166 INDUSTRIAL REVOLUTION AND WAGES

. « « We have hitherto supposed that it is a matter of
indifference to the employer whether he employs few or
many people to do a piece of work, provided his total wagesbill
 for the work is the same. But that is not the case. Those
workers who earn most in a week when paid at a given rate
for their work, are those who are cheapest to their employers
(and ultimately to the community, unless indeed they overstrain
 themselves, and work themselves out prematurely).
For they use only the same amount of fixed capital as their
slower fellow workers; and, since they turn out more work,
each part of it has to bear a less charge on this account.
The prime costs are equal in the two cases; but the total cost
of that done by those who are more efficient, and get the
higher time-wages, is lower than the total cost of that done
by those who get the lower time-wages at the same rate of
piece-work payment.

In the United States, Professor Seligman of Columbia
University, very effectively illustrated the economy of high
wages when accompanied by labor efficiency.?

Economic production [he said], implies the turning out of
the greatest product with the least cost. Se far as the wages
of labor form an element of cost, it would seem to follow
that low wages or cheap labor is a necessary condition of
low cost. Before accepting this ostensibly self-evident proposition,
 however, it is necessary to pursue the analysis further.
. . . In any single industry low wages do not necessarily
mean low cost. The real cost of labor is to be measured by
its productive efficiency. Just as the hundred-thousand-dollar
railway president is cheap because an inferior and low-priced
substitute would botch matters and increase expenses, so in
the case of the ordinary wage-earner the real cost is to be
measured by the ratio of wages to the product of labor. In
the Philippines the contractors find it in the end cheaper to
hire the Chinamen in preference to the natives, although the
“1 “Principles of Economics,” Edwin R. A, Seligman, Professor of Political
Economy, Columbia University; Longmans, Green & Co., New York, 1921; pp.