Wage and salary rates of pay remain at the heart of the laborbargain, although a new dimension has been created in recent decades bythe rise of various forms of supplements to employee compensation.
Information on the general movement of wage rates, and on the structureof rates by such characteristics as occupation, industry, region, unionstatus, and sex, provides crucial insight on the status and well-beingof the working population. In a complex industrial society, thedevelopment with limited resources of useful statistics in these areas,and more recently in the area of supplementary compensation, has been aformidable undertaking. This article traces the work of the Bureau of Labor Statistics overthe past century in the field of wage statistics, including theattention that has been given since World War II to the growth of wagesupplements. An effort has been made to place this work in broadhistorical perspective. This account does not cover related Bureauprograms, including the extensive work on consumer prices and theimportant series of average hourly and weekly earnings by industrydeveloped from employment statistics.
19th century beginnings The years 1875 to 1900 were in many ways a period of extraordinaryeconomic growth and change in the United States. It was marked by theclosing of the geographic frontier. An impressive expansion of thetransportation network facilitated the settlement of the West, andcontributed to a large increase in farm output. At the same time,manufacturing expanded at a rapid pace, accompanied in many industriesby larger scale operations, consolidations of firms, and the growth ofmonopoly practices. The last quarter of the century also saw substantial changes in thesize and industrial composition of the labor force.
Between 1880 and1900, the number of “gainful workers” increased by almost 12million. In 1880, the gainfully employed work force was about equallydivided between agricultural and nonagricultural employments, but by1900 the agricultural share, while still rising in absolute terms, haddeclined to approximately 37 percent of the total. The proportion ofemployment in manufacturing, transportation, and construction hadincreased significantly over the same period. There changes were accompanied by economic fluctuations ofconsiderable magnitude, including an unusually sever depressionbeginning in 1893. As a result, there arose new currents of thoughtwith respect to wage determination, trade unionism, and the role ofgovernment in relation to labor, and various comprehensive movements forsocial reform emerged. In particular, the impulse toward collectiveaction to defend or improve labor standards began to acquire momentumamong the growing wage-earning population.
Of major althoughshort-lived significance was the meteoric rise of the Knights of Labor,the membership of which reached about 700,000 in 1886 but declinedprecipitously thereafter. Of much greater long-run importance was theformation of the American Federation of Labor (AFL) in 1881 as apermanent trade union center. The Federation survived the longdepression of the 1890’s, and union membership began to climbsharply toward the end of the decade–rising from 447,000 in 1897 to868,500 in 1900, mainly in unions affiliated with the AFL.
(Thesefigures include Canadian members of labor unions with headquarters inthe United States.) It was during this period that the Bureau of Labor Statistics wascreated, with a broad mandate to “. . . collect information uponthe subject of labor, its relation to capital, the hours of labor, andthe earnings of laboring men and women. . . .
” The creation of thenew agency in 1884 reflected a growing demand for information on laborconditions to provide a basis for improved labor standards. With respectto earnings or wages, there were few guides for the work of the newBureau. Some experience with wage surveys had been accumulated by a fewState agencies, notably in Massachusetts. At the Federal level, theonly important previous effort to develop statistics of wages byoccupation was a special study conducted for the decennial census of1880. This report, which was not published until 1886, gave annualaverage wage rates by occupation for “typical” establishmentsin 53 industries back, where possible, to 1860 or even earlier. Thedata, which were collected by mailed questionnaires, were published ingreat detail.
The new Federal Bureau was extraordinarily fortunate in its firstcommissioner, Carroll D. Wright, who had headed the Massachusetts Bureauof Statistics of Labor since 1873. Wright would prove an authenticpioneer in the development of labor statistics both here and abroad.
With respect to the collection and presentation of wage survey data, anumber of general principles reflected his experience in Massachusettsand at the Federal Bureau. These related basically to the compilationand presentation of data designed to throw light on the structure ofwages, although, as we shall see, the new Bureau’s studies alsowould provide the basis for most of our knowledge of the trend of wageswell into the present century. With regard to the collection of wage data by occupation, Wrightfelt strongly that the use of trained field agents rather than mailedquestionnaires was required to ensure the adequacy and quality ofresponse. In the absence of modern sampling procedures andestablishment universe information, he favored the coverage of”typical” of “representative” establishments, whichin practice meant those that had been in business for some time.Concerning the presentation of wage statistics, Wright was insistent upon the use of well-defined occupational classifications. In view ofthe observed dispersion of wage rates within occupations, he tended tofavor presenting survey results in the form of wage distributions, wherefeasible, rather than by occupational averages alone.
“Of lateyears,” he wrote in 1892, “the demand has been that employeesshould be classified not only minutely as to occupations, but as torates of pay as well. Appropriately, in view of the times, the first annual report of theCommissioner dealt with industrial depressions. It included the resultsof the first occupational wage survey conducted bys the Bureau. Thedata related to 1885 and were taken directly by Bureau agents from thepayroll records of 582 establishments in about 40 industriesoverwhelmingly in the manufacturing sector. The results were publishedin the form of daily average wage rates by occupation, industry, andState; estimates were presented separately for men, women, and childrenand youths. The Commissioner’s fifth annual report (1889) on railroad labor developed occupational wage statistics in great detail for 60carriers.
The Bureau’s field agents found more than a thousand jobtitles in the payroll records of these railroads. Many of theseinvolved similar duties. The most detailed wage statistics were shownin table 11 of the report, where distributions of daily rates orearnings by occupation were presented, together with distributions ofannual earnings. The claim was made that “. .
. the chief value ofthis report, so far as time and wages are concerned, is to be found in athoroughly scientify classification, not only of the time employed ofeach individual employee of the roads considered, but of rates by dayand by year,” as shown by the payrolls. These studies, together with two other extensive wage surveysconducted during the early 1890’s, provided the Bureau withinvaluable experience in occupational classification, data collection,and the presentation of survey results. They prepared the way for ahighly fruitful survey stemming from a Senate resolution of March 3,1981, which instructed the Committee on Finance to study the effects oftariff legislation on wages and prices. In accordance with theresolution, Senator, Nelson W. Aldrich asked Wright to undertake thetask of developing wage and price statistics for the years 1840-91. The problem of locating establishments with payroll records for allor most of this long period obviously was difficult.
