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THE CASE FOR

A LEGAL MINIMUM WAGE

PUBLISHED AND SOLD BY

THE FABIAN SOCIETY.

PRICE ONE PENNY.

LONDON:

THE FABIAN SOCIETY, 3 CLEMENT'S INN, STRAND, W.C.
PUBLISHED JULY 1906. REPRINTED APRIL 1908.

The Case for a Legal Minimum Wage.

In a discussion of the institution of a National Legal Minimum Wage there is no need to deal with the fascinating but abstract subject of the right of the State to interfere with the conditions under which persons employ, or are employed. The development of factory legislation and its effects upon national life and industry have settled the question as to the limits of State regulation in this sphere once and for all by proving that experience alone can shew where these limits ought to be fixed. The only real criticism to which industrial legislation is now subjected is not on the ground of principle but on the practical question of effectiveness in points of detail, and such criticism leads to continual demands being made for the extension of legislation to secure a standard minimum of leisure and safety for an increasing number of the workers.

State Minima.

But not only in matters of safety and leisure has the State assumed, with general approval, the duty of fixing a standard. All normal children, and many who are abnormal, are legally required in the interests of national mental efficiency to receive a minimum of instruction; every person is supposed to be compelled to conform to a certain sanitary minimum; and in housing the State is gradually feeling its way to the enforcement of a minimum of health and comfort. These measures, aiming at the protection of the masses from the evil effects of anarchic industrial conditions, are, however, limited to a considerable extent in their utility by the failure of the State to secure sufficient remuneration to those industrially employed. There appears to be a superstition held by economists and politicians, even by those who have no prejudice against State regulation in itself, that the cash relation between employer and employed is so sacred that to interfere with it by law is to commit the unpardonable economic and political sin. Moreover, it was thought that the worker would become educated through compulsory Education Acts; healthy through Public Health Acts; comfortably housed through Housing Acts; and that the inevitable result of this education, health and comfort would be increased mental and physical efficiency capable of effecting a dead lift in wages all round. This expectation has not been realized, as may be easily gathered from recent well-known enquiries into social conditions. It is glaringly apparent that an alarming proportion of the mass of the people, in spite of the efforts of the State by indirect and partial means to

raise the standard of life, do not receive sufficient wages to provide for a healthy physical existence. The researches of Mr. Charles Booth and Mr. B. S. Rowntree indicate that it is probable that at least twelve millions of our population are living just on or below a level of bare subsistence. This estimate appears to be so well founded that a responsible politician, Sir Henry CampbellBannerman to wit, adopted it as an argument in favor of the return of the Liberal Party to power. It is true that according to Mr. Rowntree a good deal of this degrading poverty arises from the careless and unscientific expenditure of incomes, which, if carefully and scientifically expended would be just sufficient to maintain physical efficiency. The class which suffers through this cause would not be directly assisted by the enforcement of a legal minimum wage of the kind we shall discuss, but below it there is another class which does not receive enough to maintain physical efficiency, no matter how wisely the family expenditure may be regulated. Nothing but a rise in family income can help this lower class.

Wages Clauses in Public Contracts.

99 66

In spite of the protests of old-fashioned economists against the legal regulation of wages, the State, both central and municipal, has begun to act upon the principle that no sweating or underpayment must be allowed in its direct or indirect service. The adoption by public bodies of a "standard," "fair," "agreed," or "trade union rates of wages clause in forms of tender for their work is undoubtedly a small step in the direction of the regulation of wages by the State, even though it may be simply a public endorsement of a private agreement arrived at between employers and a trade union. And when a municipal body goes further and, finding that there is no "standard," "fair," agreed," or "trade union" rate in a particular trade, proceeds to fix a minimum wage for members of that trade when it is engaged upon public work, either directly, or through the medium of a contractor, a longer and still more important step in the same direction has been taken, and the infringement of the right of free contract in matters of wages becomes extremely flagrant. The London County Council for several years has fixed minimum rates to be paid by contractors who carry out its tailoring work; and, recently, the companies who take the contracts for keeping clean the acres of glass in London's educational and other public buildings have been bound by the Council to pay a minimum rate per hour to the men engaged upon the work. Along these lines something has been done to help weak and unorganized sections of labor to attain a higher standard of comfort. But there are strict limitations to the efficacy of wage clauses in contracts for public work. It is very difficult in an occupation which is either badly organized or wholly without a trade. organization to make certain that the clauses are observed. those trades where unionism is strong the natural tendency of the contractor to try to get round the labor conditions of his contract

