"Values to the extent of $100 are paid to 'labor' or in the form of 'compensation' or of 'wages and salaries.' How is this $100 actually divided up among those who participated in its production?" The answer to that question can not as yet be made final; to the careful searcher after truth it is far from satisfactory; yet those who have eyes to see will find in it many suggestions of the situation that will stand revealed when all of the facts in the case are made available for study.
The tentative answer as to the disposition of service income will indicate for the various classes of industries what the situation of the ordinary, or "modal," person is. Of course the answer will not cover individual cases. No general statement holds true of individual instances. It will, however, show for certain occupations the general scale of service incomes.
No one can overstate the danger of trying to deduce from a statement of averages, or other general ideas referring to a class of things or persons, the condition of individuals in that class. It does not follow because the average for machinists on a certain railroad is $1.90 per day that the machinists on that road all receive $1.90 per day. It does not even follow that any one machinist is receiving exactly $1.90 per day. Some are receiving more, and some less. The mathematical computation derived from these individual rates of daily wages yields the average, $1.90.
The average is, at best, a crude method for the statement of incomes. Convenient because of ease in handling, it is misleading in the extreme when employed for purposes of generalization. It bespeaks not instances, or laborers, or families, but abstract deductions from the relation existing between these highly humanized economic facts.
The classified wage is far more satisfactory as a method of statement than is the average wage. Instead of averaging the wages of all machinists and stating the result as $1.90, the statement is made in this form: "Of 100 machinists, 5 receive less than $1.50 per day; 12 receive from $1.50 to $1.74; 40 receive from $1.75 to $1.99; 20 receive from $2.00 to $2.24," and so on through the list. The result is a presentation of earners by groups in a way that tells the size of the group and the amount earned by each number. Out of 100, 40 earn from $1.75 to $1.99. That is a very different matter from saying that the average wage is $1.90. If care is taken, generalizations regarding types and tendencies may be made without doing too much violence to individual instances. These generalizations should, wherever possible, be based on classes, rather than on averages.
Classified wage figures do not permit of such ready generalizations. They do, however, decrease error. People have assumed that the steel industry is a very lucrative one because certain individuals have made millions in it, or that there is an abundant chance for rapid advancement in the railroad industry because certain railroad presidents came
