the labyrinth of social amelioration. Theories of distribution give way to ulterior considerations of immediate social policy. The state of Victoria is definitely committed, for example, to the doctrine that the government shall enforce the right of the workers to a legal living wage. The New Zealand law and the precedents built upon it commit the state to the vastly more comprehensive policy of the redistribution of the income from private industry. The same is true of Western Australia. This program does not appear today as the inevitable outcome of a policy of compulsory wage arbitration. It is fair to say, however, that such has been the positive tendency in the great laboratory of modern social legislation, where the judicial methods have become almost universalized in the settlement of industrial disputes. And it seems needless to point out that the precedents of wage arbitration have been in the interests of the human being, the individual worker, rather than in the interests of industry for its own sake. It is not our task here to enter upon a consideration of the validity of such a distinction. The principles underlying wage arbitration have become not an economic theory of distribution but a social theory of redistribution.

Among modern social students there has been a wide difference of opinion as to the theoretical merits of arbitration as a device for wage settlement. The persistent division of sentiment has made the subject one of frequent controversy.

Mr. S. N. D. North, in 1896, gave expression to what is perhaps the fundamental fallacy of the theories of wages in industrial arbitration: 1

The question whether wages ought to follow prices, or prices wages, is one which boards of arbitration cannot determine. . . . We may resolve and protest and insist, but it still remains the fact that the living wage is only possible under conditions which allow the living price. This is the A B C of industrial economics. . . . That is the inexorable law which trade-unionism cannot repeal. If the wage could make the price, it would never fail to do so.

To the many questions propounded in the statement of the problem of the wage theories in arbitration there is found in the precedents no adequate answer. As a method of industrial peace,

1 Industrial Arbitration: Its Methods and its Limitations," in Quarterly Journal of Economics, Vol. X (1896), p. 415.

arbitration is intermediate, not final; corrective, not remedial; 3pportunist, not ideal; an expedient for which the defense is to be found in present social policy. From the narrowly economic point of view, as contrasted-if such contrast be permissible-with that of general social welfare, wage doctrine in industrial arbitration is as lacking in theoretical justification as is the legal minimum wage, the usual product of arbitration in practice. There is a fundamental circle in the reasoning; throughout, a begging of the question. It takes its place with the other cost-of-production theories of distribution. In judging, however, the usefulness of compulsory arbitration as a device for the maintenance of industrial peace the reminder may not be inappropriate that the "business of the labor arbitrator is not to please orthodox professors of economy, but rather to find a reasonable modus vivendi for two disputants who are unable to find it for themselves."

WILSON COMPTON

DARTMOUTH COLLEGE

1 W. P. Reeves, State Experiments in Australia and New Zealand, Vol. II, p. 169.

M

XLII

MINIMUM WAGES FOR WOMEN1

UCH as has been said of late about minimum wages for women,

the questions raised have been dealt with but rarely in the light of economic theory. Economists seem to have been wary of applying to this concrete problem the general reasoning which figures so much in the treatises. A reluctance of the same sort is observable in their treatment of other current questions. What is the influence of immigration on the general rate of wages? What has economics to offer on the controversy between closed shop and open shop? What is the effect of a protective tariff on the rates of wages? The answers to such questions should at the least be made easier by economic theory; indeed, to aid in answering them would seem the ultimate object of theory. Yet the economists have contributed much more to the accumulation of facts, the ascertainment of details, than to the elucidation of the broad, general problems. Perhaps this restraint has been due to a consciousness that we are not sure of our ground. Economic theory is in a process of readjustment; our current formulas must be regarded as provisional; some, at least, among the next generation are likely to see new light in many directions. The egregious errors of which the economists of the first half of the nineteenth century were guilty when they applied offhand the theories of their day impose caution. But there is no more searching way of testing the generalizations of our own time than the attempt to apply them, perhaps to use them as the basis of prophecy. And if in the course of such applications our theories prove bad or useless, the sooner we find it out the better.

