WAGE. – When a worker offers his labor for a fixed price, that is, for a fixed amount of money—hourly, daily, weekly, fortnightly, or monthly—without any reference to the actual productivity of the labor supplied, the remuneration is called a wage, and the worker is a wage earner; the contractual institution and the economic system relating to it are likewise called wage labor (the word wage recalls the salt that, in the days of ancient royal Rome, was used to compensate soldiers and proletarian labor employed in public works). Even today, the term wage is used to designate the remuneration paid to manual workers, whereas for those engaged in intellectual activity and positions of managerial responsibility, the term salary is used.
A wage may be: 1) time-based, if fixed according to the unit of time employed in the work (a certain amount per hour). It is only improperly referred to as piecework pay when it is fixed by taking the unit of work as the criterion (a certain amount for each job), and as incentive pay when the unit of work to be completed within a maximum time is taken as the basis and the fractions of time saved are remunerated with bonuses; 2) absolute, if fixed with reference to an average model family, so as not to distinguish between married and unmarried workers; 3) relative, if fixed on the basis of the family members dependent on the worker.
I. CHARACTERISTICS OF THE SALARY CONTRACT
The essential characteristic of the salary contract is that it is without term and without guarantee; hence the contractual relationship may be terminated at any moment. Although unobjectionable when considered in the abstract, from the standpoint 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 the fair price of labor and from that of the precariousness of employment and the resulting moral situation. Unfortunately, this contractual institution is connected with the general circumstances and conditions of industry—not only seasonal or agricultural industries, but also all those tied to the instability of markets—and with unpredictable, fluctuating, and uncertain political and economic situations. For these reasons, whenever industries must be able to rid themselves of labor exceeding their actual needs, and do so without excessive severance burdens, the wage laborer is abandoned to his fate. In the present state of affairs, however, most industries are unable to guarantee the worker, and especially the unskilled and nonspecialized worker, a materially and morally different condition from that of wage labor. Connected with the system of s. is a painful spiritual condition that is its direct consequence: although this may have been scarcely noticed and may not have weighed excessively when the working masses were uneducated and accustomed to a very frugal way of life, today it has become unbearable for a growing number of workers, the healthiest, who through improved education, observation of facts, professional training, critical ability, a more varied and comfortable life, and finally participation in public life, now aspire above all to the moral satisfactions due to merit, collaboration, and initiative. It should also be added that closer contact with employers and managers has generally done little to preserve their former prestige in the eyes of workers.Attempts have been made to mitigate and correct this complex state of affairs, under the auspices of the Church itself (v. ANNO; RERUM SERVARUM), through various kinds of social provisions progressively adopted during the past century in all civilized nations. These include: wage supplements in the form of the many allowances for overtime and arduous or dangerous work; the guarantee of collective agreements for occupational categories at the provincial, regional, or national level, particularly with regard to minimum wages, classifications by skill, arrangements for holidays, sickness, accidents, and retirement, notice of dismissal, and factory internal committees; the sliding scale for the semiautomatic adjustment of s. to the cost of living; the various forms of assistance, welfare provision, and insurance; piecework contracts, which remunerate certain jobs by measure or by number, and mixed or incentive contracts (s. a compito); sharecropping, agricultural and industrial; production bonuses, which in various forms compensate the most active and capable workers; the category of intermediate employees, which enables older and more experienced wage workers to share in certain more favorable contractual conditions proper to the clerical category; and finally the family s., which adjusts remuneration to some extent to actual need, increasing it by as many separate allowances as there are dependent members of the worker’s family.
This 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 passed over in silence, consisting principally in the fact that it chiefly benefits those who are least deserving and least prepared, without encouraging them toward spiritual and professional improvement, while, with regard to the more deserving and experienced, it entails limitations on the generosity generally shown by enterprises toward their most capable and devoted collaborators. Consequently, the increase in compulsory social burdens is accompanied by the discontent of the best workers and by a general decline in labor productivity.
II. SOLUTION OF THE WAGE PROBLEM
Wages paid in money are called nominal, since they do not measure the actual well-being earned by the worker: when related to the prices of the things indispensable to life, that is, converted into products and services purchasable with the money of the wages, they become real.Trade-union agitation can affect only nominal wages; hence its limited practical effectiveness overall. To increase real wages, it is necessary instead to influence prices or, which amounts to the same thing, the purchasing power of money, by economic means that the labor movement either ignores or is unable to control (v. PREZZO). Thus wage increases, by themselves causing an increase in production costs or a reduction in industrial profits, generally make prices rise (v. SALARIO, REGIME). Now that the crucial period of wage demands, with the gains mentioned above, has passed, at least on the level of ideas, it is appropriate to set out toward comprehensive and decisive solutions.
The true solution to the problem evidently does not lie in precarious agreements concerning the level of wages between those interested in increasing them and those interested in keeping them constant: it may instead lie in bringing competition between wage earners and employers under this new climate of the revalorization of human work, after resolving the question of industrial financing in such a way as to balance the supply of workers with the demand for labor, thereby ensuring workers the freedom and material possibility to choose their employment.
Only through such freedom of choice do wages rise
and does individual merit find the means to manifest itself and be appreciated. Any other provision would represent only a partial and scarcely effective substitute. This freedom is currently impeded by insufficient capital, the inadequate professional preparation of the labor force, as well as the limited mobility of capital and labor power, which policies prevent from meeting wherever and whenever it would be useful, necessary, and possible.
No enterprise can live and prosper, even while struggling and improving itself, if control over its labor force in terms of quantity, kind, and remuneration is taken away from it; this is also true of totalitarian regimes and state enterprises. For this reason, although the wage problem, because of its urgency and gravity, has attracted and continues to attract attention and arouse the concern of classes and governments, it is not only not foremost among economic problems but, if regarded as such, diverts intelligence and good will from the study of the essential problems, namely those of saving, the insurance of savings, savings (v.).
After a century of struggles, the social field has adopted the principle that forbids considering labor as a commodity subject to the law of supply and demand, instead asserting labor’s noble human character. This principle, however, is a moral one, not an economic one. It is true: social morality can, indeed must, intervene to correct the harshness of natural laws, and therefore also of economic ones, for example, through the minimum wage and the family wage, as has by now been social legislation (v.): this does not, however, authorize the conflation of economic science with morality to the point of denying the former any autonomy in its own field of action (v. LAVORO; SALARIALE, REGIME).
The Marxist sophism according to which the worker’s inability to purchase with his own wages the commodity produced by his own labor would prove that capital has stolen from the worker’s wages is of a piece with the collapsed axiom of value measured by hours of labor. Production and exchange are two distinct acts carried out under different systems and according to different laws: the cost of production, which is not formed solely by wages, has no necessary relation to exchange value, which is established or permitted by the market (v. SCAMBIO).