The studyultimately provided data for more than 500 occupational series in 22industries, mainly in manufacturing. Comparatively few of theestablishments and usable payroll records prior to 1860. Thepublication of the data for two payroll periods in each year byindustry, establishment, and occupation, took up almost 1,300 pages ofthe Senate Committee’s report. The Committee observed that “..
. no other investigation has been made with so with a scope, such avariety of detail, and covering so extensive a period.” The significance of this study for the Bureau’s work in thefield of wage statistics was twofold.
It gave experience in thecollection of data over an extended period in the past, and it providedthe basis for measurement of changes in the level of wages through theconstruction of wage indexes. The latter represented an innovation ofsignal importance for which credit must go to Professor Roland P.Falkner of the University of Pennsylvania, who was employed by theSenate Committee to analyze the survey data. Using 1860 as the baseyear, Falkner prepared indexes for each occupation by establishment, foreach of the 22 industries included in the survey, and for the 22industries combined. Despite its many limitations, the Bureau’s work for theAldrich Committee is the major source of information on the structureand course of wages in this country from 1860 to 1890, and yields someinsight for the years back to 1840. The study’s wage trendestimates have been analyzed and reworked a number of times, mostrecently by E. H.
Phelps Brown and Sheila V. Hopkins and by Clarence D.Long. The next major wage study undertaken by the Bureau undoubtedly wasinfluenced by experience gained in surveys for the Aldrich Report, andforeshadowed the nature of work to be done into the 20th century. Thisstudy provided average daily wage rates by year for each of 25 selectedoccupations in 12 major cities for the period 1870-98. The occupationsselected were those “susceptible of accurate definition,” andthe data were taken directly from the payroll records of at least twoestablishments in each city for the occupations covered. Thereport’s text tables showed average daily wages by year for alloccupations combined, and the percentage change since 1870 for each yearfrom 1871 to 1898. The latter estimates were deemed to be “quiteindicative” of the movement of wages generally.
Similar data wereshown for three cities in Great Britain and for one city each in Franceand Belgium. The foreign data were compiled by the authorities in thecountries concerned at the request of the Bureau. In short, during the last 15 years of the 19th century, the Bureauaccumulated considerable experience in the planning and conduct ofsurveys of wages and standard hours of work. The merits of datacollection from payroll records by personal visit were established. Muchinsight was gained into the difficult problem of job classification at atime when formal job descriptions were uncommon and titles for the samejob could vary widely among establishments. Problems in the presentationof occupational wage data related to the observed dispersion of rates ofpay were recognized.
Finally, the introduction of index numbers in theAldrich Report provided a convenient means for measuring the movement ofwages over time. The development of sophisticated survey samplingtechniques was, of course, far in the future. 1900 to the GreatDepression The Bureau’s work in wage statistics during the first threedecades of the 20th century achieved a coherence that distinguishes itfrom its 19th century origins. This cohesion was attained despite thegreat economic and social changes that occurred during the period,including U.S. participation in World War 1. Between 1900 and 1930,gross national product in constant dollars rose at an average annualrate of 3.1 percent.
The sharpest downturn in economic activity was thecomparatively short postwar recession beginning toward the end of 1920.The civilian labor force grew by about 20 million, with nonfarm workersaccounting for approximately 77 percent of total employment by 1930.The automobile began to provide greater mobility for both people andindustry. The growth in trade union membership that had begun in 1897continued with only minor pauses to 1920, when membership reached 5million. A sharp decline occurred during the postwar recession, butmembership stabilized at about 3.6 million by 1924.
Finally, asubstantial body of protective social legislation was enacted at theState level during this 30-year period, largely with reference to workperformed by women and children. During the winter of 1900-01, the Bureau began a major study ofoccupational wages by industry, with the data carried back to 1890. Thestudy was undertaken with the view that “. . .
the constant demandfor current data could be met only by a very painstaking and completeinvestigation which would result in thoroughly representative figuresfor a period of years and which would serve as the basis for the regularannual collection and presentation of data concerning wages. . .
.”Due to staff limitations, the study required several years forcompletion. Data for 1902 and 1903 were included in the final resultsof the investigation, which appeared in 1905 as the Commissioner’sNineteenth Annual Report, a volume of almost a thousand pages.
The study was confined to “the leading manufacturing andmechanical industries” and to the “distinctive occupationswhich are considered representative of each industry,” and coveredpayroll periods most nearly representing “normal conditions”of operations for each establishment during each year. In all, 67industries, 519 occupations, and 3,475 establishments were surveyed.Industry coverage was largely confined to manufacturing and the buildingtrades. Each year from 1890 to 1903, the Commissioner’s Annual Reportpresented average rates of pay by occupation, industry, and region, andfor selected occupations, by city and State. Complete wagedistributions also were given for the occupations included in the cityand State tabulations. An outstanding achievement was the presentationin a text table of an overall index of hourly rates, computed fromaverages of industry relatives weighted by aggregate wages paid by eachindustry as shown by the census of 1900. As Paul H.
Douglas pointedout in his great study of real wages in the United States from 1890 to1926, the Bureau’s index computations were for some years thepreferred statistical basis for generalizing on the trend of wages.(Actually, the correspondence between the Bureau’s wage-weightedindex and Douglas’ own wage rate index for manufacturing, which wasprepared from the same data but differently constructed, is strikinglyclose. For example, both indexes show wages in 1903 to be 16 percenthigher than the average for 1890-99.) The general format of the 1890-1903 study was followed in annualsurveys during the next 4 years. The results of these studies werereported in the Bureau’s bimonthly bulletin. The surveys againwere confined largely to manufacturing, but their scope was limited toindustries in which wages paid amounted to $10 million or more as shownby the 1900 census.
The 1904 survey, for example, covered 350 selectedoccupations, 3,732 establishments, and 42 industries. The 1904 wageindex for all industries was linked to the general index for 1890-1903on the basis of changes in those establishment studied in both 1903 and1904, and this chaining procedure was followed for subsequent years to1907. After 1907, there was a 4-year interruption in the Bureau’swage survey program.
