The price of labor (wages), like that of everything else subject to the conditions of exchange, constantly tends toward the cost of its production.
First then, would a general reduction of the hours of labor tend to increase real wages? By real wages we mean the actual amount and social well-being obtainable for a day's labor. In order to answer this question it is necessary to understand how the general rate of real wages is determined. Here we come upon another of the popular fallacies which has done so much to prejudice the average employer against the labor movement. It has not only been taught and believed that high wages are injurious to the interests of the employing class, but it has also been generally accepted that wages are governed by the proportion between the demand and the supply of laborers. And that nothing Can increase the laborers' wages which does not diminish their numbers in proportion to the amount of capital. Consequently, wages can be increased only in One or two ways, either by increasing the employers' capital or reducing the number of laborers.
Happily, however, for the advancement of civilization, this doctrine, as elsewhere shown, instead of being the iron law of economic truth, is a monument of economic heresy. It is now susceptible of scientific demonstration that wages are not a badge of slavery, but a necessary and continual part of industrial progress. The economic law of wages, when properly understood, will be found to be as elastic as human wants' and desires, and capable of as much expansion as the social character of man. This law only needs to be understood by the laboring and employing classes in order to enable them to see that the laborers' income may be indefinitely if gradually increased, without impairing that of any other class, and the progress of society be continuously promoted without abolishing the wages system, or subverting existing social and industrial institutions. When the law of wages, which the limits of this paper prevent from more than briefly intimating, is understood, it will be seen to be the social quality instead of the mere numerical quantity of the laborers which determines their income. It will be found that the price of labor (wages), like that of everything else subject to the conditions of exchange, constantly tends toward the cost of its production. This does not mean that the prices of every particular thing are determined by the cost of producing that particular article, nor that the price is determined by the average cost of producing such articles, but that the general price of any given class of commodities is determined by the cost of producing or replacing that portion of the necessary supply which is produced under the greatest disadvantage. That portion of the general supply of a commodity which is produced at less than the maximum cost yields a profit proportionately to the difference.
Applied to labor, this law is that wages (the price of labor) constantly tend toward the cost of producing service (the cost of a thing being that which its owner gave for it, or would have to give to replace it). The cost of labor to its owner, the laborer, is obviously the cost of his living Upon the same principle then, that producers will not consent to continuously sell a commodity for less than it costs to produce or replace it, the laborer will not consent to sell his service for less than it cost him, i. e. for less than will furnish him a living.