Full text of Income and Wages in the South

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

The University o f North Carolina
Social Study Series

IN C O M E A N D WAGES
IN T H E SOUTH

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

T H E U N IV E R SITY OF NORTH CAROLINA
SOCIAL STU D Y SERIES
Published in cooperation with the Institute for Research in Social
Science under the general editorship of Howard IV. Odum
Odum and Johnson: The Negro and His Songs................................. $3.00
Puckett: Folk Beliefs of the Southern Negro..................................... 5.00
Odum and Johnson: Negro Workaday Songs..................................... 3.00
Odum and others: Southern Pioneers..................................................... 2.00
Pound: Law and Morals............................................................................. 2.00
Giddings: The Scientific Study of Human Society................................ 2.00
Odum and Willard: Systems of Public Welfare................................. 2.00
Branson: Farm Life Abroad..................................................................... 2.00
Ross: Roads to Social Peace..................................................................... 1-50
Willey: The Country Newspaper............................................................. 1.50
Jordan: Children’s Interests in Reading................................................. 1.50
Odum: Public Welfare and Social W ork............................................. 1-50
North: Social Differentiation..................................................................... 2.50
Knight: Among the Danes......................................................................... 2.50
Steiner and Brown: The North Carolina Chain Gang........ ............ 2.00
Lou: Juvenile Courts in the United States............................................. 3.00
Carter: The Social Theories of L. T. Hobhouse.................................. 1.50
Brown: A State Movement in Railroad Development........................ 5.00
Miller: Town and Country......................................................................... 2.00
Mitchell: William Gregg: Factory Master of the Old South.......... 3.00
Metfessel: Phonophotography in Folk Music....................................... 3.00
Wager: County Government in North Carolina.................................. 5.00
Brown: Public Poor Relief in North Carolina..................................... 2.00
Walker: Social Work and the Training of Social Workers.............. 2.00
Herring: Welfare Work in Mill Villages............................................... 5.00
Vance: Human Factors in Cotton Culture............................................. 3.00
Johnson: John Henry................................................................................... 2.00
Rhyne: Some Southern Cotton Mill Workers and Their Villages.. 2.50

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

The U niversity o f N orth Carolina P ress
Chapel Hill, N. C.
The Baker and Taylor Co.
New York
Oxford University Press
London
Maruzen-Kabushiki-Kaisha
Tokyo

INCOME AND WAGES
IN THE SOUTH
BY

CLAREN CE HEER
Research Associate in the Institute for Research in Social Science
in the Unicersity of North Carolina

C H A P E L H IL L
TH E U N IV E R SITY OF N O RTH CAROLINA PRESS

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

1930

C O P Y R IG H T , 1930, BY
T H E U N IV E R S I T Y OF N O R T H C A R O L IN A PRESS

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

PRINTED
THE

IN THE

SEEMAN

UNITED

PRESS,

STATES

DURHAM,

OF A M E R I C A

NORTH

CAROLINA

PREFACE

H IS preliminary study o f wages and income in the
South grew out o f the immediate need for comparative

data which arose in connection with regional studies o f eco
nomic and social situations now being made by the Institute
for Research in Social Science at the University o f North
Carolina.

The study owes its publication in its present form

to the timeliness o f the subject and to the current demand
for inform ation in the field covered.

These factors have

been allowed to outweigh the advantages o f making a more
exhaustive study or one which incorporated the new census
data, either o f which courses would have involved delay.
Although the author assumes full responsibility for the
statistical data and for the conclusions drawn therefrom,
the study, nevertheless, owes much to cooperative effort.
Special thanks are due Dean D. D. Carroll and Professor
H oward W . Odum, o f the Board o f Governors, for making
possible a preliminary inquiry at this time.

The author is

under especial obligation to Miss Harriet L. Herring, Re
search Associate, who not only contributed valuable ideas
and sound criticism, but generously gave the author the bene
fit both o f her extensive researches in the field o f southern
industry and o f her first-hand knowledge o f the South.

is under especial obligation, also, to Miss Katharine Jocher,
Assistant Director o f the Institute, who prepared the manu
script for the press.
Finally, the author wishes to acknowledge his indebted
ness to his w ife for her substantial assistance in the tedious
work o f compiling the statistical data and for many sugges
tions and criticisms.
Chapel Hill, N. C.
April, 1930.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

£ jq

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CONTENTS
C hapter

PAGE

T H E IN CO M E ST A T U S O F T H E SO U TH

The South and its characteristics— Statistical sources— Fed
eral income tax returns— Estimated income per capita.

C hapter

P R O D U C T IV IT Y A N D W A G E S IN SO U TH ERN
A G R IC U L T U R E ........................................................12
Gross farm income per worker— Wages of farm laborers—
Methodology.
C hapter

III

T H E W A G E D IF F E R E N T IA L IN SO U TH ERN
I N D U S T R Y .............................................................23
The census average wage— Is the census wage significant—
Specific industries— Specific occupations and employments.

C hapter

M ISC E LLA N E O U S W A G E A N D S A L A R Y
D I F F E R E N T I A L S .................................................. 42
Trade union wage scales— Wages in federal naval establish
ments— Miscellaneous employments— Railway and public util
ity wages— Salaries of teachers and clergymen— Omitted
occupations— Summary of findings— Labor costs and real
wages.
C hapter

W H Y SO U TH E R N INCOM ES A R E L O W

. . . .

The preponderance of low yield occupations— Industrial
wages and agricultural productivity— Farmers’ incomes—
Farm and industrial incomes compared— Future of the wage
differential.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

IN C O M E AND WAGES
IN TH E SOUTH

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CHAPTER I
T H E IN C O M E S T A T U S O F T H E S O U T H
E O G R A P H IC A L regions, like individuals, may be

classified on the basis o f their income status.

In some

parts o f the country, the average level o f income per in
habitant is high.

This may be due to the presence o f a

relatively large number o f wealthy persons or to the fact
that salary and wage scales are higher than elsewhere.
other parts o f the country, the level o f income is low.

In
This

condition is usually found to exist where there are few per
sons o f great wealth, where the bulk o f the population is
engaged in unproductive employments, and where salaries
and wages are lower than elsewhere.
Although regional differences in the average level o f
money incomes bear no necessary relation to the quality o f
life which the various regions afford, it is none the less es
sential that such differences be carefully analyzed and meas
ured.

In a pecuniary society, whose economic ramifications

extend over an ever widening area, differences in income
levels may have important practical consequences.

They

may cause entire industries to change their location or may
set in motion a tide o f migration.

They may be responsible

for inequalities in taxation, for differences in the purchasing
habits o f consumers and, not infrequently, for sectional con
flicts o f interest and outlook.
Incomes and wages in the South have been considerably
below the average obtaining in the rest o f the country for
upwards o f sixty years.

Until comparatively recently, the

effects o f this condition were mainly local and excited little

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

[3 ]

INCOME

outside attention.

AND

WAGES

THE

SOUTH

This is no longer the case.

The new

industry o f the South is part and parcel o f a larger economy,
and the comparative level o f southern wages has accordingly
become a matter o f nation-wide concern.
Since it is in the field o f industry that the new forces at
work in the South have been most widely felt, it is not
strange that the interest o f industrial enterprisers, labor
leaders, and students o f economics has been centered chiefly
upon the wages o f southern factory workers.

W ages and

incomes in the various gainful employments are, however,
to a considerable degree interdependent.

In the South, as

elsewhere, the earnings o f factory workers are affected by
the rewards offered in other occupations, and by prevailing
income standards.

The problem o f industrial wages in the

South is thus inextricably bound up with a much larger
problem, that o f discovering the various factors which make
the general average o f southern income what it is today.
Incomes in the South are quite generally lower than in the
rest o f the United States.

This generalization holds whether

the incomes under comparison be those o f farmers, ministers,
teachers, skilled trade unionists, unorganized common labor
ers, employees o f strictly private enterprises, employees o f
railroads and other public utilities, or servants o f the state.
It is the purpose o f the follow ing study to measure and
to analyze these income differentials.

M ore specifically it is

proposed to compare the general level o f income in the South
with that o f the rest o f the country and to observe the vari
ations in the income and wage differentials applicable to
particular occupations and employments.

It is also pro

posed to inquire into the nature o f some o f the factors which
are responsible for the income disparity between the South

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

THE

INCOME

STATUS

OF T H E S O U T H

and elsewhere and to consider what influences, if any, are
at work to remove them.
T o carry out these proposals in any adequate fashion
would require the development o f much new information
and an amount o f original research far beyond the powers
o f any single investigator.

This basic work still remains to

be done; the present study offers no substitute for the de
ficiency.

Its purpose is merely to gather together such frag

mentary statistics on income in the South as now exist ready
at hand and to suggest tentative answers to the questions
raised on the basis o f the uncertain light afforded by data
which are admittedly incomplete and imperfect.
T HE SOUTH AND ITS CHARACTERISTICS

The term “ South” as currently used has no definite con
notation.

Roughly speaking, it means the southeastern por

tion o f the United States, but just how far west and north
its domain extends is a question over which there might be
disagreement.

It is necessary, however, to draw a line some

where, and, for the purpose o f the present study, it has been
drawn at Texas and Oklahoma in the west, and at Missouri,
Kentucky, W est Virginia, and Maryland in the north.

thus delimited, the South comprises ten states, Virginia,
North Carolina, South Carolina, Georgia, Florida, Ten
nessee, Alabama, Mississippi, Arkansas, and Louisiana.
The question at once arises as to whether these southern
states possess any characteristics, other than geographical
propinquity and a common historical background, which
justify their being lumped together for the purpose o f an
income study.

It is a common impression that the South

is rapidly becoming industrialized.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

In this respect, at least,

INCOME AND

WAGES

THE

SOUTH

the southern states are by no means all alike.

I f it is proper

to measure the rate o f industrialization o f a state by the
percentage increase in the number o f its factory wage earn
ers, then five o f the states under consideration possessed the
distinction o f leading the entire country with respect to the
rapidity o f their industrial growth during the period from
1919 to 1927.

In South Carolina, according to the Census

o f Manufactures, the number o f wage earners in manufac
turing establishments increased by 37 per cent during the
eight years in question.

North Carolina came next with an

increase o f 30 per cent, followed by Georgia with an increase
o f 25 per cent, Tennessee with an increase o f 21 per cent,
and Alabama with an increase o f 11 per cent.

In the re

maining southern states, on the other hand, the number o f
industrial workers showed slight declines.
It would be a mistake, however, to attach too much im
portance to industry in characterizing the South.

Most o f

the region’s recent industrial progress has been due to the
expansion o f a single activity, the manufacture o f textiles.
Even in the most industrialized o f the southern states, the
proportion o f the total working population engaged in manu
facturing is considerably below the proportion found in the
industrial states o f the Northeast.

The distinguishing char

acteristic, which all o f the southern states have in common,
is the fact that they are still predominantly rural and agri
cultural.

Six o f them appear among the ten states which, in

1920, had the lowest ratios o f urban to rural population in
the entire country.

Seven o f them are to be found among

the ten states which outranked the entire country with re
spect to the relative size o f their farm populations in 1925.
North Carolina has a higher proportion o f factory wage

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

THE

INCOME

STATUS

OF T H E

earners than any state in the South.

SOUTH

Nevertheless, over half

o f its population lived on farms in 1925.
Aside from the predominance o f agriculture, another
characteristic which distinguishes practically all o f the south
ern states is the prevalence o f farm tenancy.

O f the ten

states which, in 1925, led the entire country with respect
to the proportion o f tenant-operated farms, no less than
seven belonged to the South.

All o f the southern states are

o f course alike in having a larger proportion o f Negroes
than any other states in the union.

In 1920, the ratio o f

Negroes to the total population ranged from 19 per cent in
Tennessee to 52 per cent in Mississippi.
A final common characteristic o f the southern states is
their low average o f wealth.

Here again they stand out

sharply from the rest o f the country.

Thus, a ranking o f

all the states o f the union on the basis o f per capita tangible
wealth, as estimated by the Bureau o f the Census for 1922,
shows eight o f the ten poorest states to be southern.

This

fact alone would seem to offer sufficient warrant for treating
the South as a unit for the purpose o f the present study.
STATISTICAL SOURCES

Existing statistical materials bearing on the relative level
o f income in the South fall roughly into four general classes.
Some light on the subject may be obtained from federal
income tax statistics.

A second source o f information is

the excellent study o f the National Bureau o f Economic R e
search entitled Income in the Various States/

which con

tains an estimated allocation by states o f the national income
totals for the years 1919 to 1921 inclusive.

The various

1 Leven, Income in the Various States, National Bureau of Economic
Research, New York, 1925.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

publications o f the Bureau o f the Census and o f other fed
eral agencies such as the Department o f Agriculture, the
Interstate Commerce Commission, and the Bureau o f Edu
cation, offer a wealth o f information, segregated by states,
concerning total values produced, number o f workers em
ployed, and aggregate salary and wage payments in specific
lines o f economic activity.

Finally, there are at hand a

number o f studies, made for the most part by the Depart
ment o f Labor, which afford geographical comparisons o f
the hourly wage rates paid in specific trades and occupations.
The evidence obtainable from each o f these sources will be
considered in turn.
FEDERAL INCOME TAX RETURNS

W hen it is realized that fewer than 10 per cent o f the
gainfully employed o f the country file federal income tax
returns, it will be seen at once that these returns offer very
little help to the investigator interested in measuring geo
graphical differences in the general income level.

