When the present writer made an argument for the legal minimum wage something more than ten years ago, he was able to find only one American economist who had touched the subject, and the verdict of that one was unfavourable.[261] A little over a year ago, Dr. John O'Grady sent an inquiry to one hundred and sixty economists of the United States to ascertain their opinions on the same subject. Of the ninety-four who replied seventy were in favour of a minimum wage law for women and minors, thirteen were opposed, and eleven were non-committal; fifty-five favoured such legislation for men, twenty were against it, and nineteen were disinclined to give a categorical answer. About three-fourths of those who responded expressed the opinion that the measure would tend to increase the efficiency both of the workers and of methods of production.[262]
It is worthy of note that the nine members of the late Federal Commission on Industrial Relations, although disagreeing widely and variously on most other important questions and proposals, were all favourable to a minimum wage law for women and minors.[263]
The most comprehensive and most searching criticism of the legal minimum wage from the viewpoint of economic theory has been made by Professor F. W. Taussig.[264] While he does not commit himself definitely to the assertion that a universal minimum wage of, say, eight dollars per week, would cause a notable amount of unemployment among women, he regards this consequence as sufficiently probable to indicate the "need of going slow in the regulation of women's wages." Specifically, he would have public wage boards refrain from fixing the minimum rates high enough to maintain women living away from home. His final and only serious argument for this position relates to the marginal effectiveness of women workers. He assumes that all "the fitful, untrained, indifferent women are got rid of; that all who offer themselves for work at the age of (say) eighteen years have had an industrially helpful education,—" and then raises the question whether all of them will be "able to get distinctly higher wages than are now current."[265] Obviously the question is not serious unless it contemplates the probability of unemployment for a considerable proportion. If only one per cent. or less of the women should be unable to find employment at the higher wages, the net social advantage of the minimum wage device would be so obvious as to render Professor Taussig's opposition quite unreasonable. Making the assumptions quoted above from his pages, let us try to see whether his apprehensions are economically justifiable.
If they are reasonable or probable they must rest on one of two fundamental conditions: the occupations available to women are too few to absorb all that would seek to become wage earners at eight dollars per week; or a considerable section of them would be unable to produce such a high wage. Possibly the first of these assumptions is true, but neither Professor Taussig nor any other authority has presented evidence to support it, and it is on the face of things not sufficiently probable to justify hesitation in the advocacy of a minimum living wage. If the second assumption be correct, if the product of a considerable section of women (all adequately trained) would be insufficient to yield them eight dollars per week, in addition to the other costs of production, the conclusion is inevitable that the same result would follow the attempt to pay all male adults (likewise adequately trained) a family living wage of, say, fifteen dollars per week. For the product of the average man does not exceed that of the average woman by even as great a ratio as fifteen to eight. If the average woman is not worth eight dollars a week to an employer in any kind of woman's occupation, the average man is not worth fifteen dollars. Therefore, we cannot hope, even with the aid of a thorough system of industrial and vocational training, to provide all adult males of average capacity with a family living wage and the minimum means of living a reasonable life.
This is a veritable counsel of despair. It implies either that the law of diminishing returns is already operating in this country in such a way as to prevent the national product from being sufficiently large to provide a minimum wage of fifteen dollars a week for men, and eight dollars a week for women; or that the product, though ample for this purpose, and for all the other necessary payments to the higher priced workers and to the other agents of production, cannot under our present industrial system be so distributed as to attain the desired end. For the first of these hypotheses there is no evidence worthy of the name. If Professor King is right in his estimate of an average family income of 1494 dollars annually[266] the difficulty before us does not lie in the field of production. Professor Taussig seems to rest his fears on the second hypothesis, on the assumed impossibility of bringing about the required distribution; for he points out that increased efficiency of the workers may, like increased efficiency of the material instrumentalities of production, in the long run redound mainly to the benefit of the consumers, while wages may be little if any above the old level. If these fears are justified, if the difficulty is entirely one of the mechanism of distribution, and if it cannot be overcome by legal enactment, then is our competitive organisation of industry bankrupt, and the sooner we find out that fact definitely the better. If the legal minimum wage will help to expose such a situation, will show that, no matter how much the productivity of the workers may be increased, a large proportion of them must by the very nature of the competitive system be forever condemned to live below the level of decent existence, then the minimum wage is worth having merely as an instrument of economic enlightenment.
Professor Taussig's argument and illustrations[267] seem to contemplate a condition in which the number of women who become fitted for a certain trade is excessive relatively to the demand for its products, and to the supply of women in other industries. Were industrial training thus misdirected, and were the trained persons unable or unwilling to distribute themselves over other occupations, they would, indeed, face precisely the same dilemma as do the unskilled workers to-day. That is; a majority would be condemned to insufficient wages, or a minority to unemployment. But we have been assuming an adequate system of industrial and vocational training, a well-balanced system, one that would enable the workers to adjust their supply to the demand throughout the various occupations. In these conditions the economic axiom that a supply of goods is a demand for goods should become beneficently effective: the workers should all be able to find employment, and to obtain the greater part of their increased product. Surely Professor Taussig does not mean to commit himself to the view that every increase in the productive power of the workers will in the long run help them only inasmuch as they are consumers, the lion's share of the additional product being taken by other classes. Probably such is the usual result in a régime of unregulated competition, and unlimited freedom as regards the wage contract. But this is precisely what we expect a minimum wage law to correct and prevent. We rely upon this device to enable the workers to retain for themselves that share of the product which under free competition would automatically go to the non-labouring consumers. We hope that blind and destructive economic force can be held in check by deliberate and beneficent social control.
The fact of the matter seems to be that Professor Taussig's argument is too hypothetical and conjectural to justify his pessimistic conclusions. It is unpleasantly suggestive of the reasoning by which the classical economists tried to show the English labourers the folly and futility of trade unionism.
Other Legislative Proposals
The ideal standard of a minimum wage law is a scale of remuneration adequate not only to the present needs of individuals and families, but to savings for the contingencies of the future. Until such time as the compensation of all labourers has been brought up to this level, the State should make provision for cheap housing, and for insurance against accidents, sickness, invalidity, old age, and unemployment. The theory underlying such measures is that they would merely supplement insufficient remuneration, and indirectly contribute to the establishment of genuine living wages. In Europe, housing and insurance legislation is so common that no reasonable and intelligent person any longer questions the competency or propriety of such action by the State.
If an adequate legal minimum wage, in the sense just defined, were universally established, the State would not be required to do anything further to effectuate wage justice, except in the matter of vocational and industrial education. This would qualify practically all persons to earn at least a living wage, and would enable those who underwent unusual sacrifices either before or during their employment to command something over and above. In other words, all workers would then be able to obtain what we have called "the equitable minimum." And the labouring class as a whole would possess sufficient economic power to secure substantially all that was due by any of the canons of distributive justice.