Professor Carver makes no attempt to ascertain or state the exact physical productivity of labour as compared with that of capital, but confines his attention to what he calls the "economic" productivity of a given unit of labour in a given productive process.[239] "Find out accurately how much the community produces with his [the labourer's] help, over and above what it produces without his help, and you have an exact measure of his productivity."[240] By this rule we can determine a man's productivity not only as compared with his inactivity in relation to a given industry or establishment, but as compared with the productivity of some other man who might be substituted for him. Thus understood, productivity expresses the economic value of a man to the industrial process in which he participates. It "determines how much a man is worth, and consequently, according to our criterion of justice, how much a man ought to have as a reward for his work."[241]
While this conception of productivity is relatively simple, and the canon of justice based upon it is somewhat plausible, neither is adequate. To many situations the productivity test is substantially inapplicable. The removal from industry of the man who works alone; for example, the independent shoemaker, blacksmith, tailor, or farmer, would result not in a certain diminution, but in the entire non-appearance of the product; and the removal of the capital or tools would have precisely the same effect. According to the former method, the labourer is to be credited with the whole product, and capital with nothing; according to the latter method, capital produces everything, and labour nothing. Even when several labourers are employed in an establishment, the test is inapplicable to those who are engaged upon indispensable tasks; for example, the engineer in the boiler room of a small factory, and the bookkeeper in a small store. Remove them, and you have no product at all; hence a rigid enforcement of Professor Carver's test would award them the whole product. To be sure, we can get some measure of the productivity of these men by observing the effect on the product when inferior men are put in their places; but this merely enables us to tell how much more they are worth than other men, not their total worth. Moreover, even the substitution test is not always practicable. The attempt to ascertain the productivity of a workman of high technical skill by putting in his place an utterly unskilled labourer, would not yield very satisfactory results, either to the inquiry or to the industry. In the majority of such cases, the difference in the resulting product would probably far exceed the difference in the existing wage rates of the two men, thus showing that the skilled worker is getting considerably less than he is "economically worth."
In the field to which it is applicable, namely, that of more or less unspecialised labour in large establishments, Professor Carver's theory violates some of the most fundamental conceptions of justice and humanity. He admits that it takes no account of the labourer's efforts, sacrifices, or needs, and that when unskilled labour becomes too plentiful, the value of the product may fall below the cost of supporting a decent standard of living. While he looks with some sympathy upon the demand for a minimum wage of two dollars per day, he contends that unless the labourer really earns that amount, some other man will be paid less than he earns, "which would be unjust." To "earn" two dollars a day means, in Professor Carver's terminology, to add that much value to the product of the establishment in which the labourer is employed; for this is the measure of the labourer's productivity. If all the men who are now getting less than two dollars a day are receiving the full value of their product, and if all the other workers are likewise given the full value of their product, an increase in the remuneration of the former will mean a deduction from the compensation of the latter.
These conclusions of ethical pessimism are extremely vulnerable. As we have shown in chapter xvi, efforts, sacrifices, and needs are superior to productivity as claims to reward, and must be given due consideration in any just scheme of distribution. Professor Carver would leave them out of account entirely. In the second place, it is not always nor necessarily ever true that to raise the wages of the poorest paid labourers will mean to lower the remuneration of those who are better paid. Many workers, particularly women, are now receiving less than the measure of their "productivity," less than they "earn," less than their worth to the employer, less than he would be willing to pay rather than go without their services. Professor Carver would, of course, not deny that the wages of all such labourers could be raised without affecting the remuneration of other workers. Even when the poorest paid class is receiving all that its members are at present worth to the employer, an increase in their compensation would not necessarily come out of the fund available for the better paid. It could be deducted from excessive profits and interest; for we know well that in many industries competition does not automatically keep down these shares to the minimum necessary to retain the services of business ability and capital. It could be provided to some extent out of the enlarged product that would result from improvements in the productive process, and from the increased efficiency of those workers whose wages had been raised. Finally, the increased remuneration could be derived from increased prices. When we speak of the unskilled labourer as getting all that he produces, or all that he earns, we refer not to his concrete product, but to the value of that product, to the selling price of the product. Neither this price, nor any other existing price, has anything about it that is either economically or ethically sacred. In a competitive market current prices are fixed by the forces of supply and demand, which often involve the exploitation of the weak; in a monopoly market they are set by the desires of the monopolist, which are likewise destitute of moral validity. Hence a minimum wage law which would raise the price and value of the product sufficiently to provide living wages for the unskilled workers, thus increasing their "productivity" and enabling them to "earn" the legal wage, would neither violate the principles of justice, nor necessarily diminish the compensation of any other labouring group. To be sure, the increased prices might be followed by such a lessening of demand for the product as to diminish employment; but this is another matter which has no direct bearing on either the economic or the ethical phases of productivity and earning power. And the disadvantages involved in the supposition of a reduced volume of employment may possibly be not so formidable socially as those which accompany a large volume of insufficiently paid occupations. This question will receive further consideration in a later chapter.
In the meantime, we conclude that Professor Carver's theory or rule is inapplicable to a large part of the industrial field, and that where it does apply it frequently runs counter to some of the fundamental principles of distributive justice.
Although the principle of needs is somewhat prominent among the theories of wage justice, it received only incidental mention in the last chapter. Considered as a comprehensive rule, this principle has been defended with less energy and definiteness than most of the other canons. Considered as a partial rule, it is sound and fundamental, and therefore could not have been classed among theories that are unacceptable.
Many of the early French Socialists of the Utopian school advanced this formula of distribution: "From each according to his powers; to each according to his needs." It was also put forward by the German Socialists in the Gotha Program in 1875. While they have not given to this standard formal recognition in their more recent platforms, Socialists generally regard it as the ideal rule for the distant future.[242] The difficulties confronting it are so great and so obvious that they would defer the introduction of it to a time when the operation of their system will, they hope, have eradicated the historical human qualities of laziness and selfishness. To adopt needs as the sole rule of distribution would mean, of course, that each person should be rewarded in proportion to his wants and desires, regardless of his efforts or of the amount that he had produced. The mere statement of the proposal is sufficient to refute it as regards the men and women of whom we have any knowledge. In addition to this objection, there is the insuperable difficulty of measuring fairly or accurately the relative needs of any group composed of men, women, and children. Were the members' own estimates of their needs accepted by the distributing authority, the social product would no doubt fall far short of supplying all. If the measurement were made by some official person or persons, "the prospect of jobbery and tyranny opened up must give the most fanatical pause." Indeed, the standard of needs should be regarded as a canon of Communism rather than of Socialism; for it implies a large measure of common life as well as of common ownership, and paternalistic supervision of consumption as well as collectivist management of production.
