Security for the Worker

Security for the Worker

It is no longer possible for families to be economically self-sufficient. The wage-earner in mine or factory produces little or nothing that he can directly consume; for the most part the necessities of life are produced by others. Even the farmer pro­duces only a small part of what his family consumes. For him an adequate standard of living can be procured only by the ex­change of some of his crops for other needed articles. This mutual interdependence makes the process of exchange of fundamental importance in the wellbeing of all the people in modern society. To facilitate the process of exchange we use money. The wage-earner sells his labor for money, just as the farmer sells his crops for money; they then use the money to buy the commodities they need. The wellbeing of the wage-earner and the farmers is obviously dependent upon their ability to sell their services or goods for money; if there is no one willing or able to buy, their condi­tion is desperate. From time to time in our society there have been great numbers of wage-earners and farmers ready to sell their goods and services but unable to find buyers; at other times because of illness or accident they have been unable to offer goods and services for sale. These times have been so prevalent and have recurred so frequently that they constitute one of the major problems of contemporary civilization. For want of a better term we call this condition social insecurity.

Concern with this problem began in the early part of the 19th century when the industrial revolution changed the character of English civilization. The financial distress of many English families combined with the need for unskilled work in the cot­ton mills led to the employment of very young children and women. The policy of individualism and laissez-faire left each manufacturer free to pay the lowest wage the women and chil­dren would accept, and to provide the poorest working condi­tions these people would agree to. Consequently poverty and un­sanitary working and living conditions were rampant. It was against such situations that Robert Owen, Sismondi, Thomp­son, and others protested so vigorously. These protests and the growing organization of workmen brought about the first inter­vention of the government to protect the interests of working persons.

The first of the so-called labor legislation consisted of a series of acts of the English Parliament designated to protect young children and women from long hours, night work, and unsani­tary working conditions. These acts, covering the period from 1802 to 1840, were known as the Factory Aots. Some years later, as the industrial revolution fell with full force upon them, the United States and other countries passed similar laws. Gradually these laws in modified form were extended to apply to men as well as women and children. Factory laws require safety precau­tions, regulate lighting, and set minimum standards for health and sanitation. These matters are considered as a public interest, since society is naturally interested in the health and safety of the working population. Conditions which impair the welfare of the working men or women are and ought to be subject to public control.

In the last half century social insurance has been one of the most important means of promoting social and economic se­curity among wage-earners. Briefly defined, social insurance is a system of insurance established by law to guarantee benefit pay­ments and services as a right to all wage-earners incurring some disaster which causes loss of income. Nineteenth Century Ger­many was the pioneer in systems of social insurance. In order to combat the poverty resulting from sickness and industrial acci­dents, and to forestall, the growth of socialism, Bismarck intro­duced in 1881-83 both industrial accident and health insurance. Later, old-age insurance was established. Great Britain was the next large nation to feel the. necessity of protecting workmen against the hazards of modern industry. In 1911, under the leadership of Lloyd George the English Parliament set up a comprehensive plan of social insurance including health insur­ance, old age pensions, and unemployment insurance. Work­men's compensation had been established some years earlier. In the United States state governments, one by one, introduced workmen's compensation. Beginning with New York State in 1910, all states in the-nation have now adopted a workmen's compensation law.

The basic cause of workmen's compensation legislation was that as a result of industrial accident the income of a family was temporarily or permanently curtailed either wholly or in part. The family consequently was forced to seek, assistance through public or private charity. Where the employer was at fault it was difficult for the workman to secure damages in the courts; even if the worker was himself at fault the community had to bear the expense of his injury. In theory a responsible workman would save himself the embarrassment of appealing for charity by pro­viding for just such emergencies. In practice it was found that very few wage-earners could or did make such provision. To most people the community could best deal with this problem by preparing for it in advance through some kind of social insur­ance. Much the same line of reasoning supports unemployment insurance, old age pensions, and health insurance. The fact that workmen are not directly responsible for many of these hazards lends force to the argument that a community-wide program should be established to meet emergencies efficiently, system­atically, and without stigma to the wage-earners.

