The Settlement of Wage Disputes

by Herbert Feis

There is but one pertinent comment to be made upon this opinion. If the wage earners' organizations, themselves, demand that variation be introduced into the policy of standardization, that demand should be granted. But it must be observed that these organizations must not give lip service to the application of the principle of standardization without variation, and once having secured it, make such a course impossible by demands for differentials over the uniform standard wage. In the face of such tactics, it will be impossible to maintain any definite policy of wage standardization. If the labor organizations desire the application of the principle of wage standardization without qualifications, they must be loyal to that desire, and they must not be swayed by small temporary advantages or by sectional interests. And, on the other hand, if they desire that the principle of standardization be applied with qualifications, they must not attempt to disguise demands for general wage increases as standardization movements. Such a policy is calculated to perpetuate industrial conflict. Such is the bearing of the pledge given by the representatives of the transport workers (Great Britain) incidental to their claim for a 16 shilling national minimum daily wage. "I am conscious that whatever your decision may be, if the principle of the minimum be established, some people in some ports are going to get more on the first settlement than others. We have faced that, and we have discussed it with the whole of our men. It was assumed by the chairman of the employers at the previous meeting, to take a striking illustration, that if Liverpool received 12 shillings per day and Glasgow 14 shillings, if you decided on 16 shilling a day, Glasgow would say 18 shilling, 'because I was above Liverpool before.' That is not so, my Lord. That is clearly understood by every member of the federation in every port in the country."[101]

7.—It may be hardly necessary to say, that up to the present, the various questions involved in the application of the principle of standardization in industry have not been settled by a careful study of the results produced. At the present time the manner in which the principle is applied is governed in the first instance, by the economic characteristics of the industry in question, and in the second instance by the area of influence of the various labor organizations, and by the degree of centralized control within each of them.[102]

One of the circumstances which has played a part in determining the area of standardization in any industry is that success in the enforcement of collective agreements has depended largely upon whether all or most of the enterprises in competition with each other have been included in the same agreement. This circumstance has been sometimes decisive of the degree of centralized authority in the various trade unions. It has also tended to govern the attitude of particular trade unions towards the application of the principle of standardization without variation or modification.[103] The history of trade unionism is full of instances of organizations which have striven in vain to maintain uniform standardized wage rates throughout imperfectly organized areas.[104] Even when wage disputes have been settled by public agency, the usual procedure in the past has been to make the area covered by the agreement entirely dependent upon the area of dispute.[105]

For all of that there has been in recent years a steady drift towards an extension of the area of standardization. In various industries careful thought has been given to the possibility of standardization on a national scale, though at present very few unions enforce such a scale.[106] On the railroads there are at present nation-wide wage scales. In Great Britain, to-day this is one of the most vexed of questions. Indeed Great Britain just has gone through a great coal strike in which it was one of the two great issues. The miners asked that "a levy be made upon each colliery company on every ton of coal raised to the surface to be used for ensuring the payment of wages agreed upon in a national wages settlement." The miners argue, and correctly, that district settlements would give unequal reward to men doing precisely the same work, and called upon for the same service.[107]

8.—The introduction of standardization into crafts or industries in which a variety of wage rates for substantially the same tasks exist gives rise to one other difficult problem. That is the determination of the level of standardization for each occupation.

It will be argued, at a later point, that under any economic system in which labor organization is an accepted part of the economic structure, the wage levels established in different industries or occupations will have to be brought into relation with each other.[108] If that is so, the level of standardization of any industry or occupation would be determined in accordance with these principles, after they had been in operation for some time. As a matter of fact, however, under any policy of wage settlement, the enforcement of standardization will be something of an independent and prior process—prior, that is, to the application of any other principles intended to keep the wage levels in different industries or occupations in relation to each other. Standardization will be, so to speak, an initial stage of policy to be gone through before any other stages are entered upon. In this initial stage, the principal data that should be taken into consideration when fixing the level of standardization for any occupation is the actually existing variety of wage rates for that occupation. Where in the scale of actually existing rates the level of standardization is set must be a matter of judgment and compromise. That level of standardization should be chosen, which it is believed will produce more good and less harm than any other level that might be chosen. Or in other words, the level of standardization should be determined by a balance of the interests involved—that point being chosen at which, it is judged, the most favorable balance is established.

There is current, indeed, one doctrine of standardization which holds that there is but one satisfactory level of standardization for an occupation in which wages have been hitherto unstandardized. That doctrine, crudely stated, is that the standard wage for the work in question should be the highest of the unstandardized wages.[109] That doctrine is called "standardization upward."

If the suggested test is sound, it cannot be admitted that the doctrine of standardization upward is always valid. For there is no reason to believe that the level of the highest of the hitherto unstandardized rates is, of necessity, the one at which the most favorable balance of interests is established. In many cases there may be a presumption to that effect—if the doctrine is reasonably interpreted. That is to say, if it is taken to mean the higher range of wages, rather than the highest single wage. That presumption arises from the fact that, unless there is evidence to the contrary, the higher range of unstandardized wages indicates what wages may be enforced throughout the occupation without causing great disturbance and unemployment. The circumstances which would govern the correctness of this presumption are many and have already been discussed.[110] The actual range of difference between the various wage rates being paid for the same occupation in different enterprises should be given importance in the judgment as to whether standardization should take place at the level of the higher range of wages.

Furthermore, in many cases where wages are standardized at a level lower than some of the wage rates already paid for the work in question, it would usually be sound to provide that these higher-wage rates should not be reduced at once. This ruling was adopted in the decisions of the War Labor Board and it has also been embodied in the so-called "saving clauses" in the American railway wage decisions.[111]

9.—The principle of standardization may be considered basic in any wage policy for industrial peace. This is not because the existence of various wage rates for the same work is the greatest source of industrial conflict. But because the establishment of clearly known wage rates for each type of labor, extending over the field of its employment (with whatever limitations or variations are admitted to the principle) is often essential to the operation of any other principles of wage settlement. The establishment of standard wage rates makes possible a clear knowledge of the economic position of the various classes of wage earners. Likewise, it makes possible the accurate measurement of wage change; and also makes for simplicity and uniformity in the application of changes. Lastly, it tends to produce a careful classification of the different kinds of work, in which the minor and local differences in the nature of the work are gradually eliminated. These are the reasons for the "strong public interest in standardization" which was spoken of above.[112]