While the formula of needs must be flatly rejected as complete rule of distributive justice, or of wage justice, it is valid and indispensable as a partial standard. It is a partial measure of justice in two senses: first, inasmuch as it is consistent with the admission and operation of other principles, such as productivity and sacrifice; second, inasmuch as it can be restricted to certain fundamental requisites of life, instead of being applied to all possible human needs. It can be made to safeguard the minimum demands of reasonable life, and therefore to function as a minimum standard of wage justice.
Human needs constitute the primary title or claim to material goods. None of the other recognised titles, such as productivity, effort, sacrifice, purchase, gift, inheritance, or first occupancy, is a fundamental reason or justification of either rewards or possessions. They all assume the existence of needs as a prerequisite to their validity. If men did not need goods they could not reasonably lay claim to them by any of the specific titles just enumerated. First comes the general claim or fact of needs; then the particular title or method by which the needs may be conveniently supplied. While these statements may seem elementary and platitudinous, their practical value will be quite evident when we come to consider the conflicting claims that sometimes arise out of the clash between needs and some of the other titles. We shall see that needs are not merely a physical reason or impulse toward acquisition and possession, but a moral title which rationalises the claim to a certain amount of goods.[243]
The validity of needs as a partial rule of wage justice rests ultimately upon three fundamental principles regarding man's position in the universe. The first is that God created the earth for the sustenance of all His children; therefore, that all persons are equal in their inherent claims upon the bounty of nature. As it is impossible to demonstrate that any class of persons is less important than another in the eyes of God, it is logically impossible for any believer in Divine Providence to reject this proposition. The man who denies God or Providence can refuse assent to the second part of the proposition only by refusing to acknowledge the personal dignity of the human individual, and the equal dignity of all persons. Inasmuch as the human person is intrinsically sacred and morally independent, he is endowed with those inherent prerogatives, immunities, and claims that we call rights. Every person is an end in himself; none is a mere instrument to the convenience or welfare of any other human being. The worth of a person is something intrinsic, derived from within, not determined or measurable by reference to any earthly object or purpose without. In this respect the human being differs infinitely from, is infinitely superior to, a stone, a rose, or a horse. While these statements help to illustrate what is meant by the dignity of personality, by the intrinsic worth, importance, sacredness of the human being, they do not prove the existence of this inherent juridical quality. Proof in the strict sense is irrelevant and impossible. If the intrinsic and equal moral worth of all persons be not self evident to a man, it will not approve itself to him through any process of argumentation. Whosoever denies it can also logically deny men's equal claims of access to the bounty of the earth; but he cannot escape the alternative conclusion that brute force, exercised either by the State or by individuals, is the only proper determinant of possessions and of property. Against this monstrous contention it is not worth while to offer a formal argument.
The second fundamental principle is that the inherent right of access to the earth is conditioned upon, and becomes actually valid through, the expenditure of useful labour. Generally speaking the fruits and potentialities of the earth do not become available to men without previous exertion. "In the sweat of thy brow thou shalt eat thy bread," is a physical no less than a moral commandment. There are, indeed, exceptions: the very young, the infirm, and the possessors of a sufficient amount of property. The two former classes have claims to a livelihood through piety and charity, while the third group has at least a presumptive claim of justice to rent and interest, and a certain claim of justice to the money value of their goods. Nevertheless, the general condition is that men must work in order to live. "If a man will not work neither shall he eat." For those who refuse to comply with this condition the inherent right of access to the earth remains only hypothetical and suspended.
The two foregoing principles involve as a corollary a third principle; the men who are in present control of the opportunities of the earth are obliged to permit reasonable access to these opportunities by persons who are willing to work. In other words, possessors must so administer the common bounty of nature that non-owners will not find it unreasonably difficult to get a livelihood. To put it still in other terms, the right to subsist from the earth implies the right to access thereto on reasonable terms. When any man who is willing to work is denied the exercise of this right, he is no longer treated as the moral and juridical equal of his fellows. He is regarded as inherently inferior to them, as a mere instrument to their convenience; and those who exclude him are virtually taking the position that their rights to the common gifts of the Creator are inherently superior to his birthright. Obviously this position cannot be defended on grounds of reason. Possessors are no more justified in excluding a man from reasonable access to the goods of the earth than they would be in depriving him of the liberty to move from place to place. The community that should arbitrarily shut a man up in prison would not violate his rights more fundamentally than the community or the proprietors who should shut him out from the opportunity of getting a livelihood from the bounty of the earth. In both cases the man demands and has a right to a common gift of God. His moral claim is as valid to the one good as to the other, and it is as valid to both goods as is the claim of any of his fellows.
Every man who is willing to work has, therefore, an inborn right to sustenance from the earth on reasonable terms or conditions. This cannot mean that all persons have a right to equal amounts of sustenance or income; for we have seen on a preceding page that men's needs, the primary title to property, are not equal, and that other canons and factors of distribution have to be allowed some weight in determining the division of goods and opportunities. Nevertheless, there is a certain minimum of goods to which every worker is entitled by reason of his inherent right of access to the earth. He has a right to at least a decent livelihood. That is; he has a right to so much of the requisites of sustenance as will enable him to live in a manner worthy of a human being. The elements of a decent livelihood may be summarily described as: food, clothing, and housing sufficient in quantity and quality to maintain the worker in normal health, in elementary comfort, and in an environment suitable to the protection of morality and religion; sufficient provision for the future to bring elementary contentment, and security against sickness, accident, and invalidity; and sufficient opportunities of recreation, social intercourse, education, and church-membership to conserve health and strength, and to render possible in some degree the exercise of the higher faculties.