Practically

all that the returns tell us is the number o f single persons
and heads o f families whose individual or family incomes
fall above certain variable limits.
is not supplied completely.

Even this information

Concerning the incomes received

by the 90 per cent o f the gainfully employed who do not file
returns, the tax statistics are silent.
In spite o f the above considerations, it is probably legit
imate for the purpose in view to attach some significance
to the ratio which the number o f persons filing returns in
each state bears to the total state population.

Table I sets

forth such state ratios for the calendar year 1926.

I f indic

ative o f nothing else, this table is useful as showing the

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

THE

INCOME

STATUS

OF T H E S O U T H

variations from state to state in the proportion o f the total
population which has attained or has surpassed a reasonably
adequate income standard.

It will be seen that the propor

tion o f persons with incomes large enough to require the
filing o f returns is only about one-third as great in the
South as in the rest o f the country.

M oreover, o f the ten

states having the lowest percentage o f income taxpayers,
no less than eight belong to the southern group under
consideration.
ESTIMATED INCOME PER CAPITA

M ore revealing evidence o f the difference in income lev
els as between the South and the rest o f the country is fur
nished by the National

Bureau o f

Econom ic Research

estimates o f aggregate income by states.

Table II gives a

comparison, based on these estimates, o f the average per
capita income o f the South and the corresponding average
for the remainder o f the country with respect to the only
years for which such data are available, viz., 1919 to 1921.
It will be seen from this table that the per capita income o f
the South fell short o f the comparable figure for the rest o f
the country by 45 per cent in 1919, 54 per cent in 1920, and
58 per cent in 1921.

In other words, during the years in

question Southerners were obliged to get along on an aver
age income less than half as great as the average income
received by residents o f other sections o f the United States.
The shortcomings o f the figures presented in Table II
are obvious.

In the first place they are ten years old.

the second place general averages, obtained by dividing the
aggregate o f incomes received from all sources by the total
population, can have but limited significance.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

N o infor-

INCOME

AND

WAGES

THE SOUTH

T able I
Percentage of Total Population Filing Federal Income Tax Returns
for Calendar Year 1926.

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Percentage
of
Population
Rank
Filing
Returns

State

Indiana................

7.31
6.66
6.20
5.34
5.20
5.07
4.70
4.26
4.25
4.14
4.02
3.89
3.88
3.80
3.78
3.53
3.50
3.44
3.36
3.32
2.84
2.64
2.49
2.47

Average Ten
Southern States. .

1.43

Massachusetts. . .

Pennsylvania. . . .
Michigan.............
Rhode Island. . . .
Wyoming.............

New Hampshire..
Utah

25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48

Percentage
of
Population
Filing
Returns

State
Vermont..............
Minnesota...........
Nebraska.............
Arizona................
Montana..............
Idaho....................
Texas....................
Iowa.....................
Louisiana.............
West Virginia.. . .
South Dakota___
Kansas.................
New Mexico........
Oklahoma............
North Dakota. . .
Virginia................
Tennessee............
Kentucky............
North Carolina ..
Georgia................
Alabama..............
Arkansas..............
Mississippi...........
South Carolina...

2.45
2.42
2.42
2.36
2.33
2.23
2.10
2.04
2.03
1.95
1.80
1.80
1.68
1.60
1.54
1.50
1.44
1.30
1.24
1.17
1.13
1.02
.96
.76

Average Rest of
Country...............

4.01

T able II
Comparison of Annual Current Income Per Capita, Ten Southern States
and Remainder of Country.*
Calendar Years 1919-1921

Annual Current Income Per Capita
Year
1919.................
1920.................
1921.................

Southern States

Rest of Country

Percentage
South to Rest
of Country

$378
348
369

$691
760
877

54.7
45.8
42.0

♦Source- Leven, Income in the Various States, National Bureau of Economic Research, New
York, 1925, pp. 249 and 253.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

THE

INCOME

STATUS

OF T H E S O U T H

mation is supplied as to the manner in which individual in
comes are distributed around the general average, nor are
any means afforded for measuring income differentials
applicable to specific industries and occupations.
In order to understand why the general level o f income
in the South is low, it is necessary to know something about
the particular forms o f gainful activity which constitute the
South’s chief means o f support, and to compare the returns
received from such activities with the returns yielded by
similar activities in other parts o f the country.

F or this

purpose recourse must be had to the data compiled by the
Bureau o f the Census and other governmental agencies cov
ering the operations o f specific industries.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

C H A P T E R II
P R O D U C T IV IT Y A N D W A G E S IN S O U T H E R N
A G R IC U L T U R E
T H A S already been pointed out that the South is over

whelmingly agricultural.

In four o f the states under

consideration, North Carolina, South Carolina, Mississippi,
and Arkansas, over half o f the total population lived on
farms in 1925.

O f the total number o f persons gainfully

employed in the southern area as a whole, 52.6 per cent
were engaged in agriculture in 1920.

The corresponding

ratio for the rest o f the country was only 20.4 per cent.
Since agriculture constitutes the main source o f livelihood
o f such a large proportion o f the southern population, it is
obvious that per capita agricultural productivity has an im
portant bearing not only upon the incomes received by the
farming classes, but, indirectly, upon the incomes o f other
classes o f the population as well.
T

able

III

Comparison of Annual Gross Agricultural Income Per Worker, Ten
Southern States and Remainder of Country*

Year
1899..
1909..
1919..
1924..
1927..

Basis of All Workers Employed

Basis of Adult Male Workers

Remainder Percentage
Ten
South is
of
Southern
of Rest of
United
States
Country
States

Remainder Percentage
Ten
South is
of
Southern
United
of Rest of
States
Country
States

$189
318
1,059
591
609

$471
925
2,569
1,582
1,611

40.1
34.3
41.2
37.4
37.8

$334
648
1,656
925
953

$595
1,214
2,993
1,844
1,879

56.2
53.4
55.3
50.1
50.7

»For the derivation of the results shown in this table, see the section on methodology at the
end of this chapter.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

[ 12 ]

WAGES

SOUTHERN

AGRICULTURE

GROSS FARM INCOME PER WORKER

That agriculture yields a much lower return per farm
worker in the South than it does in the rest o f the country
is decisively demonstrated by the data exhibited in Table
III.

This table has been compiled partly on the basis o f

census data and partly from inform ation supplied by the
Department o f Agriculture.

A detailed explanation o f the

methods used in arriving at the final results is given at the
close o f this chapter.

N o high degree o f accuracy can be

claimed for the amounts which purport to show the gross
value o f farm products per worker.

F or the purpose in

view, however, it is the ratios between the South and the
rest o f the country which are important, and it is believed
that these ratios reflect the comparative situation with a fair
measure o f precision, since most o f the errors and omissions
which affect the absolute totals are probably present to the
same extent in both o f the areas under comparison.
It will be seen from Table III that the gross value o f
farm products per adult male worker gainfully employed in
southern agriculture has averaged but little above one-half o f
the corresponding value for the rest o f the country during
the last 28 years.

In view o f the importance o f agriculture

in southern economy, this fact goes far to explain why the
general level o f income in the South is low.
WAGES OF FARM LABORERS

If southern agriculture yields a gross return per worker
only half as great as the average for the rest o f the country,
this circumstance should be expected to exercise an important
influence upon the rate o f wages paid hired farm labor.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

A c-

INCOME AND

WAGES

THE

SOUTH

cording to the Census o f Occupations, there were in the
southern area as a whole, in 1920, some 430,000 male per
sons, 18 years o f age or over, belonging to the class o f farm
laborers working out.

That these farm laborers formed no

insignificant portion o f the southern working population is
indicated by the fact that their total number amounted to
more than half o f the number o f male workers o f all ages
employed in manufacturing establishments in the same area
in 1919.

The farm laborers in question were by no means

all Negroes.

A ccording to the census, about 45 per cent o f

them were whites.

Although their number has undoubtedly

fallen off considerably since 1920, farm laborers still con
stitute one o f the m ajor working class groups in the South.
H ow do the wages o f farm laborers in the South com
pare with the average wages paid similar kinds o f workers
in other parts o f the country?

Does the farm wage differ

ential correspond to the differential in per worker agricul
tural productivity?

Answers to these questions are supplied

by Table IV , which gives data on the average wages o f
hired farm hands in the various states o f the union as col
lected by agents o f the Department o f Agriculture.

It will

be noted that as o f July, 1929, the average cash wage o f
casual farm laborers ranged from $1.20 per day in South
Carolina to $2.05 per day in Virginia.

The median o f the

state averages for the ten southern states under consider
ation was $1.55 per day.

The median o f the state averages

in the remainder o f the United States was $3.25 per day.
The wages o f casual farm laborers in the South, in other
words, amounted, on the average, to only 48 per cent o f the
wages paid elsewhere.
Hired farm laborers frequently receive certain perqui-

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGES

SOUTHERN
T

able

AGRICULTURE

Average Wages of Male Farm Laborers, by States.

State

Rank

Ten Southern
States
South Carolina. . .
Georgia..................
Alabama...............
Louisiana..............
Mississippi............
Tennessee.............
Arkansas...............
Florida..................
North Carolina. ..
Virginia.................

1
2
3
4
5
6
7
8
9
10

Laborers, Not
Boarded, Average
Wages Per Day,
July 1929*

Casual Farm
Non-Casual Farm
Laborers, Average
Laborers, Monthly
Cash Earnings Per
Earnings Plus Per
Day Plus Per
quisites,Year 1925**
quisites, Year 1926**

31.20
1.30
1.40
1.50
1.55
1.55
1.65
1.65
1.80
2.05

31.97
2.09
2.26
2.33
2.59
2.19
2.41
2.66
2.54
2.99

346.84
51.30
50.65
52.89
63.58
51.69
56.60
69.55
57.19
61.79

31.55

32.37

353.82

31.80
1.95
2.05
2.20
2.20
2.30
2.75
2.75
2.75
2.75
2.90
3.05
3.05
3.10
3.15
3.20
3.20
3.25
3.25
3.25
3.25
3.25
3.30
3.35
3.35
3.35
3.35
3.45
3.50
3.55
3.55
3.60
3.65
3.70
3.80
3.85
3.85
3.85

32.90
3.26
4.16
3.48
3.42
3.25
3.00
3.88
4.38
4.04
5.10
5.21
4.45
4.98
5.42
4.73
3.95
4.58
5.58
4.16
4.08
4.09
5.23
5.21
4.04
5.19
4.12
4.24
4.67
4.56
5.22
4.15
4.85
4 97
4.12
4.20
4.96
3.93

360.56
71.43
65.68
66.40
64.57
72.44
72.50
76.76
75.24
70.47
83.22
81.99
73.58
80.13
82.89
77.20
95.93
138.62
82.25
80.73
78.98
93.90
80.81
77.60
79.89
77.12
83.59
92.91
100.51
115.51
95.89
92.30
95.26
93.30
93.30
89.03
88.45
95.07

Median..................

33.25

34.31

381.40

Percentage South is of
Rest of Country

47.7

54.9

66.1

Median, South... .
Remaining States
Kentucky..............
Texas....................
Oklahoma.............
Missouri................
New Mexico.........
West Virginia. . . .
Arizona.................
Delaware..............
Indiana.................
Maryland..............
Illinois...................
Colorado...............
Ohio.......................
Maine....................
Iow a......................
Minnesota............
Oregon..................
Nevada.................
North Dakota. . . .
Pennsylvania........
Wisconsin..............
Utah......................
South Dakota. . . .
Kansas..................
Michigan..............
Nebraska..............
Vermont................
W yoming..............
Idaho....................
California..............
New lersey...........
New Hampshire. .
Washington..........
Massachusetts.. . .
Connecticut..........
New York.............
Rhode Island.......

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38

*Monlhh Labor Review, Sept. 1929, p. 173.
** Yearbook of Agriculture, 1928, pp. 1059 and 1060.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

sites in addition to their money wages.

SOUTH

The Department o f

Agriculture has compiled estimates o f the average cash value
o f such perquisites in each o f the several states for the years
1925 and 1926.

I f the value o f perquisites be added to the

cash earnings, the disparity between farm wages in the
South and the rest o f the country is somewhat lessened but
it is nevertheless considerable.

Thus it will be seen from

Table IV that the average wage, including perquisites, o f
casual farm laborers in the median southern state in 1926
was $2.37 per day, which represented about 55 per cent o f
the corresponding average for the rest o f the country.
Non-casual farm laborers probably represent the most
skilled and experienced workers o f their class.

It will be

seen from Table IV that the average monthly compensa
tion, including perquisites, o f this type o f laborer in the
median southern state was $54 in 1925, which represented
66 per cent o f the corresponding average for the rest o f the
country.

Summarizing the evidence furnished by Table IV ,

it may be said that the differential in farm wages as between
the South and the rest o f the country is in substantial ac
cord with the differential in agricultural productivity, al
though the relationship seems to weaken in the case o f the
more experienced workers.
METHODOLOGY

N o recent statistics are available bearing upon the amount
o f net income derived from agriculture in the various states.
The Census o f Agriculture, however, furnishes estimates,
by divisions and states, o f the gross value o f farm products.
These gross production figures are admittedly incomplete.
Moreover, they contain certain elements o f duplication, the

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGES

SOUTHERN

AGRICULTURE

most serious o f which is the double counting o f crops fed
to livestock.

