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VI.—The Economics of the Minimum Wage.

Call that which is just equal, not that which is equal just.—Greek proverb.

The result of our investigation up to this point has been to find that a system intended by Parliament as one for the settlement of strikes has proved in actual practice to be an arrangement for placing the regulation of all trade and industry under the control of the unions exercised through a court created for the purpose. The union leader is constituted a Lycurgus, organising things according to his own ideas, and he is busily engaged in framing a constitution for a society composed of consumers, employers, and wage-earners, amongst whom he undertakes to distribute wealth as he thinks proper. How little consideration the consumer receives either from the unions or from the court we shall see further on. The unions assert and exercise through the court the right to say what wages all classes of workers are to receive and what work they shall give in return; and the question arises whether this is practicable in a community not founded upon pure Socialism, but upon private property, and ostensibly upon freedom of contract, and in which industries are carried on by private employers at their own risk and with their own capital. This attempt is made by arbitrarily fixing a minimum wage for each industry, and it is probably not the least use arguing with the workers that all such efforts to enrich one class at the expense of another are wholly uneconomic: for they would probably reply, "So much the better"; nor is it any use expecting to convince them that the only way to permanently raise wages is to increase production. For the teachings of history and economics not only the unionists, but the delegates they send to Parliament, have the most profound contempt; and so it is useless to prove that such arbitrary devices to increase wages are as ineffectual as were the "Statute of Labourers" and the conspiracy laws to keep wages down. The unionist refuses to believe that wages are proportioned to the productivity of industry and the abundance of capital, and that whatever tends to restrict output, whether it be legislation or union regulations, reacts in the long run upon the worker. Unfortunately for the worker the tendency of unionism has been to lead him to look upon wages as so much money extracted from the capitalist, and to regard the capitalist as an enemy to be despoiled; whereas facts show that if the interests of capital and labour are not identical they are certainly not antagonistic: they are reciprocal. The real antagonism is between employer and employer. There is [unclear: reason] fear that the evil done by [unclear: unionism] fostering this spirit of antagonism [unclear: far] than countervails any good they do. [unclear: In] a country which has been described as [unclear: the] Paradise of the worker's, the [unclear: agitators] him that he is unjustly treated, [unclear: that] has a right to more than he [unclear: receives], the only obstacle to his obtaining [unclear: more] the employer, and that the way to [unclear: extract] it is by coercion. Such teaching [unclear: is] ally mischievous in a country such [unclear: as] New Zealand, where the people are [unclear: omni] Unionism has its uses, but as an [unclear: instructor] of socialistic warfare it is [unclear: utterly] chievous. At present this warfare [unclear: is] on by means of legislation directed [unclear: ap] capital through the Arbitration [unclear: Court].

By means of incessant labour [unclear: lega] and everlasting disputes capital is [unclear: kept] a state of uncertainty and [unclear: pertuberation] but the union leaders either refuse [unclear: to] cognise the fact or glory in it. They [unclear: ha] as the idea of frightening capital, [unclear: and] it a "bogey" set up by the [unclear: employee] just as they laughed at the "[unclear: bogey]" foreign competition in the [unclear: engineer] out of 1897-8.

In England the danger is proving [unclear: to] so real that a scheme is now on [unclear: foot] send union delegates abroad to [unclear: see] themselves and report to their deluded freres. In France the Socialist. [unclear: Lab] party is actively engaged in labour legislation, and M. Millerand, the representative of that party in Military, has found it necessary to of the danger of frightening capital taking flight. In New Zealand [unclear: there] unmistakable signs that capital [unclear: is] ing alarmed, but nothing short [unclear: of] experience can bring conviction to [unclear: the] rage unionist, whilst as for [unclear: the] ho glories in frightening capital.

