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U N IT E D S T A T E S D E P A R T M E N T O F L A B O R
Frances P erkin s, Secretary
B U R E A U OF L A B O R ST A TISTIC S
Isador L ubin, C om m issioner (on leave)
A . F. H in richs, A c tin g C om m issioner
+
Spendable Earnings
o f Factory W orkers
1941-43
By
N . A R N O L D TO LLES
o f th e
B u rea u o f L abor S ta tistic s
B ulletin 7^o. 769
{Reprinted from the M onthly L abor R eview , M arch 1944, w ith additional datal
U N ITED STATE S G O V E R N M E N T PR IN T IN G OFFICE, W ASH IN G TO N : 1944
F or sale b y the Superintendent o f D ocum ents, U . 8. G overnm ent P rin tin g O ffice
W ashington 25, D . C. - P rice 5 cents
Bulletin 7\fo. 769 of the
United States Bureau of Labor Statistics
[Reprinted from the M onthly L abo r R e v ie w , March 1944, with additional data]
Spendable Earnings of Factory Workers, 1941—43
Summary
The phrase “ take-home wages” has been used very frequently to
describe the averages of weekly earnings published by the Bureau of
Labor Statistics. This popular description was never entirely accu
rate, because the published averages relate to gross weekly earnings
before deductions have been made. Some workers always have been
subject to deductions for such items as group insurance, occupational
supplies, and union dues. The cash sum “ taken home” was some
what less than the gross weekly pay. Until recently, however, these
deductions were small in aggregate amount and were seldom subject
to violent change. The published averages of weekly earnings were
therefore satisfactory as a measure of the trends of spendable income.
Two recent developments have depressed the level of currently
spendable earnings: The widespread sale of war bonds, beginning in
1942, and the extension of personal taxes down to the income levels of
wage earners, beginning in 1943. Thus, the comparison between the
68.4-percent rise in gross factory earnings and the 23.4-percent rise
in the Bureau’s cost-of-living index, since January 1941, is mislead
ing. The appropriate comparison to show current levels of living
would appear to be between living costs and spendable earnings.
The gross earnings of workers in the United States no longer repre
sent their currently spendable income. For factory workers as a
whole, the average of gross weekly earnings rose 68.4 percent between
January 1941 and October 1943. The corresponding increase in the
average of spendable income, after taxes and a 10-percent bond sub
scription, was 44.8 percent for a worker supporting a family of 4 and
24.2 percent for a worker without dependents. Dining the same
period the cost of a standard budget rose by an average of 23.4 percent.
The worker who earned the average factory wage of $26.64 in
January 1941 had $26.37 to spend on current living. By October
1943, price increases had raised the cost of this standard from $26.37
to $32.54. Average weekly earnings actually advanced to $44.86
by October 1943. However, out of this $44.86, the average factory
worker with a family of four had a currently spendable income, as
defined above, of $38.19, while the worker without dependents had a
net of $32.76 per week. Thus, the net addition to spendable earnings
over this period amounted to $5.65 per week in the case of the married
680344°—44
1
2
Spendable Earnings of Factory Workers
worker used as an example and to 22 cents per week in the case of a
worker without dependents.
Among the various manufacturing industries, sharp differences are
evident in the trends of both gross and spendable earnings. At one
extreme, the worker in the newspaper and periodical industry experi
enced an average rise in gross earnings, even before bonds and taxes,
of only 21.4 percent, or less than the rise in living costs. At the other
extreme is the fertilizer industry where gross earnings rose by more
than 80 percent and net spendable earnings rose by 62 and by 40
percent, respectively, for married and single workers. Shipyard
workers experienced about the average percentage rise in gross earn
ings (66.9 percent) to the unusually high level of $62.91 per week in
October 1943. However, a shipbuilding worker without dependents
who earned the average gross amount per week was left with net
spendable earnings in October 1943 of $44.70 or $1.34 less than the
amount required to meet the current cost of the average living stand
ard for such a worker in January 1941. A shipbuilding worker sup
porting a wife and two children would have spendable earnings of
$50.58 under the same circumstances, or $4.54 more than the amount
required to maintain his former plane of living.
The burdens of the war have been borne by nearly all factory
workers, in the form either of a reduced scale of living or of harder
work without material improvement in current living. Because
most factory wage earners are working more intensely and for longer
hours, they have been able to maintain their spendable earnings and
to save. Any gains mad e in spendable earnings have been small, quite
different from those implied by comparing the gross average of earn
ings with average living costs. Neither widespread deprivation nor
widespread inflationary spending can be found among the factory
population.
