The Effects of Inadequate Wages
From the book; "Labor Problems in American Industry" 1949

Low wages produce effects which are harmful and undesirable, not only for the workers themselves, but also for employers and society. In fact, most of the bad effects of unemployment make themselves felt through curtailment of income; inadequate wages are often the result of part-time and irregular employment.

It is possible, however, for a person to be steadily employed and still not receive enough to live healthfully and decently or obtain what he believes to be his rightful share of the national income. A large part of the working class fail to earn an   adequate wage even in the best years. This article deals with the effects of low wages, regardless of the factors which make them low.

1. The effects on employers. The effects on employers. Employers are in business to sell their products at prices which give them profitable margins over the costs of production. The more far-sighted among them have long recognized that low levels of wages may prevent the realization of this aim. 

In the first place, the ultimate regulator of production is the wants of consumers made effective by actual purchases, and inasmuch as wage earners and their families comprise the great majority of consumers, to pay them low wages without greatly reducing the prices of all commodities is to curtail their buying power, which in turn means that employers will in the end not be able to sell all their products at a profit. Continued "prosperity," in short, depends a great deal on the maintenance of high wages.

Employers have found, moreover, that high incomes have a tendency to make workers more mentally alert and physically fit, while low wages undermine productivity by producing discontent and bodily impairment.

There is a third, more indirect effect of low wages on employers. Not only do they tend to lose because low-paid workers are poor customers and inefficient producers. In the long run they may have to pay more taxes so that the various governments can provide institutional or other relief and care for those whose incomes are too small for self-support. This, of course, is a wasteful and undesirable way of redistributing income.

2. The effects on wage-earners. effects on wage-earners. As in the ease of unemployment, the chief sufferers from low wages are the ones who have to live on them --- the workers themselves and their families. Even a casual and superficial examination of a group of underpaid laborers reveals facts which indicate a lack of physical well-being. 

A number of detailed studies made by sociologists and economists substantiate one's own observations and deductions. To begin with, members of wage-earners' families are more likely to die and have a shorter average life expectancy than those in wealthy homes, the death rate of the lower class of workers being over three times that found among the well-to-do. 

The death rate from specific diseases, such as tuberculosis, Bright's disease, scarlet fever, pneumonia, and influenza, is decidedly higher in the poverty-ridden slum districts than in the better residential areas. Mortality among mothers at childbirth, as well as other non-fatal effects, is more common among the poorer classes because of inability to pay for competent pre-natal, and post-natal care.

There is also a cause-and-effect relation between the amount at the fathers' earnings and the ability of babies to survive the trying times of infancy.

Thus, the United States Children's Bureau found, from an investigation of over 21,500 live-born infants in seven different cities, that the lower the fathers earnings were, the higher was the death rate per 1000 live births; the range was, progressively, from 166.9 deaths per thousand, when the fathers' annual incomes averaged less than $450, to 59.1 deaths per thousand in the class where the fathers were earning $1250 and more per year.

Nor are the members of workers' families at a physical disadvantage only during birth period. There is a great likelihood that the babies who do survive will not get enough food or the right kinds of food to permit proper physical development during childhood. A number researches have established the fact that there is a relationship, sometimes direct and sometimes indirect, between economic status and the weight and height of children.

The adults themselves may also suffer from malnutrition. This in turn lowers vitality and resistance and makes them easier prey to sickness and disease, while lack of medical care decreases the probability recovery, as already noted. Inadequate housing and clothing also play their parts in producing physical weakness.

The United States Public Health Service has shown that the number of cases of disabling sickness per thousand individuals and the amount of working time lost thereby was decidedly greater among the low-income groups than among the better paid.

Wage-earners also suffer mentally because of economic insufficiency. Any sharp distinction between ''mind'' and "body" is of course artificial because the human organism is a unit made up of interdependent parts, each affecting the others in greater or less degree. Nevertheless, that part which may be.

Termed the "conscious self" is specifically and directly affected by economic well-being, or the lack of it. Malnutrition may retard the development of intellectual powers in a physical way, and inadequate income all too often prevents children from securing ordinary training and education.