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can be more or less effectively checked. Where unionism is either absent or weak the way of the transgressing contractor is easy. Moreover, the number of persons employed directly or indirectly upon municipal or State work under regulated conditions, while increasing, is at present comparatively small, and although the number of contractors who carry out such work is large the regulated conditions do not apply to all their employees but only to those engaged in executing the public contracts. Hence we find that the tailoring contractor to the London County Council will pay the minimum rate for the Council work; but it is understood that the worker who is given a park-keeper's suit to make up is compelled to balance the advantage in wages accruing therefrom by taking a certain quantity of other work for her employer's private customers at a far lower rate of pay than the County Council's minimum. To parody the showman's classic phrase, what she gains on the regulated municipal uniform she loses on the unregulated private overcoat.

Therefore, although the introduction of wage clauses and the fixing of minimum rates in connection with public work are extremely desirable and useful they do not promise to be either efficient or speedy as a means of improving the lot of those for whom an immediate rise in income is the only salvation. They are mentioned here simply as illustrations of the fact often overlooked, that the State, in spite of the serious warnings of economists, has begun, if only in a very tentative way, to take an intelligent interest in the terms of the cash nexus between employer and employed.

Obsolete and Modern Economic Theory.

"All generous minds," says the most genial of American essayists, "have a horror of what are commonly called facts." One need not possess a very generous mind to have a horror of what used to be called political economy. It is now happily banished to Saturn; but it must not be supposed that genuine economic science has been banished with it. The Saturnian economy was the economy or middle class professional life, in which every man is his own employer and capitalist, absurdly applied to modern industrial civilization by college professors. It misled the nation on every practical issue; and it would, if it could, prevent the enactment of a minimum wage law by giving yet another mistaken verdict against it. Those who are desirous of learning in detail the arguments in support of such a verdict, and also how they may be effectively demolished, are referred to Mr. and Mrs. Sidney Webb's Industrial Democracy. But the professors still protest. They were against the Factory Acts; against the prevention of capitalist exploitation of children of tender years; against the fencing of dangerous machinery; against trade combinations of the working people; in a word against the whole trend of modern industrial and social legislation. Against the enactment of a minimum wage law they reason as they taught the individualistic opponents of the Ten Hours' Bill to reason sixty years ago. They urge that the cost of production would be increased in

the industries where the minimum wage was enforced, and that therefore they would inevitably shrink or collapse owing to the falling off in the demand for their products which would result from the rise in price caused by the increased cost of production. This would tend to swell the ranks of the unemployed, and the last stage of the sweated worker would be worse than the first. This argument is based upon the assumption that the industries referred to can only exist by the employment of sweated labor. The practical opposition to the abolition by legislation of insanitary, unsafe, and unhealthy factories and workshops, and to the State prevention of excessive overworking of women and children was based upon similar assumptions. "The cotton industry will be ruined," said the Lancashire millowner in effect, backed up by the economic professors, "if it is compelled to bear the expense of making decent the places in which the manufacture is carried on." Speaking in the House of Commons in 1855 against a Bill for the compulsory fencing of machinery, John Bright said that if the Bill passed he would advise his partners to shut up their mills because the legislature would not allow them to employ their hands at a profit.* Needless to say there was still a handsome dividend to be drawn from the cotton industry after the cost of fencing machinery had been met; and the Lancashire mills are still open, thereby shewing scant respect for college-made economics. We know now that the effect of stopping competition in wages at the expense of the vitality of the workers is, to quote from Industrial Democracy, to concentrate it upon efficiency. A minimum wage would continue and intensify that salutary concentration. Doubtless a number of the weakest and least efficient workers would then be excluded from employment where formerly they had been able to keep themselves partially alive by their sweated and inefficient labor, inefficient because underpaid. This result instead of being deplored should be welcomed. It would draw attention to the urgent need for the State to take in hand the problem of the unemployable-a problem which arises mainly through the absence of a national minimum wage. Even if some occupations were unable to bear the cost of a minimum wage it would obviously be a national benefit for them to disappear rather than to continue by living upon the life capital of the nation.

Wages Law in New Zealand.

Before going further into detail with regard to the proposed law it will be well at this stage to consider an important practical objection, namely, that although it might be possible to draft on paper a satisfactory Minimum Wage Bill, and even get it passed, the Act would break down in practice owing to the immense difficulties which would arise in its administration. It is urged that the work of calculating and fixing the minimum wage rate and of inspection for the prevention of evasion would be so vast and minute that the wit of man could not devise riachinery capable of coping with it.

Simpson, Many Memories of Many People, pp. 263-264; quoted by Prof. Dicey in Law and Opinion in England.

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