This was due primarily to the pressure of otherwork, notably a large investigation into the conditions of women andchild wage earners and a study of wages, hours, and working conditionsin the iron and steel industry, both of which were published as Senatedocuments. The program was resumed in 1912 with two series of surveys.The first consisted of studies based on payroll records of rates of pay(or of earned rates for incentive workers) in selected occupations in 12industries: cotton, wool, and silk textile; lumber, millwork, andfurniture; boots and shoes; hosiery and knit goods; cigars; clothing;iron and steel; and building and repairing of steam railroad cars.Except in the case of cigars and clothing, data were carried back to1907. With the next few years, five of these industries (silke,millwork, furniture, cigars, and car building) were dropped whileslaughtering and meatpacking was added. The industries that remained inthe program were surveyed approximately every 2 years until 1933.
The 1912 survey of cotton-goods manufacturing and finishingillustrates the essential nature of this group of studies. Bureauagents obtained data for the “principal occupations” directlyfrom mill payroll records. An innovation was the publication of jobdescriptions in the survey report. The coverage of establishments wasconsiderably broader than in earlier studies of cotton-goodsmanufacturing, and the data, as previously noted, were carried back to1907. Distributions of workers by hourly rates of pay at 1-centintervals were shown by occupation for the industry as a whole and byState. The Bureau’s continued interest in the trend of wages wasmanifest by the linkage of annual wage changes during 1907-12 to theexisting 1890-1907 index for cotton textiles. The second group of studies begun in 1912 were concerned with unionwage scales and standard hours of work in the building industry,newspaper printing, book and job printing, marble and stone work, metaltrades, baking, and millwork.
In all, 49 crafts were surveyed in 39cities. The initial report states that the data were “. .
. inevery case furnished by officials of the local unions to special agentsof the Bureau of Labor Statistics, and wage scales, written agreements,and trade union records were used wherever possible.” As with the payroll studies, the union wage data were extended backto 1907. Wage scales were shown by trade and city for each year from1907 to 1912, and indexes of the movement of scales back to 1890 werecomputed for many of the crafts in the industries covered. Thesestudies, with some changes in industry coverage, were to continue on anannual basis for almost 80 years. These payroll and union wage studies had the great virtue ofproviding a large measure of consistency in the Bureau’soccupational wage survey program over a period of roughly two decades.They also provided a measure of continuity with the major survey thathad produced the 1890-1903 report on occupational wages and with theannual surveys of 1904-07.
They developed data on the structure ofwages by skill and sex for manual jobs in a variety of relativelylow-wage and high-wage industries. Data provided by locality and Stateyielded a measure of insight into interarea wage differences. As previously mentioned, these surveys were the source for themanufacturing and building components of the seminal Douglas study ofmoney and real wages from 1890 to 1926. Shortly after World War I, theBureau itself ventured to put together an annual general index of wagesin response to inquiries that “.
. . have generally related torecent years but . .
. frequently ask for an index that shall compareCivil War Changes with those during and following the late WorldWar.” The index was prepared (with some hesitation) from “allsources available,” and was published initially for the period from1840 to 1920.
It was later extended in several stages to 1934. Two additional observations should be made concerning theBureau’s work in wage statistics during this period. The first isthat World War I had minimal impact on the generation of wage data.
Although several Government agencies were established to deal withwartime labor problems, there was not effort, as there would be duringWorld War II, to impose comprehensive wage controls. Wage adjustmentefforts for particular industries (such as shipbuilding) tended to focuson those made necessary by rising living costs, which led to theestablishment of the Bureau’s Consumer Price Index. Toward the endof the war, the War Industries Board asked the Bureau to undertake wagesurveys in a number of industries for use in the solution of laborproblems and to provide a record of industrial conditions at the heightof the war effort. These surveys, with occupational wage data for 28industries, were not completed until after the war, and the results werepublished in 1920. The second observation is that, while generally continuing thegroup of payroll studies begun in 1912, the Bureau extended its wagesurvey activity to additional industries during the 1920’s. Anumber of these were manufacturing industries essentially new to the20th century, including motor vehicles, rubber tires, synthetictextiles, and airplane and aircraft engines.
Several nonmanufacturingindustries also were added to the program, most notably bituminous coal mining and air transport. This major phase of the Bureau’s work in wage statistics cameto an end about 1932. Although the surveys of the period were confinedto manual jobs and largely to selected industries in the manufacturingsector, they provided a reasonably consistent body of data on both thestructure and trend of wages for industrial workers. They undoubtedlyalso played a role in private wage determination through collectivebargaining and employer personnel administration. In their absence, weshould know much less than we do about economic conditions during thefirst three decades of this century.
Depression and war, 1930-45 The great Depression began toward the end of 1929. Unemployment,which was estimated at 3.3 percent of the civilian labor force duringthe years 1923-29, rose to an estimated 25 percent in 1933. Recovery wasonly partial during the remainder of the decade; even in 1940, theunemployment rate was estimated at 14.6 percent.
However, the steadyexpansion of war production and of the Armed Forces after mid-1940brought the rate to 1.2 percent by 1944. The singular decade of the 1930’s witnessed the beginning ofan unprecedented and continuing involvement of the Federal Governmentwith the economy.
Aside from social insurance programs, thisdevelopment expressed itself with respect directly to labor in two majorforms. The first was machinery through the Davis–Bacon Act of 1931 andthe Walsh–Healey Act of 1936 for the establishment of wage standardsfor workers employed by contractors or subcontractors on publicconstruction or in the provision of manterials and supplies to theFederal government, and, by the Fair Labor Standards Act of 1938, forminimum wages for most workers engaged in or producing goods forinterstate commerce. The second, embodied in the National LaborRelations Act, Protected the right of workers to join unions and imposedupon employers the duty to bargain collectively over wages and otherterms of employment. Partially as a result of this latter act, U.S.union membership, which had declined to 2.7 million by 1933, reached14.3 million by 1945, and collective bargaining was extended to manystrategic sectors of the economy.
