178 INDUSTRIAL REVOLUTION AND WAGES
Very obvious changes in prices induced organized labor to
realize the necessity for calculating in real wages. Very obvious
changes in productivity of labor to-day induce organized
labor again to widen its wage policy.
Higher money wages from an economic point of view do
not improve the situation of the worker if prices increase
more than money wages.
Higher real wages from a social point of view do not improve
the situation of the worker if productivity increases
more than real wages.
For, higher productivity without corresponding increase of
real wages means that the additional product has to be
bought by others than the wage earner. This means that the
social position of the wage earner in relation to other consumers
becomes worse, because his standard of living will not
advance proportionately with those of other groups.
Deteriorating social position—that is, declining purchasing
power of the mass of the wage-earners in relation to the national
product—brings about industrial instability which will
develop into industrial crisis.
The American Federation of Labor is the first organization
of Labor in the world to realize the importance of the factor
productivity in economic society. It no longer strives merely
for higher real wages; it strives for higher social wages, for
wages which increase as measured by prices and productivity.
This modern wage policy lifts the movement to an absolutely
new level. For higher real wages meant only: betterment
of the economic position—while higher social wages
mean: betterment of the economic and social position of the
worker. The modern wage policy guarantees an active but
stable development of industrial society.
President Green’s declaration as to “social wages” was
later more elaborately explained by a series of articles in
The American Federationist by members of the staff of the
Research Department of the American Federation of
1 “Organized Labor's Modern Wage Policy,” Research Series No. 1.
American Federation of Labor, Washington, 1927.
