Table XV.
| General Course of Rates of Wages |
Retail Prices of Food in London | |
| 1902 | 93 | 91 |
| 1903 | 92 | 92 |
| 1904 | 92 | 92 |
| 1905 | 92 | 92 |
| 1906 | 94 | 92 |
| 1907 | 97 | 94 |
| 1908 | 96 | 96 |
| 1909 | 95 | 96 |
| 1910 | 95 | 98 |
| 1911 | 95 | 98 |
| 1912 | 98 | 103 |
| 1913 | 100 | 100 |
| 1914 (Jan. to July) | 100 | 100 |
Both sets of figures in Table XV are computed from the XVIIth Abstract of Labour Statistics, except that the level of wages in 1914 is equated to that in 1913 on the ground of other information as to the absence of any important change. The basis of the computation of wages is not sufficiently wide to ensure minute accuracy, and since it depends only on changes of rates it does not allow for the slow but progressive increase of the average earnings of all workers due to the relative increase of the numbers in the better-paid occupations. The inclusion of fuel among retail prices hardly affects the numbers. Rent, however, is known (Cd.6955, p. xxviii) to have increased on the whole less than food prices between 1905 and 1912. The conclusion is that money wages increased nearly step by step with the cost of living in the 13 years in question.
No official index number of average wages had been published up to 1921 since 1913, but there is enough information to lead to a rough estimate (see Table XVI). It should be realized that the figures have not the necessary precision to allow minute calculations to be based on them (Bowley, Prices and Wages in the United Kingdom 1914-1920, p. 105).
Table XVI.
| General Course of Rates of Wages |
Official Cost-of-Living Index Number | |
| 1914 July | 100 | 100 |
| 1915 July | 105 to 110 | 125 |
| 1916 July | 115 to 120 | 145 |
| 1917 July | 135 to 140 | 180 |
| 1918 July | 175 to 180 | 205 |
| 1919 July | 210 to 215 | 210 |
| 1920 July | 260 | 250 |
The wage figures depend throughout on wages for a normal week (reduced in 1918 and 1919) or on changes in piece rates. During the war-years earnings increased so much more rapidly than wages, owing to various facilities for making additional money, that it is probable that an index number for earnings would show as high figures as those in the second column except in 1917. If, however, we pay attention only to rates for nominally the same work, it is seen that prices rose before wages from 1914 for at least three years. If the view is accepted, as argued above, that the official index number tends to show too great a rate of increase, then by July 1918 wages had caught up with prices, and, while in 1919 and 1920 they had slightly passed the official measurement of prices, in fact real wages increased in these years. In 1921 it was too early to trace the effect on wages of the fall of prices that began in the winter of 1920-1; apart from those cases where wages were bound to the cost-of-living figures by a formula, the first influence was felt in unemployment and consequently diminished average earnings, not on rates of wages.
Some examples of the formulae connecting wages with prices are given in the article on Wages, and that governing civil service and salaries is stated above. The general effect was to increase or decrease weekly rates in a lower proportion than prices, but where the proportion was applied to a standard wage higher than that in 1914 the whole increase over that date was at some periods greater than that of prices. Thus the wages arranged in Jan. 1920 for a porter on the lowest scale were as follows:—
| Rate of wages | Money wages in relation to pre-war rate |
Cost-of-living number |
Real wages in relation to pre-war rate | |||||||||||||
|
100 | 100 | 100 | |||||||||||||
| 182 | 145 | 125 | ||||||||||||||
| 209 | 175 | 119 | ||||||||||||||
| 232 | 200 | 116 | ||||||||||||||
| 255 | 225 | 113 | ||||||||||||||
| 277 | 250 | 111 | ||||||||||||||
| 550 | 550 | 100 | ||||||||||||||
If then the cost-of-living index really measures the value of money the porter is better off when prices fall. Where such an arrangement took effect a slight check was put on the circular influence of prices on wages and wages on prices.
So far we have considered the interaction of wages and the prices that enter into working-class expenditure. There is still the question how wages have affected the cost of the unit of output. A bricklayer and his labourer averaged about 14½d. an hour between them in the summer of 1914 and 45d. in the summer of 1920, i.e. three times as much as in 1914; owing to the reduction of hours their weekly rates were only 2½ times the former rate. In industries in general the reduction of hours was rather less, probably about one-tenth on the average, and while the index number for weekly wages was 255 in July 1920 that for hourly wages would be about 285 (July 1914 = 100). There is no certain information by which to connect the change in the cost of an hour's labour with the cost of a unit of output. On the one side it was generally alleged that the pace of work had been more or less intentionally reduced, though this is not substantiated by such figures for piece earnings as are available; and, though in factories there is some diminution of overhead expenses and waste time when the day's work is done in two instead of in three shifts, the general expense of salaries, interest on capital, rents, rates, etc., has to be met out of the diminished hours of work. No doubt the potential energy of the workman per hour is greater in a 48-hour than a 54-hour week, but the increase appears not to have been realized in 1919-20. On the other hand the high cost of labour and of materials (especially coal) stimulates employers to economize their use. In engineering especially many improvements in machinery were made during the war, the use of oil and petrol having replaced in some cases that of coal; in agriculture labour is saved by the use of oil-driven tractors. It is not possible to estimate the net influence of these factors, nor to state numerically in general how far the increase of wages has affected the cost of the product to the purchaser. In the article on Wages are shown the scanty data relating to the general movement of wages in other countries than the United Kingdom, and these can be brought into relation with the index numbers of food and of the cost of living given above.
In Norway wages in the summer of 1918 were about 90% and the cost of living about 160% above the levels of 1914. In April 1919 various rates of wages were from 130 to 210% and the average had probably increased to 180% above 1914, while the cost of living was the same as in the previous year. In spite of reduction of hours weekly wages appear to have gained on the cost of living during the year May 1919 to May 1920.
In Denmark a more detailed table (see Table XVII) can be given:—
Table XVII.
| Hourly earnings | Cost of living | |
| 1914 | 100 | 100 |
| 1918 Aug. | 200 | 182 |
| 1919 Feb. | 224 | 190 |
| Aug. | 338 | 211 |
| 1920 Feb. | 358 | 242 |
| Aug. | 396 | 262 |
Hours were reduced in 1919 till at the end of the year an 8-hour day was usual as compared with 10 hours before the war. Real weekly earnings had evidently increased considerably be-
