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ABIAN SOCIETY.-The Fabian Society consists of Socialists. A statement of its Rules and the following publications can be obtained from the Secretary, at the Fabian Office, 3 Clement's Inn, London, W.C.

FABIANISM AND THE EMPIRE: A Manifesto.
Edited by BERNARD SHAW. 6d. post free.

FABIAN ESSAYS IN SOCIALISM. (35th Thousand.)
Paper cover, 1/-; plain cloth, 2/-, post free from the Secretary.
FABIAN TRACTS and LEAFLETS.

Tracts, each 16 to 52 pp., price 1d., or 9d. per doz., unless otherwise stated. Leaflets, 4 pp. each, price 1d. for six copies, 1s. per 100, or 8/6 per 1000. The Set of 84, 3s.; post free 3/5. Bound in Buckram, 4/6; post free for 55. Boxes for set, 1s., post free 1s. 3d.

1.-On General Socialism in its various aspects.

TRACTS.-113. Communism. By WM. MORRIS. 107. Socialism for Millionaires. By BERNARD SHAW. 79. A Word of Remembrance and Caution to the Rich._By_JOHN WOOLMAN. 78. Socialism and the Teaching of Christ. By Dr. JOHN CLIFFORD. 87. The same in Welsh. 42. Christian Socialism. By Rev. S. D. HEADLAM. 75. Labor in the Longest Reign. By SIDNEY WEBB. 72. The Moral Aspects of Socialism. By SIDNEY BALL. 69. Difficulties of Individualism. By SIDNEY WEBB. 51. Socialism: True and False. By S. WEBB. 45. The Impossibilities of Anarchism. By BERNARD SHAW (price 2d.). 15. English Progress towards Social Democracy. By S. WEBB. 7. Capital and Land. 5. Facts for Socialsts (8th edn. revised 1899.) LEAFLETS-13. What Socialism Is. 1. Why are the Many Poor? 38. The same in Welsh.

II.-On Application of Socialism to Particular Problems. TRACTS. 112. Life in the Laundry. 110. Problems of Indian Poverty. By S. S. THORBURN. 98. State Railways for Ireland. 88. The Growth of Monopoly in English Industry. By H. W. MACROSTY. 86. Municipal Drink Traffic. 85. Liquor Licensing at Home and Abroad. By E. R PEASE. 84. Economics of Direct Employment. 83. State Arbitration and the Living Wage. 74. The State and its Functions in New Zealand. 73. Case for State Pensions in Old Age. By G. TURNER. 67. Women and the Factory Acts. By Mrs. WEBB. 50. Sweating: its Cause and Remedy. 48. Eight Hours by Law. 23. Case for an Eight Hours Bill. 47. The Unemployed. By J. BURNS, M.P. LEAFLETS.-89. Old Age Pensions at Work. 19. What the Farm Laborer Wants. 104. How Trade Unions benefit Workmen.

III.-On Local Government Powers:

How to use them. TRACTS.-114. The Education Act, 1902. 111. Reform of Reformatories and Industrial Schools. By H. T. HOLMES. 109. Cottage Plans and Common Sense. By RAYMOND UNWIN. 105. Five Years' Fruits of the Parish Councils Act. 103. Overcrowding in London and its Remedy. By W. C. STEADMAN, L.C.C. 101. The House Famine and How to Relieve it. 52 pp. 76. Houses for the People. 100. Metropolitan Borough Councils: their powers and duties. 99. Local Government in Ireland. 82. Workmen's Compensation Act: what it means and how to make use of it. 77. Municipalization of Tramways. 62. Parish and District Councils. 61. The London County Council. 54. The Humanizing of the Poor Law. By J. F. OAKESHOTT. LEAFLETS.-81. Municipal Water. 68. The Tenant's Sanitary Catechism. 71. Same for London. 63. Parish Council Cottages and how to get them. 58. Allotments and how to get them. FABIAN MUNICIPAL PROGRAM, FIRST SERIES. London's Heritage in the City Guilds. Municipalization of the Gas Supply. Municipal Tramways. The Scandal of London's Markets. A Labor Policy for Public Authorities. SECOND SERIES (Nos. go to 97). Municipalization of the Milk Supply. Municipal Pawnshops. Municipal Slaughterhouses. Women as Councillors. Municipal Bakeries. Municipal Hospitals. Municipal Fire Insurance. Municipal Steamboats. Each Series in a red cover for 1d. (9d. per doz.); separate leaflets, 1/- per 100. IV.-On Books.