In the following pages I shall endeavor to consider the legislative measures for regulating women's wages in the light of some generally accepted economic principles. At the very outset let it be noted that the problem is in essential respects different for women's 1 From Quarterly Journal of Economics, Vol. XXX (1916), pp. 411-422.

wages from what it is for men's wages. About minimum wages for men nothing will here be said. And as regards women, the wages of the lowest group only need be considered at this stage of American discussion and legislation. A wider application of the minimumwages principle is of course possible-to the establishment of a series of minima, for men and for women, and varying for the several grades of labor. But it is to a single minimum, designed to be effective for the lowest-paid grade of women's labor only, that legislation is directed in the United States; and the present paper will be restricted to this sort of regulation.

The broad facts are sufficiently known. They have been admirably set forth in compact form by Professor C. E. Persons in an article recently published in these columns.1 Let me summarily recapitulate them The number of women and girls employed in factories and shops is growing fast. It is growing particularly fast in the occupations classed by the census under the head of "trade and transportation," among which shops hold the first place for women Both in the factories and shops the great majority of the women are young. Of all the women employed, at least half are between the ages of sixteen and twenty-five; among those who work in factories and shops the proportion of young women is even greater., It follows that they are a shifting class, industrial birds of passage. One set enters the shops and factories and remains there a year or two, at most a few years. Its members marry and are succeeded by a new set. Though there are some older women in the group here under review,—the lowest-paid group,-it is made up chiefly of the young. And from their youth and the temporary nature of their work it follows that in the main they are unskilled or inexperienced; or, if skilled and experienced, only in such tasks as can be easily learned. Again, the majority of these girls and women live at home. They are ordinarily members of a family group which makes common cause in domestic life. As Professor Persons sums up the outcome of his wide-ranging research: "It boots little to multiply illustrations. . . The typical female workers are the 80 per cent living at home and contributing the larger part of their earnings to the family treasury. Twenty per cent of the girls at most are independent workers."

1" Women's Work and Wages in the United States," Quarterly Journal of Economics, Vol. XXIX (1915), p. 203.

Finally, current wages are low and are usually less than is reckoned necessary for the support of a woman living alone. As a rough generalization it may be said that the wages of the young women who constitute the bulk of those employed in factories and shops range about $6 a week. Investigations by various commissions lead to the conclusion that the minimum on which a woman dependent on herself can meet "the necessary cost of proper living" (some such phrase appears in the various statutes) is at the least $8 a week. The usual wages of the great majority of women employed are less than this minimum.

Here is presented the first general question, Are not the industries which employ these women to be deemed "parasitic"? Is it not clear that the women who receive but $6 a week, and need $8 for self-support, must have the difference made up somehow? The industries which employ them seem not to pay their way, and the consumers who buy the products do not recoup the full expenses of production. Is not the difference necessarily made up from some other source-by parents, by charities, perhaps by prostitution? This, as is familiar enough, is the ground most frequently urged for fixing minimum wages for women. Such legislation, it is maintained, recognizes an undeniable fact; it puts an end to a clear case of economic parasitism.

This version of the case has been stated so frequently and by such careful thinkers and has been so little questioned-not directly questioned at all, so far as I know-that one must hesitate to take issue with it. And yet it seems more than questionable. It is not clear beyond peradventure that the case is one of parasitic industries; nor must the minimum needed for the support of the independent women necessarily serve as the basis for legislative regulation.

By a "parasitic" industry is meant, I take it, one which necessarily entails some aid and payment from an extraneous source. The typical cases are those of industries employing adults who receive literally less than the bare physical minimum of subsistence. Such cases have been brought to our attention by Mr. Rowntree and others in inquiries on the wages of British laborers of the lowest grade. Similar cases are to be found on the Continent, especially when the handicraft labor of former days is in process of being displaced by machine industry, the handicraftsmen clinging desperately and