A n attempt was made to eliminate this dupli

cation in the Census o f 1900, but the effort was abandoned
in subsequent reports.
Comprehensive information on the value o f farm prod
ucts cannot be obtained from the Census o f Agriculture
beyond the year 1919.

The Census o f 1925, for instance,

gives merely the values o f crops and livestock products,
omitting the value o f animals sold or slaughtered.

In for

mation compiled annually by the Department o f Agriculture
may, however, be utilized from the point where the census
material leaves off.

Thus the Department o f Agriculture

publishes annual estimates o f the gross income derived from
farming operations after making deductions for products
fed to livestock, used for seed, or wasted.

These estimates

apply to the nation as a whole, but certain supplementary
data are available which permit the national totals to be al
located between the South and the rest o f the country.
Table A sets forth the estimated gross value o f all farm
products in the ten southern states under consideration and
in the remainder o f the country for the years 1899, 1909,
1919, 1924, and 1927. The figures for 1899, 1909, and 1919
have been obtained from the Census o f Agriculture.

As has

already been indicated, the 1899 totals represent values
reached after deducting the estimated value o f crops fed to
livestock.
and 1919.

This is not true o f the census estimates for 1909
The figures for 1924 and 1927 represent an

allocation between the South and the rest o f the country o f
the Department o f Agriculture’s national totals for gross
farm income.1 The method used in making this allocation
is shown in Table B.
1 See Yearbook of Agriculture, 1928, p. 1051, Table 525.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES
T

able

THE

SOUTH

Gross Value of Farm Products.
Ten
Southern States

Year
1899.............................................
1909.............................................
1919.............................................
1924.............................................
1927.............................................

715,600,000
1.565.335.000
4.214.098.000
2.076.040.000
2.138.980.000

Remainder of
Country
$ 3,048,578,000
6.928.895.000
17.211.526.000
9.926.960.000
10.114.020.000

A s will be seen from Table B, the national total for
gross farm income was split into three sub-totals, repre
senting respectively income from crops, income from meat
animals, and income from poultry and dairy products.

The

share o f the South in each o f these sub-totals was then
separately computed.

The basis o f allocation in the case o f

income from crops was supplied by the Department o f A g ri
culture’s annual estimates, by states, o f the gross value o f
all crops produced.2 Before the estimates in question could
be used, however, it was necessary to eliminate, as far as
possible, the value o f crops fed to livestock.

The principal

crops fed to animals are corn, oats, barley, and hay.

The

1920 Census o f Agriculture gives, by states, the average
percentages o f these crops which were neither sold nor held
for sale by farmers in 1919.

It was assumed that the unsold

percentages represented crops fed to livestock, and that the
percentages in question had not changed greatly since 1919.
On the basis o f these two assumptions, the percentages o f
the corn, oat, barley, and hay crops not sold in 1919 were
applied to the values o f the corresponding crops in 1924
and 1927.

The values thus obtained were then subtracted

from the Department o f Agriculture’s state estimates o f
’ See Yearbook of Agriculture, 1925, p. 1204; ibid., 1928, p. 1037.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGES

total crop production.

SOUTHERN

AGRICULTURE

A fter this deduction had been made,

the ratio, which the value o f crops produced in the ten
southern states bore to the value o f crops produced in the
country at large, was computed and used to determine the
share o f the South in the total national income from crops.
T

able

Allocation of Gross Agricultural Income Between the South and the
Rest of the Country.

Item

Gross Income
for F.ntire
Country as
Estimated by
Department of
Agriculture
in Millions
1924

1927

Percentage
Allocated
to Ten
Southern
States
1924

Gross Income
Allocated to
Southern States
in Thousands

1927

1924

Grains...................... $1,842 $1,636
Fruits and
Vegetables........... 1,333 1,453
Cotton and
Cotton Seed........ 1,719 1,458
All Other................. 1,232 1,236
Total Crops......... $6,126 $5,783
Meat Animals......... 2,619 2,842
Dairy and Poultry
Products.............. 3,258 3,628

24.33
9.21

26.70 $1,490,460 $1,544,060
241,210
211,440
7.44

10.57

Total Income. . . . 12,003 12,253

344,370

383,480

$2,076,040 $2,138,980

In determining the share o f the South in the country’s
total income from meat animals, the only available basis o f
allocation was the value o f animals on farms, as estimated
annually by the Department o f Agriculture.

This basis can

not be expected to give highly accurate results.

Neverthe

less, where large sections o f the country are under consider
ation, there is an obvious correlation between the value o f
meat animals produced in a given area and the value o f such
animals on farms at a given date.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

The method used in

able

Percentage of Gross Income from Meat Animals Allocatable to the South.
Farm Value, Jan. 1, 1927
(In thousands)

Weighted Value
Weight**

Entire
United
States

Remainder..........................................
Dairy Cattle*...............................

$ 59,103
26,153

$990,857
324,726

Total...................................................
Hogs...........................................................
Sheep..........................................................

$85,256
83,092
6,821

$1,315,583
945,093
432,619

Plus

$59,679
134,243
3,410

$920,908
1,512,149
216,310

$197,332

$2,649,367

7.44

_ ‘ Estimates of the Department of Agriculture indicate that approximately one-fourth of the total beef and veal supply of the country is furnished by
dairy cattle and dairy calves. The value of dairy cattle has, therefore, been given a weight of one-quarter as against the value of beef cattle.
“ Statistics published by the Department of Agriculture indicate that the value of beef and veal animals produced in 1924 represented 70 per cent of the
weighted value of beef and veal animals on farms as of January 1, of that year. The value of hogs produced in 1924 represented 160 per cent of the value
of hogs on farms as of January 1, and, finally, the value of sheep produced represented approximately SO per cent of the value of sheep on farms as of the
first of the year. See Yearbook of Agriculture, 1924, p. 961, Table 573.

SOUTH

Grand Total.......................................

.70
1.60
.50

THE

32,289,761
1,298,904

$163,716
104,613

Entire
United
States

WAGES

All Cattle...................................................
Less Dairy Cattle.....................................

Ten
Southern
States

AND

Ten
Southern
States

Percentage
South is
of Total

INCOME

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

to
O

WAGES

SOUTHERN

AGRICULTURE

determining the percentage o f the total income from meat
animals allocataire to the South in 1927 is illustrated in
Table C.
A s has already been indicated, the Census o f Agriculture
for 1925 gives the value o f livestock products by states for
the year 1924.

On the basis o f this data it was possible to

obtain directly the percentage o f the total income from poul
try and dairy products allocatable to the South in 1924.

The

same percentage was used for 1927, on the assumption that
there had been no change during the intervening two years.
In order to compare the per capita agricultural produc
tivity o f the South with that o f the rest o f the country, it
was necessary to divide the gross values produced in each
section by the number o f persons employed in agricultural
pursuits.

The total numbers o f persons gainfully employed

in agriculture for the years 1900, 1910, and 1920 were ob
tained from the Census o f Occupations.

Approximate esti

mates o f the numbers employed in 1924 and 1927 were
calculated on the basis o f the percentage decline in farm
population between 1920 and 1925 as reported by the Cen
sus o f Agriculture.
The Census o f Occupations reports as gainfully employed
in agriculture many women and children whose contribution
to the total agricultural product may be exceedingly slight.
The South, due to its large N egro population, employs a
considerably greater proportion o f women and children on
farms than does the rest o f the country.

T o compute the

average product per worker on the basis o f figures which
include persons o f both sexes and o f all ages will conse
quently unduly depress the southern average.

The work o f

women and children, as a general rule, merely supplements

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE SOUTH

the work o f adult males, and for this reason it is possibly
preferable to limit consideration to the latter class o f workers.
T o disregard the labor o f women and children entirely will,
however, result in somewhat exaggerating the southern aver
age.

The proper method would, o f course, be to equate the

women and children to their equivalent in terms o f adult
males.

Since there is no way o f doing this, both bases o f

calculation were used in the present study.

Table D gives

the data on the number o f agricultural workers employed
upon which these calculations were based.
T

able

Number of Persons Gainfully Employed in Agriculture, Ten Southern
States and Remainder of Country.
Both Sexes and All Ages

Adult Males**

Year

Ten Southern
States

Remainder of
Country

Ten Southern
States

Remainder of
Country

1900............
1910............
1920............
1924*..........
1927*..........

3,794,486
4,927,906
3,978,306
3^510^457
3,510,457

6,479,183
7,489,491
6,704,638
6.276.212
6.276.212

2,142,116
2,416,380
2,544,231
2.245.029
2.245.029

5,125,884
5,708,745
5^750,933
5,383,448
5,383,448

•Estimated by applying the percentage decline in farm population between 1920 and 1925,
to the 1920 totals for agricultural workers.
•♦Figures for 1900 and 1910 represent all male workers twenty-one years of age or over. Figure*
for later years represent male workers 20 years or over.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

C H A P T E R III
T H E W A G E D IF F E R E N T IA L IN S O U T H E R N
IN D U S T R Y
R O B L E M S connected with the growth o f southern in

dustry have received so much attention in recent years
that it is easy to lose sight o f the fact that the South is still
one o f the most agricultural regions in the United States.
In 1920, for every Southerner engaged in manufacturing
and mechanical pursuits, there were three Southerners en
gaged in farming. In the rest o f the country the situation
was almost reversed. For every person engaged in agricul
ture there were 1.6 persons in the manufacturing and me
chanical employments. The emphasis placed on southern
industry is, nevertheless, amply justified by the extraordi
nary rapidity with which it is expanding. Outside o f the
South, the number o f wage earners employed in manufac
turing establishments declined by some 9 per cent between
1919 and 1927. In the ten southern states under consider
ation the number o f factory employees increased by 9 per
cent during the same period. Further light on the drift to
ward industry in the South is furnished by the relative rate
o f decline o f the farm population. Between 1920 and 1925
the southern farm population experienced a reduction o f
11.8 per cent, as compared with a reduction o f only 6.4 per
cent for the rest o f the country.1
Roughly speaking, about one and one-half million per1 The figures on farm population for 1925 are not strictly comparable
with those reported in 1920, since the definition used in 1920 included
not only persons living on farms but, in addition, those farm laborers
and their families who, while not living on farms, did live in rural ter
ritory outside any incorporated places.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

[ 2 3]

INCOME AND

WAGES

THE

SOUTH

sons are gainfully employed in manufacturing and mechan
ical industries in the South.

This constitutes about 18 per

cent o f the total working population.

Except for agricul

ture, which is rapidly losing ground, industry supports a
larger percentage o f the southern population than any other
gainful activity.

The relative adequacy o f this support as

compared with standards attained in other sections o f the
country is, therefore, o f considerable moment.
O f the total number o f Southerners engaged in manu
facturing and mechanical pursuits, somewhat over a million
are factory wage earners.

A rough measure o f the relative

level o f income obtaining among these employees is supplied
by the Census o f Manufactures, which gives, by states, the
average number o f wage earners employed during the year
as well as the total amount expended for wages.

Division

o f the amount spent for wages by the number o f workers
employed gives an annual average wage which, within limits
to be noted further on, may be taken as a fairly accurate
index o f the variation in average industrial earnings as be
tween different sections o f the country.
THE CENSUS AVERAGE WAGE

Table V gives a comparison o f the average census wage
in the ten southern states under consideration with the cor
responding average for the rest o f the country.

This table

seems to indicate that the average earnings o f southern fac
tory workers have been from 30 to 40 per cent lower than
the earnings o f similar classes o f employees in other parts
o f the country for a long period o f years.

Before attaching

too much significance to this evidence, however, it is in order
to inquire into its limitations.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE DIFFERENTIAL
T

able

Comparison of Census Average Wage, Ten Southern States and Re
mainder of Country.
Census Average Wage
Year

Ten Southern
States

Remainder of
United States

$197
257
215
272
337
410
884
792
794
832
828

$252
292
389
445
495
601
1,196
1,229
1,313
1,339
1,366

1849.................
1859.................
1869.................
1899.................
1904.................
1914.................
1919.................
1921.................
1923.................
1925.................
1927.................

Percentage South
is of Rest
of Country
77.9
87.9
55.4
61.3
68.1
68.2
73.9
64.4
60.5
62.1
60.6

The objection may legitimately be raised that the cen
sus average wages, as calculated in Table V , reflect neither
average annual earnings nor rates o f pay for comparable
kinds o f work.

In the first place the wages in question

are simply arithmetic results obtained by dividing the ag
gregate annual amount spent for wages by the average num
ber o f workers employed.

The average number o f workers

employed is obtained by dividing by 12 the sum o f the num
bers reported on the payrolls as o f the 15th day o f each
month.

It is plain that the census average wage does not

measure the actual average earnings o f the workers attached
to a given industry.

It merely indicates what would have

been their average per capita earnings if production sched
ules had been so arranged as to give them continuous em
ployment throughout the year.

The possible error involved

in using the census average wage as a measure o f per capita
earnings may be illustrated by a simple example.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

Let it be supposed that two industries have identical wage
bills o f $1,000,000 per annum.

The first industry operates

with a stable working force o f 1,000 employees throughout
the year.

