note: (1) the habit of imitation, which leads a boy to enter the same occupation his acquaintances have chosen; (2) the not infrequent tendency of sons to enter their father's occupation; (3) lack of knowledge or of early appreciation of the relative advantages of different employments, and (4) the fact that only a small number of options may be open to the residents of a particular territory. These facts, in turn, have an important bearing upon the localization of industry, for industries are apt to be located in places where there is a present and prospective supply of specially skilled labor. Differences in wages, together with other factors just mentioned, are not, however, the only considerations which attract laborers to different occupations. Many economic writers have observed that there are differences in the wages paid in different employments which are out of all proportion to any differences in the training or the ability they require. Adam Smith enumerated five circumstances which make up for a small pecuniary gain in some employments, and counterbalance a great one in others." These are: "I. The agreeableness or disagreeableness of the employments themselves; II. The easiness and cheapness, or the difficulty and expense, of learning them; III. The constancy or inconstancy of employment in them; IV. The small or great trust which must be reposed in those who exercise them; and V. The probability or improbability of success in them." These circumstances need explanation in two particulars: First, the agreeableness or disagreeableness of an employment is very often a matter of the social standing attached to it. Many men are doing clerical work to whom some kind of physical exertion would be both more pleasant and more profitable, but who dislike to be classed among the "manual laborers." So-called "professional pursuits "attract many men to whom more lucrative opportunities, requiring less special preparation, are open in other employments. In the second place, the significance of these circumstances is affected by the fact that the most poorly paid (because the least efficient) laborers are found in the most disagreeable and the most uncertain employments. The Wage Contract. The wages that a laborer actually receives are determined by an agreement between himself and his employer. Here appear again those " gains of bargaining " which were mentioned in the discussion of the prices of commodities. But in the case of the wage agreement, if the bargain is between an employer and an individual workman, the advantage is likely to be very largely on one side. The employer is apt to know pretty accurately what he can afford to pay the laborer; he knows about how much the laborer will add to his product, and his knowledge of business conditions helps him to estimate the value of this added product. He knows what it would cost him to get his added product in other ways, as by paying some of his present employees for "overtime" work, or possibly by speeding his machinery faster. Moreover, there is the possibility, or even probability, of getting some other laborer, in case he fails to come to an agreement with the one in question. His experience as an employer of laborers will help him to gauge the minimum that the laborer will accept. With the laborer the situation is very different. He can gauge with less accuracy just how much his services are worth to the employer. The minimum wage that he will accept will be governed by his very limited power of holding out for higher wages, or by his estimate of what he can get in other employments very few of which may be open to him. The whole situation may be expressed by the statement that it is usually a matter of small importance to the employer whether or not he secures a particular laborer, while the securing of a particular employment is often a matter of the very greatest importance to the laborer. Under these conditions wages are apt to be fixed much closer to the minimum which the laborer will take than to the maximum which the employer will pay. Where laborers can bargain in groups rather than as individuals, their disadvantages are greatly lessened. The fundamental motive underlying the development of labor organizations has been to secure the advantages of collective bargaining. QUESTIONS AND EXERCISES 1. How far are wages determined by the productivity of labor? In what different ways do wages affect the productivity of labor? What meaning, or meanings, do you attach to the word "productivity" in the foregoing questions? 2. Why are the wages of men higher than the wages of women in the same employments? 3. Make a short outline, or table, of the factors determining the supply » and demand of labor. 4. Are wages paid as a reward for the irksomeness of labor? Are they paid on account of the scarcity of labor? 5. Some economists have held that "a demand for commodities is not a demand for labor." Discuss this statement. REFERENCES CARVER, T. N. The Distribution of Wealth, Chap. iv. FETTER, F. A. Principles of Economics, Chaps. xx-xxvi. FLUX, A. W. Economic Principles, Chap. viii. MARSHALL, ALFRED, Principles of Economics, 6th ed., Book vi, Chaps. i-v. TAUSSIG, F. W. Wages and Capital. THOMPSON, H. M. The Theory of Wages. CHAPTER XXII LABOR PROBLEMS Types of Labor Organizations. There are at least three distinct types of labor organizations: the Trade Union, representing a combination of wage earners in a single trade or two or three closely related trades; the Industrial Union, composed of all kinds of wage earners working in a given industry; and the mixed Labor Union, made up of wage earners from many trades and many industries. Thus, the Brotherhood of Locomotive Engineers, strictly a trade union, makes no attempt to include other workers in the railway service; the United Mine Workers, however, an industrial union, attempts to combine all persons working in and around the mines; while the Knights of Labor, in the period of its strength and prosperity, fused all sorts and conditions of workers in some of its district assemblies, and combined these assemblies in a closely knit; highly centralized national labor union. The difference in the structure of labor organizations colors their policies and gives rise to important problems. The trade and industrial unions are, as we should expect, much more homogeneous, and therefore much more efficient than the labor unions, but they are likely to be narrower in their aims and more selfish in their policies. The labor unions, on the other hand, have in the past proved much less efficient, much more unwieldy and much more disposed to make use of coöperation, political action, and other devices which are not suited to associations of wage earners, or at least not easily handled by them. For the larger and more general objects common to wage workers as a body, many of the American unions have combined in a large, loosely knit confederacy, known as the American Federation of Labor. This organization interferes just as little as possible with the constituent unions, and confines its activity to securing favorable labor laws, organizing trades in districts of the country in which trade unions have heretofore failed to get a start, rendering assistance to unions which are hard pushed in strikes or other disputes with employers, encouraging the use of union-label goods, and, in short, to furthering all those interests which labor organizations have in common. The membership of the American Federation of Labor in 1914 was a little over two millions. The Economic Justification of Labor Organizations. The question is often asked why labor organizations are necessary, in view of the fact that wages are fixed, at least within broad limits, by deep-lying economic and social forces which the labor organization cannot effectively control. If wages depend upon demand and supply, it is said, what excuse for the troublesome and irritating trade union? The answer is in part that economic laws work themselves out through men and through organizations - they are not selfenforcing. We have had labor organizations of one kind and another ever since the wage system existed, and we shall unquestionably continue to have such organizations unless the wage system is superseded by something more satisfactory. Even if we grant that labor is in essentials a commodity whose price is fixed by demand and supply, there is still a reason for the labor organization. The supply of labor is largely controlled, in the long run, as we have seen, by the standard of life; and one of the great functions of the labor organization is to strengthen and advance the standard of life. If a great horde of unorganized and unsympathetic wage earners are continually bidding against one another in the labor market, each individual endeavoring to get a little more work by offering to take a little less pay, the standard of living will be subtly undermined, “nibbled away," as a well-known writer has expressed it. The labor organization, by repressing the vicious activity of this competition, by compelling its members to offer the same terms and abide by common or standard rules, bulwarks the standard of life, and gives it increased precision, increased power and durability. In |