Wage Rates and Workers' Incomes

Report Outline
Levels of Wages and Business Activity
High Wage Theory in Prosperity and Depression
Annual Earnings and Wage Stabilization
Special Focus

Levels of Wages and Business Activity

Advance of Wage Rates to New High in 1937

While production, prices, employment, and payrolls were declining during the latter part of 1937, ware rates were moving upward to levels well above those of 1929. A substantial body of opinion among economists holds last year's rapid advance in labor costs to have been a primary cause of the business recession. This view was expressed by Leo Wolman, labor economist of Columbia University and former chairman of the Automobile Labor Board, and by several other leading economists, at the annual meeting of the American Economic Association last December 30 at Atlantic City.

Statistics of average hourly earnings afford the best available information on general movements of wage rates. Average hourly earnings in 25 manufacturing industries, as reported by the National Industrial Conference Board for the period 1914–1937, are shown in the table below.

Hourly earnings in manufacturing industries averaged 69.1c for the first 11 months of 1937, as compared with 60.6c in 1920, 59.0c in 1929, and 61.7c in 1936. Hourly earnings averaged 71.7c in November, 1937, the last month for which figures are available. This is the highest average ever recorded by the N. I. C. B. The November figure represents an advance of 12.4 per cent over the average for January, 1937, and is 21.5 per cent higher than the average for 1929.