The second industry operates with 1,200 em

ployees for six months o f the year and with a force o f 800
employees during the remaining months.

According to the

method o f calculation used by the Census o f Manufactures,
both industries will have an average working force o f 1,000
employees.

Both industries will, therefore, have the same

census average wage o f $1,000.

However, unless the work

ers, laid off in the second industry, find equally remunerative
employment elsewhere, the average actual earnings o f the
workers attached to that industry will be considerably below
the average o f the industry which provides stable all year
round employment.
IS THE CENSUS WAGE SI GNIFICANT?

It is evident that variations in the census wage averages
as between different industries reflect corresponding vari
ations in average actual earnings only when there is sub
stantial similarity with respect to the ratio which the total
number o f workers attached to each industry bears to the
average number o f workers it employs during the year.
Translated into concrete terms, this requirement means that
the average amount o f unemployment per worker, in each
o f the industries under consideration, must be the same.

an industry which has no reserve o f unemployed labor, and
which gives continuous work to all o f its employees through
out the year, the census average wage constitutes an accurate
measure o f average actual earnings.

On the other hand, in

an industry which habitually has a large reserve o f unem-

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE DIFFERENTIAL

ployed labor, and in which few workers have continuous em
ployment throughout the year, the census average wage may
be considerably higher than the actual earnings per worker.
The question therefore arises, as to whether the indus
tries o f the South are sufficiently like those o f the rest o f
the country, with respect to the factor o f employment sta
bility, to ju stify using the percentages shown in Table V as
measures o f the relative difference in actual per capita earn
ings.

That no material error is involved in assuming such

similarity is indicated by the results o f a study made by
Professor Paul F. Brissenden for the United States Bureau
o f the Census.

Professor Brissenden supplies carefully

worked out estimates, by states, o f the average actual earn
ings o f industrial wage earners for the census years 1899
to 1923.2 W hen the census wage averages shown in Table
V are replaced by the estimated actual earnings, as computed
from Professor Brissenden’s data, little change in the per
centage relation between the South and the rest o f the coun
try is found to result.

F or instance, when such substitutions

are made for the year 1923, the ratio between the South and
the rest o f the country changes no more than from 60.5 per
cent to 61.7 per cent. The same procedure followed out with
respect to the year 1919 changes the ratio given in Table V
from 73.9 to 70.8 per cent.
A second objection, which may be raised against the
accuracy o f the comparison given in Table V , is that no
allowance has been made for a possible difference in the
proportion o f women and children in the tw o wage earning
groups under consideration.

Since women and children

* “Earnings of Factory Workers, 1899 to 1927,” Census Monographs,
X , p. 107, Table 42.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES IN

THE

SOUTH

normally receive lower wages than adult males, it is evident
that the group having the higher percentage o f women and
children will have a lower average o f per capita earnings,
even though the two groups are on a basis o f parity with re
spect to the earnings o f their adult males.

In order to secure

a valid comparison, it is necessary to reduce each group to
the same footing as regards age and sex distribution.

That

a correction o f this kind would have little effect on the per
centages shown in Table V is indicated by data which are
available with respect to the census year, 1919.
In that year, approximately 15.2 per cent o f the wage
earners in southern establishments were women over 16
years o f age, and 1.8 per cent were children o f both sexes
under sixteen years.

The comparable percentages for the

remainder o f the country were 20.2 per cent and 1.3 per
cent respectively.

Professor Brissenden estimates that the

average full-time earnings o f women factory workers in
1919 were about 54 per cent as great as the earnings o f adult
males, and that the per capita earnings o f children under
sixteen years o f age averaged around 30 per cent o f the
earnings o f adult males.3

This information makes it pos

sible to recalculate the census wage averages for 1919 on the
basis o f wage earning groups composed exclusively o f adult
males.

A s thus revised, the census average wage for the

South is found to represent 72.3 per cent o f the comparable
average for the rest o f the country, instead o f 73.9 per cent
as shown in Table V .

This difference is too small to have

any importance from the standpoint o f the present study.
It may be objected, finally, that Table V attempts to
compare the earnings o f workers engaged in widely dis* Census Monographs, X , p. 297, Table 134.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE DI FFERENTIAL

similar industries and occupations.

This is perfectly true.

The table in question simply shows how average earnings in
the particular types o f employment open to southern wage
earners compare with earnings in the particular occupations
open to wage earners outside o f the South.

It cannot and

does not purport to measure the relative differences in rates
o f pay for comparable kinds o f work.
It is apparent that none o f the limitations o f Table V are
sufficiently potent to discredit its main testimony, which is
that the average annual earnings o f industrial workers in
the South are, roughly speaking, about 40 per cent below
the average obtaining in other parts o f the country.

This

information is important as far as it goes, but it does not go
far enough.

T o what extent is the lower average o f south

ern earnings due to a lower scale o f wages for comparable
kinds o f w ork?

T o what extent is it due to other factors

such as, for instance, a preponderance o f industries which
normally employ large numbers o f unskilled workers ? Data
bearing on the first o f these questions are given in the re
maining sections o f the present chapter.

The second ques

tion is touched upon in Chapter V .
SPECIFIC INDUSTRIES

The bulk o f the industrial wage earners o f the South are
concentrated in a comparatively small number o f industries.
By all odds the most important activity, from the standpoint
o f the number o f workers employed, is the manufacture o f
textiles.

Southern cotton goods establishments employed

about 271,000 wage workers in 1927.

Knit goods estab

lishments employed about 50,000 workers.

All told, nearly

a third o f the total number o f southern industrial wage earn
ers were attached to the textile industry in 1927.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME AND

WAGES IN

THE SOUTH

N ext in importance to textiles as a source o f employment
is the lumber and timber industry.

About 215,000 wage

earners, or slightly more than one-fifth o f the total number
o f southern industrial workers, were engaged in this indus
try in 1927.

None o f the remaining industries o f the South

stand out with any particular degree o f prominence as re
gards number o f workers employed.

A possible exception

are steam railroad repair shops, the operation o f which re
quired the services o f approximately 60,000 persons in 1927.
This was the only southern industry, aside from textiles and
timber products, which gave employment to more than
40,000 persons in 1927.
The wage comparisons which follow are confined in the
main to the few important industries enumerated above.
This limitation was necessary because o f the lack o f adequate
data on other industries.

The wage statistics presented,

however, cover nearly 60 per cent o f all workers engaged in
manufacturing activities in the South.
Table V I gives a comparison between the South and the
rest o f the country o f the census wage averages obtaining
T

able

Comparison of Census Wage Averages in Specified Industries, Ten
Southern States and Elsewhere. Census Year 1927.*
Census Average Wage

Railroad Renair Shops.....................
‘ Source: Census of Manufactures, 1927.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

South

Elsewhere

$655
671
748
1,230
1,376

$1,099
1,012
1,195
T,495
1,537

Percentage
Southern
Average is
of Average
Elsewhere
59.6
66.3
62.5
80.4
89.5

WAGE DIFFERENTIAL

respectively in the cotton goods industry, the lumber and
timber industry, the knit goods industry, foundry and ma
chine shops, and railroad repair shops.

It appears from this

table that the wage differential between the South and the
rest o f the country is markedly reduced when consideration
is limited to comparable industries.

A s indicated in Table

V , the general census wage average for the South in 1927
represented only 60.6 per cent o f the corresponding general
average for the rest o f the country.

The wage ratios appli

cable to the specific industries shown in Table V I are in all
but one instance greater than this figure, ranging from 59.6
per cent in the knit goods industry to 89.5 per cent in the
case o f railroad repair shops.

That there should be a greater

disparity in the general average o f industrial wages, as be
tween the South and elsewhere, than in the wage averages
applicable to specific industries may at first sight seem curi
ous.

A s is more fully explained in Chapter V , however, this

apparent anomaly is due to the fact that the dominant indus
tries o f the South are low-wage industries, whereas, outside
o f the South, there are many high-wage industries which
are either very weakly represented in the South or not repre
sented there at all.
The fact that the percentage ratios between the southern
wage averages and the corresponding averages for the rest
o f the country are subject to considerable variation from
industry to industry is another circumstance which calls for
explanation.

W h y should the wages o f southern workers

in the knit goods industry, for instance, have averaged less
than 60 per cent o f the average obtaining among the same
class o f workers elsewhere, while wages in southern railroad

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

repair shops averaged nearly 90 per cent o f the correspond
ing average elsewhere?
The variations in question are probably due in part to
the fact that the industrial classifications used are extremely
broad and include establishments which differ considerably
with respect to the type o f their product and the character
o f their manufacturing operations.

W ithin the same indus

try, there may be found, at one extreme, establishments
which specialize on products requiring the employment o f a
high proportion o f skilled workers; and, at the other ex
treme, establishments the manufacturing operations o f which
are such as to require a relatively small proportion o f skilled
workers.

In the first class o f establishments, the average

census wage will naturally be high.

The second class o f

establishments will have a relatively low census wage aver
age.

In an industry, the southern branch o f which has more

than its proportionate share o f the latter class o f establish
ments, a disparity in the census wage averages as between
the South and the rest o f the country is bound to appear,
even though there are no differences in rates o f pay for
comparable kinds o f work.

The relative distribution o f the

high and low wage establishments, as between the South and
elsewhere, will not, o f course, be the same for all industries.
This circumstance probably accounts in part for the differ
ences in the wage spreads shown in Table V I.
There is very little inform ation at hand on which to base
an estimate o f the extent to which the lower census wage
averages o f southern industries are due to a larger repre
sentation o f establishments, the manufacturing processes o f
which require a relatively small proportion o f skilled work-

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE

ers.

DIFFERENTIAL

There is direct evidence, however, that this factor is

responsible for the extremely broad wage spread between
the southern and northern divisions o f the knit goods
industry.
The most important product o f this industry is hosiery,
o f which there are two main types, seamless and full-fash
ioned.

Full-fashioned hosiery workers represent on the

whole a more highly remunerated group o f employees than
workers on seamless hosiery.

Thus, a shift by Massachu

setts hosiery mills, from the manufacture o f seamless to the
manufacture o f full-fashioned hosiery, was in large part re
sponsible for an increase in the average earnings o f male
hosiery workers in that state from 47 cents per hour in 1926
to $1.15 per hour in 1928.4 The number o f full-fashioned
hosiery mills in the South is relatively small, and this cir
cumstance undoubtedly serves to exaggerate the difference
in average wages as between the southern and northern
branches o f the knit goods industry.
Another circumstance, which partially explains the vari
ations, as between industries, in the wage ratios shown in
Table V I, is the fact that the industries under comparison
differ with respect to the factor o f geographical location.
F or instance, outside o f the South, the lumber and timber
industry is concentrated mainly in the Pacific Coast States.
These states have on the whole a very high regional level
o f wages.

Even within the southern area, there are con

siderable variations from state to state in the general level
o f wages.

In the cotton textile industry, for instance, aver

age hourly earnings, for a representative pay period in 1928,
* Bulletin of the United States Bureau of Labor Statistics, No. 504.
p. 10.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOM E AND WAGES IN TH E SOUTH

were 31.6 cents in Virginia, 29.5 cents in North Carolina,
26.0 cents in South Carolina and Georgia, and 24.4 cents in
Alabama.5 W hen an industry is located in an area o f high
wages in the North and in an area o f low wages in the
South, the wage differential between its two divisions will
naturally be greater than if the situation were reversed.

The

factor o f geographical location, as a cause o f industrial vari
ations in the disparity between southern and northern wage
averages, is o f comparatively slight importance, however, in
comparison with another factor which is brought to light
when the wage differentials applicable to specific occupations
within the several industries are compared.
SPECIFIC OCCUPATIONS AND EMPLOYMENTS

The United States Bureau o f Labor Statistics has col
lected sample data by states relative to the hourly earnings
o f workers engaged in specific occupations and employments
in a number o f important industries.

These industries in

clude cotton goods, hosiery and underwear (knit g ood s),
lumber and timber, and foundry and machine shop products.
The census wage averages for all o f the above industries
have been given in Table V I.

Tables V II, V III, IX , and X ,

which are based on the data compiled by the Bureau o f Labor
Statistics, give average hourly earnings in the more impor
tant occupations included within these industries. They also
show, by occupations, the relative level o f southern earnings
o f pay as compared with the level o f earnings elsewhere.
A cursory examination o f these tables indicates that there
is no uniform relation between the average wages paid in
s Bulletin of the United States Bureua of Labor Statistics, No. 492,

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE DIFFERENTIAL

various occupations in the South and the wages prevailing
in similar occupations in other parts o f the country.

The

wage ratio between the South and elsewhere ranges, in fact,
all the way from 51 per cent, in the case o f sorters in saw
mills, to 104 per cent, in the case o f certain classes o f ma
chinists.

A further tendency to be noted is the apparent

relationship between the size o f the wage differential and
the factor o f skill.

A s will be seen, the difference in hourly

earnings between the South and the rest o f the country is
apparently at a maximum in the case o f common labor and
shows a tendency to become progressively less with each ad
vance in the grade o f skill.

In the case o f one or two highly

skilled occupations it disappears entirely.

