Practical of Wages. CHAPTER XXIX THE LABOR MOVEMENT § 311. The treatment of wages in the chapters on distribuApplication tion was open to the charge of being unduly abstract. The of Theory assumption that competition has free play among workmen and employers involves a disregard of palpable facts and must, for many readers, have weakened the force of the conclusions that under such circumstances workmen of the same grades of capacity competing in the same labor market tend to secure the same rates of wages and that in general these rates tend to be the shares of the joint product that are economically imputable to labor as distinguished from the other factors of production. These conclusions were presented, it cannot be too strongly emphasized, not as descriptive of actual conditions, but rather as tendencies, to be considered in connection with actual conditions. Full weight must now be given to the undoubted truth that competition in the labor markets of the world is not free and all-sided, as assumed, but obstructed in various ways, and the extent to which we should modify our conclusions in reference to the relation between work and pay to make them true to the facts must receive careful consideration. Disadvantages of Wage earners in Bargaining. The wages contract is a bargain, and when it fails to secure for labor its full competitive share of the product the cause must be sought in the unequal bargaining ability of workmen and their employers. The principal disadvantages under which workmen are placed are: First, that their labor resembles a perishable commodity in that it must be sold each day if they are not to incur loss. This circumstance often forces them to accept wages that are below their normal earning capacity and nearly always makes them more impatient to have the bargain concluded than their employers, who may, to be sure, be losing profits but are rarely haunted by DISADVANTAGES OF WAGE-EARNERS 549 the spectre of outright destitution. For workmen tramping the streets in search of employment this ground of inequality can hardly be exaggerated. It must be remembered, however, that the typical workman in normal times is not the unemployed seeker after a job, whose unfortunate plight is so often pictured, but the man already employed, who is trying to better himself. Unemployment often forces workmen to make bad bargains, but even bad bargains may place them in a position to make better terms with their next employers. It must be remembered on the other hand, however, that unemployment may and often does continue so long as to break the spirit and lessen the efficiency of the workman and thus to cause a permanent lowering of his earning capacity. A second disadvantage results from the superior knowledge which employers usually have of the conditions which influence the wage contract. More intelligent, as a rule, and able from their position to take a broader survey of the labor market, employers can often persuade workmen to accept terms much worse than free, all-sided competition would secure for them. A third disadvantage results from the actual or tacit understandings which often restrain employers from competing freely for employees by advancing wages. There is a strong reluctance on the part of employers to "spoil the labor market," and even when they are not combined in employers' associations, as is now so often the case, this serves to make them conservative in reference to wages. tions. The tendency of the above disadvantages is to render work- Countermen inferior to employers as bargainers and to cause them considerato accept less than their fair share of the products they help to produce. This, it must be clearly understood, is also only a tendency. Any disparity between current rates of wages and the value of the product which labor is able to produce affords an inducement to employers to secure more hands. Ordinarily this motive is strong enough to overcome the reluctance which employers feel to bidding up wages, and ordinarily competition among them is sufficiently active to maintain wages even when the ignorance and inertia of individual workmen might lead them to accept less than market conditions call for. Only in cases in which the isolated workman, An Illustration. Labor tions in the United States. who is temporarily out of employment, bargains with the unscrupulous employer is full advantage likely to be taken of the wage-earner's weakness. In the usual situation the inequality in bargaining power between employer and employee is at least partly offset by competition among employers to secure workers or by organization among the workers themselves. The force and reality of the competition among employers for workmen are proved in every period of active prosperity in the United States. As I write (August, 1912) the iron and steel industry of the country is in a highly active condition. The scarcity of workers in the Pittsburg district is so great that not only are higher wages being offered but employing agents are even paying the fines of workmen who happen to be in prison for minor offenses to secure their release and their return to the mills in which they were employed. The indications are that this activity will continue for some time and in that event a substantial increase