29. What to Read on social and economic subjects. 4th edition, enlarged and re-arranged. 6d. net.

V.-On General Politics and Fabian Policy.

108. Twentieth Century Politics. By SIDNEY WEBB. 70. Report on Fabian Policy. 41. The Fabian Society: its Early History. By BERNARD SHAW. VI.-Question Leaflets, containing Questions for Candidates for the following bodies:-20, Poor Law Guardians. 24, Parliament. 27, Town Councils. 28, County Councils, Rural. 56, Parish Councils. 57, Rural District Councils. 59, Urban District Councils. 102, Metropolitan Borough Councils BOOK BOXES lent to Societies, Clubs, Trade Unions, for 6s. a year, or 2/6 a quarter Printed by G. Standring, 7 Finsbury St.. London, E.C., and published by the Fabian Society.

3 Clement's Inn, Strand, London, W.C.

THE ECONOMICS OF DIRECT EMPLOYMENT.

WITH AN ACCOUNT OF THE FAIR WAGES POLICY.

PUBLISHED AND SOLD BY

THE FABIAN SOCIETY.

SECOND EDITION. REVISED.

PRICE ONE PENNY.

LONDON:

THE FABIAN SOCIETY, 3 CLEMENT'S INN, STRAND, W.C.
SECOND EDITION, FEBRUARY 1900. REPRINTED, JULY 1906.

The Economics of Direct Employment*

DURING the last twelve years there has gradually been developed, among the various Town and County Councils and other public authorities, a definite economic policy with regard to the employ ment of labor. This policy, initiated by the School Board for London in January, 1889,† has been adopted, to a greater or lesser degree, by several hundred local governing bodies throughout the United Kingdom. It has, perhaps, been most completely carried out by the London County Council, where it has been successfully maintained for over ten years, and where it has lately been endorsed and confirmed by a decisive majority at the election of 1898.

The Labor Policy of the London County Council. The Labor Policy of the London County Council has been intelligently criticized, from the point of view of economic science, mainly under three heads. Instead of "buying its labor in the cheapest market," as it was termed, it has, from the first, striven to adopt as its standard the trade union rate of wages, and to assert a "moral minimum" of earnings below which it was inexpedient that any London citizen should be allowed to sink. Moreover, not content with proceeding on these lines as regards the workmen whom it directly employs, it has sought throughout to secure that all contractors executing its work should adopt the same principle. Finally, it has endeavored, wherever possible, to dispense with the middleman entrepreneur, and to substitute salaried supervision and management directly under public control.

The Fair Wages Movement.

Let us take first what is known as the Fair Wages Movement. After prolonged discussions, repeated at intervals during nine years, it has become the settled policy, (a) to pay, in each trade, the recognized standard rate of wages, (b) to give no adult male workman less than 6d. per hour, and no adult woman less than 18s. per week. Those

* Most of this tract has already been published under the title "The Economic Heresies of the London County Council: a paper read before the Economic Section of the British Association for the Advancement of Science, Oxford, 13th August, 1894, by Sidney Webb, L.C.C."

†The London School Board was, in January, 1889, the first public body to adopt the principle of insisting that not less than the recognized standard rates of wages should be paid. See The History of Trade Unionism, and also Industrial Democracy, by Sidney and Beatrice Webb.

"The Standing Orders of the L.C.C.", containing the Fair Wages Clauses, is sold at Is. by P. S. King & Son, Great Smith Street, Westminster. For other places see House of Commons Return, " Urban Sanitary Districts (Conditions of Contracts)," No. 47, 11th February, 1898; 2d. (P. S. King & Son.)

unfamiliar with the actual practice of industrial life at first imagined that the trade union rate of wages meant just whatever rate the trade unions might choose to claim. As a matter of fact the trade union rate of wages is, in every organized trade, a well-understood expression, denoting the actual rate which has been agreed to, more or less explicitly, by representative employers and the trade union executives. What the Council has done has been merely to insert in its own standard list of wages the rate proved, on enquiry, to be actually recognized and adopted by the leading employers in the particular trade within the London district. In the whole of the building trades, for instance, which include seven-eighths of the work done for the Council, the trade union rate of wages has been solemnly agreed to in a formal treaty between the London Building Trades Federation and the London Master Builders' Association. So far as the organized skilled trades are concerned, the Council has not attempted to do more than place itself on a line with the common average of decent employers.