During the same year that the act waspassed, however, a deep split occurred in the trade union movement, abreach that was not to be closed for 20 years. By the time the United States became involved in World War II as acombatant on December 7, 1941, the economic impact of the conflict hadalready begun to be felt and measures to deal with its consequences hademerged. One group of measures designed to contain the inflationary consequences of resource diversion to war production was comprehensivecontrol of changes in wage rates and prices. This had a decisive effecton the Bureau’s wartime wage statistics programs, and postwarconsequences as well. The early 1930’s had seen the end of the relatively small butsystematic program of payroll-based industry wage surveys that had beenconducted during the previous two decades.
The annual survey of”common labor entrance rates” was discontinued in the early1940’s in large part because of the increasing ambiguity of theconcept of “unskilled” or “common” labor. Droppedalso, in 1934, was the occasional publication of the broad annual wageindex that had first been published in 1920, having been pieced togetherfrom such data as were available. Its discontinuance appears to havebeen related to the institution in 1932 of the Bureau’s averageemployment and payroll reporting system.
Between 1932 and the beginning of the defense buildup in 1940, theBureau’s wage survey activity was largely, although not entirely,geared to the informational needs of the new Federal agencies concernedwith labor standards. Thus, a number of studies were undertaken for usein the administration of the short-lived National Industrial RecoveryAct of 1933 which provided by industry for “codes of faircompetition” containing minimum wage and maximum hour provisions.At the direct order of the President, an especially noteworthy study wasmade in the cotton textile industry covering pay periods in 1933 and1934, following a general strike in that industry in 1934.
Severalsurveys were undertaken in cooperation with the Works ProgressAdministration. Work was done also in connection with prevailingminimum wage determinations under the Walsh-Healey (Public Contracts)Act of 1936, which covered work performed by Federal governmentcontractors. The pace of survey activity accelerated after the passage of theFair Labor Standards Act (1938), which initially provided for Federalminimum wage determination (above a statutory level) on an industrybasis. During 1938 and 1939, about 45 industry wage surveys wereconducted for use in minimum wage proceedings. Most of these studiesdeveloped data on the distribution of workers by pay rates orstraight-time hourly earnings, without occupational detail. Theytypically related to relatively low-wage consumer-goods industries. Ina few cases, they provided the basis for appraisal of the wage andemployment effects of minimum wage orders before these effects weremasked by the upsurge of economic activity associated with the war.
Concern with minimum wage determinations faded as the defenseprogram got underway in mid-1940. With expansion of the defense effort,unemployment declined, shortages of skilled workers began to appear, andthe incidence of strikes rose sharply during the first half of 1941. InMarch of that year, a tripartite National Defense Mediation Board wasappointed to assist in the settlement of labor disputes; this agency wassuperseded in January 1942 by the National War Labor Board, which wasgiven the additional function of stabilizing rates of pay as part of acomprehensive economic stabilization effort. As a consequence of these developments, the Bureau’s wagesurvey activity shifted initially from consumer-goods industries toheavy industries essential to war production.
Occupational wage studieswere undertaken in such industries as shipbuilding, aircraft, rubber,nonelectrical machinery, and the mining, smelting, and refining ofnonferrous metals. Beginning in 1941, special studies were alsorequested for use in the settlement of specific labor disputes inindustries vital to the war effort. With the beginning of comprehensive wage stabilization under theWar Labor Board, the governmental need for wage statistics increasedmanyfold. This led to a substantial expansion of Bureau staff and theestablishment of regional offices to parallel those set up by the Board.For the most part, two types of wage information were provided for Boarduse. The first involved data on wage rates or straight-time earnings byoccupation, industry, and labor market for Board decision in thousandsof claims for increases on interplant wage inequity grounds, togetherwith some studies in connection with specific labor disputes. Thesecond was a general wage rate index to measure the effectiveness of thewage stabilization program.
The surveys for use in Board decisions in inequity cases involvedspecial procedures to expedite data collection and presentation. Theseincluded the development of patterns of “key” jobs byindustry, the preparation of uniform job descriptions, and thestandardized presentation of survey results. Althogether, job patterns,each typically including from 10 to 20 occupations, were prepared formore than 120 manufacturing and nonmanufacturing industries. It wasreported in 1945 that, under this crash program, data on pay rates inkey occupations had been collected from more than 100,000establishments, and that some 8,000 reports on an industry-localitybasis had been transmitted to the Board.
This was an extraordinaryachievement over a period of little more than 2 years, and represented avital contribution to the wartime wage stabilization program. The second Bureau contribution to the wage stabilization effort wasthe construction of an occupationally based index of urban wage rates.Becuase the War Labor Board sought to stabilize basic rates of payrather than earnings, such an index was needed to provide some measureof its effectiveness. A properly constructed index can eliminate manyof the factors that affect earnings rather than rates, including premiumpay for overtime and late-shift work, interindustry employment shifts,and changes in occupational skill ratios.
The urban wage index was based on data for key occupations in about6,000 establishments, and covered selected manufacturing andnonmanufacturing industries in some 69 labor markets, It was issuedsemiannually beginning in April 1943, but was estimated back to Januar1941 for the manufacturing sector. Discontinued largely for budgetaryreasons in 1947, this index would have been a valuable tool for theanalysis of postwar wage movements. Its final publication gaveestimates of wage-rate change for manufacturing between January 1941 andSeptember 1947, and for selected nonmanufacturing industries betweenApril 1943 and April 1947. Postwar program adjustment, 1945-47 For more than 3 years, almost all of the Bureau’s expandedresources for wage survey purposes had been devoted to data needs forwage stabilization and labor dispute settlement. By the beginning of1945, the pressure of these needs had eased substantially. The war wascoming to an end, and problems of industry reconversion to peacetimeproduction were being discussed. It was now necessary to devise aninterim program to meet anticipated requirements for wage statisticsduring the immediate postwar period. The most significant Bureau decision with regard to the wageprogram was to conduct a large number of nationwide occupational wagesurvey on an industry basis, with regional and locality breakdownswhenever possible.
