The Settlement of Wage Disputes

by Herbert Feis

As an applied doctrine, the doctrine of the unity of wage income and of the wage earners means that the same wage should be paid throughout industry for work which requires approximately the same human qualities, and which makes approximately the same demands upon the individual. The common effort involved in production is emphasized, rather than the differences between the work performed by workers in different parts of the field of production. As an applied doctrine, the doctrine of extra reward means that certain groups of wage earners should receive higher wages than other groups, because the work they perform is deemed to require considerably higher individual qualities or talents, or to make considerably greater demands upon the individuals engaged upon it.[140] The extra reward should not be regarded primarily as an ethical right; but rather as a payment to ensure the development and exercise of those higher qualities and talents required in the performance of the more skilled industrial tasks, and to ensure also the performance of the more arduous, irregular, disagreeable, and less desirable industrial tasks. It is a recognition of the fact that the spirit of serving without direct reward is not a sufficiently strong and constant motive to persuade men to make the special efforts, or to undergo the special disadvantages required for some kinds of work. It is an incentive to the development of those abilities and talents which are relatively scarce in industry; it is also an incentive to the undertaking of those tasks which the run of men, at any given time and place, regard as unusually difficult or undesirable. The extra reward for different kinds of work which are judged to require for their performance qualities equally difficult to secure, and which subject individuals to the same hardships should be the same. The test of the special reward must be in any particular case, the amount necessary to secure the performance of the work in question.

The conscientious and consistent application of these two doctrines in settlement of wage controversies which involve the reconsideration of established differentials should result in the gradual building up of an ordered scheme of wage relationship, such as is sought. This scheme would rest upon fairly widely held ideas as to the most suitable basis for wage differences. It would not make greater call upon the human sense of fairness than must be made by any plan which hopes to secure industrial peace by getting all parties to industrial conflict to agree upon rules or principles for the settlement of the claims of each. Whether that aim, itself, is a fanciful one, need not be again debated here.

5.—Lest it appear that the above proposals have been put forward without giving due weight to their defects, it is now well to consider certain criticisms to which they may be fairly open. Two objections, in particular, are likely to be made. One is of practical nature, the other of a theoretical nature. They may be considered in that order.

The objection of a practical nature is that it will not be possible to apply the suggested principles either accurately or consistently, and this for two reasons. Firstly, it may be asserted that the application of the proposed doctrines would require a scientific comparison of the characteristics of different kinds of work, which comparison is declared to be unobtainable. Secondly, it may be said that in order to fix such wage differentials as are reasonably certain to accomplish the ends for which they are set, it will be necessary to have a precise knowledge of many facts and forces. This knowledge may be declared to be unobtainable.

No simple or very final answer can be returned to these doubts. It must be admitted that it will always remain difficult to compare occupations except in general descriptive terms. The relative training and talents required for different kinds of work, and the relative demands made upon the individual by different kinds of work will always remain, to a great extent, a matter of opinion. It is also true that only a general knowledge can be obtained of the factors governing the supply of any particular sort of labor at a given time, and the probable effect of any wage change upon that supply. The differentials which would be established from a consideration of such material could not claim to be more than a practical approximation to the differentials which would carry out the intention of the policy.

Still, scientific method could be pushed further than it has been in the comparison of occupations. The statements of the various interested parties would be a valuable guide in the estimate of occupations. Furthermore, only the major relationships between occupations would have to be taken into consideration. For example, if the question at issue was whether the wages of miners were too low as compared with wages in other industries—that is to say, whether a demand on the part of the miners for an improvement in their relative economic position was justified—only the most important of mining occupations would have to be taken into account in reaching a decision. There would be small risk of error in applying a decision, based upon a study of the work performed and of the income received in the most important mining occupations, to the less important mining occupations also. And indeed such would prove probably the only practicable policy. Furthermore, revision of the existing differentials would be undertaken only when the case for revision seemed definite and clear. As for example, it was clear in England before the war, that railroad labor was underpaid; or, as was clear to the whole of the recent President's commission on the wages of coal miners, that the wages of the miners were too low, relative to wages in other industries—though the commission differed on the amount of wage increase to be awarded.

But perhaps the most significant answer to those objections which rest on practical grounds is the fact that any wage level that might be set for any occupation under the proposed principles would be but the minimum standard wage for that occupation. And no element in the whole policy of wage settlement should stand in the way of the payment of a higher wage than that fixed by the central authority for any type of work. Thus no fear would have to be entertained that any industry would be faced with a shortage of labor due to the difficulty of getting precise knowledge on which to base wage differentials.

Here, indeed, we approach very close to that other objection which may be put forward on theoretical grounds. Which objection is that all attempts at revision of existing wage differentials would involve a risk of producing, on the one hand, a shortage of certain kinds of labor, and, on the other hand, an oversupply of other kinds. It is reasoned that in spite of every effort of careful calculation of wage differentials, some danger of over or undersupply of certain kinds of labor will always be present.

These fears would be based upon a misconception of the nature of the policy of wage settlement that is proposed. As has already been emphasized, the wage level that would be fixed for any kind of labor would be but a minimum standard wage. There is no part of the proposed policy of wage settlement which would interfere with the payment of higher wages than the standard minimum. Therefore, no industry would find itself unable to secure the labor it required merely because of the differentials established by the central authority. Each industry would still retain all its powers of bargaining for the labor it needs. Nor, on the other hand, would there be any serious danger that the wage rates set for any industry or occupation would be so high as to add to any already existing possibilities of oversupply of certain types of labor. For, after all, the central authority would consider the question of the revision of existing wage differentials only when the question is pressed upon it by the failure of the workers and employers to agree. The central authority would not be likely to declare wage rates higher than those contended for by the wage earners or lower than those contended for by the employers. And it is not too much to presume that in practically all cases neither of the two sides presses claims from which they do not expect to benefit. The employers are not likely to seek such wage rates as will not procure the needed labor supply; and only in rare cases are the wage earners likely to press for increases of wages that would bring about an increased measure of unemployment.[141] When those rare cases arise, indeed, it will be the duty of the central authority to protect the interested parties against their own bad judgment.

Thus it cannot be admitted that the application of the proposed principles would produce an intensification of the already existing possibilities that particular industries or occupations would be short of the kind of labor they need, or that they would be overcrowded. This conclusion is greatly strengthened by the thought that under our present practices, wage settlements are constantly being reached without any reward whatsoever for the disturbance of customary differentials; and serious maladjustments in the supply of labor do not often result because of that.