On what ground is it contended that a worker has a right to a decent livelihood, as thus defined, rather than to a bare subsistence? On the same ground that validates his right to life, marriage, or any of the other fundamental goods of human existence. On the dignity of personality. Why is it wrong and unjust to kill or maim an innocent man? Because human life and the human person possess intrinsic worth; because personality is sacred. But the intrinsic worth and sacredness of personality imply something more than security of life and limb, and the material means of bare existence. The man who is not provided with the requisites of normal health, efficiency, and contentment lives a maimed life, not a reasonable life. His physical condition is not worthy of a human being. Furthermore, man's personal dignity demands not merely the conditions of reasonable physical existence, but the opportunity of pursuing self perfection through the harmonious development of all his faculties. Unlike the brutes, he is endowed with a rational soul, and the capacity of indefinite self improvement. A due regard to these endowments requires that man shall have the opportunity of becoming not only physically stronger, but intellectually wiser, morally better, and spiritually nearer to God. If he is deprived of these opportunities he cannot realise the potentialities of his nature nor attain the divinely appointed end of his nature. He remains on the plane of the lower animals. His personality is violated quite as fundamentally as when his body is injured or his life destroyed.
While it is impossible to define with mathematical precision the degree of personal development that is necessary to satisfy the claims of personal dignity, it is entirely practicable to state with sufficient definiteness the minimum conditions of such development. They are that quantity of goods and opportunities which fair-minded men would regard as indispensable to humane, efficient, and reasonable life. The summary description of a decent livelihood at the end of the second last paragraph, would probably be accepted by all men who really believe in the intrinsic worth of personality.
The claim of a worker to a decent livelihood from the goods of the earth does not always imply a strict right to a livelihood from one's present occupation. To demand this would in some circumstances be to demand a livelihood not on reasonable but on unreasonable terms; for the persons in control of the sources could not reasonably be required to provide a decent livelihood. Their failure to do so would not constitute an unreasonable hindrance to the worker's access to the earth in such circumstances. In chapter xvi we saw that not all business men have a strict right to that minimum of profits which is required to yield them a decent livelihood: first, because the direction of industry is not generally the business man's only means of getting a living; second, because the community, the consumers, do not regard the presence and activity of all existing business men as indispensable. Of course, the community is morally bound to pay such prices for goods as will enable all the necessary business men, whether manufacturers or traders, to obtain a decent livelihood in return for their directive functions; but it is not obliged to provide a livelihood for those business men whose presence is not required, who could vanish from the field of industrial direction without affecting either the supply or the price of goods, and whose superfluous character is proved by the fact that they cannot make a livelihood at the prevailing prices. They are in the position of persons whom the community does not desire to employ as business men. In refusing to pay prices sufficiently high to provide these inefficient business men with a decent livelihood, the community is not unreasonably hindering their access to the common goods of the earth. Such men are really demanding a livelihood on unreasonable terms.
On the other hand, the wage earner's claim to a decent livelihood is valid, generally speaking, in his present occupation. In other words, his right to a decent livelihood in the abstract means in the concrete a right to a living wage. To present the matter in its simplest terms, let us consider first the adult male labourer of average physical and mental ability who is charged with the support of no one but himself, and let us assume that the industrial resources are adequate to such a wage for all the members of his class. Those who are in control of the resources of the community are morally bound to give such a labourer a living wage. If they fail to do so they are unreasonably hindering his access to a livelihood on reasonable terms; and his right to a livelihood on reasonable terms is violated. The central consideration here is evidently the reasonableness of the process. Unlike the business man, the rent receiver, and the interest receiver, the labourer has ordinarily no other means of livelihood than his wages. If these do not furnish him with a decent subsistence he is deprived of a decent subsistence. When he has performed an average day's work, he has done all that is within his power to make good his claim to a decent livelihood. On the other hand, the community is the beneficiary of his labour, and desires his services. If, indeed, the community would rather do without the services of an individual labourer than pay him a living wage, it is morally free to choose the former alternative, precisely as it is justified in refusing to pay a price for groceries that will enable an inefficient grocer to obtain living profits. Whatever concrete form the right of such persons to a decent livelihood may take, it is not the right to living wages or living profits from the occupations in question. Here, however, we are discussing the labourer to whom the community would rather pay a living wage than not employ him at all. To refuse such a one a living wage merely because he can be constrained by economic pressure to work for less, is to treat him unreasonably, is to deprive him of access to a livelihood on reasonable terms. Such treatment regards the labourer as inferior to his fellows in personal worth, as a mere instrument to their convenience. It is an unreasonable distribution of the goods and opportunities of the earth.
Obviously there is no formula by which such conduct can be mathematically demonstrated as unreasonable; but the proposition is as certain morally as any other proposition that is susceptible of rational defence in the field of distribution. No man who accepts the three fundamental principles stated some pages back, can deny the right of the labourer to a living wage. The man who does not accept them must hold that all property rights are the arbitrary creation of the State, or that there is no such thing as a moral right to material goods. In either supposition the distribution and possession of the earth's bounty are subject entirely to the arbitrament of might. There is nothing to be gained by a formal criticism of this assumption.
What persons, or group, or authority is charged with the obligation which corresponds to the right to a living wage? We have referred to "the community" in this connection, but we do not mean the community in its corporate capacity, i.e., the State. As regards private employments, the State is not obliged to pay a living wage, nor any other kind of wage, since it has not assumed the wage-paying function with respect to these labourers. As protector of natural rights, and as the fundamental determiner of industrial institutions, the State is obliged to enact laws which will enable the labourer to obtain a living wage; but the duty of actually providing this measure of remuneration rests upon that class which has assumed the wage-paying function. This is the employers. In our present industrial system, the employer is society's paymaster. He, not the State, receives the product out of which all the agents of production must be rewarded. Where the labourer is engaged in rendering personal services to his employer, the latter is the only beneficiary of the labourer's activity. In either case the employer is the only person upon whom the obligation of paying a living wage can primarily fall.
If the State were in receipt of the product of industry, the wage-paying fund, it would naturally be charged with the obligation that now rests immediately upon the employer. If any other class in the community were the owners of the product that class would be under this specific obligation. As things are, the employer is in possession of the product, and discharges the function of wage payer; consequently he is the person who is required to perform this function in a reasonable manner.
Evidently the employer who cannot pay a living wage is not obliged to do so, since moral duties suppose a corresponding physical capacity. In such circumstances the labourer's right to a living wage becomes suspended and hypothetical, just as the claim of a creditor when the debtor becomes insolvent. Let us see, however, precisely what meaning should reasonably be given to the phrase, "inability to pay a living wage."