Subtractions From Gross Earnings
In January 1941, the basic period of the so-called ‘‘Little Steel”
formula, the only Nation-wide deduction from gross weekly pay was
the social-security tax of 1 percent. Certain workers had additional
deductions for such items as union dues, tools and supplies, private
group insurance, and unemployment-compensation taxes.
Early in 1942 everyone was urged to subscribe at least 10 percent
of his gross earnings to war bonds. Workers throughout the country
have responded very generally to this appeal and have arranged for
voluntary deductions from their pay envelopes for this purpose.
This part of the worker’s gross earnings is not available for current
spending. It is true that war bonds may be redeemed after they
have been held for 60 days, but in fact the amount of cash obtained
by such redemption is only a small fraction of the amount subscribed.
Nearly three-quarters of the workers have arranged for regular pay
roll deductions for the purchase of wTar bonds and, by the end of 1943,
these deductions averaged 9 percent of the gross pay of the partici
pants. Bond deductions for industry as a whole amounted to about
7 percent of total pay rolls, including the pay of nonparticipants. In
addition, many workers subscribed for war bonds directly.
No attempt is made in this article to adopt the average percentage
of bond deductions as a basis for calculating spendable earnings.
Rather, the calculations are made for the usual case of the worker who
meets the quota of the pay-roll savings plan by subscribing 10 per
Spendable Earnings of Factory Workers
3
cent of his gross earnings. The 10-percent net subscription is assumed
for January 1943 and thereafter. Purely for purposes of illustra
tion, a subscription of 5 percent was adopted for July 1942 and a
subscription of 7% percent for October 1942. Bond redemption may
be ignored, since it has not occurred in the usual case.
The deduction of war-bond subscriptions from gross earnings entails
no implication that the individual workers were faced with any loss for
this reason or that the deductions were compulsory. The term “net
spendable earnings,” as here used refers to the cash a worker has to
spend, regardless of any change in his capital position. To the extent
that the factory worker responded to the war-bond drives as expected,
his spendable earnings were correspondingly reduced.
Beginning in 1943 the mass of factory workers became liable for
personal income taxes for the first time in the history of this country.
Moreover, the approximate amount of this liability was deducted from
the worker's pay check by the employer. During the first half of 1943
the income tax applicable to the mass of wage earners was the “victory
tax,” amounting to 5 percent of taxable income. Income exempted
from the victory tax was limited to $624 per year or $12 per week.
This exemption is the same for all persons. Since July 1943 a new
income tax has been added to the victory tax. The sliding scale
of rates under the new tax’ begins at 6 percent on the first $2,000 of
taxable income.1 Under the income tax a single person is allowed a
personal exemption of $500 and an earned-income credit of 10 percent.
These two personal income taxes reduced the spendable earnings of
nearly all wage earners. The amount of tax liability depends, of
course, on the number of dependents supported by the worker as well
as on the level of his gross income. Hence, it would be somewhat
unrealistic to speak of an average amount of income tax per wage
earner. It has seemed preferable to compute the tax liability for two
contrasting types of income-receivers: (1) A worker who is the sole sup
port of an adult and two children and (2) a single person with no
dependents. The tax computations provided are based on the final
tax liability rather than the estimated amounts which have been with
held. It has been assumed that the worker had no tax liability in 1942
and, therefore, is not involved in the “ forgiveness” feature of the
current tax law. It is assumed further that all of the worker's income
is obtained from earnings and that he has tax deductions amounting
to 6 percent of gross warnings.
For wage-earning families as a whole, average spendable earnings
have been raised since 1941, by the employment of additional family
members and by the decline in single-worker families. These in
fluences are necessarily excluded from the present inquiry into the
spendable earnings of two constant family types. Neither the family
of 4 nor the worker without dependents is presented as an average
family unit.
Trends of Gross and Net Spendable Earnings
From January 1941 to October 1943, the average weekly earnings
of factory workers rose by 68.4 percent—from $26.64 to $44.86. In
the earlier period, nearly all of these gross weekly earnings were cur1 The normal tax is 6 percent on all taxable income (after deductions, earned income credit, and personal
exemptions). The surtax sliding scale begins with 13 percent on the first $2,000 of surtax net income (i. e.,
after deductions and personal exemptions). Since there is no earned income credit on the surtax, an indi
vidual might pay a surtax and no normal tax. In this case, the beginning rate would be 13 percent.
