AMERICAN LABOUR

Manawatu Standard, Volume XLVI, Issue 47, 25 January 1926, Page 10

AMERICAN LABOUR

WAGES BASED ON PRODUCTION. (Contributed by the N.Z. Welfare League.) The American Federation of Labour, at its recent annual convention, had an interesting debate over wages and production which resulted in a declaration that lias been called a new labour policy. The language of the entire resolution hardly seems to justify the claim that any new idea or policy has had sudden birth, but' an attempt within the federation to formulate a wage policy based primarily upon production undoubtedly is of real importance. The original resolution upon the subject in tho report of the committee on resolutions was no more than a general declaration condemning all wage reductions as producing social and industrial unrest and raising instead of lowering production costs. John F. Frey, head of the International Moulders’ Union, declared that “the time had come when the position of tho trades’ union movement on the question of wages must be more clearly defined.” “Wo cannot base our wage demands,” he said, “upon any individual or group conception of tho cost of living. What may bo a living wago for one man may not bo for another. Wages should bo based upon the value of what we aro creating. Methods of production aro continually being perfected, including utilisation of water power, and this should be reflected in the wages wo receive.” Frey, therefore, asked that the following addition be made to the committee’s report: “Social inequality, industrial instability and injustice must increase unless tho workers’ real wage—tho purchasing power of their wages—is advanced in proportion to man’s increasing powers of production.” On tho following day the new draft was offered and adopted. It reads as follows: “We hold that the best interests of wage-earners, as well as tho whole social group, are served, increasing production in quality as well as quantity, by high wago standards, which assure sustained purchasing power to the workers and therefore higher national standards for tho environment in which they live and the meam to enjoy the cultured opportunities l . We declare that wago reductions produce industrial and social unrest and that low wages are not conducive to low production costs.” Wo urgo upon wage earners everywhere :

“that wo oppose all wago reduction, and that we urgo upon management tho elimination of waste in production in order that selling prices may be lower and wages higher. To this end wo recommend co-operation in study of waste in production, which tho assay of the Federal American Engineering Societies covering important industries has shown to be 50 per cent, attributable to management and only 25 per cent. attributable to labour, with 25 per cent, attributable to other sources, principally managements, industries producing commodities for any industry under consideration. “Social inequality, industrial instability and injustice must increase unless the workers’ real wages—the purchasing power of their wages—coupled with a continuing reduction in the number of hours making up the working day, are progressed in proportion to man’s increasing power of production.” Tho decision on wago policy was unanimous, without so much as a debate. The 400 delegates voted to declaro that the American working man must begin to protect himself against being subordinated to increasing introduction of labour-saving machinery and electric power. They acted on the principle that the offset lay in proportionate increase of wages, with respect to purchasing power and decrease of working hours. Tho weight of tho pronouncement, in expressed opinions of tho delegates, was in the last paragraph. The introduction of these two principles was what took the convention by surprise and caused it to take tho matter under advisement over night. President William Green hailed the declaration by saying: “This action places American labour in a most advanced position on wage theories. It may be regarded as the enunciation of a new idea. It is a position far in advance of any position we have ever taken before. We aro on tho threshold of a great new era. We are in the infancy of giant power. A new condition is here, and wo must meet it, and this is our way of meeting it.” A BANKER’S VIEW, The Bulletin of Tho National City Bank of New York comments as follows : Whether or not tlieso declarations aro to bo taken as enunciating a new and advunced policy seems to depend upon whether the dominant idea is that great possibilities for the labouring musses fid-in increased production, or that increased productive capacity is a menace to be neutralised or suppressed in some manner. Does the federation have a vision of the universal gains to be had from an increase of productive power, and is it inspired to co-operate in obtaining them, or is it on the offensive? Obviously it will make a great difference which way the influence of organised labour is given. Tho Frey amendment as orginally proposed did not raise this question, but in the resolution as adopted it is nearly smothered by expressions which are suggestive of tho traditional attitude of labour towards machinery. The idea of connecting up tho working man’s advance with increasing production is all to tho good. It is not only true that his v real gains must come through industrial progress, but that industrial progress will utterly fail of results and actually choke down for want of an expanding market unless there is the widest possible distribution of benefits. All plans for increasing production necessarily contemplate a corresponding increase of consumption, and the only way that consumption can be obtained is through a constant increase in the buying power of the masses. Broadly speaking, everything produced in all the industries must bo sold back to the people engaged in the industries, for there is no other way of disposing of the output. Questions may be raised as to the relative distribution between proprietors and employees, but the proprietors are not running their works on the theory that they are selling their products to each other. They aro all striving for the broadest possible market, and that can bo had only through the purchasing power of the masses.

Therefore, there can be no controversy over the proposition that “real wages”—the purchasing power of wages”—must increase in proportion to man’s “increasing power to production.” It is the basic principle of the existing order of society. It is in line with all experience. It is a declaration in favour of just what has Been taking

place ever since capital began to be used for increasing production. Mr. Frey’s original statement and amendment’are entirely sound and unexceptionable. It is true that wages cannot bo based' upon a theoretical conception of tho standard of living. It is certain that nobody will pay wages very long unless they are covered by the value of the services rendered ; not even a Socialist state could do that. CONTRAST WITH NEW ZEALAND. What gives food for thought to us in New- Zealand is tho contrast of . policy enunciated by this great Federation of Labour in America and the generally pronounced Labour policy here and in Australia. Under our Arbitration Law, and apart from' it, we are constantly engaged in settling wage standards “ujion a theoretical conception of tho standard of living.” Tho idea of basing wages on the valuo of output and seeking from increased production advancement in labour’s benefit is a view we seldom find expressed by any labour union in these Dominions. The Now Zealand Alliance of Labour mado a pronouncement on wages v'hicli was founded solely on tho cost of living basis. Unions and their officers have followed suit. The question of relation between the work given and the w'ages received is passed over. Still, it is only from tho production that wages can bo paid. Employers and employed might well consider whether greater general , benefit will not result from giving more attention to production and relying less on the speculative basis of tho cost of living. High production, elimination of v'astc, good wages and lowered prices arc ideals of labour in America which could be tried here, we think, with advantage.