An employer is not obliged to pay a full living wage to all his employés so long as that action would deprive himself and his family of a decent livelihood. As active director of a business, the employer has quite as good a right as the labourer to a decent livelihood from the product, and in case of conflict between the two rights, the employer may take advantage of that principle of charity which permits a man to prefer himself to his neighbour, when the choice refers to goods of the same order of importance. Moreover, the employer is justified in taking from the product sufficient to support a somewhat higher scale of living than generally prevails among his employés; for he has become accustomed to this higher standard, and would suffer a considerable hardship if compelled to fall notably below it. It is reasonable, therefore, that he should have the means of maintaining himself and family in moderate conformity with their customary standard of living; but it is unreasonable that they should indulge in anything like luxurious expenditure, so long as any of the employés fail to receive living wages.
Suppose that an employer cannot pay all his employés living wages and at the same time provide the normal rate of interest on the capital in the business. So far as the borrowed capital is concerned, the business man has no choice; he must pay the stipulated rate of interest, even though it prevents him from giving a living wage to all his employés. Nor can it be reasonably contended that the loan capitalist in that case is obliged to forego the interest due him. He cannot be certain that this interest payment, or any part of it, is really necessary to make up what is wanting to a complete scale of living wages. The employer would be under great temptation to defraud the loan capitalist on the pretext of doing justice to the labourer, or to conduct his business inefficiently at the expense of the loan capitalist. Anyhow, the latter is under no obligation to leave his money in a concern that is unable to pay him interest regularly. The general rule, then, would seem to be that the loan capitalist is not obliged to refrain from taking interest in order that the employés may have living wages.
Is the employer justified in withholding the full living wage from his employés to provide himself with the normal rate of interest on the capital that he has invested in the enterprise? Speaking generally, he is not. In the first place, the right to any interest at all, except as a return for genuine sacrifices in saving, is not certain but only presumptive.[244] Consequently it has no such firm and definite basis as the right to a living wage. In the second place, the right to interest, be it ever so definite and certain, is greatly inferior in force and urgency. It is an axiom of ethics that when two rights conflict, the less important must give way to the more important. Since all property rights are but means to the satisfaction of human needs, their relative importance is determined by the relative importance of the ends that they serve; that is, by the relative importance of the dependent needs. Now the needs that are supplied through interest on the employer's capital are slight and not essential to his welfare; the needs that are supplied through a living wage are essential to a reasonable life for the labourer. On the assumption that the employer has already taken from the product sufficient to provide a decent livelihood, interest on his capital will be expended for luxuries or converted into new investments; a living wage for the labourer will all be required for the fundamental goods of life, physical, mental, or moral. Evidently, then, the right to interest is inferior to the right to a living wage. To proceed on the contrary theory is to reverse the order of nature and reason, and to subordinate essential needs and welfare to unessential needs and welfare.
Nor can it be maintained that the capitalist-employer's claim to interest is a claim upon the product prior to and independent of the claim of the labourer to a living wage. That would be begging the question. The product is in a fundamental sense the common property of employer and employés. Both parties have co-operated in turning it out, and they have equal claims upon it, in so far as it is necessary to yield them a decent livelihood. Having taken therefrom the requisites of a decent livelihood for himself, the employer who appropriates interest at the expense of a decent livelihood for his employés, in effect treats their claims upon the common and joint product as essentially inferior to his own. If this assumption were correct it would mean that the primary and essential needs of the employés are of less intrinsic importance than the superficial needs of the employer, and that the employés themselves are a lower order of being than the employer. The incontestable fact is that such an employer deprives the labourers of access to the goods of the earth on reasonable terms, and gives himself an access thereto that is unreasonable.
Suppose that all employers who found themselves unable to pay full living wages and obtain the normal rate of interest, should dispose of their businesses and become mere loan capitalists, would the condition of the underpaid workers be improved? Two effects would be certain: an increase in the supply of loan capital relatively to the demand, and a decrease in the number of active business men. The first would probably lead to a decline in the rate of interest, while the second might or might not result in a diminution of the volume of products. If the rate of interest were lowered the employing business men would be able to raise wages; if the prices of products rose a further increase of wages would become possible. However, it is not certain that prices would rise; for the business men who remained would be the more efficient in their respective classes, and might well be capable of producing all the goods that had been previously supplied by their eliminated competitors. Owing to their superior efficiency and their larger output, the existing business men would be able to pay considerably higher wages than those who had disappeared from the field of industrial direction. As things are to-day, it is the less efficient business men who are unable to pay living wages and at the same time obtain the prevailing rate of interest on their capital. The ultimate result, therefore, of the withdrawal from business of those who could not pay a living wage, would probably be the universal establishment of a living wage.
Of course, this supposition is purely fanciful. Only a small minority of the business men of to-day are likely to be driven by their consciences either to pay a living wage at the cost of interest on their capital, or to withdraw from business when they are confronted with such a situation. Is this small minority under moral obligation to adopt either of these alternatives, when the effect of such action upon the great mass of the underpaid workers is likely to be very slight? The question would seem to demand an answer in the affirmative. Those employers who paid a living wage at the expense of interest would confer a concrete benefit of great value upon a group of human beings. Those who shrank from this sacrifice, and preferred to go out of business, would at least have ceased to co-operate in an unjust distribution of wealth, and their example would not be entirely without effect upon the views of their fellow employers.
Against the foregoing argument it may be objected that the employer does his full duty when he pays the labourer the full value of the product or service. Labour is a commodity of which wages are the price; and the price is just if it is the fair equivalent of the labour. Like any other onerous contract, the sale of labour is governed by the requirements of commutative justice; and these are satisfied when labour is sold for its moral equivalent. What the employer is interested in and pays for, is the labourer's activity. There is no reason why he should take into account such an extrinsic consideration as the labourer's livelihood.
Most of these assertions are correct, platitudinously correct, but they yield us no specific guidance because they use language vaguely and even ambiguously. The contention underlying them was adequately refuted in the last chapter, under the heads of theories of value and theories of exchange equivalence. At present it will be sufficient to repeat summarily the following points: if the value of labour is to be understood in a purely economic sense it means market value, which is obviously not a universal measure of justice; if by the value of labour we mean its ethical value we cannot determine it in any particular case merely by comparing labour and compensation; we are compelled to have recourse to some extrinsic ethical principle; such an extrinsic principle is found in the proposition that the personal dignity of the labourer entitles him to a wage adequate to a decent livelihood; therefore, the ethical value of labour is always equivalent to at least a living wage, and the employer is morally bound to give this much remuneration.