At present the unions are [unclear: concent] their efforts mainly upon two [unclear: objects]—the court for the purpose of [unclear: securing] preference for unionists and getting [unclear: a] minimum wage fixed in every trade. [unclear: They] to think that the decree of the [unclear: court] maintain a "living" wage in [unclear: spite] of bad times. We could forgive [unclear: to] ism a great deal if it tended [unclear: to] the efficiency of labour, but it [unclear: cannot] does not make any such pretension. [unclear: T] can, indeed, be no doubt that [unclear: the] effect of the minimum wage and [unclear: the] preference to unionists is very much in [unclear: the] opposite direction. Formerly consisted of the [unclear: elite] of the [unclear: worked] cause the policy was to exclude [unclear: men] were not worth the standard [unclear: wage]; this is now impossible. The effect [unclear: of] is to countervail whatever [unclear: tendency] page 17 [unclear: ism] had towards increasing the efficiency [unclear: of] labour, which is admitted by Dr and [unclear: Mrs] Webb to be essential to justify their [unclear: existence]. It has no doubt made them [unclear: e] "independent," as the following [unclear: incident] will show:—A master painter engaged [unclear: two] unionists for a job of painting and [unclear: preparing]; one he selected because of his [unclear: being] an expert paperhanger, and the other because of his skill as a painter. On [unclear: visiting] the job for the first time he found the [unclear: paperhanger] doing the painting and the painter doing the paperhanging. On [unclear: asking] the men to change places, one of them [unclear: instead] of complying, told this [unclear: tyrannical] to go to—with his job, and left.

[unclear: This] is what unionists would call a spirit [unclear: of] independence. It is perfectly clear that [unclear: when] such a spirit as this pervades the men [unclear: an] employer has no control over his busi[unclear: ness] and to dismiss a unionist for [unclear: disregarding] instructions is out of the question. [unclear: But] even Mill, the great advocate of [unclear: unionism] that to extract work from [unclear: employees] without the power of dismissal is and practicable. But matters are coming [unclear: such] a pass in this best of all possible [unclear: tries] that employers durst not dismiss a [unclear: workman] if he is a unionist. The following little incident illustrates the obverse unionists' idea of independence. [unclear: An] employer on his way to a job one [unclear: morning] forgathered with two of his men. The [unclear: employer] happened to be carrying a parcel [unclear: of] material for the job, and the men [unclear: re] of the burden. Presently they [unclear: lly] handed him back the parcel, [unclear: pointing] to some workmen who had come [unclear: in] some distance off, and explaining that [unclear: they] they should be seen by other members of [unclear: union] carrying anything for the [unclear: em] before starting time they were liable to [unclear: be] reported to the union and fined! [unclear: Anything] more contemptible than such a [unclear: it] amongst men it were indeed difficult a [unclear: imagine]: tyranny, miscalled independence [unclear: towards] employers and espionage and [unclear: dation] as between themselves, and through it all the determination to give [unclear: the] employer as little value as possible [unclear: for] received.

[unclear: The] evil effects of the minimum wage [unclear: ially] when combined with [unclear: preference], membership of a union is no [unclear: guara] competence are obvious. In the first [unclear: although] although the fixed wage is a [unclear: mini] not a maximum, it is to be expected that [unclear: the] minimum will tend to become the [unclear: maximum]. An employer compelled to [unclear: pay] of his men more than, they are worth is [unclear: certain] to pay good men less than they are [unclear: worth], unless the demand for labour is [unclear: to] make this impossible. This [unclear: is] admitted by the authors of "[unclear: Industrial] Democracy," and our experience in New Zealand shows this to be the actual result. The skilled workman, who is naturally inclined to take pleasure in the full exercise of his skill, and who is probably too, high spirited to submit to union tyranny, is affronted to find that the duffer at his elbow, who perhaps works on the "ca' canny" principle, receives the same wage as himself. The effect of this upon the industry of the country must be very serious; but what is most serious is the effect upon the character and efficiency of the worker. The effect upon apprentices must be most pernicious; knowing that us soon as he becomes a journeyman, he becomes entitled to the minimum wage, the apprentice has no incentive to improve himself and carry on his education. Decline of efficiency is inevitable, and I am informed by employers in the building trade that within the last few years it has been so marked that, in estimating the cost of work, thoy have to allow for three men where formerly they allowed for only two. If this be really the effect of unionism and regulation of industry by law, then there could be no greater condemnation, for it is not only our industries that are endangered, but the oharacter of our people, and even civilisation itself.

