The German statistical office also publishes statistics of wage rates for a number of important industries as specified in labor agreements. The following tables compare for the United States and Great Britain wages, productivity of labor, and horsepower for some of the most important industries. The figures are obtained from industrial census and other production statistics as just described.

Because the production of most manufactured articles, owing to their diversity, can not well be recorded in quantities, values must usually be employed for comparison. In comparing production the value added by manufacture is preferable to value of product. The value of the product includes the value of the raw material entering into the article produced, while the value added by manufacture includes only the value created by the manufacturing process. Since the kinds of raw material entered into the manufactured articles compared may be of incomparable qualities and values, a comparison of the value of products may be an inaccurate portrayal of the productivity of the manufacturing processes. This defect, however, does not apply to value added by manufacture, and therefore such values are appropriate, where obtainable, for a comparison of productivity.

The following table summarizes for each of the industries covered in the preceding table the percentage that the average British wage is of the United States wage and the percentage that the British productivity per workman is of the United States productivity per workman. While the British wage in each industry is only a fraction of the American wage, the British productivity per workman is only a fraction of the American productivity per workman. The British fraction of productivity is greater than the British fraction of wages by more than a negligible amount in only one case. In most cases the British fraction of wages is higher than the British fraction of productivity.

Relative wages and productivity of United States and British labor

The relative wages and productivity of British and American labor may also be shown in another way.

The following table, derived from the large preceding table, shows for various industries, the comparative value produced for each dollar paid out in wages in the United States and Great Britain. The quantities produced for each dollar of wages are also shown for several industries. With respect to the quantities of goods produced for each dollar of wages, it appears that the British production is much. less in coal, soap, cement, pig iron, and sugar refining. In these industries the British labor cost is much higher than the American labor cost. It is probable that a larger percentage of high-grade soap is included in the British than in the American figures, and this partly accounts for the great difference in quantity production. In the paper industries the British and American manufacturers obtain the same quantity of product for a dollar of wages. In the cotton industry the British use slightly more cotton than the American for each dollar paid out in wages. In the boot and shoe industry a dollar in wages produces more shoes in Great Britain than in the United States but the value of the British shoes is less.

In wall paper and in printing and publishing a dollar spent for labor brings greater value returns in Great Britain than in the United States. In china and earthenware, wool goods, and leather the returns for the labor dollar are about the same; in all the other industries the value returns for a dollar spent for labor are greater in the United States than in Great Britain.

The following table covers all the manufacturing industries in the United States and practically all the manufacturing industries of Great Britain. If the average annual value added by manufacture per wage earner is divided by the average wage, the result is the value produced for each dollar paid out in wages. The table shows that for every dollar paid out in wages the American manufacturer obtains a net production valued at $2.50, while the British employer obtains a net production valued at $2.14.

Wages and productivity in manufacturing industries, United States (1925) and Great Britain (1924)1

1 From Census reports.

Weighted average wage for manufacturing industries.

If the dollar represents a certain amount of commodities in each country, the American manufacturer, for the amount of commodities represented by the dollar given out in wages, obtains in net production two and a half times the amount given to labor and the British manufacturer receives 2.14 times the amount of goods given to labor. Irrespective of the amount of commodities represented by a dollar (the price level), the figures show that the American manufacturer obtains for his wage expenditure a greater ratio of return than the British manufacturer.

According to numerous statistics of basic materials, shown in the following chapter, the British price level of such materials is about 85 per cent of the United States level. The fact that the United States exports a wide variety of manufactured goods all over the world, however, would support the conclusion that there is less difference in the general price level between the two countries.

The foregoing tables, which compare wages and production in the United States and Great Britian, are therefore probably a rough picture of actual conditions. They show that the American wage earner receives much higher renumeration than the British workman, but that for every unit of goods received as wages, the American workman turns back more in production than the British workman. As a productive machine the American workman with his high consumption is more profitable than the British workman with his low consumption. The American manufacturer does not therefore in general suffer in competition with the British manufacturer because of labor costs. The high American wages are more than compensated by high labor productivity. This is a general statement, however, and does not necessarily apply to any individual commodity mentioned in the above tables.

The amount of commodities represented by the dollar may be different in the United States from what It is in Great Britain. This is discussed later.