Moreover, the habit of looking at the wage contract as a matter of commutative justice in the mere sense of contractual justice, is radically defective. The transaction between employé and employer involves other questions of justice than that which arises immediately out of the relation between the things exchanged. When a borrower repays a loan of ten dollars, he fulfils the obligation of justice because he returns the full equivalent of the article that he received. Nothing else is pertinent to the question of justice in this transaction. Neither the wealth nor the poverty, the goodness nor the badness, nor any other quality of either lender or borrower, has a bearing on the justice of the act of repayment. In the wage contract, and in every other contract that involves the distribution of the common bounty of nature, or of the social product, the juridical situation is vitally different from the transaction that we have just considered. The employer has obligations of justice, not merely as the receiver of a valuable thing through an onerous contract, but as the distributor of the common heritage of nature. His duty is not merely contractual, but social. He fulfils not only an individual contract, but a social function. Unless he performs this social and distributive function in accordance with justice, he does not adequately discharge the obligation of the wage contract. For the product out of which he pays wages is not his in the same sense as the personal income out of which he repays a loan. His claim upon the product is subject to the obligation of just distribution; the obligation of so distributing the product that the labourers who have contributed to the product shall not be denied their right to a decent livelihood on reasonable terms from the bounty of the earth. On the other hand, the activity of the labourer is not a mere commodity, as money or pork; it is the output of a person, and a person who has no other means of realising his inherent right to a livelihood. Consequently, both terms of the contract, the labour and the compensation, involve other elements of justice than that which arises out of their assumed mutual equivalence.
In a word, justice requires the employer not merely to give an equivalent for labour (an equivalent which is determined by some arbitrary, conventional, fantastic, or impossible attempt to compare work and pay) but to fulfil his obligation of justly distributing that part of the common bounty of the earth which comes into his hands by virtue of his social function in the industrial process. How futile, then, to endeavour by word juggling to describe the employer's obligation in terms of mere equivalence and contractual justice!
Some difficulties occur in connection with the wage rights of adult males whose ability is below the average, and female and child workers. Since the dignity and the needs of personality constitute the moral basis of the claim to a decent livelihood, it would seem that the inefficient worker who does his best is entitled to a living wage. Undoubtedly he has such a right if it can be effectuated in the existing industrial organisation. As already noted, the right of the workman of average ability to a living wage does not become actual until he finds an employer who would rather give him that much pay than do without his services. Since the obligation of paying a living wage is not an obligation to employ any particular worker, an employer may refrain from hiring or may discharge any labourer who does not add to the product sufficient value to provide his wages. For the employer cannot reasonably be expected to employ any one at a positive loss to himself. Whence it follows that he may pay less than living wages to any worker whose services he would rather dispense with than remunerate at that figure.[245]
Women and young persons who regularly perform a full day's work, have a right to compensation adequate to a decent livelihood. In the case of minors, this means living at home, since this is the normal condition of all, and the actual condition of almost all. Adult females have a right to a wage sufficient to maintain them away from home, because a considerable proportion of them live in this condition. If employers were morally free to pay home-dwelling women less than those adrift, they would endeavour to employ only the former. This would create a very undesirable social situation. The number of women away from home who are forced to earn their own living is sufficiently large (20 to 25 per cent. of the whole) to make it reasonable that for their sakes the wage of all working women should be determined by the cost of living outside the parental precincts. This is one of the social obligations that reasonably falls upon the employer on account of his function in the present industrial system. In all the American minimum wage laws, the standard of payment is determined by the cost of living away from home. Besides, the difference between the living costs of women in the two conditions is not nearly as great as is commonly assumed. Probably it never amounts to a dollar a week.
Up to the present we have been considering the right of the labourer to a wage adequate to a decent livelihood for himself as an individual. In the case of an adult male, however, this is not sufficient for normal life, nor for the reasonable development of personality. The great majority of men cannot live well balanced lives, cannot attain a reasonable degree of self development outside the married state. Therefore, family life is among the essential needs of a normal and reasonable existence. It is not, indeed, so vitally necessary as the primary requisites of individual life, such as food, clothing, and shelter, but it is second only to these. Outside the family man cannot, as a rule, command that degree of contentment, moral strength, and moral safety which are necessary for reasonable and efficient living. It is unnecessary to labour this point further, as very few would assert that the average man can live a normal and complete human life without marriage.
Now, the support of the family falls properly upon the husband and father, not upon the wife and mother. The obligation of the father to provide a livelihood for the wife and young children is quite as definite as his obligation to maintain himself. If he has not the means to discharge this obligation he is not justified in getting married. Yet, as we have just seen, marriage is essential to normal life for the great majority of men. Therefore, the material requisites of normal life for the average adult male, include provision for his family. In other words, his decent livelihood means a family livelihood. Consequently, he has a right to obtain such a livelihood on reasonable terms from the bounty of the earth. In the case of the wage earner, this right can be effectuated only through wages; therefore, the adult male labourer has a right to a family living wage. If he does not get this measure of remuneration his personal dignity is violated, and he is deprived of access to the goods of the earth, quite as certainly as when his wage is inadequate to personal maintenance. The difference between family needs and personal needs is a difference only of degree. The satisfaction of both is indispensable to his reasonable life.
Just as the woman worker who lives with her parents has a right to a wage sufficient to maintain her away from home, so the unmarried adult male has a right to a family living wage. If only married men get the latter wage they will be discriminated against in the matter of employment. To prevent this obviously undesirable condition, it is necessary that a family living wage be recognised as the right of all adult male workers. No other arrangement is reasonable in our present industrial system. In a competitive régime the standard wage for both the married and the unmarried men is necessarily the same. It will be determined by the living costs of either the one class or the other. At present the wage of the unskilled is unfortunately adjusted to the subsistence cost of the man who is not married. Since two prevailing scales of wages are impossible, the remuneration of the unmarried must in the interests of justice to the married be raised to the living costs of the latter. Moreover, the unmarried labourer needs more than an individual living wage in order to save sufficient money to enter upon the responsibilities of matrimony.