Between 1945 and mid-1947, such studies were made inno fewer than 70 manufacturing and 11 nonmanufacturing industries. Eachpresented data on rates of pay for selected occupations and ratedistributions for all plant workers on a national and regional basis,and virtually all contained occupational data for specific localities.Information typically was shown on occupational earnings by size ofestablishment, size of community, method of wage payment, andunionization, and for such plant practices as scheduled hours of work,shift differentials, paid vacations and sick leave, and insurance andpension plans. Most of the studies also contained data on salaries fora few office occupations. This large group of nationwide studies were issued in a specialseries of wage structure reports in mimeographed form. Unfortunately,few were published in the Bureau’s series of numbered bulletins,but many summary articles based on the surveys appeared in the MonthlyLabor Review. During this period, the Bureau continued its annual surveys ofunion wage scales in building, printing, and several other industries.Of great importance in subsequent survey planning were studies ofclerical salaries on a cross-industry basis in a few local labormarkets.
A variety of special studies relating to such issues asguaranteed wage plans in the United States, the economic status ofregistered nurses, and the experience of workers in various industrialreconversion situations also were conducted. Particular notice should be given to the rise of a board analyticalcapability within the Bureau during this period. This, no doubt, was afunction of staff size stimulated by the exceptional volume ofstatistical information generated during 1945-47. Several notablestudies were produced, including an analysis of changes in wagedifferentials by skill for manual workers between 1907 and 1947 inmanufacturing and the building trades. This pioneer study pointed upstriking changes that had occurred in supply-demand conditions in thelabor market over the four decades. A companion study, confined tomanufacturing, dealt with the course of regional wage differentialsduring the same period. Other studies relating to the immediate postwarperiod dealt with such topics as shift differentials in manufacturing,vacation practices in major industry groups, and the prevalence ofinsurance and pension plans.
Reshaping wage programs, 1947-70 In mid-1947, the Bureau experienced a sharp reduction in itsbudget–in effect a postwar readjustment–although its resourcesremained substantially above the prewar level. With respect to wagestatistics, this budget reduction, together with other factors, led to amajor reexamination of programs. A basic question was whether continued concentration on nationwideindustry surveys represented the best use of the available resources.Experience during the war had indicated the great importance of data atthe level of the local labor market, where most wage decision occur.
Itwas clear, moreover, that the white-collar segment of the labor forcehad shown impressive growth and would continue to expand. In paydetermination for most types of white-collar workers, the importance ofthe local labor market was, if anything, greater than for manualworkers. Most white-collar jobs are found in a great variety ofindustries, suggesting the need for some type of cross-industry surveyfor this type of employment.
Other influences also were at work. The rapid spread of tradeunionism in the 1930’s and during the war, and the”rounds” of wage increases during the years immediatelyfollowing the war, produced great interest in the dynamics of wageadjustment. Another influence was the spread of supplementary benefits,public and private, representing income to workers and cost toemployers.
Aside from the existence of a broad demand for data for usein private wage decisions and for public policy purposes, great academicresearch interest also had developed. A general factor that contributed importantly to programdevelopment during this period was the emergence during the late1940’s of efficient modes of probability sampling in governmentstatistical surveys. With relation to the Bureau’s studies ofoccupational wages, pathbreaking work was done in adapting probabilitysampling to universes of establishments. The use of probabilitysampling, rather than purposive sampling, permitted a more efficient useof survey resources, the more reliable calculation of population values,and the estimation of sampling errors. The essential problem in 1947 was to devise, with limitedresources, a program that would throw as much light as possible on thestructure of occupational wages and salaries, on supplementary forms ofcompensation, and on the dynamics of wage development. Considerablethought and experimentation suggested that two occupational wage surveysystems were needed, together with several other types of recurring reports. The principal ingredients of the revised program aresummarized below. Cross-industry labor market surveys.
In 1948, pilot studies on thecollection of salary data for office clerical occupations on across-industry basis were undertaken in a few large labor markets. Thesewere successful technically, and the response from users of wage data inthe markets covered was encouraging. In 1949, experimental survey weremade in a number of smaller cities.
The occupational coverage wasbroadened in these studies to include selected skilled and relativelyunskilled manual jobs that were not unique to particular industries.The skilled manual occupations were drawn primarity from those involvedin plant maintenance, and the unskilled from material movement,warehousing, and custodial work. Our of this experimental effort grewthe concept of the community wage survey. As it happened, this exploratory work was coming to a close at theoutbreak of the Korean War in June 1950, which called forth another wagestabilization effort. The National Wage Stabilization Board, formed inSeptember 1950 to administer wage controls, concluded that communitywage studies were well suited for use in its work.
It providedresources for the conduct of such studies in a large number of labormarkets, with occupational coverage extended to jobs peculiar to majorindustries in each area surveyed. The results of these and other Bureauwage studies and reports were extensively used in Board decision, andprovided the basis for a series of analyses of interarea differences inthe level of wages, occupational differentials, fringe Benefits, extentof unionization, and the formalization of wage structures. Wage Stabilization Board budgetary support for the labor marketsurvey program ended after the Korean emergency. The Bureau’s ownresources could provide for only about 20 community surveys annualy,with coverage limited to cross-industry occupations.
If was decided asa matter of policy to conduct these surveys in the same metropolitanareas each year. This decision was based largely on the fact that theuse of survey data in wage determinations by employers and unionsdepends on its currency. Extensive support developed for the surveys inthe communities in which they were made. Numerous requests forcommunity surveys in other areas had to be firmly rejected. In light of the widespread interest in the cross-industry type ofsurvey, a rational basis was sought for a more elaborate program.
Theresult was a proposal for annual surveys in a sample of metropolitanareas (approximately 80 of the 183 then existing), selected to representall such areas. The sample was designed to include all metropolitanareas with employment of 250,000 or more. This would permit estimates ofthe level and distribution of wages for a significant group ofwhite-collar and manual jobs for all metropolitan areas–in effect, forthe urban economy. It would provide a basis for national estimates,separately for office and plant workers, of scheduled hours of work,holiday and vacation provisions, the incidence of private insurance andpension plans, and collective bargaining coverage. Wage comparisonsamong areas and broad regions also could be made. The budgetary requirements for this program were met toward the endof the 1950’s when an urgent Federal need developed for nationaldata on white-collar salaries in private industry to implement acomparability pay policy for the 1.
