Evening star., 1924-09-20
CALLS LOWER PAY
HELP TO WORKERS
Babson Says Higher Earn.
ings by Mills Means More
Steady Employment.
BY ROGER w. BABSON.

Special Dispatch To The star
WELLESLEY HILLS. Mass, Sep
tember 20--When the American
Woolen Company recently announced
that it must suspend it's dividend ant
the stock dropped 90 points the ac.
ton was largely due to the actor
of the company in the Spring OF last
year in increasing wages 1919 pei
cent when other wooden companies
felt there should be wage reductions
The American Wooden Company ther
stood out alone against wage reduc-
tfons when other New England mills
felt that such reductions were in the
interest of wage earners, stockhold.
ers and the public generally. The
American Woolen Company is now
suffering for its action at that time
Wages Highest in History.
During the war wages increased
very rapidly. In early 1920 they stood
at what was then the highest point ir
the history of industry in the United
States. The panic of 1920 resulted
in some wage cutting. In 1922, how
ever, wages again began to increase
until at the present moment they
stand at approximately 10 per cent
above the peak of 1920 and at the
highest point, both in dollars and in
power ever TedcneQ. f4TTl
ployes are determined to keep them
where they are and to push them
even higher. Moreover, certain EN-.
ployers have co-operated with the
wage workers in this attempt
In the years since 1914 great
changes have come over the indus.
trial situation. The producing power
of the country has tremendously in
creased. In every manufacturing
town great new factories stand as
monuments of the zeal of war time
while other pre-war factories are idle
and are placarded with for sale
signs. 1t will take years for the con-
Suming power of the country, through
domestic and foreign trade, TO catch
up with this development This fea-
ture is against the wage ambitions
of the employees.
immigration Law Aids EmpIoye..
ON the other hand, during and
since the war we have entered upon
plan to limit and regulate immi-
grafton. Not only do we select who
shall come, but the total admissible
is but fraction of what we admitted
before the war. This change plays
INTO the hands of employees. So the
battle goes on between those who
want wages kept up on the one hand,
ana those who would reduce them on
the other.
Wage rates are what an employer
agrees TO pay his employees, and II is
over wage rates that employers and
employees fight. Earnings-what the
employe gets in his pay envelope
are the result of multiplying wage
rates by hours worked or by product
turned out. In years time this
product constitutes the yearly in
come of the worker and determines
whether he can afford to buy an au-
tomobile. Real wages are what the
employe can buy with his earnings.
Real wages are much talked about
by academic people, uplifters and the
!lke' put they do not cut much figure
in wage contests.
No industry can pay real wages
unless it is making money enough so
that ii does not have to cut corners.
Wage rates are what employees are
interested in first of all, theE they
are interested in what is earned un-
der the rates. 1t is of no great i'm
portance to have wage rates high If
earnings are low.
New Tendency Appears.
In the past two years a new ten
dency has appeared in industry. Our
records show that in that time so
firms have reduced wages from the
peak of 1923. Thus wage rates have
been reduced in 81 textile mills. in "a
shoe shops, in II iron and steel mills,
in II metal trade shops, in 10 lumber
plants. and so forth. These do not
represent all of the cuts. The total
number of wage cuts is much in ex-
cess of these figures. While other
employers have been raising wages
or allowing them to stay where they
We're, these textile mills, shoe shops
and steel mills have been reducing
wagesi
Now what makes earnings go up or
down is work. What makes work is
orders. What produces orders is abil-
lty to sell. and ability to sell depends
upon price. This last was never truer
than 1t is today. What is the posi-
ton of the textile man who has raised
or held up wages as a seller of goods
compared with the 81 textile mills
that have cut wages? What is the
position Of the shoe maker who has
not reduced wages going to be as a
seller of shoes in competition with the
"a shoe shops that have cut wages? !?
Orders Decide Working Hours.
Put in another way, that question
means: How much are the EMPLOYEES
shops going to earn during the next
II months compared with the total
earnings during the same period of
the people who work in the mills and
shops that have cut wages? And what
is going to be the result when the
statesmen of these high wage plants
report to their boss that they can
not get orders because the low wage
shops are selling for less money than
they can offer goods for? Every low
wage shop in any industry is an ar
gument for lower wages in the other
shops in that industry, because prices
are the determining argument in get
ting orders. Orders determine to
what extent the factory is to operate.
Employees who have these wage
rates are going to be at work, when
others with higher wage rates are
going to be working part time or
not at all. 1t is the factory that can
sell at low price that will get the
business during the coming months.
and it is the employees of such fac
tories that will have the largest earn
ings during the year even though
their wage scales are lower.
Regrets Reduction I'm Wages.
1t is considerations Of this sort tina t
have Influenced my thinking about
wages. 1 as as sorry as any one to
see wages go down. 1 know, how
ever, it Is not wages that, in the last
analysis, interest the wage Garner. 1t
is earnings. With our immense pro-
ducing capacity, the sooner we get
into line to sell goods at lower prices,
the better for the workers. Wages
may not go down much in the next
few months. In the long run they
are bound to.
No matter what happens to wages,
the advantage now all lies with the
factories and communities which are
enjoying lower costs. The process is
inevitable. The farmers have had
their medicine in the way of defla-
tipn Most business mon have had