Only two objections of any importance can be brought against the male labourer's claim to a family living wage. The first is that just wages are to be measured by the value of the labour performed, and not by such an extrinsic consideration as the needs of a family. It has already been answered in this and the preceding chapters. Not the economic but the ethical value of the service rendered, is the proper determinant of justice in the matter of wages; and this ethical value is always the equivalent of at least a decent livelihood for the labourer and his family. According to the second objection, the members of the labourer's family have no claim upon the employer, since they do not participate in the work that is remunerated. This contention is valid, but it is also irrelevant. The claim of the labourer's family to sustenance is directly upon him, not upon his employer; but the labourer has a just claim upon the employer for the means of meeting the claims of his family. His right to this amount of remuneration is directly based neither upon the needs nor the rights of his family, but upon his own needs, upon the fact that family conditions are indispensable to his own normal life. If the wife and young children were self supporting, or were maintained by the State, the wage rights of the father would not include provision for the family. Since, however, family life involves support by the father, the labourer's right to such a life necessarily includes the right to a wage adequate to family support.
Thus far, the argument has been based upon individual natural rights. If we give up the doctrine of natural rights, and assume that all the rights of the individual come to him from the State, we must admit that the State has the power to withhold and withdraw all rights from any and all persons. Its grant of rights will be determined solely by considerations of social utility. In the concrete this means that some citizens may be regarded as essentially inferior to other citizens, that some may properly be treated as mere instruments to the convenience of others. Or it means that all citizens may be completely subordinated to the aggrandisement of an abstract entity, called the State. Neither of these positions is logically defensible. No group of persons has less intrinsic worth than another; and the State has no rational significance apart from its component individuals.
Nevertheless, a valid argument for the living wage can be set up on grounds of social welfare. A careful and comprehensive examination of the evil consequences to society and the State from the under-payment of any group of labourers, would show that a universal living wage is the only sound social policy. Among competent social students, this proposition has become a commonplace. It will not be denied by any intelligent person who considers seriously the influence of low wages in diminishing the efficiency, physical, mental, and moral, of the workers; in increasing the volume of crime, and the social cost of meeting it; in the immense social outlay for the relief of unnecessary poverty, sickness, and other forms of distress; and in the formation of a large and discontented proletariat.[246]
The living wage doctrine also receives strong support from various kinds of authority. Of these the most important and best known is the famous encyclical, "On the Condition of Labour," May 15, 1891, by Pope Leo XIII. "Let it then be granted that workman and employer should, as a rule, make free agreements, and in particular should agree freely as to wages; nevertheless, there is a dictate of natural justice more imperious and ancient than any bargain between man and man; namely, that the remuneration should be sufficient to maintain the wage earner and reasonable and frugal comfort." Although the Pope refrained from specifying whether the living wage that he had in mind was one adequate merely to an individual livelihood, or sufficient to support a family, other passages in the Encyclical leave no room for doubt that he regarded the latter as the normal and equitable measure of remuneration. Within a dozen lines of the sentence quoted above, he made this statement: "If the workman's wages be sufficient to maintain himself, his wife, and his children in reasonable comfort, he will not find it difficult, if he be a sensible man, to practise thrift; and he will not fail, by cutting down expenses, to put by some little savings and thus secure a small income."
All lesser Catholic authorities hold that the adult male labourer has some kind of moral claim to a family living wage. In all probability the majority of them regard this claim as one of strict justice, while the minority would put it under the head of legal justice, or natural equity, or charity. The differences between their views are not as important as the agreements; for all the Catholic writers maintain that the worker's claim is strictly moral in its nature, and that the corresponding obligation upon the employer is likewise of a moral character.
The Federal Council of the Churches of Christ in America, representing the principal Protestant denominations, has formally declared in favour of "a living wage as a minimum in every industry."
Public opinion likewise accepts the principle of a living wage as the irreducible minimum of fair treatment for all workers. Indeed, it would be difficult to find any important person in any walk of life to-day who would have the temerity to deny that the labourer is entitled to a wage sufficient for reasonable family life. Among employers the opinion is fairly general that the narrow margin of profit in competitive industries renders the burden of paying a family living wage to all adult males unfairly heavy; but the assertion that the wage contract is merely an economic transaction, having no relation to justice, is scarcely ever uttered publicly.
For self-supporting women a living wage is not less than eight dollars per week in any city of the United States, and in some of our larger cities it is from one to two dollars above this figure. The state minimum wage commissions that have acted in the matter, have fixed the rates not lower than eight nor higher than ten dollars per week.[247] These determinations are in substantial agreement with a large number of other estimates, both official and unofficial.
When the present writer was making an estimate of the cost of decent living for a family about eleven years ago, he came to the conclusion that six hundred dollars per year was the lowest amount that would maintain a man and wife and four or five small children in any American city, and that this sum was insufficient in some of the larger cities.[248] Since that time retail prices seem to have risen at least twenty-five and possibly forty-five per cent.[249] If the six hundred dollar minimum were correct in 1905 it should, therefore, be increased to seven hundred and fifty dollars to meet the present range of prices. That this estimate is too low for some of the more populous cities, has been fully proved by several recent investigations. In 1915 the Bureau of Standards put the minimum cost of living for a family of five in New York City at $840.18. About the same time the New York Factory Investigating Commission gave the estimate of $876.43 for New York City, and $772.43 for Buffalo. In 1908, when the cost of living was from ten to thirty per cent. cheaper than to-day, the United States Bureau of Labour found that, "according to the customs prevailing in the communities selected for study," a fair standard of living for a family of five persons among mill workers, was $600.74 in the South, and from $690.60 to $731.64 in Fall River, Massachusetts.[250]
According to the "Manly Report" of the Federal Commission on Industrial Relations, between two-thirds and three-fourths of the adult male labourers of the United States receive less than $750.00 a year, and the same proportion of women workers are paid under eight dollars a week. A considerable majority, therefore, of both male and female labourers fail to obtain living wages. We are still very far from having actualised even the minimum measure of wage justice.
A living wage for all workers is merely the minimum measure of just remuneration. It is not in every case complete justice. Possibly it is not the full measure of justice in any case. How much more than a living wage is due to any or all of the various classes of labourers? How much more may any group of workers demand without exposing itself to the sin of extortion? By what principles shall these questions be answered?
