doing equally good work.