This tendency is

not particularly pronounced as regards industries in which
differences in grades o f skill are slight and in which advance
ment from one occupation to another is comparatively easy.
It is strikingly evident, however, in industries in which there
are broad differences in skill as between various occupational
groups and in which passage from one group to another is
difficult.
In the cotton goods and hosiery and underwear indus
tries, which are covered in Tables V II and V II I respectively,
the correlation between the degree o f occupational skill and
the size o f the wage differential is not as clearly apparent as
in the case o f the lumber and timber industry or o f foundry
and machine shops.
variety o f factors.

This circumstance is attributable to a
In the first place, the gradations o f skill

which separate the various occupations o f the textile indus
try are for the most part very slight.

A m ajority o f the

occupations may be mastered in a relatively short period o f

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

time.

WAGES

THE

SOUTH

Employees in certain occupations are remunerated on

a piece-rate basis.
used.

AND

In other occupations a time-rate basis is

Generally speaking, the differential in hourly earn

ings, as between the South and elsewhere, Is somewhat
smaller in the piece-rate than it is in the time-rate occupa
tions.

Another factor, which has to be reckoned with, is the

circumstance that certain textile occupations are carried on
primarily by males in the South, whereas in the North they
are carried on primarily by females.
Despite disturbing influences such as these, the tendency
o f the wage differential to vary with the degree o f skill is
observable to a certain extent even in the textile industry.
Reference to the figures for male workers in the cotton
goods industry given in Table V II, for instance, shows that
the only occupations markedly out o f line with the tendency
noted are those o f doffers and weavers.

It is significant that

the remuneration in both o f these occupations is normally
based on piece rates whereas the other occupations are gen
erally on a time-rate basis.
The relationship between the size o f the wage differential
and the skill o f the occupation, as measured by the rate o f
compensation received, is displayed more prominently in the
sawmill industry, data on which are given in Table IX .

will be noted that the average level o f southern wages in oc
cupations which yield less than 30 cents an hour, ranges from
51 per cent to 62 per cent o f the corresponding wage level
elsewhere.

Southern wages in occupations which yield from

30 to 40 cents per hour range from 62 per cent to 70 per cent
o f the prevailing wages elsewhere. Graders in the South re
ceive an average o f 42 cents per hour, which is 76.5 per cent
as great as the average earnings o f graders in the rest o f the

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Southern States

Occupational
Classification

Number
of Empls.
Covered

Average
Hourly
Earnings

N orthern States

Number
of Empls.
Covered

Average
Hourly
Earnings

Percentage
Southern
Earnings
are of
Northern

Picker Tenders............................................................
Card Tenders and Strippers.......................................
Doffers.........................................................................
Speeder Tenders..........................................................
Slubber Tenders..........................................................
Weavers.......................................................................
Loom Fixers................................................................

774
1,151
3^013
2,415
768
5,738
2,089

$.232
.260
.280
.317
.317
.341
.399

397
606
932
498
336
4,588
1,452

S.380
.416
.411
.483
.475
.456
.602

61.1
62.5
68.1
65.6
66.7
74.8
66.3

1,113
3,119
6; 962
453
722
3,759

.208
.209
.228
.283
.285
.308

1,142
1,498
3; 456
537
2,273
4,364

.273
.314
.373
.363
.383
.425

76.2
66.6
61.1
78.0
74.4
72.5

F emales :

Trimmers or Inspectors..............................................

DIFFERENTIAL

M ales ;

WAGE

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

T able VII

Comparison of Average Hourly Earnings in Cotton Goods Manufacturing, Five Southern and Six Northern States,
October 1928.*

’ Source: Bulletin of the United States Bureau of Labor Statistics, No. 492, p. 26. The five southern states comprise Alabama, Georgia, North Carolina
South Carolina, and Virginia; the six northern states, Connecticut, Maine, Massachusetts, New Hampshire, New York, and Rhode Island. With the
exception of female drawers-in, only occupations represented by 1000 or more employees have been included in the above table.
OJ

able

VIII
GJ
00

Southern States

Occupational
Classification

Number
of Empls.
Covered

Average
Hourly
Earnings

N orthern States

Number
of Empls.
Covered

Average
Hourly
Earnings

Percentage
Southern
Earnings
are of
Northern

H osiery
M a l es :

55.5
69.6

809
380
1,355
436
261
238

.226
.232
.232
.245
.272
.280
.317

1,088
914
1,128
2,406
783
334
453

.378
.452
.368
.414
.420
.381
.392

59.8
51.3
63.1
59.2
64.7
73.5
80.9

89
33

.408
.595

357
190

.510
.751

80.0
79.2

248
64
74

.220

1,066
391
295
376

.292
.359
.361
.366
.373
.352

75.3
69.9
72.5
72.6
72.1
76.7

F emales :

Inspectors.....................................................................
Menders.......................................................................
Knitters, Transfer.......................................................
Loopers.........................................................................
Pairers or Maters........................................................
Folders.........................................................................
Winders........................................................................

1,201

U nderwear
M ales :

Knitters, Web or Tube...............................................
Machine Fixers............................................................
F emales :

Inspectors....................................................................
Cutters, Hand, Layers-up and Markers...................
Buttonhole Makers.....................................................
Folders.........................................................................
Seamers........................................................................
Finishers.......................................................................

112

415
422

.251
.262
.266
.269
.270

2,010

2,753

•Source: Bulletin of the United States Bureau of Labor Statistics, No. 504, p. 42. For the underwear industry, the states compared are North Carolina,
Tennessee, and Virginia in the South, and Connecticut, Rhode Island, Illinois, Indiana, Massachusetts, Michigan, Minnesota, Wisconsin, New Hampshire,
Vermont, New York, and Pennsylvania in the North. For the hosiery industry, the southern states comprise Alabama and Louisiana, Georgia, North Car
olina, Tennessee, and Virginia; the northern, Illinois, Indiana, Maryland, West Virginia, Massachusetts, Michigan, Minnesota, Wisconsin, New Hampshire,
Vermont, New Jersey, New York, and Pennsylvania. Only the more important occupations, in which employees could be segregated by states, have been
included in the above table.

SOUTH

$.686
.912

THE

657
366

$.381
.635

WAGES

776
444

AND

Boarders.......................................................................
Machine Fixers............................................................

INCOME

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Comparison of Average Hourly Earnings in the Hosiery and Underwear Industry, 1928.*

Southern States

Occupational
Classification

Laborers.............................................................................
Off-Bearers........................................................................
Edger Tailers.....................................................................
Sorters...............................................................................
Transfer Men....................................................................
Truckers............................................................................
Saw Tailers.......................................................................
Doggers.............................................................................
Stackers, Hand.................................................................
Machine Feeders, Planing...............................................
Tallymen...........................................................................
Edgermen..........................................................................
Setters................................................................................
Graders..............................................................................
Millwrights........................................................................
Sawyers, Head, Band.......................................................

Number
of Empls.
Covered
11,857
412
315
1,753
'337
1,612
'324
601
544
2,455
811
256
445
329
541
261
305

Average
Hourly
Earnings
3-219
.222
.229
.230
.232
.240
.256
.259
.264
.270
.272
.326
.367
.376
.419
.524
.831

O ther States

Number
of Empls.
Covered
10,169
448
393
2,385
371
1,525
'414
743
417
1,862
'971
424
476
413
1,021
'440
363

Average
Hourly
Earnings
3.401
.404
.391
.450
.440
.411
.433
.436
.427
.505
.457
.527
.565
.541
.548
.663
.934

Percentage
Southern
Earnings
to Those
Elsewhere
54.6
55.0
58.6
51.1
52.7
58.4
59.1
59.4
61.8
53.5
59.5
61.9
65.0
69.5
76.5
80.5
89.0

*Source: Bulletin of the United States Bureau of Labor Statistics, No. 497, p. 28. The ten southern states are Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia. The other states are California, Idaho, Kentucky, Maine, Michigan,
Minnesota, Montana, Oregon, Texas, Washington, West Virginia, and Wisconsin. Only occupations represented by 6S0 or more employees have been
included in the above table.

WAGE DIFFERENTIAL

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

T able

Comparison of Average Hourly Earnings in Sawmills, Ten Southern and Twelve Other States, 1928*

able

Southern States

Occupational
Classification

Number
of Empls.
Covered

Average
Hourly
Earnings

Percentage
Southern
Earnings
are of
Earnings
Elsewhere

O ther States

Number
of Empls.
Covered

3.498
.545
.507
.762
.825
.832

57.2
57.0
64.1
72.4
85.8
92.8

245
35
60
69
51
61
22
98
35
23
27
249
21

.289
.383
.404
.419
.439
.557
.592
.615
.639
.729
.744
.754
.794

8,097
687
1,611
4',690
6,610
7,958
1,796
5,866
2^ 173
2'840
'818
3,545
1'207

.461
.532
.514
.608
.664
.654
.744
.696
.728
.756
.725'
.726
.842

62.7
72.0
78.6
68.9
66.1
85.2
79.6
88.4
87.8
96.4
102.6
103,9
94.3

M achine Shops :

Laborers, Male............................................................
Blacksmiths’ Helpers, Male.......................................
Machinists’ Helpers, Male........................................
Drill Press Hands, Male.............................................
Fitters and Bench Hands, Male................................
Assemblers, Male........................................................
Planer Hands, Male....................................................
Lathe Hands, Engine, Male.......................................
Boring-Mill Hands......................................................
Toolmakers, Male.......................................................
Blacksmiths, Male......................................................
Machinists, Male.........................................................
Pattern Makers, Male................................................

•Source: Bulletin of U. S. Bureau of Labor Statistics, No. 471, p. 33. The southern states included in the comparison are Alabama, Georgia, Louisiana,
and Tennessee. The remaining group comprises California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massa
chusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Washington, and
Wisconsin.

SOUTH

10,664
3,729
1,589
2',935
5,126
l'464

THE

3.285
.311
.325
.552
.708
.772

353
128
231
105
249
48

WAGES

Laborers, Male............................................................
Chippers and Rough Grinders, Male........................
Molders’ Helpers, Floor, Male...................................
Core Makers, Male.....................................................
Molders, Hand, Floor, Male......................................
Pattern Makers, Male................................................

AND

F oundries :

INCOME

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Comparison of Average Hourly Earnings in Foundries and Machine Shops, Four Southern and Twenty-four Other
States, 1927*

WAGE DIFFERENTIAL

country.

Southern millwrights, with average earnings o f

52 cents per hour, receive 80.5 per cent as much as the aver
age earnings elsewhere.

Finally, in the case o f the highly

skilled sawyers, whose average earnings in the South are 83
cents per hour, the ratio o f southern wages to those paid
elsewhere is 89 per cent.
Table X , which sets forth the comparative wage situ
ation in foundries and machine shops, reveals similar tend
encies.

Thus, in foundries, the ratio o f average southern

earnings to average earnings elsewhere is 57 per cent in the
case o f common labor, 64 per cent in the case o f semi
skilled molders’ helpers, and 93 per cent in the case o f the
highly skilled pattern makers.

In machine shops, the range

o f the same ratio extends from 63 per cent in the case o f
laborers to 104 per cent in the case o f skilled machinists.
Since there is no uniform wage differential between the
South and the rest o f the country, and since the size o f the
wage differential with respect to any particular occupation
depends largely on the factor o f skill, it is easy to under
stand why average earnings for entire industries fall short
o f the corresponding averages for the rest o f the country by
varying degrees.

In industries which employ a high propor

tion o f unskilled workers, the disparity in average earnings
between the South and elsewhere will naturally be high.

industries in which skilled workers predominate, the dis
parity in average earnings will be small.

This fact goes far

toward explaining why the average census wage for the
southern lumber and timber industry is so low relative to the
corresponding census average for the rest o f the country,
and why the census wage averages for railroad repair shops
and foundry and machine shops are relatively high.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

C H A P T E R IV
M IS C E L L A N E O U S W A G E A N D S A L A R Y
D IF F E R E N T IA L S

A G E statistics covering employees in manufacturing
establishments are by no means the only data which

indicate that the differential between the South and the rest
o f the country reaches its maximum in unskilled employ
ments and is at a minimum as regards occupations involving
a high degree o f skill.

Table X I gives a comparison o f the

wages paid common laborers in eight different lines o f ac
tivity, including casual labor on farms, common labor in
sawmills, street cleaning and other unskilled work performed
by laborers on city payrolls, labor on federal-aid road p roj
ects, common labor in foundries and in machine shops, and
common labor in United States naval establishments. There
are probably some differences as to the grade o f labor utilized
in the various activities mentioned.

Moreover, the propor

tion o f N egro workers is possibly greater in certain employ
ments such as farming and sawmill operation than it is in
others.

The wage rates quoted in Table X I, however, apply

in all cases to the lowest grade o f adult male labor employed.
In four o f the employments listed, the basis o f the wage
comparison is hourly earnings. In the remaining four employ
ments the basis used is hourly rates o f pay.

It is significant,

therefore, that the table reveals an extremely broad spread,
in every one o f the employments enumerated, between the
southern wage averages and those obtaining elsewhere.

The

difference is greatest in the case o f casual farm labor, which
in the South is largely performed by Negroes and which may
there be obtained at less than half the average wage required

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

[ 42]

WAGE AND SALARY DIFFERENTIALS

in other parts o f the country.

In none o f the activities speci

fied, however, do the southern rates for common labor ever
reach as high as 65 per cent o f the rates prevailing elsewhere.
T able XI
Comparison of Average Wages for Common Labor, the South and
Elsewhere.