Poverty may he a blessing to the exceptional individual and spur him on to unusual achievement, but its effect on the average person is stultifying and repressive and often leads to behavior which is individually and socially unwholesome. Feelings of inferiority, a tendency to blame others for one's shortcomings and failures, and continual bitterness against society are frequently found among people in the lower income groups.

Worry over inability to provide the necessities of life helps rob them of bodily and mental health. It would be wrong to conclude that all unskilled employees are continually torn with anxiety and are never happy, but it is impossible to disregard the fact that they have to face contingencies rarely known by those with higher incomes.

There can be no doubt that the chances for adequate instinct expression are much less among members of low-income families than among members of the higher income groups.

3. The effects on society. The effects of low wages are of course not limited to workers or employers as individuals. The sum total of their troubles produces social problems of the first magnitude.

If a majority of employers cannot sell the products which their plants have the capacity to produce, because the mass of consumers have too little money to buy them, the maladjustment may become so general and serious that a major depression with its attendant hardships is brought on.

Thus, the studies of research groups such as the Brookings Institution indicate that the unequal distribution of income in the United States leads periodically to over-saving and under buying, which in turn lead to an economically and socially undesirable lack of balance between producing capacity and financial speculation, on the one hand, and consuming capacity, on the other.

In 1929, for example, 84 per cent of the aggregate family savings out of income in 1929 were made by those having incomes of $5000 or more (i.e., by 8 per cent of all the families), and since there was very little saving by those having incomes of less than $2000 (i.e., by 60 per cent of the families), there was a tendency for more and more of the national income to be directed into investment rather than into immediate purchasing channels. 

This over-saving led to; (1) to the development of a producing capacity 20 per cent in excess of available buying capacity; and (2) to an unmanageable speculation in real estate and stocks, ending in the world-shaking crash of October, 1929.

The over development of producing capacity was no larger than 20 per cent because profit. prospects with available purchasing power were not bright. Consequently, excess savings turned from investment in real capital-wealth or producing capacity to speculation.

While total wages were increasing about 20 per cent from 1923 to 1929 And retail buying was holding close to its ''computed normal," new Issues of capital stock (to expand plants and investments) rose 137 per cent, private American investments a broad 50 per cent, brokers loans (1922 to 1929) for security purchases 110 per cent, arid mortgage indebtedness on urban real estate 100 per cent.

The main causes of the 1929-33 depression can be discerned in these figures. There are other harmful social effects of low worker incomes. If workers are physically and mentally unwilling or unable to work at top efficiency for their companies, society fails to benefit as much as it might from lower prices.

Individual bitterness and unrest among employees may be translated into socially destructive group action. Inequality of opportunity and inability to secure fair treatment and redress in the courts or in the political arena add to the rankling sense of injustice and lead to disrespect for all law and order. 

If the workers are financially unable to care for themselves when they are ill or superannuated, society must help them by establishing and operating public hospitals, clinics, and asylums and providing old-age assistance.

The need for prisons can be traced in no small measure to inadequacy of income. Poverty existing along with immense wealth, together with the knowledge of the means whereby many rich individuals accumulate and hold wealth, tends to develop mental attitudes which lead to and condone criminal behavior. 

Poverty does not, as is popularly supposed to produce crime through starvation and physical necessity except during periods of extreme depression and unemployment. Rather does it operate through a growing disregard for the laws promulgated by the, dominant class.

Finally, the payment of low wages to married male adults usually makes it necessary for families to look for additional sources of income. Wives and children enter industry and boarders and lodgers are crowded into workers' dwellings. Although it would be far from true to say that these methods of supplementing income are wholly bad, there is ample reason for doubting that the net social and economic effect is beneficial.

Happy family life should not be endangered by influences that may be disruptive. Children should not have to forego the advantages of education and training, and although many women do voluntarily take positions in the business world and contribute a great deal to society in their occupational activities, the ones who are forced to find jobs against their inclinations should not have to forego the family duties and pleasures for which they are biologically fitted.

From the wage-earner's standpoint the employment of women and children in industry is both an effect and a cause of low wages. Many of them seek jobs because the fathers' wages are low. Their competition in the labor market then tends further to depress wages. This is a vicious circle.