The Settlement of Wage Disputes

by Herbert Feis

The weight of this contention must be decided in each case by the facts which support it. In some instances it may be clear that the vigorous and summary application of wage standardization would cause men to be thrown out of work, who could not easily find work elsewhere, and would make a considerable amount of fixed capital valueless or almost so. In those instances there would be reason for considering the extent to which the standardization should be carried out, and also what variations should be introduced into its application. That such cases are not infrequent is borne out by the Australasian experience of which Mr. Collier writes, "In regard to the practicability of the common rule, opinion differs. In some staple industries such as coal mining, it has been said to operate fairly. But its application to small industries and retail stores, where conditions vary more widely, is fraught with considerable risk and is proceeded with slowly.... While the power to enforce industrial conditions throughout a state or given territory is of unquestionable value, experience shows it must be exercised with caution."[86]

The test to be applied in each instance should be the balance of interest involved, including a strong public interest in standardization as one of the elements in a policy of wage settlement. When weighing the facts for or against the limitation or variation for the reason under discussion, several distinctions should be made. Firstly, in regard to the nature of the difference in advantage possessed by the various units of the industry in question. Secondly, in regard to the way in which the differences in advantage are distributed among the various units of the industry.

The case for limitation or variation is apt to be stronger when the difference in advantage is a natural difference than when it is an acquired difference. In either case, the decision must rest upon the balance of good and harm to be anticipated from a straightforward and unmodified application of the principle. But when the difference in advantage is a natural difference, such as exists between different mining areas, there is greater reason for deliberate procedure than otherwise. For the possibility that an abrupt suspension of certain enterprises be caused without compensating extension of other enterprises, is the more genuine. Such a situation was recognized, for example, in the case of the living wage legislation for agriculture in England; and thus instead of applying one standard wage throughout all districts, standardization was carried out by districts.[87] Even in this case, however, the various district advisory boards are under a strong and constant pressure (under the terms of the act) to bring the rates in the various districts to the same level. Such, also, to take another example was the situation recognized in the course of the attempt during the war to standardize the wages of the stevedores and longshoremen employed in the South Atlantic ports. Here straightforward and unmodified standardization would have caused, it was judged, the diversion of certain freight carrying steamship lines from ports in which they now operate.

If the differences in advantage are in the nature of acquired differences, only convincing evidence of the permanent harm likely to result from general standardization would justify limitation or variation. For in this case, the necessity of paying standard wage rates is itself a powerful force towards overcoming conditions that have been declared a definite competitive disadvantage. Probably no extension of wage standardization in industry has ever taken place without injuring some individuals. It is the net balance of gain or loss that is significant. In most past instances when standardization has been enforced in an industry, marked by an unequal distribution of acquired advantages, the consequences have not verified the predictions of those who believed it would cause great disturbance and unemployment. On the contrary, it has frequently resulted in the development of better organization within the industry.

Again, the case for the limitation or variation is apt to be the stronger, when the difference in advantage is between concentrated but widely separated areas, such as might exist between two ports, for example, than when the differences are between different units in the same industrial area or field. For in the second case, the possibility of causing lasting unemployment would be less. The distinction, however, is entirely one of degree.

Whatever limitations or variations are admitted should not be settled arbitrarily; they should correspond to the facts which make them advisable. The union attitude in respect to the extension of wage standardization is sometimes as cautious as that of the employers. That is because those workers employed at the points which are supposed to possess the smaller advantages, natural or acquired, are not likely to support an unmodified application of the principle of standardization, unless they believe the consequent industrial changes will be beneficial, or at least not harmful, to themselves. The advice, if not the concurrence, of all interested parties is of the greatest value in arriving at a satisfactory determination. A good example of such an arrangement is to be found in the agricultural living wage legislation in Great Britain. It is provided therein that "When a district committee has been established for any area, it shall be the duty of the Committee to recommend to the Agricultural Wages Board, minimum rates of wages fixed under this act, and no variation or cancellation of such a rate shall have effect within that area unless ... recommended by the district wages committee."[88]

3.—Another possible ground for limitation or variation of the principle of standardization is set forth often in the contention that the character of the work performed by any large group of wage earners is not the same throughout the field of its employment. Such, for example, was the argument of the directors of the American railways, as summarized by Mr. Stockett: "... The railways oppose district standardization on the ground that rates cannot be disassociated from conditions and since conditions vary widely on different roads in such extensive territories as the railway districts they maintain that rates cannot be made uniformly applicable on all the roads. The amount of compensation, the roads hold, is governed by the labor performed, the skill and efficiency required, the responsibility and hazard involved, the discipline necessary, the rapidity of promotion, and the cost of living."[89]

It is plain that the point of view which inspires the above argument is at variance with the beliefs that are behind the movement for wage standardization. The argument accords no validity to the belief that group unity and group aims deserve recognition in the settlement of wages. The doctrine of standardization on the contrary represents this belief, and sets groups standards above the existence of minor difference in the work performed by the group. The practical consequences of any wage policy which gave full recognition to these minor differences must also be weighed. These have been vigorously stated, for the case of railway labor, by Mr. Stockett. "... The employees maintain that the varying physical and traffic conditions in the different roads should not constitute a basis for the payment of various rates. It may be true, they hold, that physical conditions and traffic peculiarities differ as between different roads, but it would be impossible to determine a separate rate of pay for each special condition. In the course of development of the railways conditions are always changing. Grades may be leveled, additional tracks laid, curves straightened, passenger and freight densities may differ from year to year and from day to day. The attempt to determine the proper rates for each different condition and to change them as conditions change, the employees assert, is obviously absurd. The plan of fixing a standard rate governing an entire district may be illogical and its basis arbitrary, but it is deemed the best devised and does substantial justice in a broader sense than any other system."[90]

Cases may arise, indeed, where the difference in the character of the work performed really means that the same name covers two relatively distinct occupations, and two or more quite different classes of wage earners. Such cases are probably rare. In circumstances where the constant differences between the character of the work performed by workers is relatively great, it will usually be found that they are distinguished into different groups.[91] It is a question of degree, of course. And if the existing distinctions do not fit the facts, those distinctions should be changed.[92]

In unorganized industries, it will sometimes be found that the classification of occupations is very defective. If wage standardization were to be introduced into those industries, it would be found necessary to standardize occupations first. Such was the task undertaken, for example, by the War Labor Board in the Worthington Pump and Machinery case.[93]