WAGE. — When a worker cedes his labor for a fixed price, that is, for a fixed quantity of money, whether hourly, daily, weekly, fortnightly, or monthly, without any reference to the actual productivity of the labor performed, the remuneration is called a wage, and the worker is a wage earner; the contractual institution and the economic system concerning it are also referred to as wage labor (the word wage recalls the salt that, in the days of ancient regal Rome, was used to compensate soldiers and proletarian labor engaged in public works). Even today, the term wage is used to designate the remuneration paid to manual workers, while for those who perform intellectual work or hold positions of managerial responsibility, the term salary is used.
Wages can be: 1) time-based, if fixed according to the unit of time worked (so much per hour). It is only improperly that piece wages are spoken of, if fixed by taking as the criterion the unit of work performed (so much per each piece), and bonus wages, if the basis is the unit of work to be completed within a maximum time, with bonuses paid for time saved; 2) absolute, if fixed in accordance with a standard average family, making no distinction between married and unmarried workers; 3) relative, if fixed according to the number of dependents supported by the worker.
I. CHARACTERISTICS OF THE WAGE CONTRACT
The essential characteristic of the wage contract is that it is open-ended and unsecured: hence the contractual relationship can be terminated at any moment. While unassailable in the abstract as a matter of ethics and law, wage labor represents the least favorable condition that can be imposed upon a capable and willing worker: both from the standpoint of a just price for labor and from that of the precariousness of employment and the moral consequences that follow. Unfortunately, this contractual institution is tied to general conditions and situations in industry, not only in seasonal or agricultural sectors but also in all others that are linked to unstable markets and to unpredictable, fluctuating, and uncertain political and economic conditions. For these reasons, whenever industries must shed excess labor without excessive severance burdens, the wage earner is abandoned to his fate. At the present state of affairs, however, most industries are unable to guarantee workers—especially unskilled labor—a condition materially and morally different from wage labor. The wage system is connected to a painful spiritual condition that is its direct consequence: this condition, which may have been barely noticed and not excessively burdensome when the working class was uneducated and accustomed to a very frugal way of life, has now become unbearable for a growing number of workers—the healthiest part—who, through improved education, observation of facts, professional training, critical capacity, a more varied and comfortable life, and finally participation in public life, now aspire to the moral satisfactions due to merit, collaboration, and initiative. Added to this is the fact that closer contact with employers and managers has generally not enhanced the former prestige of these figures in the eyes of workers.To this complex state of affairs, the Church herself has sought to bring mitigations and corrections (v. QUADRAGESIMO ANNO; RERUM NOVARUM) through various social provisions, progressively adopted in this last century in all civilized nations. These include: wage supplements in the form of numerous allowances for overtime, arduous, or hazardous work; the guarantee of collective bargaining agreements on a provincial, regional, or national scale, particularly regarding minimum wages, skill classifications, holiday, sickness, accident, and retirement benefits, notice of termination, and internal factory commissions; the sliding scale for semi-automatic adjustment of wages to the cost of living; various forms of assistance, social security, and insurance; the contract for excellence, which remunerates certain jobs by the piece or by number, and mixed or incentive contracts (task wages); sharecropping, both agricultural and industrial; production bonuses that, in various forms, compensate the most active and capable workers; the category of intermediaries, which extends to senior and experienced wage workers certain more favorable contractual conditions proper to salaried employees; and finally, family wages, which to some extent adjust remuneration to actual need by adding separate allowances for each dependent in the worker’s household.
Such regulation, which is becoming ever more complex and detailed, has undeniable human and social value, safeguarding the intrinsic dignity of labor. Its negative aspects must not, however, be overlooked; they consist mainly in the fact that it benefits primarily the less deserving and less prepared workers, without stimulating them to spiritual and professional improvement, while for the more meritorious and experienced it leads to restrictions on the generosity generally shown by businesses toward their most valuable and loyal collaborators. The result is that, alongside the increase in mandatory social burdens, there is also the dissatisfaction of the best workers and a general decline in work performance.
II. SOLUTION TO THE WAGE PROBLEM
Money wages are called nominal wages, inasmuch as they do not measure the actual well-being gained by the worker: when wages reach the price of the essentials of life, that is, when translated into products and services purchasable with the wage money, they become real wages.Labor agitations can influence only nominal wages; hence their limited practical effectiveness overall. 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 labor unionism, whether or not it is equipped to do so, is unable to manipulate (v. PREZZO). Thus it happens that wage increases, by themselves, often lead to higher production costs or reduced industrial profits, which generally drive up prices (v. SALARIO, REGIME). Having passed, at least on the level of ideas, the critical period of wage demands, with the gains mentioned above, it is now opportune to move toward comprehensive and decisive solutions.
The true solution to the problem does not lie, obviously, in the precarious agreements on the level of wages between those interested in raising them and those interested in keeping them constant. Rather, it may lie in restoring, under this new climate of human revaluation of labor, competition between wage earners and employers—after resolving the issue of industrial financing in the sense of balancing the supply of workers with the demand for labor power—thus ensuring workers the faculty and the material possibility of choosing their employment.
Only through such freedom of choice do wages rise, and individual merit finds a way to manifest itself and be appreciated. Every other provision represents only a partial and ineffective substitute. At present, this freedom is impeded by the scarcity of capital, the lack of professional training among workers, and the low mobility of both capital and labor, which is prevented by policies from meeting where and when it would be useful, necessary, and possible.
No enterprise can survive and prosper, even while struggling and improving itself, if it is deprived of control over the quantity, kind, and remuneration of its labor force; this is true even for totalitarian regimes and state-run enterprises. It is for this reason that the wage problem, although its urgency and gravity have drawn and continue to draw the attention of classes and governments and arouse their concerns, is not only not the foremost among economic problems but, if so regarded, diverts the intelligence and goodwill of those who should be studying the substantial problems—those of saving, securing savings, and the rational employment of savings (q.v.).
After a century of struggle, the maxim has prevailed in the social field that forbids treating labor as a commodity subject to the law of supply and demand, instead vindicating for labor its noble human character. This, however, is a moral maxim, not an economic one. It is true that social morality can—and indeed must—intervene to mitigate the harshness of natural laws, including economic ones, for example by establishing a minimum wage and a family wage, as has now been done in almost all social legislation (q.v.). This does not, however, justify confusing economic science with morality to the point of denying the former any autonomy within its own sphere of action (q.V. LAVORO; SALARIALE, REGIME).
The Marxist sophism that the worker’s inability to purchase with his wage the goods produced by his labor proves that capital has stolen from the worker’s wage is one with the exploded axiom that value is 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 made up solely of wages, has no necessary relation to the exchange value that is fixed or permitted by the market (q.V. SCAMBIO).