With the passage of the Social Security Act in 1935, the United States accepted the principle of social insurance as the basis for measures combating the most disastrous types of insecurity. Be­cause of the federal nature of the American government the Social Security Act encourages the passage of State legislation rather than the establishment of comprehensive federal programs. This encouragement is achieved through extensive grants-in-aid, the grant being conditioned upon the acceptance by the State of certain minimum standards for each of the various programs. The Act includes provisions for unemployment insurance, old age pension, care of dependent children, maternal and child health, pensions for the blind, vocational rehabilitation of physi­cally handicapped and blind persons, and the federal old age in­surance which is an exception to the general pattern established by the Act in that it is wholly federal in its administration.

The unemployment provisions of the Act cover all employees of a business employing eight or more workers. Workers in non­profit educational, philanthropic, and religious enterprises are excluded as are marine workers, agricultural workers, domestic servants, and casual laborers. When a man becomes unemployed he registers with the United States Employment Service and after a waiting period of three weeks he will receive a benefit equiva­lent to approximately 1/2 his weekly wage. The minimum is $7.00 a week and the maximum is $20.00. States of course vary in the amount of minimum and maximum payable. Benefits are paid for a total period of 16-32 weeks, but benefits for only half the number of weeks can be received in any given year. Some states have introduced the merit-rating principle, which allows the state to reduce the taxes on any employer who maintains full em­ployment for his workers.

The old-age pension (or assistance) program is also a state program. Any person 65 years of age without visible means of support may receive a pension up to $40.00 (this varies greatly for different states) per month depending upon his need. Most states require that the person be a citizen of the United States and a resident of the state for at least 5 years in order to qualify. The federal government will pay half the cost of each pension granted by the state up to a maximum payment of $20.00 for each person. This is the real reason why the maximum pension tends to be $40.00.

The old-age insurance features of the Social Security Act are federal in scope. All workers working in establishments em­ploying one or more workmen are eligible for benefits when they reach the age of 65 if they are no longer employed. In addition, dependents' benefits are paid, the amount paid being a portion of the total benefit calculated above for each dependent. The total benefit, however, cannot exceed $85.00. To finance this pro­gram the federal government levies a tax upon every employer and employee. The excluded occupations are the same as in unemployment insurance.

The United States did not include health insurance in the So­cial Security program although this has long been a fixture in foreign systems of social insurance. Under the direction of the Social Security Board extensive investigation has been undertaken to ascertain how such a system might best be introduced. Suggestions for health insurance have already been made in the form of proposed legislation in state and federal legislatures.

One other aspect of the government's attempt to provide se­curity for workers must be mentioned. This is the minimum wage law. Under classical economic theory it was assumed that wages, like the price of any other commodity, would be set by the eco­nomic forces of the market place. Government interference was unjustified and would do more harm than good. In spite of this attitude, and the firm resistance of employers, minimum wages have been legislated in every industrialized nation. The first laws on this subject were passed in New Zealand and Australia in the 1890's, and in England in 1908. Massachusetts in 1912 became the first state in the United States to adopt such legislation; many other states followed. However, reaction of the American courts to minimum wages was unsympathetic. The laws were upheld by a tie vote of the Supreme Court in 1916, declared unconstitu­tional in 1923 and again in 1936 only to be declared constitu­tional in 1937 and 1940.

American minimum wage laws are of two types. There is first the federal law (Fair Labor Standards Act of 1938) which sets a minimum of 40 cents an hour applicable in 1945, and a 40-hour week. Any person working above 40 hours is entitled to time and a half-time for the extra labor. This law covers all workers employed in industries engaged in interstate commerce. Whereas the federal law determines wages and hours by statute, state laws require that industrial committees be appointed in each industry. These industrial committees, representing the employer, the employee, and the public, investigate the economic condition of the industry and the needs of the employees and arrive at a minimum wage which is reasonable for both. The latter method is the one applied generally in other countries with minimum wage laws, especially Great Britain.