Let us now proceed to consider some of the more direct effects of the minimum wage. The unions strenuously claim credit for the general rise in wages; but there is good reason to believe that in many cases it has been attained not by means of unionism, but in spite of it—by reason of the increase; of production, by the increased use of machinery, and improved methods of work. As to the fact of the increase there is no doubt: not only the nominal (money) wages but the real wages have increased, because the prices of the necessities and conveniences of life have tended to decrease even more than nominal wages have increased. That this is the tendency under conditions of freedom there is no doubt; but can the same be said under a system used for the purpose of artificially and arbitrarily raising wages? The answer must be in the negative so far as the New Zealand experiment is concerned. Nominal (money) wages have been raised in many instances by the court, but even unionists admit that prices have gone up in a greater proportion. The ultimate outcome is that real wages (i.e., the number of commodities that can be bought with the money wages) have not increased. A natural rise of wages does not increase prices or dimininish profits, but an arbitrary rise tends to produce both of these effects, and the only way of increasing the income and improving the material condition of the wage-earners is through a natural and permanent, advance e of real wages. The worker's standard of liviving page 18 is not improved by merely giving? him more money to spend, but by enabling him to buy more of the good things of life with his wages. Unfortunately his notions on the subject are perverted and confused: he imagines, with Ben Tillet, that wages should regulate prices instead of prices regulating wages, and one can easily see that this preposterous idea lies at the root of many of the demands made before the court. But even the unionists are beginning to realise the absurdity of the idea that a general rise of wages attained by means of an equal or greater rise in prices is beneficial; and in some cases it has actually been suggested that the court might raise wages by reducing the price of the raw material! A beautiful illustration of the difficulties created by artificial devices for raising wages! The unionist leaders seek to evade this difficulty, and at the same time appeal to the prejudice against employers, by putting into the worker's head that most mischievous and fallacious conception that wages come out of the employer's pocket. The unionist imbued with the teachings of Karl Marx thinks it is for the benefit of the workers that the employer's capital should be eaten up and consumed in the payment of wages.

The recent history of the boot trade in New Zealand presents a lesson which even the unionists are taking to heart. It will be remembered that the court, having regard to the effect of the importation of American goods upon the local industry, refused to raise the minimum wage. What is the result? That the workers, recognising the impossibility of keeping up wages by decree of the court, have joined the employers in sending two operatives to the United States to learn the American system. Here, then, is a case in which even unionists have been constrained to admit that neither acts of Parliament, nor awards, nor further protection could enable them to compete with the Americans, and that the only way is to increase and cheapen production.

The same thing must happen in all industries in which foreign competition can operate. There are, no doubt, some industries in which it is possible to maintain a minimum wage by raising prices, and in some trades there has existed what can only be described as a conspiracy between the unionists and the employers (to which the Conciliation Boards and the court have been parties) against the interests of the public as consumers. But, after all, the workers themselves constitute by far the larger proportion of the consumers, so that an increase of (nominal) wages gained at the cost of an equal (and probably greater) increase in the cost of necessaries is no real benefit to them, whilst such an increase is positively unfair to other classes in the community. Here we come face to [unclear: face] one of the fundamental objection [unclear: is] minimum wage—the fact that it [unclear: does] give the first place to the interest [unclear: of] consumer. No one objects to [unclear: the] seeking to obtain for the workers [unclear: a] share of the social wealth of the [unclear: comm] but when they try to attain this [unclear: end] expense of other classes or [unclear: otherwise] by increasing the wealth of the [unclear: eco] their influence is wholly mischievous.

There is one class in particular [unclear: that] all to lose and nothing to gain by [unclear: the] of the unions, and the Court [unclear: of] tions, and, indeed, by our [unclear: boasted] legislation generally—the farmers, [unclear: the] important class in the community. [unclear: Age] ture, according to a Chinese [unclear: pro] the root of the social tree, and [unclear: manufacturer] and trade are merely the [unclear: branches]. member seeing a pictorial [unclear: presentation] the same idea in a country [unclear: store] almanac, where the clergyman [unclear: was] sented as praying for all, [unclear: the] pleading for all, the solider as [unclear: fighting] all, whilst the farmer at his [unclear: plough] last, saying "I work for all." [unclear: When] unionist mechanic, who makes [unclear: the] plough, applies to the court [unclear: for] of wages, he imagines he can [unclear: over] objection by suggesting an [unclear: equal] in the price of the plough; and [unclear: when] the statutory Providence to whom we [unclear: have] to trusted the regulation of all [unclear: our] ventures mildly to suggest that [unclear: an] in the price might reduce work by [unclear: ing] importations, the unionist is [unclear: ready] his favourite remedy—more protection increase of duty; or if the industry [unclear: in] tion happens to be one in which [unclear: mer's] produce forms the raw [unclear: material] unionist will suggest that the [unclear: difficulty] be met by a reduction in the [unclear: price] to the producer—the farmer. [unclear: This] happened in the case of the [unclear: tanners] a reduction in the price of hides [unclear: was] gested! And yet the unionists [unclear: and] unionists' Premier think the [unclear: farmers] not form unions. Self-[unclear: protection] utmost the poor farmer can hope [unclear: to] by forming unions, for neither [unclear: the] Providence that presides over [unclear: the] Court of Arbitration, nor the [unclear: onm] Parliament itself can fix a [unclear: minimum] for the farmers' oats, his wheat, [unclear: or] mutton, or his wool. No, not even [unclear: if] Trades and Labour Council [unclear: gave] mission to fix a minimum price [unclear: and] safed to the farmers the [unclear: official] and support of the Labour party.

