1939: Wages, Hours And Working Conditions

The prevailing levels of wages and employment in 1939 were the result of not only the economic forces working during the past year, but also the broad movement of wages and employment since and before the World War. In the face of these long-time developments the interpretation of current data, divorced from their historical background, is bound to be inadequate and misleading.

In the last quarter century, wages, hours and working conditions in American industry have been revolutionized. The maximum work-week of factory workers declined since 1914 from roughly 55 to 42 hours a week, or by 13 hours. In the anthracite and bituminous coal industries, the week was reduced from 55 to 52 hours, respectively, to 35 hours a week. And the work-week of railroad employees declined from 60 to 48, or by 12 hours.

Under the influence of the inflationary forces of the World War, the depressions of 1921 and 1930, and the labor policies of the country since 1933, the combined average rate of money wages (hourly earnings) of employees in manufactures, soft and hard coal mining, rail transportation and construction nearly tripled, increased by 180 per cent. As indicated in Chart I these money wages rose much more rapidly than the cost of living, since average real hourly earnings (the purchasing power of money earnings) doubled during the same period, 1914-39. Furthermore, since 1933 alone, the real hourly earnings of the employees in this group of industries increased by one-third.

At the same time, however, volume of employment failed altogether to keep pace with this phenomenal advance in the hourly rate of wages. While employment rose and fell with the recovery and decline in business activity, the aggregate number of jobs afforded by these five industries was in 1939, a year of business recovery, only a few per cent above 1914, twenty-five years earlier. Payrolls or total wage disbursements increased in the same period 100 per cent, but this advance, of course, was due to the rise in the price of labor and not to expansion in employment.

Since the work-force of the American economic system is composed of highly diverse groups of employees, engaged in an enormous variety of activities, the general prosperity of the country and the balance of its economy must depend upon the relative levels of wages and working conditions that prevail in diverse occupations. It is known, for example, that rates of wages are much higher in union than in non-union employments, in the North than in the South, in metropolitan centers than in rural areas. Taking the period 1914-39 as a whole, we find the rates paid to farm labor were in 1939 only 7 per cent higher than in 1914, while the rates of industrial wage-earners had increased 180 per cent. Quite clearly the wages of farm labor never recovered from the severe decline of 1921, nor did they participate in the great upsurge of industrial wages following 1933. In this period, moreover, the cost of living advanced 40 per cent. Consequently, the purchasing power of farm labor's wage rate was in 1939 less than in 1914, while that of the industrial wage-earner's rate had doubled.

In 1939 there was a resumption of the tendency, interrupted by the depression of 1938, of wages to rise and working conditions to improve. Greater business activity, as in the past, contributed to the restoration of wage cuts and the granting of increases in scattered occupations and industries. The application of the Fair Labor Standards Act continued to lift the wages of the lowest paid workers and, hence, to affect the general level of wages. The negotiation of collective agreements between union labor and employers exerted much the same influence. But the average rate of wages showed only a fractional advance in 1939.

Employment and payrolls, however, showed a more decided improvement. Since 1938 was a year of partly declining and partly improving business conditions, comparisons between the whole of that year and 1939 are likely to be misleading.

Hours of labor experienced no radical change in 1939. But the trend was still downward. Although no quantitative records are available to measure the extent of the improvement, it is probable that such improvements in working conditions as more liberal provisions for vacations with pay, stricter seniority rules and the like have continued. See also LABOR LEGISLATION; PRODUCTION AND TRADE.