7 million Federal white-collar andpostal employees. An interagency technical committee concluded that theannual 80-area survey design was an appropriate survey vehicle, withadditional data collected from a subsample of establishments forselected professional, managerial, and technical jobs. The Congressapproved funds for this program, and for expansion of other aspects ofwage survey activity, for fiscal 1960 (then beginning July 1959). WhenCongress passed the Federal Salary Reform Act of 1962, thiscross-industry survey had been tested in 2 years of operation. With some changes in the design and size of the sample, refinementsin occupational definitions, the inclusion of a number of additionaloccupations, and modifications of data collection procedures, thissurvey system has continued on an annual basis for more than twodecades. Industry wage surveys. Occupational wage studies on an industrybasis were not abandoned with the development of the community wagesurvey program. Such studies remained highly important for insight intothe structure of wages and benefits for nonsupervisory workers inestablishment groupings differentiated by product, technology, laborforce composition, extent of unionization, and other factors.
Partly foreconomy in the use of resources, there was a shift in emphasis duringthe late 1940’s from the industrywide surveys of the 1945–47period to surveys in major areas of industry concentration. The intentbehind this industry-locality program was the annual study of wages andrelated benefits in some 25 manufacturing and nonmanufacturingindustries, together with less frequent industrywide studies in a fewindustries where wages were determined on a national basis. Thelong-term program of union scale studies in a few industries wascontinued. During the 1950’s the Bureau also undertook under contractmany surveys, largely of the wage distribution type, for use inappraisal of the effects of minimum wage actions under the Fair LaborStandards Act, and as a basis for decisions on minimum wage policy.These studies continued into the 1960’s as minimum wage coveragewas extended to retail trade, service industries, and other areas ofemployment. The industry wage studies program was enlarged and systematized aspart of the planning process that produced the 80-area community wagesurvey proposal. Provision was made for recurring studies inapproximately 50 manufacturing and 20 nonmanufacturing industries,either nationally or in areas of major concentration.
Most of theseindustries were scheduled for survey on a 5-year cycle, with others,predominately in textiles and apparel, on a 3-year cycle. The fewstudies based on union scales rather than employer payroll records wouldcontinue on an annual basis. Altogether, about 20 surveys would beplanned for each year. At the time of their selection, the 70 industries included in theprogram accounted for about three-fifths of manufacturing and a third ofnonmanufacturing employment. The 3- or 5-year periodicity for most ofthese studies was not ideal, but industry wage structures (that is,relative rates of pay) tend to change slowly. These surveys developeddata for selected jobs, such as plant maintenance, that cut acrossindustry lines and alos, for selected processing jobs peculiar to eachindustry. Data for the distribution of rates of pay or straight-timehourly earnings for all production or nonsupervisory workers werecollected, together with information on establishment practices, such asshift work, and supplementary benefits provisions. Thus, by the end of the 1950’s two well-articulatedoccupational wage survey programs had been developed, one on a locallabor market and the other on an industry basis.
The latter programalso provided for a considerable amount of information by labor marketor region. Together, they shed much light on the level and structure ofwages and salaries in the U.S. economy, and provided data for a varietyof governmental uses, private wage and salary decisions, and research. Supplementary remuneration surveys. Beginnning in the second halfof the 1930’s, a variety of supplements to basic rates of pay beganto assume significance in the U.
S. wage structure. These supplements,some legally required and others established through collectivebargaining or employer personnel policy, provided additional moneyincome, paid leisure, or income security for workers, and represented acost to employers. It was clear by 1950 that benefits supplementary to basic wageswould continue to account for an increasing share of worker,compeensation.
In 1951, with close industry cooperation, a study wasmade of supplementary expenditures in basic steel. In 1953, amethodological study of problems in the measurement of employerexpenditures on major benefits in manufacturing was undertaken. This wasfollowed in 1956 by a study of benefit expenditures in the electric andgas utility industry, conducted as part of an industry wage survey, andby a 1958 survey of the composition of payroll hours for factoryworkers. Finally, in 1959, a continuous program was launched. The initialstudy measured employer expenditures on benefits for production workersin manufacturing. Data were developed by major industry group, region,level of wages, size of establishment, collective bargaining coverage,metropolitan or nonmetropolitan location, and the composition of payrollhours. This broad-based study was repeated in 1962, following benefitexpenditure surveys in the mining and finance, insurance, and realestate industries. At the request of the Civil Service Commission, aspecial survey was made in 1963 of benefit expenditures for white-collarworkers in metropolitan areas in a broad segment of U.
S. industry.During the following 2 years, numerous studies were conducted inindividual manufacturing and nonmanufacturing industries. In 1966, an initial survey was made of compensation expenditures inthe entire private nonfarm economy. Data were shown separately formanufacturing and nonmanufacturing, by establishment size, and, fornonoffice workers, by union status. This study, in esence, rounded outmore than a decade of experimental work and studies in limitedindustrial sectors.
Future surveys were to be conducted biennially forthe entire private nonfarm economy, with studies in selected industriesin the intervening years. Current wage changes. During the years immediately following WorldWar II, enormous interest developed in changes in wage rates andemployee benefits in major collective bargaining situations. Thisreflected the growth of collective bargaining as a mechansim for wagedetermination, and the influence that major settlements might have onthe wage bargain–union and nonunion–in other firms and industries. To facilitate response to inquires, the Bureau began publication ofa monthly report entitled Current Wage Developments in January 1948.
This report, available on a subscription basis, sought to list generalwage changes and changes in benefit provisions in all collectivebargaining settlements covering 1,000 workers or more. Because thereport was based largely on secondary sources, the names of the unionsand employers concerned in the settlements were identified. This monthly periodical has become a major source of information oncurrent wage behavior. The year 1954 saw the inclusion for the firsttime of quarterly and annual statistical summaries of newly negotiatedwage rate changes. During the mid-1960’s, procedures were devisedfor estimating the cost of supplementary benefits, and since 1966, datahave been presented on the total change in compensation in bargainingsettlements affecting 5,000 workers or more.