Even the unionists themselves [unclear: are] ning to have a doubt as to the [unclear: pre] of fixing and maintaining a [unclear: minimum] by ordinance, and it is begining [unclear: to] upon them that they may [unclear: eventually] page 19 [unclear: to] come out by the same, hole where they [unclear: went] in." The labour advocates before the [unclear: boards] and the court are in the habit of [unclear: attempting] to justify their demand for [unclear: increase] of wages by pointing to the great [unclear: increase] in the cost of necessaries of life, [unclear: and] specially the rise in house rents. They [unclear: are] compelled to admit that to some extent [unclear: this] is the result of the working of the sys[unclear: tem], but they find it necessary to complete [unclear: the] circle by bringing all industries [unclear: under]. In a recent case one of the labour [unclear: advocates] urged upon the board the fact that [unclear: Dunedin] is one of the most expensive towns [unclear: the] world to live in! and therefore it [unclear: necessary] to raise wages: the old circle [unclear: of] protection and restriction making further [unclear: protection] necessary.

[unclear: One] of the favourite arguments of the [unclear: agitator], termed advocate, is the [unclear: enormous] in house rents, which he, of course, [unclear: to] the rapacity of the landlords. The [unclear: Landlord] may have to pay about one-[unclear: third] more for material and labour in order [unclear: that] the worker may receive higher wages, [unclear: he] must not raise the rent; and in [unclear: order] to reduce rents the Government or the [unclear: municipality] must build houses to be let to the poor workers at low rents! At all [unclear: the] wage-earner must be saved from [unclear: the] consequences of his own action. If the [unclear: ale] capitalists button up their pockets and [unclear: refuse] to make work for him, then the [unclear: Government] must do it! As for the farmers [unclear: and] other classes who suffer equally in [unclear: consequence] of increased prices, they are not [unclear: worth] considering!

[unclear: Such] are some of the difficulties [unclear: incidental] to attempts to fix arbitrarily the rate of [unclear: wages]. Another evil inseparable from [unclear: the] minimum wage is the hardship it [unclear: en] the elderly and the slow work[unclear: man]. In many cases employers are anxious to [unclear: keep] on faithful workmen when they [unclear: are past] their best, and are no longer worth the [unclear: minimum] wage, but of course at a [unclear: lower]. But this is not business, but [unclear: mere] and it is not allowed by [unclear: the] such men must become pensioners [unclear: the] State. We are, of course, aware [unclear: the] awards make provision for "[unclear: per]-" allowing elderly or slow [unclear: workmen] take employment at wages less than the [unclear: minimum]. But such a system is open to [unclear: many] objections—it is humiliating to the [unclear: when] the demand labour is exceptional, employers prefer [unclear: nothing] to do with men who [unclear: are] worth the minimum nor free to [unclear: work] at a wage which the worker him[unclear: self] as well as the employer, may consider [unclear: pays]. It pays the employer better to pay the [unclear: minimum] to good men than to pay less [unclear: to inferior] men. Many a deserving man has had to endure bitter humiliation and hardship from the operation of the minimum wage in Victoria, and there the system has utterly broken down.

An instance of this has been brought under my notice as I write. An employer in Christchurch was keeping on one of his workmen when he was over 70 years of age, and paying him 7s a day. The unionists came along and insisted upon the employer paying the minimum wage, and the consequence was that the workman had to be turned adrift. The unionists will no doubt say he can get an old-age pension; and if he cannot, he is entitled to charitable aid!

We have yet to learn that there are some demands which can only be made by madmen and listened to by fools, and this demand for a minimum wage in all industries seems to be one of them. At the root of it lies the Utopian cry "Equality and Fraternity," at once preached and discredited by the French Revolution. For Liberty we have substituted Liberalism, which in New Zealand means its opposite; and we are likely to learn by experience the truth of the saying, "Equality may be a right, but no human power can convert it into a fact." But we may perhaps console ourselves with the reflection that there is a presumption that what cannot be accomplished ought not to be accomplished.