Type of Employment

Casual Farm Laborers, Not
Boarded, Median of State Aver
ages for Wages per Day, July,
19292......................... "
Common Labor in Sawmills, Aver
age Hourly Earnings, 19283. . . .
Unskilled Street Laborers, Directly
Hired by 369 Southern Cities
and 2,257 Cities Elsewhere,
Hourly Entrance Rate, Median
Ci tv, 19284...................
Common Laborers Employed on
Federal Aid Road Projects,
Average Hourly Rates, 19285. ..
Common Labor in Foundries,
Average Hourly Earnings, 19276.
Common Labor in Machine Shops,
Average Hourly Earnings, 19277.
Common Labor Employed in 13
Selected Industries, Average
Hourly Entrance Rates,
Jan. 1, 1929s................................
Common Labor in U. S. Naval
Establishments, Three Southern
and Seven Northern Ports,
Hourly Rate at Median Port,
19299.............................

The South1

Elsewhere

Percentage
Southern
Wages are of
Wages
Elsewhere

$1.550

$3.250

47.7

.219

.401

54.6

.255

.452

56.4

.267

.445

60.7

.285

.498

57.2

.289

.461

62.7

.291

.458

63.5

.360

.560

64.3

* Unless otherwise indicated the term “ South” means Virginia, North Carolina, South Car
olina, Georgia, Florida, Tennessee, Alabama, Mississippi, Arkansas, and Louisiana.
* For source see Table IV.
3 For source see Table IX.
4 Source: Bulletin of the U. S. Bureau of Labor Statistics, No. 481, p. 1.
‘ Source: Yearbook of Agriculture, 1928, p. 1105. For the purpose of this comparison the
southern area includes, in addition to the ten states indicated above, the states of Delaware Ken
tucky, Maryland, Oklahoma, Texas, and West Virginia.
* For source see Table X.
1 For source see Table X .
* Source: Monthly Labor Review, May 1929, p. 189. This report gives average hourly en
trance rates by geographic divisions. The rate for the South, as given in the above table, repre
sents a weighted average of the averages for the South Atlantic and East South Central Divisions.
The rate for the rest of the country represents a weighted average of the remaining divisional"
averages.
* For source see Table X III.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

TRADE U NI ON WAGE SCALES

Whereas common laborers rank near the bottom o f the
scale o f skill, trade unionists may be placed near the top.
The wages o f trade unionists should, therefore, be expected
to approach more closely the level prevailing in other parts
o f the country, and such statistics as are available do not
disappoint this expectation.

The United States Bureau o f

Labor Statistics makes an annual compilation o f union wage
scales obtaining in each o f forty cities.

Eight o f these cities

are located in what has been defined for the present purpose
as the South.

Table X I I compares the rates o f pay obtain

ing in the respective median cities o f the South with the
T able X II

Comparison of Trade Union Wage Scales, Eight Southern Cities and
Thirty-two Cities Located Outside of the South, May IS, 1929.*

Occupation

Hourly Rate Hourly' Rate
of Pay,
of Pay,
Median
Median
City
Southern
Elsewhere
City
S I.500
.900
.920

$1.500
1.200
1.023

100.0
75.0
89.9

1.000
1.125
.875
1.250
1.250

1.145
1.375
1.125
1.500
1.375

87.3
81.8
77.8
83.3
90.9

.923

1.057

87.3

1.000

1.148

87.1

$1.074

$1.245

86.0

Compositors, Day Work,

Typesetting Machine Operators,
Typesetting Machine Operators,
Unweighted Average..................

Percentage
Southern
Rates are
of Rates
Elsewhere

»Source: Monthly Lahor Review, September, 1929, p. 144. The eight southern cities are
Atlanta, Birmingham, Charleston, Jacksonville, Little Rock, Memphis, New Orleans, and Rich
mond. The thirty-two other cities comprise Baltimore, Boston, Buffalo, Chicago, Cincinnati
Cleveland Dallas, Denver, Detroit, Fall River, Indianapolis, Kansas City, Los Angeles, Louis
ville Manchester, Milwaukee, Minneapolis, Newark, New Haven, New York, Omaha, Phila
delphia, Pittsburg, Portland, Providence, St. Louis, St. Paul, Salt Lake City, San hrancisco,
Scranton, Seattle, and Washington.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE

AND

SALARY

DIFFERENTIALS

corresponding averages applicable to the group o f cities
located outside o f the South.

It will be noted that in none

o f the trades listed is the representative southern rate more
than 25 per cent below the corresponding figure for cities
outside o f the South.

On the average, southern trade union

wage rates are only 14 per cent below the level prevailing
elsewhere, as contrasted with a differential ranging from 40
to 50 per cent in the case o f common labor.
WAGES I N FEDERAL NAVAL ESTABLISHMENTS

That the tendencies discussed above are sufficiently strong
to affect the wage policy o f even so disinterested an em
ployer as the United States government is indicated by Table
X III.

The Federal government has ten naval establish

ments, three o f which are located in the South.

The oper

ation o f these establishments normally requires a consider
able force o f civil employees representing a wide variety o f
occupations and trades.

Employees are divided into three

groups or services on the basis o f their skill and experience.
The laborer service comprises unskilled common laborers.
The helper service comprises semi-skilled assistants to skilled
mechanics.

The mechanical service comprises the class o f

skilled craftsmen.

It will be noted from Table X I I I that

the ratio o f the representative southern to the representative
northern rate o f pay is 64 per cent in the case o f common
laborers, 82 per cent in the case o f mechanics’ helpers, and
94 per cent in the case o f skilled craftsmen.

A comparison

o f the above percentages with those given in the preceding
tables for employees o f the same grades o f skill would seem
to indicate that the wage differentials between the South and
the rest o f the country are given substantially the same rec-

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

ognition by the United States Navy as they are by private
employers.
T a b l e X III
Comparison of Hourly Wage Rates of Civil Employees in United States
Naval Establishments, Three Southern and Seven Northern
Ports. Year 1929.*

Occupation

Hourly Rate Hourly Rate Percentage
Southern
Median
Median
Northern
Rates are
Southern
of
Northern
Port
Port

G roup I—Laborer Service:

$ .36

$ .56

64.3

Electrician...................................
Machinist.....................................
Pipe Fitter...................................
Rigger...........................................

.51
.51
.51
.51

.63
.61
.63
.61

81.0
83.6
81.0
83.6

Unweighted Average..................

$ .51

$ .62

82.3

Boiler Maker...............................
Calker and Chipper, Iron..........
Cement Finisher.........................
Chauffeur.....................................
Coppersmith................................
Machinist.....................................
Diver............................................
Electrician...................................
Engineman...................................
Gardener......................................
Joiner...........................................
Mason, Brick or Stone...............
Painter.........................................
Welder, Gas.................................
Pipe Fitter...................................
Welder, Electric..........................
Plasterer.......................................
Plumber.......................................
Rigger...........................................
Sheet-metal Worker....................

$ .82
.82
.88
.60
.85
.82
1.90
.90
.81
.63
.85
1.14
.81
.83
.90
.83
1.14
.90
.81
.89

$ .88
.89
.95
.71
.96
.90
1.90
.95
.88
.63
.92
1.14
.90
.88
.94
.89
1.14
.94
.90
.95

93.2
92.1
92.6
84.5
88.5
91.1
100.0
94.7
92.0
100.0
92.4
100.0
90.0
94.3
95.7
93.2
100.0
95.7
90.0
93.6

Unweighted Average........................

$ .91

$ .96

94.2

Laborer, Common......................
G roup II—Helper Service:

G roup III—Mechanical Service:

* Source: Monthly Labor Review, Feb. 1929, p. 105. The three southern ports are Norfolk*
Charleston, and New Orleans. The northern ports are Boston, New York, Philadelphia, Wash
ington, Mare Island, Puget Sound, and Great Lakes.

MISCELLANEOUS EMPLOYMENTS

Practically all o f the income and wage data thus far pre
sented apply to persons gainfully employed in agriculture or

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE AND

SALARY

DIFFERENTIALS

in manufacturing and mechanical industries.

These persons

comprise about 65 per cent o f the working population o f the
South.

The remaining elements o f the population are, how

ever, by no means negligible.

A ccording to the Census o f

Occupations, the ten southern states under consideration had,
in 1920, some 643,000 persons gainfully employed in various
form s o f domestic or personal service.

Over half a million

o f their citizens were employed in trade and about 407,000
o f them in transportation.

Various kinds o f professional

service engaged the activity o f about 254,000 persons,
while over 236,000 were reported as employed in clerical
occupations.
A study o f income and wages in the South which fails
to present at least a modicum o f data relative to the important
classes enumerated above can scarcely make much claim to
completeness.

It is unfortunately true, nevertheless, that

very little information o f the kind desired is available.

The

Interstate Commerce Commission supplies considerable ma
terial bearing on the earnings and wage rates o f railroad
employees.

The Census o f Manufactures makes it possible

to arrive at an approximate estimate o f the average annual
salaries o f clerks in manufacturing establishments.

The

United States Bureau o f Education compiles detailed statis
tics relative to the average salaries o f public school teachers.
Certain private agencies have collected data on the average
salaries o f ministers and university professors and on the
rates o f pay o f employees in gas and electric plants.

This,

however, practically exhausts the field o f readily obtainable
information.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

RAI LWAY AND PUBLIC UTILITY WAGES

Table X I V compares the average earnings and rates o f
pay o f southern railway and public utility employees with
the general level o f earnings and wage rates in similar em
ployments elsewhere.

It will be noted that the average

earnings o f southern railroad workers are about 88 per cent
o f the average earnings in other parts o f the country.

The

wage differential, in other words, appears to approximate
T

able

X IV

Average Earnings and Rates of Pay of Railroad and Public Utility
Employees

Item
Average Annual Earnings, All
Employees, Class I Railroads,
19272..............................................
Average Annual Earnings, Em
ployees in Railroad Repair
Shops, 19273..................................
Average Hourly Kates of Ray,
Section Men, Maintenance of
Way and Structures, 19284.........
Average Hourly Earnings, Em
ployees in Gas Plants, July,
19256..............................................
Average Hourly Earnings, Em
ployees in Electric Plants, July
1925s...............................................

Percentage
South is of
Rest of
Country

The South1

Outside of
the South

$1,500.00

$1,710.00

87.7

1,376.00

1,537.00

89.5

.33

.41

80.7

.49

.55

88.9

.48

.62

77.2

1 For the purpose of the present table it has been necessary to adopt a flexible definition of
the term “ South.” The original definition applies only in the case of employees in railroad
repair shops. As regards other railroad employees, the term South means the Southern Region
as set up by the Interstate Commerce Commission. Arkansas, Lousiana, and a large part of
Virginia are thus dropped, while the state of Kentucky is added. In the case of employees in
gas and electric plants, the term South includes not only the ten states selected at the outset of
the study but in addition Delaware, Maryland, Kentucky, Oklahoma, Texas, and West Virginia.
» Source: Interstate Commerce Commission, Statistics of Railways in the United States. Average
annual earnings obtained by dividing total compensation of employees by average number
employed.
» Source: Census of Manufactures, 1927. Total wages divided by average number of wage
earners.
4 Source: Interstate Commerce Commission, Comparative Statement of Operating Averages,
Class I, Steam Railroads in the United States, Years 1925-1928.
6 Source: National Industrial Conference Board, Wages in the United States, p. 66. The
report in question gives average hourly earnings by geographic divisions. The figures for average
earnings outside of the South, as shown in Table X IV , represent unweighted averages offthe
appropriate divisional averages.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE

AND

SALARY

DIFFERENTIALS

very closely the differential observed in the case o f trade
unionists.

Inasmuch as railroad workers represent for the

most part a body o f highly skilled and experienced employees,
this is about what might be expected.

As might be expected,

also, the wage differentials applicable to employees o f gas
and electric plants are not materially out o f line with the
differential for railroad employees.
SALARIES OF TEACHERS AND CLERGYMEN

Table X V shows how the annual salaries o f southern
teachers, college professors, clergymen, and factory clerks
compare with the average salaries received in similar call
ings in other parts o f the country.

In comparing the salaries

o f public school teachers, only cities o f 10,000 to 30,000
population were considered.

This was done advisedly to in

crease the comparability o f the averages.

The comparison

is still somewhat vitiated by virtue o f the fact that it was
not possible to eliminate the salaries o f N egro teachers in
computing the southern average.

Data covering six south

ern states indicate that the average salary o f white teachers
is about 16 per cent higher than the combined average o f
white and N egro teachers.

I f this percentage holds good

for all o f the ten states under consideration, the average
salary o f southern white teachers becomes 77 per cent o f the
average for the rest o f the country instead o f 68 per cent as
indicated in Table X V .

But even with this adjustment, it

will be seen that the salaries o f southern school teachers fall
short o f the level prevailing elsewhere by a considerably
greater percentage than in the parallel case o f southern col
lege and university professors, whose salaries average around
88 per cent o f the general average for the rest o f the country.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES
T

able

TH E SOUTH

Average Annual Earnings in Specified Professional and Clerical
Pursuits.

Occupation
Average Annual Salaries of Public
School Teachers in Cities of
10,000 to 30,000 Population,
1925-19262.....................................
Average Annual Salaries of College
and University Professors,
1926-273.........................................
Average Annual Salaries of
Clergymen, 19204.........................
Estimated Average Annual Salaries
of Male Clerks in Manufacturing
Establishments, 19195..................