Spendable Earnings of Factory Workers
5
rently spendable. After deducting the social-security tax of 1 percent
(27 cents), a sum of $26.37 remained. By October 1943 the socialsecurity deduction, still at 1 percent, amounted to 45 cents. Income
and victory taxes in the case of a worker with a wife and two children,
who had average earnings of $44.86, amounted to $1.73 per week.2 The
worker who subscribed 10 percent to war bonds, as he was expected to
do, would have a further deduction of $4.49. These three deductions
totaled $6.67 per week and the remaining spendable earnings amounted
to $38.19. Thus, although the average gross earnings rose by 68.4
percent, the average net spendable earnmgs for the worker supporting
a family of four rose by only 44.8 percent. The corresponding increase
in the prices of goods customarily purchased by workers in large cities
was 23.4 percent during this whole period. Table 1 provides similar
figures for nine selected months between January 1941 and October
1943. It will be seen that the most rapid advance in spendable earn
ings occurred during the year 1941, prior to the deductions for taxes
and bonds. The results shown for the year 1942 should be under
stood as being approximate only, because of the factor of bond pur
chases. At any time during this period, the factory worker might have
responded by subscribing the full 10 percent for bonds and if he did so
he would have suffered a decline in his spendable earnings. On the
other hand, his spendable earnings would have continued to rise with
his gross earnings if he postponed his bond subscription. By 1943 the
deduction of 10 percent for bonds corresponded with the common
experience. Average spendable earnings moved very little above the
levels of 1942 until the last quarter of 1943; whereas gross earnings rose
by an average of $7.22 per week from January 1942 to January 1943,
the net spendable earnings rose by only $2.14. (See chart, p. 4.)
T able 1.— Gross Earnings, Deductions, and Spendable Earnings o f Factory Worker S u p porting A dult and 2 Children, Compared With Cost o f Living, January 1941-October 1943
Average gross
weekly earnings
Period
1941: January....................
July............................
1942: January....................
July............................
October___________
1943: January........ .............
April...........................
July...........................
October......................
Average net spend
Cost-ofable earnings
living
index
Income
Index
Index
(January
Amount
SocialBond Amount
and
(in
(January security
(in
(January
1941=
pur
victory chases
current
1941 =
current 1941=
100)
tax
* dollars)
taxes
dollars)
100)
100)
$26.64
29.62
33.40
36.43
38.89
40.62
42.48
42.76
44.86
100.0
111.2
125.4
136.7
146.0
152.5
159.5
160.5
168.4
Deductions from earnings
$0.27
.30
.33
.36
.39
.41
.42
.43
.45
$0.94
1.26
1.34
1.73
$1.82
2.92
4.06
4.25
4.28
4.49
$26.37
29.32
33.07
34.25
35.58
35.21
36.55
36.71
38.19
100.0
111.2
125.4
129.9
134.9
133.5
138.6
139.2
144.8
100.0
104.5
111.1
116.1
118.1
119.7
123.1
122.9
123.4
i Computed at 5 percent in July 1942, 7^> percent in October 1942, and 10 percent in January 1943 and
thereafter.
Table 2 shows trends of spendable earnings and living costs in
dollar values rather than indexes (see charts, frontispiece and p. 6).
Here again, the data cover the worker who supported an adult and
two children. The gross weekly earnings, the deductions, and the
net spendable earnings are identical with those shown in table 1.
In place of a cost-of-living index, however, table 2 provides a com2 The average amount of tax actually paid by the workers will exceed the amounts indicated, since the
lowest-paid workers will pay no income tax while the highest-paid will be liable for tax rates considerably
above those applying to average earnings.
05
GROSS AND N ET SPENDABLE WEEKLY EARNINGS OF FACTORY WORKERS
COMPARED WITH EARNINGS REQUIRED TO MAINTAIN LIVING STANDARDS OF JANUARY 1941
SELECTED MONTHS, JANUARY 1941 -OCTOBER 1943
DOLLARS
DOLLARS
50
-GROSS WEEKLY EARNINGS
I ^D EDU CTIO NS FROM EARNINGS
>
WIFE AMO 2 CHILDREN
-N E T SPENDABLE EARNINGS
ADDITIONAL
-SPENDABLE EARNINGS
IN CURRENT DOLLARS
—
WEEKLY EARNINGS
REQUIRED TO MAINTAIN
STANDARD OF JANUARY, 1941
JU L.
1941
1942
OCT.
A PR.
JUL
1943
OCT
Spendable Earnings of Factory Workers
50
Spendable Earnings of Factory Workers
7
putation of the earnings which a worker would have needed in each
period to support his level of living as it was in January 1941. This
computation results from a simple application of the cost-of-living
index to the net spendable earnings of $26.37 in the base period.