in wages is certain to occur, notwithstanding the almost complete absence of labor organizations among the workmen affected. The increase would, however, come with even greater certainty if the steel workers were organized. § 312. The purpose of labor organizations, or trade unions, Organiza- is, in general terms, to advance the interests of the workmen who form them. To accomplish this they choose officers (usually a president, vice-president, secretary, treasurer and members of a standing council or executive committee), accumulate funds, administer mutual insurance or benefit features, bargain with employers in reference to wages, hours and other conditions of employment, organize and carry through strikes and boycotts, collect and disseminate information in reference to labor conditions and agitate for legislation designed to promote the interests of labor. Beginning as local organizations, trade unions have now progressed in the United Kingdom and the United States until they include federations of unions of various kinds and designed to serve various purposes. In all well-organized trades the local branches are combined or "amalgamated" into national organizations. In cities, local unions are usually organized fur Re ther into "trade councils," or "united labor leagues." zations. Exact statistics of the membership of American labor or- Present ganizations are not available, but it is certainly within the Strength truth to say that over 15 per cent of the 10,000,000 odd men of Labor Organireturned by the census of 1900 as employed in trade, transportation and manufacturing and mechanical pursuits were members of unions. Of these nearly 1,000,000 were associated with the American Federation of Labor. A careful estimate places the number of paid-up members of trade unions in the United States on January 1, 1912, at 2,162,926, of whom 1,761,835 were credited to the American Federation of Labor. The membership of the British trade unions is relatively larger, being returned as 3,010,346, on January 1, 1912. This is due partly to the fact that labor is there more fully organized and partly to the greater preponderance of wage-earners in the population. Reference § 313. The development of trade unions to their present History of position of power and influence in the United Kingdom and British the United States constitutes an interesting history. In the Law with United Kingdom at the beginning of the nineteenth century to Orlabor organizations were criminal conspiracies under both ganizations common and statute law. The statutes expressly prohibiting them were repealed in 1824-25, but it was not until the early seventies that they acquired an assured legal position. It was long believed that under the Trade Union Acts then passed (1871 and 1876) they were not liable to suits for damages for the tortious acts of their officers or members. This view was declared erroneous by the highest British court in the famous Taff Vale decision (1901), in consequence of which The Law damages and costs to the extent of nearly $250,000 were assessed against one of the railroad brotherhoods. This decision led to active efforts on the part of trade unionists to have labor organizations expressly exempted by act of Parliament from liability to suits for damages. In the general election of 1906 as many as fifty-seven labor representatives were returned to Parliament and, largely as a result of their agitation, a Trades Disputes Act was passed in the same year which relieved organizations of both employers and employees from liability to suits for damages for acts committed in connection with trade disputes. As the Conspiracy and Protection of Property Act of 1875 had already declared that no act in connection with a trade dispute which was not criminal if committed by an individual should be actionable as a conspiracy because committed by two or more persons acting in combination, trade unions now enjoy a higher degree of freedom from legal restraint in the United Kingdom than in any other country. § 314. The development of labor organizations in the United States has not been checked to any appreciable extent by legal restrictions. Strikes for the purpose of advancing wages or shortening hours have rarely been held to be illegal, and in many of the states they are expressly authorized by statute. In fact, the attitude of state legislatures has been uniformly favorable to labor organizations, some of them even going to the length of prohibiting employers from discharging employees on the ground that they are members of such bodies. Strikes for other purposes, as, for example, to compel an employer to reinstate a discharged employee or to discharge an employee who is not a member of the union, have sometimes been condemned as conspiracies. The opposition of the courts in such cases has been based not on hostility to labor organizations as such, but on a desire to uphold the rights of persons who are not members of them. Thus the Court of Appeals of New York State, in branding as a conspiracy the effort of a union to secure the discharge of a non-union man, used the following language: "Public policy and the interests of society favor the utmost freedom in the citizen to pursue his lawful trade or calling, and if the purpose of |