Wages and the Cost of Living

September 1, 1930

Report Outline
Readjustments of Prices and Wages
Conflicting Views on Wage Policy
Recent Trend of Wages and of Living Costs
Pre-War and Post-War Wage Movements

Readjustments of Prices and Wages

For Ten Months commodity prices have fallen steadily. Sharp declines in wholesale prices have been followed—at a less rapid rate—by reductions in living costs. One of the consequences of this development has been a sharp controversy over the relation of commodity price readjustments to the future course of wages, for if living costs should become stabilized at present or lower levels and wages remain unchanged, employees generally would receive substantial gains in real wages and in purchasing power.

Opposition to wage reductions, at least in the immediate future, has been expressed recently by prominent business men who contend that wage cuts would reduce efficiency in production, would limit the markets for manufactured goods and other commodities, and thus would hamper the recovery of business activity. The soundness of this view is challenged by others who maintain that, to some extent at least, wages must share in a general readjustment of the prices of all goods and services. Downward wage readjustments have in the past attended periods of falling prices, although frequently the downward movement of wage rates has gone less far than that of prices, leaving wage-earners with a net gain in real wages.

The actual number of employees affected by wage cuts put into effect in recent months can not be determined because of the non-existence of sufficiently comprehensive statistical data, but reports of the federal Bureau of Labor Statistics and surveys by trade journals indicate that probably only a small proportion of the total number of industrial establishments have thus far made outright changes in wage rates. A majority of the reductions announced have been made in the textile, lumbering, and mining industries.

ISSUE TRACKER for Related Reports
Cost of Living and Wages
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Sep. 08, 2017  Universal Basic Income
Apr. 08, 2016  Future of the Middle Class
Apr. 18, 2014  Wealth and Inequality
Jan. 24, 2014  Minimum Wage
Jun. 19, 2009  Rethinking Retirement
Mar. 06, 2009  Middle-Class Squeeze
Mar. 14, 2008  Gender Pay Gap
Dec. 16, 2005  Minimum Wage
Sep. 27, 2002  Living-Wage Movement
Apr. 17, 1998  Income Inequality
Oct. 27, 1978  Wage-Price Controls
Jun. 16, 1978  Military Pay and Benefits
Mar. 23, 1966  Rising Cost of Living
Oct. 25, 1961  Price-Wage Restraints in National Emergencies
Jun. 21, 1961  Wage Policy in Recovery
Jun. 11, 1958  Prices and Wages in the Recession
Sep. 18, 1957  Control of Living Costs
Nov. 02, 1955  Wages, Prices, Profits
Jan. 26, 1954  Minimum Wage Raise
Jan. 02, 1954  Cost of Living
Jan. 21, 1953  Guaranteed Annual Wage
Dec. 17, 1952  Future of Price and Wage Controls
Nov. 19, 1951  Fringe Benefits and Wage Stabilization
Dec. 06, 1950  Wage Control
Jun. 13, 1949  Wages in Deflation
Jun. 04, 1947  Guarantees of Wages and Employment
Oct. 29, 1946  Decontrol of Wages
Dec. 01, 1945  Minimum Wages
Sep. 29, 1945  Wage Policy
Oct. 27, 1944  Wage Security
May 17, 1943  Incentive Wage Payments
Aug. 25, 1941  Prices, Profits, and Wage Control
Apr. 28, 1941  Wartime Changes in the Cost of Living
Sep. 21, 1940  Two Years of the Wage-Hour Law
Nov. 01, 1938  Industry and Labor Under the Wage-Hour Act
Jan. 20, 1938  Wage Rates and Workers' Incomes
Apr. 11, 1935  The Cost of Living in the United States
Sep. 01, 1930  Wages and the Cost of Living
May 24, 1930  The Anthracite Wage Agreement
Feb. 20, 1925  Measure of Recovery in Profits and Wages Since 1920–21 Depression
Economic Crises