The problem of complete wage justice can be conveniently and logically considered in four distinct relations, as regards: the respective claims of the different classes of labourers to a given amount of money available for wage payments; the claims of the whole body of labourers, or any group thereof, to higher wages at the expense of profits; at the expense of interest; and at the expense of the consumer.
In the division of a common wage fund, no section of the workers is entitled to anything in excess of living wages until all the other sections have received that amount of remuneration. The need of a decent livelihood constitutes a more urgent claim than any other that can be brought forward. Neither efforts, nor sacrifices, nor productivity, nor scarcity can justify the payment of more than living wages to any group, so long as any other group in the industry remains below that level; for the extra compensation will supply the nonessential needs of the former by denying the essential needs of the latter. The two groups of men will be treated unequally in respect of those qualities in which they are equal; namely, their personal dignity and their claims to the minimum requisites of reasonable life and self development. This is a violation of justice.
Let us suppose that all the workers among whom a given amount of compensation is to be distributed, have already received living wages, and that there remains a considerable surplus. On what principles should the surplus be apportioned? For answer we turn to the canons of distribution, as explained in chapter xvi. When the elementary needs of life and development have been supplied, the next consideration might seem to be the higher or nonessential needs and capacities. Proportional justice would seem to suggest that the surplus ought to be distributed in accordance with the varying needs and capacities of men to develop their faculties beyond the minimum reasonable degree. As we have already pointed out, this would undoubtedly be the proper rule if it were susceptible of anything like accurate application, and if the sum to be distributed were not produced by and dependent upon those who were to participate in the distribution. However, we know that the first condition is impracticable, while the second is non-existent. Inasmuch as the sharers in the distribution have produced and constantly determine the amount to be apportioned, the distributive process must disregard nonessential needs, and govern itself by other canons of justice.
The most urgent of these is the canon of efforts and sacrifices. Superior effort, as measured by unusual will-exertion, is a fundamental rule of justice, and a valid title to exceptional reward. Men who strive harder than the majority of their fellows are ethically deserving of extra compensation. At least, this is the pure theory of the matter. In practice, the situation is complicated by the fact that unusual effort cannot always be distinguished, and by the further fact that some exceptional efforts do not fructify in correspondingly useful results. Among men engaged at the same kind of work, superior effort is to a great extent discernible in the unusually large product. As such it actually receives an extra reward in accordance with the canon of productivity. When men are employed at different tasks, unusual efforts cannot generally be distinguished and compensated. Hence the general principle is that superior efforts put forth in the production of utilities, entitle men to something more than living wages, but that the enforcement of this principle is considerably hindered by the difficulty of discerning such efforts.
The unusual sacrifices that deserve extra compensation are connected with the costs of industrial functions and the disagreeable character of occupations. Under the first head are included the expense of industrial training and the debilitating effects of the work. Not only justice to the worker but a farsighted view of social welfare, dictate that all unusual costs of preparation for an industrial craft or profession should be repaid in the form of unusual compensation. This means something more than a living wage. For the same reasons the unusual hazards and disability resulting from industrial accidents and diseases should be provided for by higher remuneration. In the absence of such provision, these costs will have to be borne by parents, by society in the form of charitable relief, or by the worker himself through unnecessary suffering and incapacity. The industry that does not provide for all these costs is a social parasite, the workers in it are deprived of just compensation for their unusual sacrifices, and society suffers a considerable loss through industrial friction and diminished productive efficiency. In so far, however, as any of the foregoing occupational costs are borne by society, as in the matter of industrial education, or by the employer, as by the devices of accident compensation or sickness insurance, they do not demand provision in the form of extra wages.
Other unusual sacrifices that entitle the worker to more than living wages, are inherent in disagreeable or despised occupations. The scavenger and the bootblack ought to get more than the performers of most other unskilled tasks. On the principles of comparative individual desert, they should receive larger remuneration than many persons who are engaged upon skilled but relatively pleasant kinds of work. For if they were given the choice of expending the time and money required to fit them for the latter tasks, or of taking up immediately their present disagreeable labour, they would select the more pleasant occupations, for the same or even a smaller remuneration. And the majority of those who are now in the more skilled occupations would make the same choice. Hence the sacrifices inherent in disagreeable kinds of work are in many cases as great as or greater than the sacrifices of preparation for the more pleasant tasks; consequently the doers of the former are relatively underpaid. If all wages were regulated by some supreme authority according to the principles of complete justice, the workers in disagreeable occupations would receive something more than living wages. Nor would this determination of rewards be in any way contrary to social welfare or the principle of maximum net results; for the superior attractiveness of the other kinds of work would draw a sufficient supply of labour to offset the advantage conferred by higher wages upon the disagreeable occupations. The main reason why the latter kind of labour is so poorly paid now is the fact that it is very plentiful, a condition which is in turn due to the unequal division of industrial opportunity. Were the opportunities of technical education and of entrance to the higher crafts and professions more widely diffused, the labourers offering themselves for the disagreeable tasks would be scarcer and their remuneration correspondingly larger. This would be not only more comfortable to the abstract principles of justice, but more conducive to social efficiency.
To sum up the discussion concerning the canon of efforts and sacrifices: Labourers have a just claim to more than living wages whenever they put forth unusual efforts, and whenever their occupations involve unusual sacrifices, either through costs of preparation, exceptional hazards, or inherent disagreeableness. The precise amount of extra compensation due under any of these heads can be determined, as a rule, only approximately.
The next canon to be considered as a reason for more than living wages is that of productivity. This offers little difficulty; for the unusual product is always visible among men who are performing the same kind of work, and the employer is always willing to give the producer of it extra compensation. While superior productive power which is based solely upon superior native ability has only presumptive validity as a canon of justice, that is ethically sufficient in our workaday world. Moreover, the canon of human welfare demands that superior productivity receive superior rewards, so long as these are necessary to evoke the maximum net product.