In 1968, statistics weredeveloped on wage adjustments put into effect from (1) settlementsduring the year; (2) deferred changes under agreements negotiated inearlier years; and (3) provisions for adjustments geared to changes inthe cost of living. The coverage of the report was extended in 1979 toState and local government collective bargaining settlements involving5,000 workers or more. Somewhat related to the monthly report on current wage developmentswas the inauguration, also in 1948, of a series of reports on changes inwages and supplementary benefits in a limited number of key collectivebargaining situations. Through periodic supplements, these wagechronologies summarized the history of wage and benefit changesresulting from negotiations between unions and such major employers asUnited States Steel, General Motors, and Lockheed Aircraft. Thebargains covered were important in themselves and were thought in manycases to have significant pattern-setting effects in wage determination.By the beginning of the 1970’s, about 35 chronologies were beingmaintained. Wage rate trends Several of the survey systems devised after 1947 provided, as abyproduct, data on the trend of wages for important groups in theworking population. From the monthly reports on current wage developments, annualmedian and mean adjustments and wage indexes were developed for workersin the universe of major collective bargaining agreements, thusproviding the basis for index computation.
On the basis of theoccupational surveys by labor market, annual indexes of wage change wereconstructed for office workers, skilled maintenance workers, unskilledplant workers, and industrial nurses in all metropolitan areas,nationwide and by region, over the period 1961-74. These indexes werediscontinued in 1974 (with the last report published in 1975) when themethod of computing wage changes in the separate labor markets wasrevised and a more comprehensive wage rate index, described in thefollowing section, was introduced. The annual report on salaries forselected professional, administrative, technical, and clerical jobs hasprovided the basis since 1961 for developing measures of salary trendfor these occupational groups. In the early 1950’s, the Bureau also began to issue a seriesof reports on the trend of salaries for important groups of governmentemployees. The initial report for white-collar Federal workers coveredthe period 1939–50; for city public school teachers, 1925–49; and forfiremen and policemen, 1924–50. These reports were based onCongressional salary actions for classified employees in the Federalservice; on reports on teacher salaries published by the NationalEducation Association; and on several data sources for firemen andpolicemen. The reappraisal of the Bureau’s work in wage statistics thatbegan in 1947 produced over two decades a multidimensional program thatsought to meet, within the budget constraints under which it operated, awide variety of governmental and private needs for information.
Itprovided significant insight into (1) the structure of wage and salaryrates of pay for major groups of workers, manual and white-collar; (2)the rise of and expenditures for supplementary benefits as part ofcompensation for work; and (3) the dynamics and trend of wagedevelopments. The turbulent years, 1970-84 The 1970–84 period provided a turbulent backdrop for developmentsin wage statistics programs. Wide cyclical swings in the economy,coupled with Federal activities–wage and price controls and guidelines,minimum wage adjustments, and reevaluation of pay setting for Federalemployees–affected Bureau wage programs. The number and scope of suchprograms grew substantially through 1978, but then contracted abruptly and leveled off in the face of Federal budget constraints. Employment Cost Index. During the early 1970’s, Federal wageand price controls highlighted a major shortcoming in the Nation’seconomic intelligence system. Information was lacking on changes inemployers’ compensation costs (or labor costs), free frominfluences unrelated to cost change, such as emplyment shifts amongoccupations and industries with different labor cost levels. Withoutsuch information, it was virtually impossible to gauge the effects ofwage controls in the same way that price controls were assessed on thebasis of the Bureau’s Consumer Price Index.
(A similar need hadbeeen addressed when the Bureau developed the short-lived,occupationally based “urban wage rate index” to measure theWar Labor Board’s effectiveness in stabilizing wage rates duringWorld War II.) During the 1971–74 controls period, policymakers trying to trackwage rates or compensation costs were faced with a wide array of Bureauinformation, all useful for some purposes, including estimates ofaverage hourly compensation and average hourly and weekly earnings, dataon collectively bargained wage adjustments, and surveys of occupationalpay levels. The various wage measures, unfortunately, gave mixed andincomplete signals about developments in wage and compesation costs. It was in this climate that the Bureau began a long-range effort todevelop the Employment Cost Index (ECI), initially called the”general wage index.” The ECI was designed to be a timely andcomprehensive measure of labor cost change, covering all types ofworkers and industries in the economy and all elements of compensationcosts (wages, salaries, and employer costs for employee benefits). A critical feature of the ECI design was the use of fixedemployment weights by occupation and industry.
This feature specifiesmeasurement of labor cost changes in much the same way that theBureau’s Consmuer Price Index measures changes in the prices of afixed market basket of goods and services. Like the CPI, the ECI alsoyields subindexes (by broad occupational group, industry, union ornonunion status, and so forth) to provide insights into forcesunderlying overall wage and compensation cost trends. The ECI was developed in stages to meet its design objectives.Quarterly measures of wage and salary change for workers in theNation’s nonfarm economy were first published in 1976. The serieswas broadened to cover changes in total compensation costs (employeebenefit costs in addition to wages and salaries) in 1980. The followingyear, the ECI was further expanded to cover State and local governmentworkers.
Over the 1976–84 period, the number of ECI subindexesincreased from 21 to 85. The ECI–designated as a “Principal Federal EConomicIndicator” in October 1980–now provides measures of quarterlycompensation cost changes for 78 million private-sector workers and 15million State and local government Employees. It currently excludesfarm, household, and Federal workers, although coverage may be extendedto these groups in the future. FLSA surveys. PRior to 1970, the Bureau conducted a wide range ofsurveys designed to shed light on the impact (3r potential impact) ofchanges in the minimum wage and maximum hours provisions of the FairLabor Standards Act (FLSA).
The surveys, which developed data onemployee wages and weekly hours of work, were narrowly focused onindustries and areas judged to be most heavily affected by changes inthe Federal minimum wage, such as men’s and boy’s shirtmanufacturing, southern sawmills, retail trade, and nonmetropolitanareas of the South and North Central regions. The focus broadened in 1970 with the first Bureau study ofdistributions of hourly earnings and weekly hours of work fornonsupervisory employees in the private nonfarm economy. With thisstudy– designed to estimate the number of worker whose wage rates wouldbe raised in response to potential changes in the Federal minimum, andthe consequent increases in establishment wage bills–began a period ofaccelerated Bureau survey activity related to FLSA and funded by theLabor Department’s Employment Standards Administration (ESA).Subsequent years saw several increases in the Federal minimum wage–from$1.60 to $2 an hour in May 1974 (the first adjustment since 1968),followed by a series of six adjustments that brought the minimum to$3.35 an hour on January 1, 1981.
