female labour, for instance, into certain trades and professions is still impeded by the custom of regarding these occupations as the "rightful" preserve of men. This is particularly true of the older trades and professions, and consequently women tend to concentrate in the newer occupations, where custom and tradition have not so far had any material influence. Teaching and typing furnish instances of this crowding, with resultant low rates of pay.* (6) Artificial Restrictions The barriers of wealth and social position are fortunately becoming weaker, though they cannot yet be ignored. The expense of entering, say, the legal or medical profession is much too high to make merit the only standard. Qualification on an ability basis is, of course, very necessary in the public interest, and is gradually being extended to the so-called "manual trades. " In a somewhat similar category are the impediments to entering a trade fixed by certain trade unions. Where the restrictions are imposed with a view to ensuring good quality of workmanship they are all to the good. And a strong case can be adduced in favour of these restrictions where the aim of the trade unionist is to maintain a reasonable standard of life, which might be undermined if free access to the trade were open to everybody. The situation becomes irksome, however, where the professional organisation or the trade union abuses its monopolist position, and so restricts its membership as to secure reward in obvious excess of the social utility of the service rendered, or to exclude persons from membership when their employment in the occupation concerned would be of general advantage to the community. Artificial restrictions on mobility are sometimes imposed by employers' federations who keep a "black-list" of workers * See p. 132. who, through trade union or political activity, have fallen out of favour with the employers. The "black-list" is so effective in some trades, e.g. engineering, that a man may have to leave the district or even emigrate to secure work, even though there is employment to be found at home. Suspending " a man, but not giving him a proper discharge, may also hinder mobility for an appreciable time. On the other hand, restrictions are occasionally imposed by the employees' organisation. Several education authorities, for instance, have at various times been "black-listed" by the teachers' union, on grounds of unsatisfactory remuneration or working conditions. While the union has not the power to prevent teachers entering, if they wish, the service of these bodies, the warning against such authorities has been successful more often than not. (7) Specialisation. But doubtless the biggest obstacle of all to the free movement of labour is the specialisation of labour, which is becoming more intense every year. The economic activities of the community have been divided into separate industries and callings, industries have been divided into processes, processes into part-processes, and these part-processes even further sub-divided. A man who has been engaged for years on a single operation, may find, in the event of being discharged, that he is fitted for no other occupation. In this respect the skilled worker may be comparatively worse off than the unskilled. If the former has been engaged on some difficult and complex task which is now being performed by machinery, he will seldom find other employment similar to that from which he has been discharged. But the less skilled worker might not be in the same difficulty. Tending one machine, especially if it is of the "automatic" variety, is not very different from tending another. Indeed it has been contended that, the more advanced the specialisation, the easier does the mobility of labour become. For instance, if a slump occurs in the watchmaking trade, a discharged worker who has been engaged on the delicate mechanism might find somewhat similar employment in (say) the scientific instrument trade; and vice versa. The more mechanical the operation, the easier and quicker it is to transfer one's labour to it. But in the present state of industry, it is doubtful whether this mobility counts for much against the many factors making for immobility. The tendency to mobility through simplification of operations has to be recognised, and in the future, when machinery will play a still larger part, it may be more important than it is now. But even then there will be several specialised occupations between which labour will be very immobile.* Peculiarities of Labour. § 2. THEORIES OF WAGES. Whatever the ethics of the matter, labour is bought and sold like any ordinary commodity; "supply and demand" are the principal determinants of the value of a man's services as of the value of wheat. There are certain peculiarities, however, in the demand for and supply of labour that prevent a straightforward "law" of wages being formulated. The qualifying phrase "other things being equal" is never so prominent as in a discussion on wages. (a) One obvious difference between labour and material commodities is that the former is inseparable from the worker himself. Labour is not inert like the ordinary commodity bought and sold, and the human element is necessarily prominent in all dealings affecting its price. * For a full analysis of the question of the mobility of labour, see Pigou, Economics of Welfare, pp. 111-148 (1920 Edition). (b) Since labour cannot be delivered except in person, the worker is concerned with the conditions in which his labour is employed. A man who sells a piano does not trouble about the environment of the article or the manner in which it is used. But the labourer is naturally anxious that his working conditions should be as satisfactory as possible. (c) "Labour will not keep." It is, as it were, the most perishable of all commodities. A man cannot as a rule abstain from working one day in the surety that he will make up for lost time by doing twice as much the following day. (This does not apply of course to those circumstances in which rest from work has a recuperative effect, and increases a man's efficiency.) This peculiarity, shared only to a limited extent by ordinary commodities, often prevents a worker from getting the best price for his wares, as he cannot store his "goods" for a better market. (d) As shown above, labour, compared with most commodities, is very immobile. Whereas a better price will soon cause a flow of material goods from one direction to another, better wages will not have the same immediate effect on labour, whose mobility is hindered for a variety of reasons. (e) The supply of labour is comparatively fixed for a fairly long period. Special training may increase the supply of particular kinds of labour, but an increase in the total supply depends on the growth of population. This, combined with the relative immobility of labour, helps to prolong the period of high earning in one trade compared with another. Conversely, an over-supply of labour in a trade may cause very low wages yet no immediate drift of labour from that trade to another. What the economist terms a "quasi-rent" or a surplus element in income, i.e. a reward over and above the minimum necessary to in duce the supply of the particular unit, is sometimes very pronounced. If many years' training is necessary to provide a service that suddenly comes into great demand, the people who can supply this service receive a remuneration in excess of what would be considered the normal rate. (f) Lastly, in selling his labour, a worker is at a disadvantage in dealing with the employer. If the latter employs a hundred men, he is equal in bargaining power to all the hundred combined. Hence the rise of trade unions, which, by collective bargaining, put the employer and the employed on a more equal footing, and so help to restore the balance of power. The Real It is important to distinguish between the nominal expenses and the real cost of labour. Enlightened employers are recognising that it does not always pay, even in the narrowest sense, to give wages inadequate to ensure a standard of maximum efficiency. A well-known motor-car manufacturer pays far higher wages than his competitors, yet his product sells for a much lower price. The reason is intense organisation of the business and high efficiency of the workers, who are allocated to the tasks for which they are best fitted. The product per worker is so great that, notwithstanding the high expense, the real cost of labour is relatively low. Experience of minimum wage legislation for the sweated trades has abundantly shown that the real cost of labour has not increased in nearly the same degree as the nominal wages bill. In some cases the better nourishment and environment of the worker has led to an actual decline in the real cost, proving that "low wages are dear wages." It will be observed in the following pages that the earlier theories of wages (particularly that of the wages fund) either ignored or paid insufficient regard to this important distinction. |