The canon of scarcity has exactly the same value as that of productivity. Society and the employer are well advised and are justified in giving extra compensation to scarce forms of labour when the product is regarded as worth the corresponding price. This remains true even when the scarcity is due to restricted opportunity of preparation, rather than to sacrifices of any sort. In that case the higher rewards are as fully justified as the superior remuneration of that superior productivity which is based upon exceptional native endowments. The amount of extra compensation which may properly be given on account of scarcity is determined either by the degree of sacrifice involved or by the ordinary operation of competition. When men are scarce because they have made exceptional sacrifices of preparation, they ought to be rewarded in full proportion to these sacrifices. When they are scarce merely because of exceptional opportunities, their extra compensation should not exceed the amount that automatically comes to them through the interplay of supply and demand.
The canon of human welfare has already received implicit application. When due regard is given to efforts, sacrifices, productivity, and scarcity, the demands of human welfare, both in its individual and its social aspects, are sufficiently safeguarded.
In the foregoing pages the attempt has been made to describe the proportions in which a given wage fund ought to be distributed among the various classes of labourers who have claims upon the fund. The first requisite of justice is that all should receive living wages. It applies to all workers of average ability, even to those who have no special qualifications of any sort. When this general claim has been universally satisfied, those groups of workers who are in any wise special, whose qualifications for any reason differentiate them from and place them above the average, will have a right to something more than living wages. They will have the first claim upon the surplus that remains in the wage fund. Their claims will be based upon the various canons of distribution explained in detail above; and the amounts of extra remuneration to which they will be entitled, will be determined by the extent to which their special qualifications differentiate them from the average and unspecialised workers. If the total available wage fund is merely sufficient to provide universal living wages and the extra compensation due to the specialised groups, no section of the labour force will be justified in exacting a larger share. Even though the employer should withhold a part of the amount due to some weaker group, a stronger group that is already getting its proper proportion would have no right to demand the unjustly withheld portion. For this belongs neither to the employer nor to the powerful labour group, but to the weaker section of labourers.
This does not mean that a powerful body of workers who are already receiving their due proportion as compared with other labour groups, would not be justified in seeking any increase in remuneration whatever. The increase might come out of profits, or interest, or the consumer, and thus be in no sense detrimental to the rights of the other sections of labourers. This problem will be considered a little later. At present we confine our attention to the relative claims of different labour groups to a definite wage fund.
Suppose, however, that after all workers have received living wages, and all the exceptional groups have obtained those extra amounts which are due them on account of efforts, sacrifices, productivity, and scarcity, there remains a further surplus in the wage fund. In what proportions should it be distributed? It should be equally divided among all the labourers. The proportional justice which has been already established can be maintained only by raising the present rates of payment equally in all cases. All the average or unspecialised groups would get something more than living wages, and all the other groups would have their extra compensation augmented by the same amount.
Of course, the wage-fund hypothesis which underlies the foregoing discussion is not realised in actual life, any more than was the "wage fund" of the classical economists. Better than any other device, however, it enables us to describe and visualise the comparative claims of different groups of labourers who have a right to unequal amounts in excess of living wages.
Let us suppose that the wage fund is properly apportioned among the different classes of labourers, according to the specified canons of distribution. May not one or all of the labour groups demand an increase in wages on the ground that the employer is retaining for himself an undue share of the product?
As we have seen in the last chapter, the right of the labourers to living wages is superior to the right of the employer or business man to anything in excess of that amount of profits which will insure him against risks, and afford him a decent livelihood in reasonable conformity with his accustomed plane of expenditure. It is also evident that those labourers who undergo more than average sacrifices have a claim to extra compensation which is quite as valid as the similarly based claim of the employer to more than living profits. In case the business does not provide a sufficient amount to remunerate both classes of sacrifices, the employer may prefer his own to those of his employés, on the same principle that he may prefer his own claim to a decent livelihood. The law of charity permits a man to satisfy himself rather than his neighbour, when the needs in question are of the same degree of urgency or importance. As to those labourers who turn out larger products than the average, or whose ability is unusually scarce, there is no practical difficulty; for the employer will find it profitable to give them the corresponding extra compensation. The precise question before us, then, is the claims of the labourers upon profits for remuneration above universal living wages and above the extra compensation due on account of unusual efforts, sacrifices, productivity, and scarcity. Let us call the wage that merely includes all these factors "the equitable minimum."
In competitive conditions this question becomes practical only with reference to the exceptionally efficient and productive business men. The great majority have no surplus available for wage payments in excess of the "equitable minimum." Indeed, the majority do not now pay the full "equitable minimum"; yet their profits do not provide them more than a decent livelihood. The relatively small number of establishments that show such a surplus as we are considering have been brought to that condition of prosperity by the exceptional ability of their directors, rather than by the unusual productivity of their employés. In so far as this exceptional directive ability is due to unusual efforts and sacrifices, the surplus returns which it produces may be claimed with justice by the employer. In so far as the surplus is the outcome of exceptional native endowments, it may still be justly retained by him in accordance with the canon of productivity. In other words, when the various groups of workers are already receiving the "equitable minimum," they have no strict right to any additional compensation out of those rare surplus profits which come into existence in conditions of competition.
This conclusion is confirmed by reference to the canon of human welfare. If exceptionally able business men were not permitted to retain the surplus in question they would not exert themselves sufficiently to produce it; labour would gain nothing; and the community would be deprived of the larger product.
When the employer is a corporation instead of an individual or a partnership, and when it is operating in competitive conditions, the same principles are applicable, and the same conclusions justified. The officers and the whole body of stockholders will have a right to those surplus profits that remain after the "equitable minimum" has been paid to the employés. Every consideration that urges such a distribution in the case of the individual business holds good for the corporation.
The corporation that is a monopoly will have the same right as the competitive concern to retain for its owners those surplus profits which are due to exceptional efficiency on the part of the managers of the business. That part of the surplus which is derived from the extortion of higher than competitive prices cannot be justly retained, since it rests upon no definite moral title. As we saw in the chapter on monopoly, the owners have no right to anything more than the prevailing rate of interest, together with a fair return for their labour and for any unusual efficiency that they may exercise. Should the surplus in question be discontinued by lowering prices, or should it be continued and distributed among the labourers? As a rule, the former course would seem morally preferable. While the labourers, as we shall see presently, are justified in contending for more than the "equitable minimum" at the expense of the consumer, their right to do so through the exercise of monopoly power is extremely doubtful. Whether this power is exerted by themselves or by the employer on their behalf, it remains a weapon which human nature seems incapable of using justly.