During the mid-1970’s the Bureau conducted surveys ofindustries and occupations exempt from FLSA minimum wage and overtimecoverage (including small newspapers; truck-drivers and helpers in localcartage; and executive, administrative, and professional employees).Survey results were used by ESA in judging whether an exemption shouldbe continued, based on the effect it had on wages and hours of work foraffected employees. In the case of executive, administrative, andprofessional employees, the survey was used to assist ESA in settingminimum salaries as one test for FLSA exemption. The 1977 FLSA Amendments created a Minimum Wage Study Commission tohelp “resolve the many controversial issues that have surroundedthe Federal minimum wage and overtime requirements since their origin inthe Fair Labor Standards Act of 1938.” The responsibility forresearch on FLSA amendments shifted to the Commission in 1978. TheCommission’s request for Bureau surveys, which continued to befunded by ESA, resulted in broad-based studies similar to the 1970survey of nonsupervisory employees in private industry. Also at therequest of the Commission, the Bureau developed a panel study ofestablishments with which to gauge the effects of changes in the minimumwage on employee benefits within individual firms.
The Bureau’s work on FLSA surveys and the panel study ended in1981, as did the life of the Commission. Federal pay comparability. As shown earlier, the adoption by theCongress in 1962 of a comparability pay policy for Federal white-collaremployees led to the conduct by the Bureau of an annual nationwideoccupational survey of salaries in private industry for use in policyimplementation. The 1962 Act was amended by the Federal PayComparability Act of 1970. Under the amended act, the Bureau’sannual study of Professional, Administrative, Technical, and ClericalPay (the PATC survey) continues to provide a statistical basis forpolicy considerations.
Its results are used by the President’s PayAgent (the Secretary of Labor and the Directors of the Office ofManagement and Budget and the office of Personnel Management) in makingannual recommendations to the President on pay adjustments needed tomake salaries of Federal white-collar employees comparable to those oftheir private-sector counterparts. The Federal pay determination process, including the PATC survey,is large, complex, and highly controversial. It now affects they pay ofmore than 3 million employees (including the military) and hassubstantial impact on the Federal budget; every 1-percent increase inFederal pay scales costs about $1 billion.
The magnitude of the costsinvolved and the controversy surrounding the determination process havetriggered no fewer than six procedural reviews and evaluations. Review of the process began with a General accounting Office auditin 1972. Subsequent evaluations were conducted by the President’sPanel on Federal Compensation (the Rockefeller Panel) in 1975, thePersonnel Management Project (the Carter Administration’s taskgroup on Federal Government reorganization) in 1977, the GraceCommission in 1982-83, the General Accounting Office again in 1983, andthe Reagan Administration’s Cabinet Council on Management andAdministration in 1984. The reviews generated a variety ofrecommendations for improving the pay determination process, including: * Expansion of the PATC survey to cover smaller establishments andmore private-sector industries; * Amendment of the 1970 Act to include State and local governmentworkers in comparability surveys; * Determination of Federal white-collar pay comparability on anarea, rather than a national, basis for certain types of occupations,such as technical and clerical jobs; and * Consideration of employee benefits as well as pay incomparability determination. The recommendations from the 1972-77 reviews have already haddirect impact on the Bureau’s PATC survey. To date, improvementsto the study include the establishment of national training programs forBureau field representatives, and expansion of coverage to the miningand construction industries and to smaller establishments in a number ofmanufacturing industries. Pressure to consider employee benefits as well as pay in thecomparability process grew as private-sector benefit costs approached 30percent of total compensation costs in the late 1970’s. In 1978,the Bureau began construction of a comprehensive data base on employeebenefits in private industry.
Developed from a survey of detailedemployee benefit plan characteristics, the data base has been usedexperimentally by the Office of Personnel Management in estimating theeffect of implementing a Total Compensation Comparability concept inthe determination of Federal employee renumeration. The annual survey of employee benefits was first conducted in 1979,and has become one of the richest sources of employee benefit data everdeveloped. It is nationwide in scope and covers the same industries andestablishment size groups as the PATC survey. Data are collected onemployee participation rates and detailed plan provisions for suchbenefits as paid leave, short- and long-term disability benefits, healthand life insurance, and retirement plans. Shifting program priorities.
Expansion and contraction of theBureau’s wage statistics programs during 1970-84 followed patternsof the past: Growth in periods during which the Federal Government hadpressing need for more economic intelligence or for data to administerFederal law, and cutbacks when dictated by budget constraints.Difficult priority decisions on cutbacks in wage porgrams includedelimination of the biennial survey of employer expenditures for employeecomppensation; wage chronologies for about 30 major collectivebargaining situations; union wage surveys in construction, printing,local transit, local trucking, and grocery stores; municipal governmentwage surveys in the Nation’s 27 largest cities (initiated duringthe early 1970’s); and FLSA surveys. However, the period alsobrought development and growth of the quarterly ECI series, constructionof a rich data base on employee benefits, and expansion of the PATCsurvey–all contributing to a better understanding of wages andcompensation of the Nation’s working men and women.
In retrospect There are many omissions in this review of 100 years of work by theBureau in the compilation of wage statistics. But the main lines ofdevelopment have been made clear, and it may not be inappropriate torecap briefly the significance of this effort. Without the Bureau’s surveys and studies, with all theirlimitations, we would know far less than we do about the money returnfor work during the past century in our highly complex and dynamiceconomy. The Bureau has provided a reasonably consistent body ofinformation available from no other source. This reflects an underlyingconsistency and continuity of program, despite adaptations necessitatedby fluctuating budgetary levels, special governmental requirements forsurvey data, changes in the industrial composition of the workingpopulation, and the increasing complexity of the wage bargain. In substantial measure, the wage statistics program has been shapedby Federal Government needs for information for administrative andpolicy purposes. But, in line with general Bureau policy, the resultsof surveys and studies consistently have been made available to thepublic.
They have found extensive use over the years in wagedetermination through collective bargaining and employer personnelaction, and in university and other private research.