The South1

Remainder
of Country

Percentage
South is of
Remainder
of Country

$1,014.

$1,500.

2,660.

3,033.

87.7

716.

981.

73.0

1,537.

1,688.

91.0

67.6

* As regards college and university professors, the term “ South” includes the District of
Columbia and the states of Delaware, Kentucky, Maryland, Oklahoma, Texas, and West Vir
ginia, in addition to the ten states originally selected.
1 Source: United States Bureau of Education, Biennial Survey of Education, 1924-26, p. 742.
Includes salaries of kindergarten, elementary, and high school teachers.
1 Source: Publications of The General Education Board, Occasional Papers, No. 8, Table I,
p. 44.
‘ Source: Interchurch World Movement, World Survey-American Volume, p. 286.
‘ Source: Census of Manufactures, 1919. The averages shown above were obtained by divid
ing the aggregate of salaries paid by the equated number of clerks. For this purpose one male
was considered the equivalent of 1.9 females. For the justification of this procedure see Leven,
Income in the Various States, pp. 79-80.

This difference is understandable when it is considered that
professors are normally drawn from a nation-wide area,
whereas public school teachers are as a rule recruited locally.
It will be seen from Table X V that the salaries o f south
ern clergymen average around 73 per cent o f the prevailing
level elsewhere.

This percentage may possibly misrepresent

the present situation since it is based on data which are ten
years old.

It is known, however, that ministers’ salaries

vary closely with teachers’ salaries in different parts o f the
country.1 Since the respective salary differentials for teach
ers and clergymen as given in Table X V are not far apart,
1Leven, Income in the Various States, p. 95.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE AND SALARY

DIFFERENTIALS

it may be assumed that the relative difference in present
ministerial salaries, as between the South and elsewhere, is
still substantially as indicated.
According to Table X V

the average salary o f male

clerks in southern manufacturing establishments is only nine
per cent below the comparable average for the rest o f the
country.

A number o f considerations, however, serve to

cast doubt upon this result.

The figures used are over ten

years old and apply to a year in which conditions were
abnormal.

The salary averages have been estimated on a

basis which involved certain questionable assumptions.

F i

nally, in view o f the smaller average size o f southern estab
lishments, there is no certainty that comparable groups o f
employees were involved.
OMITTED OCCUPATIONS

In concluding the present survey o f southern income and
wages, it is pertinent to observe that the picture drawn is
far from complete.

Important elements o f the working

population, for instance the large group o f domestic servants
and the numerous class o f persons engaged in trade, have
been left out o f the reckoning altogether.

This deficiency,

however, may not be as serious as it appears.

The investi

gations o f the National Bureau o f Econom ic Research indi
cate that wages in occupational groups which are recruited
from the same class o f society are to a certain extent inter
dependent.2

T o the degree that this tendency may be re

lied upon, it is thus possible to consider the wage differentials
worked out in the present study for a limited number o f
employments as representative o f the average differentials
'Leven, Income in the Various States, p. 95.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

applying to groups o f occupations drawing employees from
the same economic class.

Making a practical application o f

this reasoning, it is probably safe to assume that the average
wages o f southern domestic workers fall short o f the pre
vailing level o f wages elsewhere by about the same margin
as was noted in the case o f unskilled common labor, that is,
by from 40 to 50 per cent.

The income differential applying

to persons engaged in trade is probably considerably less
than this.

Trade, however, is a general term which encom

passes a wide variety o f occupations, ranging all the way
from newsboys and porters to proprietors o f stores and bank
presidents.

This miscellaneous assortment o f employments

would obviously have to be broken up into subgroups before
any generalizations could be hazarded.
S UMMARY OF FINDINGS

It can scarcely be claimed for the statistical investigation,
which has just been brought to a close, that it has resulted
in the discovery o f any new and startling information.

The

statistics which have been presented merely supply quanti
tative confirmation o f certain facts and tendencies o f which
inform ed Southerners have been aware for a long time.
These facts and tendencies may be summarized briefly as
fo llo w s:
M oney incomes and money wages are quite generally
lower in the South than in the rest o f the country.

The

degree o f difference, however, cannot be summed up in a
single percentage which applies uniformly to all industries
and types o f employment.

Notwithstanding the publicity

which has lately centered around the lower level o f factoryearnings, it is not in manufacturing but in agriculture that

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE AND

SALARY

DIFFERENTIALS

the income differential between the South and the rest o f the
country reaches its maximum.

This is all the more serious

for the South, since agriculture represents the main source
o f livelihood o f nearly half o f its population.
The average per capita income o f the southern agricul
tural classes is, roughly speaking, about one-half o f the aver
age income received by similar classes in other parts o f the
country.

Outside o f agriculture, the extent to which south

ern earnings and rates o f pay fall below those o f the rest o f
the country seems to depend largely on the factor o f skill.
The differential in rates o f pay for the least skilled type o f
common labor appears to be on a par with the differential in
agriculture.

F or common labor in general, southern wages

seem to range from 50 to 65 per cent o f the wages in com
parable employments elsewhere.

In semi-skilled employ

ments, the range o f southern wages seems to be from 65 to
85 per cent o f the comparable wages paid elsewhere.

In the

case o f skilled mechanics, the disparity between the South
and the rest o f the country appears to reach its minimum,
southern wage rates representing from 75 to 100 per cent
o f the corresponding wage rates obtaining outside o f the
South.

The differentials noted do not seem to be materially

affected by the character o f the employing agency, applying
in substantially equal degree to wages paid by strictly private
enterprises, public utilities, and governments.
The extent to which average wages for entire industries
in the South fall short o f average wages in similar industries
elsewhere is determined largely by the relative proportions
o f skilled and unskilled workers employed.

In industries

which employ a high percentage o f unskilled workers, as for

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

INCOME

AND

WAGES

THE

SOUTH

instance in the sawmill industry, the disparity in wage levels
as between the South and the rest o f the country is large.
In the foundry and machine shop industry, which employs
a high percentage o f skilled workers, the disparity between
the South and the rest o f the country is relatively small.
LABOR COSTS AND REAL WAGES

In order to guard against the drawing o f unwarranted
conclusions, it is important that the limitations o f the statis
tics presented be clearly understood.

In the first place, it

should be borne in mind that the incomes and wages dealt
with are primarily money incomes and money wages.

Prac

tically the only gainful activity in which income items other
than cash have been taken into account is agriculture.
This particular limitation has very little significance, since
most gainfully employed persons other than farmers receive
their income in the form o f cash.

But one exception o f some

consequence deserves to be noted.

Southern textile em

ployees customarily receive certain valuable perquisites in
addition to their cash wages.

Thus the great m ajority o f

them live in company-owned houses for which they pay less
than a full commercial rental.

Electricity, coal, and wood

are also frequently supplied by the companies at less than
the full commercial rates.

The National Industrial Con

ference Board estimated the annual value o f perquisites such
as these at $87 per family in Charlotte, North Carolina, in
1920.3 N o comprehensive statistics on the value o f the non
cash elements o f the average textile worker’s income are
available, however, and in the present study only money
3 National Industrial Conference Board, Special Report No. 8, May,
1920, p. 18.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WAGE AND SALARY

wages have been considered.

DIFFERENTIALS

Had it been possible to include

the non-cash items, the wage differentials between the South
and elsewhere, as regards the textile industry at least, would
have been somewhat reduced.
From the point o f view o f the industrial enterpriser,
regional differences in money wages are, o f course, not im
portant unless they reflect actual differences in the labor cost
o f producing comparable commodities.

In other words, the

employer o f labor is interested not only in the money wage
which he pays out but in the value o f the services which the
worker gives in return for his wages.

L ow money wages

do not necessarily mean low labor costs.

It would be a seri

ous mistake, therefore, to assume that the differences in
money wages between the South and the rest o f the country,
as worked out for the present purpose, represent correspond
ing differences in labor costs per unit o f product.

The

spread o f industry to the South in recent years, coupled
with the known differentials in money wages, make it a
reasonable supposition that southern labor costs, in certain
productive activities at least, are somewhat lower than else
where.

However, the statistics on money wages developed

in the present study are not o f themselves sufficient to prove
the correctness o f this supposition.
Just as the employer o f labor is interested primarily in
labor costs, so the wage receiver is interested not so much
in his money wages as in his real wages, that is, in the
standard o f living which his money wages will enable him
to support in the particular locality in which he lives.

would doubtless be desirable to know to what extent the
differences in money incomes worked out for the present

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A N D WA GE S I N T H E S OUT H

study correspond to differences in real incomes.

This in

formation might not be difficult to obtain, if the living re
quirements and tastes o f wage earners were everywhere
alike and if there were no qualitative but only quantitative
differences in real incomes.

But as a matter o f actual fact,

such variables as climate and other environmental factors,
as well as dissimilarities in social habits, render any attempt
to measure the disparity in real income as between the South
and elsewhere an extremely hazardous undertaking.
The fact that the income and wage differentials given
in the present study have not been adjusted for regional
differences in the cost o f living does not deprive these fig
ures o f their primary significance.

As has already been in

dicated, the average amount o f money income per capita in
the South is less than half o f the corresponding average for
the rest o f the country.

So great a disparity in money in

come must necessarily carry with it a significant difference
in real income in a country as closely integrated, economi
cally, as is the United States, in which a large proportion o f
the necessities and satisfactions o f life are supplied by or
ganizations which operate on a national scale.
A consideration o f even greater importance from the
standpoint o f the present investigation is the fact that the
translation o f money wages into real wages would not change
the relative size o f the various wage differentials with refer
ence to one another.

In other words, the measurement o f

wages in terms o f commodities and services instead o f in
terms o f money would not affect the relationship observed to
exist between the size o f the wage differential and the factor
o f occupational skill.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CHAPTER V
W H Y S O U T H E R N IN C O M E S A R E L O W

H E F A C T S o f the southern income and wage situ
ation, as they have just been summarized, raise one or

two questions which invite further discussion.

In the first

place, what factors are responsible for the South’s extremely
low average o f income per capita ? According to the figures
o f the National Bureau o f Econom ic Research, shown in
Table II, the total income o f the South divided by the total
population yields a quotient which on the average is less
than half as great as the corresponding quotient for the rest
o f the country.

These figures, it is true, refer to the years

1919, 1920, and 1921.

However, as indicated by the data

contained in Tables III and IV , in neither agriculture nor
manufacturing have subsequent changes been great enough
to make the present relative position o f the South materially
different.
One

circumstance

which

partially accounts

for

the

South’s low average is the relatively small number o f South
erners belonging to the higher income classes.

This factor

cannot be rated as o f prime importance, since the recipients
o f very large incomes are not sufficiently numerous nor
sufficiently affluent to exercise a marked influence on the
general income average.1 Another factor, o f course, is the
lower scale o f wages and salaries in the South, as well as
the smaller returns per worker in agriculture.
ever, does not offer a complete explanation.

This, how
A s has been

noted, the average amount o f income per capita in the South
1 See King, The National Income and Its Purchasing Power, p. 178.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

[5 7 ]

I N C O M E A N D WA G E S I N T H E S OUT H

is less than half o f the corresponding average for the rest o f
the country.

Not even in agriculture nor in the least skilled

o f non-agricultural employments are the disparities in per
capita productivity and rates o f pay as great as the disparity
in per capita income.

It is obvious that another factor must

be looked for in order to explain adequately the low average
o f income in the South.

That factor is found in the occu

pational distribution o f its population.
The rewards offered by the various forms o f gainful
employment are by no means all alike.

Manufacturing

yields a larger average return per person engaged in it than
does agriculture.

Some forms o f manufacturing activity

yield larger returns per worker than do others.

Irrespective

o f regional differences in wage and salary scales, it is pos
sible for one geographic area to have a lower average level
o f income than another simply because its working popu
lation is more highly concentrated in occupations and em
ployments o f relatively low return.

This is one o f the main

reasons for the low level o f income in the South.

A dis

proportionately high percentage o f its population is employed
in the low-yield industries.
THE PREPONDERANCE OF LOW-YIELD OCCUPATIONS

Under present conditions, agriculture probably offers
smaller returns to those engaging in it than any other m ajor
economic activity.

The per capita productivity o f southern

agriculture, as has been seen, is particularly low.

Neverthe

less about 46 per cent o f the southern population depends on
agriculture for support.

Elsewhere, the proportion o f the

population which still elects to support itself by farming is
only 24 per cent.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

W H Y S O U T H E R N I N C O ME S ARE L OW

Since manufacturing on the whole yields larger per
worker returns than does agriculture, a shift o f man power
from the latter to the former activity would tend to increase
the South’s per capita income.

During recent years, the

number o f factory wage earners in southern establishments
has been increasing steadily. The percentage o f the southern
population engaged in manufacturing and mechanical pur
suits, however, is still far below the average for the rest o f
the country.2 M oreover, the particular industries which em
ploy the largest number o f southern workers are, generally
speaking, industries which rely heavily on unskilled and semi
skilled labor and in which average earnings per worker are
consequently low.