With regard to unskilled labor the case is more difficult. Here, in most cases, no generally recognized trade union rate exists. The Council has accordingly taken the position that it is undesirable, whatever the competition, that any of its employees should receive less than the minimum required for efficient and decent existence. Seeing that Mr. Charles Booth places the actual "poverty line" in London at regular earnings of 21s. per week, it cannot be said that the Council's "moral minimum" of 24s. for men and 18s. for women errs on the side of luxury or extravagance. But, unlike the Council's wage for skilled workmen, it is more than is actually paid by many conscientious employers; and it is undoubtedly above the rate at which the Council could obtain such laborers, if it chose to disregard all other considerations.

The labor policy of the London County Council, whether with regard to skilled or to unskilled labor, may be explained as the deliberate choice of that form of competition which secures the greatest possible efficiency, as compared with the form which secures the greatest apparent cheapness. Public offices may be filled in one of two ways. We may, on the one hand, practically put the places up to auction, taking those candidates who offer to do the work for the lowest wages. Or, on the other hand, we may first fix the emoluments, and then pick the best of the candidates coming forward on those terms. When we want brain-workers of any kind, everyone agrees that the latter policy is the only safe one. We do not appoint as a judge the lawyer who offers to take the place at the lowest rate. No one would think of inviting competitive tenders from clergymen as to the price at which they would fill a vacant bishopric. And a Town or County Council which bought its engineer or its medical officer in the cheapest market would, by common consent, make a very bad bargain. In all these cases we have learnt, by long and painful experience, that there is so much difference between competence and incompetence that we do not dream of seeking to save money by taking the candidate who offers

his services at the lowest rate. Unfortunately, many worthy people who realize this aspect of brainwork, because they belong themselves to the brainworking class, are unconscious that it applies no less forcibly to mechanical labor. They will pay any price for a good architect, but are apt to regard bricklayers and masons as all equally "common workmen." The consequence is that, owing to the extraordinary ignorance of the middle and upper class about the actual life of the handicraft trades, it has gradually become accepted as good business that, though you must take all possible trouble in choosing your manager, it is safe and right to buy wage-labor at the lowest market rates. But, as a matter of fact, there is as great a relative difference between one painter or plasterer and another, as there is between one architect or manager and another. If the pressure of competition is shifted from the plane of quality to the plane of cheapness, all economic experience tells us that the result is incompetency, scamped work, the steady demoralization of the craftsman, and all the degradation of sweating. When a man engages a coachman or a gardener he understands this well enough, and never for a moment thinks of hiring the cheapest who presents himself. Even the sharpest-pressed employer does not entrust expensive machinery to the mechanic who offers to take the least wages. The London County Council, realizing it more vividly than some bodies less in touch with the actual facts of industrial life, applies the principle all round. Whether the post to be filled be that of an architect or a carpenter, the wage to be paid is first fixed at a rate sufficient to attract the best class of men in the particular Occupation. Then the most competent candidate that can be found is chosen. Competition among the candidates works no less keenly than before; but it is competition tending not to reduce the price, thereby lowering the standard of life throughout the nation, but to enhance efficiency, and thus really to reduce the cost of production.

With regard to the lowlier grades of labor a further consideration enters in. It may be economically permissible, under the present organization of industry, for a private employer to pay wages upon which, as he perfectly well knows, it is impossible for the worker to maintain himself or herself in efficiency. But when a Board of Poor Law Guardians finds itself rescuing from starvation, out of the poor rate, women actually employed by one of its own contractors to make up workhouse clothing, at wages insufficient to keep body and soul together, even the most rigorous economist would admit that something was wrong. The London County Council, responsible as it is for the health of the people of London, declines to use its position as an employer deliberately to degrade that health by paying wages obviously and flagrantly insufficient for maintenance, even if competition drives down wages to that pitch. The economic heretics, in fact, are not the Council, but those who, in flat defiance of Adam

* The Chelsea Board of Guardians was, in 1894, paying its scrubbers Is. 6d. a day, without food, which amounts to a weekly wage of 9s. A day's illness is sufficient to force such a worker to seek relief from the rates, and the Board then finds itself rescuing from starvation its own underpaid workpeople.

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