average family in keeping with American standards of living, and when one couples with this the further fact that fifty-one per cent of all employees were receiving not to exceed $900 per year, or $300 less than enough to support an average family, can any one honestly question the justice of the demands of the railroad employees that they not only have their wages, "money wages" increased, but that their "real wages" be increased?

Since the pre-war wages upon which the Lane commission had based its increases were inadequate and inequitable, it was apparent to the Director General that additional increases were immediately necessary and to the end that this might be fairly worked out, and in keeping with recommendations contained in the Lane report, the Director General appointed the Board of Railroad Wages and Working Conditions. Since this board began its work on June first, the Director General has issued five general supplemental wage orders based on its recommendations, and many others of local nature applying to about 1,700,000 employees, adding to the pay rolls approximately $250,000,000 per year in addition to the Lane increases. With this $250,000,000 added, plus the $300,000,000 of the Lane award, plus the $300,000,000 added in 1916 and 1917, we see that, as compared with the pre-war wages, or the wages in effect in December 1915, there have already been added to the operating costs of the railroads approximately $850,000,000 per year. There are remaining over 650,000 employees who will be included in orders which will be issued in the near future and for whom possibly further increases will be added. Thus it will be seen that in the sum total approximately several hundred millions of dollars will be added to the operation costs as compared with the pre-war period and even after this immense amount of money has been added in wages, the wages of the railroad employees will be only fair and generally speaking, materially less than those paid to workers in other industries where far less skill is required. The average increase in wages will be less than fifty per cent while the increase in living costs is over sixty-five per cent. In other words, the increased wages have nowhere kept pace with the increased living costs, and still there have been added to the operating cost of the railroads almost one billion dollars a year.

The Railroad Administration's purpose is to fix wages and conditions of labor that are fair to the public and fair to the employees the Administration feels that the just interests of both should be protected. The Administration has endeavored to find a basis of wages for the railroad workers that can be maintained in the coming reconstruction period, with equal pay for the same class of work, irrespective of sex or color. The employees say that, having been loyal and patriotic, having not insisted that their wages should equal those of men no more skilled than they, their wages should not be reduced.

We have here a serious problem and one that must be solved correctly, otherwise the situation that will arise is one that is not pleasant to contemplate. Is it a problem that can best be solved under private operation or under governmental operation? The public must decide.

But as the situation now stands, in the future as during the past year, the Railroad Administration and the employees will be found in "double harness" doing their best for America. And even though private operation of railroads should be resumed, the employees will be no less loyal to their nation during the trying years of the reconstruction period. They will give a square deal to the public; they will demand a square deal for themselves.

With this problem confronting the nation, and with the possibility during the reconstruction period of an attempt to reduce the pay of the railroad employees, these two and a quarter millions or so of men and women whose wages, even during the war period have not kept pace with the increased cost of living—even though the pay be reduced on a grade with the decreasing cost of living, or if an attempt be made to decrease the wages faster than that, I think you can readily appreciate the position in which this nation will find itself, in so far as the position of the workers on the railroads is concerned. They feel and they feel justly, that having been patient, having waited to have their questions solved, having made no use of their economic strength, their wages should not be reduced. Nobody has been worried over the situation so far as the employees of the railroads are concerned. There have been no labor troubles during the past year or year and a half. In fact, I might go further and say that so far as some of the

classes of labor are concerned on the railroads, you can count on the fingers of your two hands all of the strikes that have occurred with a large portion of the employees on all of the railroads of America in the last fifteen or twenty years. But if, after having continued to work and having seen that living costs increase as they have been increasing (a large portion of these employees have received but twelve or thirteen per cent, and some of them but sixteen or seventeen per cent increase as compared with pre-war wages), they should be told that there will be a reconstruction period in which an attempt will be made to decrease wages, I think you can readily appreciate the necessity for providing some kind of machinery that will intelligently, wisely and consistently handle the problems of labor on the railroads.

[234]

STANDARD OF LIVING AS A BASIS FOR WAGE

ADJUSTMENTS

WILLIAM F. OGBURN

Director of the Cost of Living Department of the National War Labor Board

HE standard of living as a factor in determining wages

TH

has been raised to a plane of importance, seldom if ever, equaled. This has been due in large part to the great rise in the cost of living. The items of the family budget rose so precipitously in price after the summer of 1915, that, in cases where wages did not rise, the fall in the standard of living was markedly perceptible over very brief periods of time. As the standard of living of many American workers prior to the war was so low, any lowering of the standard budget brought acute suffering. So the struggle for higher wages was generally based on the plea of the rising cost of living.

Another reason why the standards of living became an important factor in determining wages was the high degree of social control exerted over labor, necessitated by the conditions of warfare. Industrial man power was so essential during the war that laissez-faire conditions involving the freer operation of supply and demand and of the strike and lockout could not be permitted, and in their place were substituted a strong measure of social control, vested in part in wage setting bodies such as the National War Labor Board, the Shipbuilding Labor Adjustment Board and the Railroad Wage Commission. With these bodies, it can perhaps be truly said, the standard of living was a guiding principle. These bodies have had extensive cost-of-living studies conducted in various parts of the country and have time and again based increases in wages specifically on the increased cost of living. Thus on one occasion the Railroad Wage Commission based the increase in wages on a measurement of the increase in living costs, and on at least three occasions the Shipbuilding Labor Adjustment Board has done so. In practically all of the cases involving wages that have come before the National War Labor Board, the increased cost of living has been considered,

and in many cases the increase in wages has been exactly the same as the increase in the cost of living.

A great number of private employers also have increased wages because of the increased cost of living. Illustrations are the Westinghouse Lamp Company, the Doehler Die Casting Company and the Tide Water Oil Company. A number of other cases have recently been cited in an article by Professor Irving Fisher. Some employers have increased wages specifically according to the percentage of increase in cost of living, determined after special surveys. Illustrations are the flour

mills of the Pacific Northwest and the Bankers' Trust Company of New York. A large national organization of employers associations, the National Industrial Conference Board, has prepared for the use of its members an extensive report into the increased cost of living. A few companies have adopted the interesting experiment of regular periodic increases in wages, based on increases in general prices. Some of these are the Index Visible, (Inc.) of New Haven, the Oneida Community, and the Kelly-How Thompson Company of Cleveland.

The facts of the increased cost of living, upon which these wage increases have been based, were determined from extensive surveys made by various agencies, such as U. S. Bureau of Labor Statistics, the National War Labor Board, the National Industrial Conference Board, the Shipbuilding Labor Adjustment Board, the Railroad Wage Commission, the University of Washington, and others. Of these studies by far the most important are those by the Bureau of Labor Statistics. From all of these studies we know fairly certainly that the cost of living based upon all the items of the family budget, including food, rent, fuel and light, clothing and sundries, had increased for the country as a whole about 55 per cent from the pre-war period, as measured by the year 1914, to June 1918. We also know that the increase has been fairly uniform over the country as a whole, the greatest variation being in rent. Up to August 1918, the increase had been about 65 per cent, this figure being the average increase over 1914, in 15 shipbuilding centers, as measured by the U. S. Bureau of Labor Statistics. At the present time a fair estimate of the increase in the cost of living would probably be 70 per cent. This figure I think can be interpreted as mean