This fact is brought out by Table X V I,

which shows the relative importance o f specific types o f
manufacturing activity in the South from the point o f view
o f the number o f wage earners employed.
It will be noted from Table X V I that half o f the indus
trial wage earners o f the South are concentrated in two in
dustries, textiles and lumber and timber.

Regardless o f

where they are carried on, both o f these industries rank low
as regards average earnings per worker employed.

Massa

chusetts employs more cotton textile workers than any other
state outside o f the South.

The average annual earnings o f

its textile workers, as indicated by the Census o f Manufac
tures, fell short o f the average earnings o f other factory
wage earners within the state by approximately 24 per cent
in 1927.

In Michigan, the average annual earnings o f work

ers in the lumber and timber industry were some 27 per cent
2 In 1920, according to the Census of Occupations, 18.1 per cent of the
working population of the South was engaged in manufacturing and
mechanical pursuits as compared with 33.7 per cent of the working
population elsewhere.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A N D WA G E S I N T H E S OUT H

below the general average o f other industrial wage earners
within the state.

Even in Oregon, where wages in the lum

ber and timber industry are exceptionally high, there was,
nevertheless, a disparity o f nine per cent between the average
earnings o f workers in that industry and the general average
o f earnings applicable to other industries o f the state, in
1927.
In most o f the northern industrial states, the effect o f
the low-wage industries is more or less offset by the presence
o f industries in which earnings per worker are high.

N o

table examples o f high high-wage industries are printing and
T

able X V I

N u m b e r o f W a g e E a r n e r s E m p lo y e d in S p e c ific T y p e s o f
i n g A c t i v i t y in th e S o u t h , Y e a r

Type of Activity

M a n u fa c tu r

1 9 2 7 .*

Average
Number of
Wage
Earners
Employed

Percentage
of Total

Textiles:
Cotton Goods......................................................
Knit Goods..........................................................

5270,995
47,063

25.8
4.5

T o t a l ..................................................................

$318,058

30.3

21,951

2.1

193,155

18.4

Railroad Repair Shops.............................................
Tobacco and Tobacco Products..............................
Turpentine and Rosin...............................................

$215,106
59,800
36,971
33,766
28,356

20.5
5.7
3.5
3.2
2.7

Iron and Steel Products Including Cast Iron
Pine
.....................................................
All Others..................................................................

24,009
335,898

2.3
31.8

G rand T o t a l .................................................... $1,051,964

100.0

Lumber and Timber Products:
Planing mill products.........................................
Lumber and timber products not elsewhere
classified.........................................................
T o t al ..................................................................

*Census of Manufactures, 1927.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

WHY

S O U T H E R N I N C O M E S ARE L OW

publishing, automobiles, iron and steel, and foundry and
machine shop products.

These industries are either absent

altogether from the South or are very weakly represented.
The foregoing considerations make it evident that the
low average o f income per capita in the South is due in the
main to three factors: ( 1 ) the relatively small number o f
persons receiving large incomes; ( 2 ) the lower scale o f sal
aries and wages coupled with the small return per worker
in southern agriculture; ( 3 ) the concentration o f the work
ing population in industries and employments which yield a
relatively low return per worker no matter where they are
carried on.
INDUSTRIAL WAGES AND AGRICULTURAL
PRODUCTIVITY

In order completely to explain the difference in per capita
income as between the South and elsewhere, it is necessary
to account for the wage and salary differentials which were
observed to be present in varying degree in practically all o f
the occupations studied.

T o treat this subject in any basic

fashion would carry the discussion far afield.

A complex o f

many interrelated factors, not all o f them economic, is doubt
less involved.

The immobility o f certain elements o f the

southern working population and the presence o f the N egro
with his low standard o f living and limited range o f occu
pational choices are obvious elements to be considered.

is not proposed here to go behind the statistical data which
have just been presented.

These data point to a strong rela

tionship between the depressed level o f southern wages and
the low income-yielding capacity o f southern agriculture.
It has been observed that the income differential between

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A N D WA G E S I N T H E S O U T H

the South and the rest o f the country is greater in the case
o f agriculture than in the case o f any other employment con
sidered.

It is in this submerged industry that nearly half o f

the southern population gains its livelihood.

In view o f

these considerations, it is highly significant that it is in the
unskilled occupations capable o f being filled by raw recruits
from the farm that the wage differential between the South
and the rest o f the country reaches its maximum.

In semi

skilled occupations, which are less immediately affected by
the competition o f the agricultural classes, the wage differ
ential is considerably diminished.

Finally, in highly skilled

occupations, which are for the most part out o f reach o f
potential industrial workers from the farm, the wage differ
ential is at a minimum and in some cases entirely disappears.
f a r m e r s ’ in c o m e s

There is abundant evidence that the annual incomes o f
hundreds o f thousands o f farmers in the South are so de
pressed that employment in manufacturing establishments
even at existing southern wages would constitute for them a
decided advance in the economic scale.

Although there are

no comprehensive statistics on the average incomes received
by farmers in different sections o f the country, the Depart
ment o f Agriculture collects annually certain sample data
from which important conclusions may be drawn.

The de

partment has compiled detailed returns covering the oper
ations in 1927 o f 5,255 southern farms.3 The average net
8 Yearbook of Agriculture, 1928, p. 1038. The statistics used cover
farms located in the South Atlantic and South Central States. That is,
the territory covered includes in addition to the ten states selected for
the present study, the states of Delaware, Maryland, West Virginia,
Kentucky, Texas, and Oklahoma.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

W H Y S O U T H E R N I N C O M E S ARE LOW

income from these farms, including the value o f food pro
duced and used on the farm, and after the deduction o f in
terest at 5 per cent on the farm investment, was $635 in the
South Atlantic States and $700 in the South Central States.
These figures represent family incomes, since the value o f
labor contributed by members o f the farmers’ family has not
been deducted.
L ow as the income figures in question may appear, there
are strong reasons for believing that they present too opti
mistic a picture to be truly representative o f the conditions
prevailing among the rank and file o f southern farmers.
The average size o f southern farms is less than 80 acres.
The farms from which returns were received by the Depart
ment o f Agriculture averaged 189 acres in the South A t
lantic States and 249 acres in the South Central States.

The

farms in question, moreover, were owner-operated farms.
O f the 2,060,000 farms reported by the 1925 Census o f A g
riculture in the ten southern states which form the basis o f
the present study, only 47 per cent were operated by owners
or managers. The remaining 53 per cent represented tenantoperated farms.

About 516,000 o f the tenant operators, or

slightly less than half o f them, were so-called croppers, that
is, married laborers, without capital o f their own, hired to
raise a crop for a half interest.
There can be no doubt that the average income o f all
southern farmers, including the 1,090,000 tenant farmers,
is considerably lower than indicated by the farm returns re
ceived by the Department o f Agriculture.

It is possible to

arrive at a rough approximation o f the true average on the
basis o f the figures for gross farm income given in Table B

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A N D WA G E S I N T H E S O U T H

on page 19.

A s indicated in that table, the gross value o f

all farm products, with duplications eliminated, amounted
to about $2,139,000,000 in the ten states under consider
ation in 1927.

Dividing this amount among the 2,060,000

farms gives a gross income per farm o f $1,038.

In the case

o f the 5,255 southern farms, for which detailed cost statis
tics were collected by the Department o f Agriculture, the net
return to the farmer, including the value o f farm products
consumed by his family, and after the deduction o f interest
at five per cent on the farm investment, represented approxi
mately 50 per cent o f the gross farm income.

I f this per

centage may be taken as applying generally, the conclusion
follows that the average southern farmer received a net re
turn for his labor and managerial functions o f approximately
$519 in 1927.
FARM AND INDUSTRIAL INCOMES COMPARED

Although the two sets o f figures are not, strictly speak
ing, comparable, it is worth while to contrast the average
farmer’s income, as calculated above, with the average an
nual earnings o f southern factory workers, as indicated by
the 1927 Census o f Manufactures.

The census average

wage, obtained by dividing the annual factory wage bill by
the average number o f workers employed, represents an in
dividual and not a family income.

It is an average, more

over, which has been diluted by the inclusion o f women and
minors.

In view o f these facts, it is all the more significant

that in the same year in which southern farmers had an
average income o f only $519 per capita, southern factory
workers, taken as a whole, had average annual earnings o f
$823 per capita; the average annual earnings o f workers in

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

W H Y S O U T H E R N I N C O M E S ARE LOW

the lumber and timber industry amounted to $748; while, in
the cotton goods industry, earnings per worker averaged
around $671 per annum.
It would, o f course, be a mistake to assume that all
southern farmers receive an income equal to $519 per year
as a reward for their agricultural efforts.

That great num

bers receive considerably less than this is indicated by a study
made by the North Carolina T a x Commission covering the
operations o f 1,115 North Carolina farms in 1927.

The

poorest farms studied were located in the mountain counties
o f the western portion o f the state.

Returns from 281 sam

ple farms located in three o f these mountain counties indi
cated an average cash income per farm o f $86.

Including

income received in kind, and without deduction o f interest
on the farm investment, the average income was $554 per
farm.

Deduction o f interest at five per cent on the value

o f the farm investment left an average o f only $273 as the
farmer’s labor and managerial income.4

In the same year,

1927, workers in North Carolina cotton mills had an aver
age census wage o f $694 per annum.
FUTURE OF THE WAGE DIFFERENTIAL

T o the theoretically minded, the South today presents
the spectacle o f an economic system in unstable equilibrium.
Southern wage rates, especially for unskilled labor, are con
siderably below the average for the rest o f the country.
Manufacturing offers larger rewards to the rank and file o f
southern workers than are normally obtainable in agriculture.
Theoretically, this situation should be expected to set strong
currents in motion.

Industrial enterprises, whose successful

* Report of the North Carolina Tax Commission, 1928, p. 119.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A N D WA GE S I N T H E S OUT H

operation depends upon the availability o f large numbers o f
unskilled and semi-skilled employees, should be expected to
move to the South.

There should be a flow o f labor from

agriculture to manufacturing, a flow which should be com
paratively rapid in view o f the South’s million or more ten
ant farmers with little in the way o f capital investment to
tie them to the land.

There should also be some tendency

for southern labor to migrate to the high wage industrial
centers o f the North.
Such scant statistical evidence as is available indicates
that the movements described have to a certain extent actu
ally been taking place.

Manufacturing activity in the South

has been expanding more rapidly than in the rest o f the coun
try.

A ccording to the Census o f Manufactures, the number

o f factory wage earners employed outside o f the South de
creased by about nine per cent between 1919 and 1927.
W ithin the South, however, the number o f persons employed
in manufacturing establishments increased by nine per cent
during the same period.

Although the shift o f man power

from agriculture to other employments is not peculiar to
any particular region, the movement seems to be progress
ing more rapidly in the South than elsewhere.

Thus, be

tween 1920 and 1925, the farm population o f the ten
southern states under consideration showed a decline o f
approximately 12 per cent.

Outside o f the South the de

cline in the farm population was only six per cent.5

The

6 The farm population figures for 1925 are not strictly comparable
with those reported in 1920, since the definition used in 1920 included
not only persons living on farms, but, in addition, farm laborers and
their families who, while not living on farms, did live in rural territory.
The Census Bureau expresses the belief that the number of laborers
thus included is not very great.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

W H Y S O U T H E R N I N C O M E S ARE L OW

absolute decline in the southern farm population between
1920 and 1925 was in the neighborhood o f 1,300,000 per
sons.

Some part, at least, o f this loss was due to migration

to the North as is evidenced by the rapid growth o f the
N egro population o f certain northern cities.
A n optimist might be inclined to view the tendencies
noted above as an augury o f the ultimate disappearance o f
the southern wage differential.

H e would doubtless seek to

justify his faith by reasoning somewhat as fo llo w s:
W ages in the South are low because the sole source o f
livelihood o f nearly half o f the population is a particularly
unprofitable agriculture.

I f agriculture could be made to

yield a more adequate living to the present masses o f south
ern farm dwellers, there would be a corresponding rise in the
level o f industrial wages.

I f such a solution be regarded as

chimerical, the only other alternative, aside from migration,
is to create opportunities for employment in more remuner
ative lines o f endeavor.

Even at the present scale o f wages,

industry has more to offer the southern worker than has
agriculture.

I f industry can be expanded to the point where

it is capable o f absorbing the sub-marginal workers on the
farms, the wage differential between the South and the rest
o f the country should, in the course o f time, automatically
disappear.

Pending the completion o f this process, the wage

differential has a useful purpose, for it serves both as a lure
to attract the industrial capitalist and as a stimulus to migra
tion.

T o attempt to reduce or remove it by artificial means

would only retard the growth o f southern industry and con
demn the tenant farmer to a longer period o f poverty on
his farm.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I N C O M E A ND WA GE S I N T H E S O U T H

Individuals who have less faith than the optimist in the
beneficent workings o f unregulated economic forces are not
likely to find this reasoning convincing.

They may very well

point out that the income disparity between the South and
the rest o f the country is as old at least as the Civil W ar and
that it has not as yet disappeared automatically.

In the opin

ion o f such as these, the present situation in the South calls
for a high order o f economic statesmanship rather than for
a supine policy o f laissez-faire.
I f the latter view is correct, and if more positive meas
ures are required to raise the level o f income in the South,
one fact seems clear.

Such measures, if they are to succeed,

must not neglect the South’s two million farmers.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Full text of Income and Wages in the South

FRASER