SALARY. - When a worker sells his labor at a fixed price, that is, for a fixed quantity of money, hourly, daily, weekly, fortnightly or monthly, without any reference to the real productivity of the labor sold, the remuneration takes the name of salary and the worker is a wage-earner: and wage-earning are also called the contractual institution and the economic regime that concerns it (the word salary recalls the salt that served, in the times of ancient regal Rome, to compensate the soldiers and the proletarian labor employed in public works). Even today the term salary is used to designate the remuneration paid to manual workers, while for the others who carry out an activity of thought and of directive responsibility the term stipend is used.
The salary can be: 1) time-based, if fixed on the basis of the unit of time employed in the work (so much per hour). Only improperly does one speak of piece-rate salary, if fixed by taking the unit of work as the criterion (so much for each job), and of bonus salary, if the unit of work to be performed within a maximum time is taken as the basis and the fractions of time saved are remunerated with bonuses; 2) absolute, if fixed in correspondence with an average family of a standard type, so as to make no distinction between married and unmarried workers; 3) relative, if fixed on the basis of the family units dependent on the worker.
I. CHARACTERISTICS OF THE WAGE CONTRACT
The substantial characteristic of the wage contract is that it is without term and without guarantee: hence the contractual relationship can be terminated at any moment. Although it is irreproachable, if considered in the abstract, as ethics and law, wage labor represents the least favorable condition that can be imposed on a capable and willing worker: both from the point of view of the just price of labor, and from that of the precariousness of employment and the moral situation that results from it. Unfortunately this contractual institution is linked to general situations and conditions of industries, not only seasonal or agricultural ones, but also all the others that are tied to the instability of markets, and to unforeseeable, fluctuating and uncertain political and economic situations. For these reasons, whenever industries must be able to free themselves of manpower exceeding real needs, and this without excessive burdens of indemnities, the wage earner is abandoned to his fate. In the present state of things, however, most industries are not in a position to guarantee the worker, and in particular the generic and unskilled one, a condition materially and morally different from wage labor. Connected to the wage system is a painful spiritual condition that is its direct consequence: this condition, if it could be scarcely noticed and not weigh excessively when the working masses were uncultured and accustomed to a very frugal regime of life, has today become unbearable for a growing host of workers, the healthiest, who through improved culture, observation of facts, professional preparation, capacity for criticism, a more varied and comfortable life, and finally participation in public life, now aspire to the satisfactions above all moral ones due to merit, collaboration and initiative. Add to this that closer contact with employers and managers has generally not benefited their former prestige in the eyes of the workers.
To this complex state of affairs attempts have been made to bring mitigations and correctives, with the Church herself as sponsor (v. QUADRAGESIMO ANNO; RERUM NOVARUM) by means of social provisions of various kinds, progressively adopted in this last century in all civilized nations. Such are: wage supplements represented by the many allowances for overtime, heavy or dangerous work; the guarantee of collective contracts of category on a provincial, regional or national scale, particularly as regards minimum wages, specialization classifications, treatment of holidays, illness, accident, retirement, notice of dismissal, internal factory commissions; the sliding scale for the semi-automatic adjustment of wages to the cost of living; the many forms of assistance, welfare and insurance; the piecework contract, which pays certain jobs by measure or number, and mixed or incentive contracts (task wage); sharecropping, agricultural and industrial; production bonuses which under various forms compensate the most active and capable workers; the category of intermediates, which makes the older and more experienced wage-earning workers share in certain more favorable contractual conditions proper to the clerical category; finally the family wage, which adjusts remuneration to some extent to actual need, increasing it by as many separate allowances as there are persons in the family dependent on the worker.
This regulation, which is becoming ever more complex and detailed, has its undeniable human and social value, protecting the intrinsic dignity of labor: its negative sides, however, must not be passed over in silence, consisting mainly in the fact that it benefits above all the least deserving and least prepared, without stimulating them to spiritual and professional improvement, while with regard to the most deserving and experienced it leads to limitations of the generosity generally shown by firms toward their most valuable and loyal collaborators. It follows that to the growth of obligatory social burdens there is also joined the discontent of the best and a general lower output of labor.
II. SOLUTION OF THE WAGE PROBLEM
The wage in money is called nominal, inasmuch as it does not give the measure of the actual well-being earned by the worker: when related to the prices of the things indispensable to life, that is, translated into products and services purchasable with the money of the wage, it becomes real.
Trade-union agitation can influence only the nominal wage; hence its scant practical effectiveness on the whole. To increase real wages it is necessary instead to influence prices or, what amounts to the same thing, the purchasing power of money, by economic means that workers' unionism either ignores or is unable to manipulate (v. PREZZO). It thus happens that wage increases, by themselves bringing about an increase in production costs or a decrease in industrial profits, generally drive prices up (v. SALARIALE, REGIME). Once the crucial period of wage demands has passed, at least on the plane of ideas, with the gains that have been mentioned, it is now opportune to move toward integral and decisive solutions.
The true solution of the problem does not lie, evidently, in precarious agreements on the level of the wage between those interested in raising it and those interested in keeping it constant: but perhaps in restoring, under this new climate of the human revaluation of labor, competition between wage-earners and employers, after having resolved the question of industrial financing, in the sense of being able to balance the supply of workers with the demand for labor, thereby assuring workers the faculty and the material possibility of choosing their employment.
Only through such freedom of choice do wages rise and does individual merit find a way to manifest itself and to be appreciated. Any other provision would represent only a partial and scarcely effective substitute. Such freedom is at present hindered by the insufficiency of capital, by the professional unpreparedness of the labor force, and also by the scant mobility of capital and of labor forces, which is prevented by policies from meeting where and when it would be useful, necessary and possible.
No firm can live and prosper, even while struggling and perfecting itself, if it is deprived of the management of its labor force in quantity, kind and remuneration; this is true also for totalitarian regimes and for state-owned firms. This is why the wage problem, despite having by its urgency and gravity attracted and still attracting attention and arousing the concerns of classes and governments, is not only not pre-eminent among economic problems but, if considered as such, diverts intellects and good wills from the study of the substantial problems, which are those of saving, of the insurance of saving and of the rational employment of saving (v.).
After a century of struggles, the maxim has prevailed in the social field that forbids considering labor as a commodity subject to the law of supply and demand, claiming instead for labor its noble human character. It is, however, a moral and not an economic maxim. True: social morality can, indeed must, intervene to correct the harshness of natural laws, and therefore also of economic laws, for example, with the minimum wage and the family wage, as has by now been done in almost all social legislations (v.): this does not, however, authorize confusing economic science with morality to the point of denying to the former all autonomy in its own field of action (v. LAVORO; SALARIALE, REGIME).
The Marxist sophism whereby the impossibility for the worker to purchase with his wage the commodity produced by his own labor would be proof of a theft by capital from the worker's wage, is one and the same as the collapsed axiom of value measured by hours of labor. Production and exchange are two distinct acts that take place under different regimes and according to different laws: the cost of production, which is not formed of wages alone, has no obligatory relations with the exchange value that is established or permitted by the market (v. SCAMBIO).