in 1916 and 39 cents in 1917-increases of 10 and 25 percent respectively. The increase in money wages in the leading manufacturing industries kept slightly above the rising cost of living so that to this limited group there were slight gains in real wages, ranging from 5 to 10 percent, during most of the war period. CHART 55 350 300 250 200 150 100 50 COTTON MILL ACTIVITY AND PRICE Price, Cotton Goods Raw Cotton Consumption Spindles in Place 1913-14 1914-15 1915-16 1916-17 1917-18 1918-19 1919-20 COTTON YEARS Source: U.S.Department of Commerce, US Bureau of Labor Statistics 350 300 250 200 150 100 50 DD39-303 This demonstrates that prices lead the way in inflation. Wages and cost of living tend to lag initially. But once a movement is well begun, there is no stopping living costs and wages. From the middle of 1916 through the armistice, prices were out in front. Early in 1919 living costs and wages passed prices but again lagged during the drastic deflation of prices in 1920. Wages in the manufacturing industries, however, increased faster than did the cost of living. The average increase in cost of living for 1917 was about 25 percent, while hourly earnings rose 40 percent in 8 manufacturing industries and INDEX 320 300 280 260 240 220 200 180 160 140 120 100 80 US BUREAU OF LABOR STATISTICS 1914 1915 CHART 56 COST OF LIVING 1914-21 1914=100 1916 WHOLESALE PRICES, COST OF LIVING AND AVERAGE EARNINGS 1914-100 1917 ALL ITEMS CHART 57 1918 CLOTHING 1919 FOOD RENT 1920 AVERAGE EARNINGS FROM "REAL GADES IN THE U.S." 50 percent in the bituminous coal industry. This disparity continued throughout and after the war period. Among the dislocating and disorganizing factors in an inflationary movement is the wide disparity among various groups of workers. Hourly money earnings in 1920 had increased 162 percent in bituminous coal but only 44 percent for Government workers. In 1918 when wages in eight manufacturing industries were up 75 percent, wages in the building trades were up only 20 percent. This is shown in chart 58, which shows average hourly earnings for eight manufacturing industries, bituminous coal, building trades, and Federal employees in the District of Columbia. The same picture is shown in chart 59. While real wages of workers in agricultural implements were below the prewar level during the war period, the wages of steel workers rose over 20 percent by 1918 and textile and food workers somewhat less. The effect of the inflation upon certain wage-earning and salaried groups is shown in the following charts. Cash weekly wages of Federal employees in the District rose gradually in 1920 to a peak more than 40 percent above the 1914 level. The increase in cost of living was so much greater, however, that real wages declined 28 percent during the same period. (See chart 60.) The cash wages of teachers in the United States had advanced more than 60 percent by, 1920 but real wages declined 20 percent during the same period. (See chart 61. In the building trades, cash wages were up from 20 to 40 percent in 1918 and 1919, while the amount of goods that building workers could buy with their wages declined 20 percent. (See chart 62.) Railway workers fared somewhat better. Their cash weekly wages were up 75 percent in 1918 so that real income was up 10 percent. Further increases in wages in 1919 and 1920, however, scarcely kept pace with climbing costs of living. (See chart 63.) The increase in cash weekly wages of 135 percent in manufacturing industries and of over 140 percent in bituminous coal raised the real income of those workers in terms of goods and services only 18 to 20 percent. As a matter of fact, real wages did not increase so much in these industries and fell much farther in other cases than the figures indicate. Price statistics understate the extent of a price rise and during a war the magnitude of the understatement is especially great. The most important reason for this, in the case of wage earners, is the deterioration of quality. |