By October 1943, after the cost of living had risen by 23.4 percent, a
worker needed to spend $32.54 in order to purchase the goods which
could have been bought in January 1941 with $26.37. The average
of net spendable earnings did rise faster than the cost of living, but
the additional spending power of the factory worker was much less
than has very frequently been supposed. While the average of gross
earnings advanced by $18.22 (from $26.64 to $44.86), net spendable
earnings left after deduction for taxes and bonds advanced by only
$11.82. At the same time the money cost of a January 1941 level of
living rose by $6.17. Thus, the worker with gross earnings of $44.86
had improved his position to the extent of only $5.65 per week.
Moreover, the additional earnings which the worker was free to spend
had, like all other income, a lower purchasing power than before. The
$5.65 in October 1943 would command no more goods and services
than could have been obtained by $4.58 in January 1941.
T able 2.— Spendable Earnings of Factory Worker Supporting A dult and 2 Children, and
Earnings Required to M aintain January 1941 Standard, January 1941-October 1943
Period
1941; January............................
July....................................
1942; January..............................
July....................................
October..............................
1943; January..............................
April...................................
July....................................
October..............................
Net spendable
earnings
DeducGross
tions
weekly
from
In cur In Janu
earnings earnings
rent dol ary 1941
lars
dollars
$26.64
29.62
33.40
36.43
38.89
40.62
42.48
42.76
44.86
$0.27
.30
.33
2.18
3.31
6.41
6.93
6.05
6.67
$26.37
29.32
33.07
34.25
35.58
35.21
36.55
36.71
38.19
$26.37
28.06
29.77
29.50
30.13
29.42
29.69
29.87
30.95
Earnings Addition to spend
required
able earnings
to maintain
stand
In cur In Janu
ards of
dol ary 1941
January rent
lars
dollars
1941
$26.37
27.56
29.30
30.62
31.14
31.56
32.46
32.41
32.54
$0.00
1.76
3.77
3.63
4.44
3.65
4.09
4.30
5.65
$0.00
1.68
3.39
3.13
3.76
3.05
3.32
3.50
4.58
Spendable Earnings in Individual Industries
The general average of the earnings of all factory workers, although
useful for some purposes, is too abstract to have much meaning for
individual workers. It would be difficult to find an actual worker whose
gross earnings advanced from $26.64 to $44.86 and whose spendable
earnings advanced from $26.37 to $38.19. Such a worker would have
had to take advantage of the average opportunity for improvement,
not only from wage-rate increases and overtime work, but possibly
also by changing his job, his employer, and his place of residence.
The actual experiences of individual workers in the wartime period
have been very diverse. This diversity is illustrated by the figures
of gross and net earnings shown in table 3.8
* As noted previously, all the results shown are for workers who did devote 10 percent of their pay to warbond purchases. In some, but not all, of the industries with the least favorable trends of spendable earnings,
actual pay-roll deductions for bonds were less than the general average. Thus, as compared with average
deductions of 9 percent of the participants’ pay rolls, the recent percentages for the newspaper, rayon, ma
chine-tool, and the baking industries have been 7, 9, 10, and 8, respectively. Against a general ratio of 7
percent of all pay rolls, including nonparticipants, these industry percentages were 3^, 6,8, and 5. In the
extreme case of newspapers, a 3H-percent bond subscription would leave a 12- rather than 4-percent rise in
spendable earnings for the married worker and a 3- rather than 10-percent decline for the single worker
(January 1941 to October 1943; compare columns 7 and 8 of table 3).
Spendable Earnings of Factory Workers
8
SPEN D ABLE E A RN IN G S OF W O RK ERS W IT H DEPEN DEN TS
The gross earnings of workers in the newspaper and periodical
industry increased by only 21.4 percent from January 1941 to October
1943; those in the baking industry increased by 37.7 percent; those in
steel mills by 57.4 percent; and those in the fertilizer industry by 83.7
percent (table 3, column 6). Even greater diversity appears in the
movement of net spendable earnings. Here, as has been seen, the
average result in the case of a worker with a family of four is a 44.8percent increase. A similar worker in the newspaper industry had
no significant increase in net spendable earnings, whereas the average
increase in the fertilizer industry was 62.2 percent. Increases of 30 to
40 percent were typical of such large industries as hosiery, meat pack
ing, steel, cotton manufacturing, automobiles, and shipbuilding.
T able 3.— Changes in Gross and N et Spendable Earnings o f Factory Worker Supporting
Adult and 2 Children and of Single Worker Without Dependents, by Industries
Percent of change, Em
January 1941 to ploy
October 1943 in— ment
DecemNet spendable ber
October 1943
earnings
1941
Janu Octo Janu
Gross
(in
ber
ary
earn
ary
thou
1941 Fam Single ings Fam Single sands)
1941 1943
ily of 4 worker
ily of 4 worker
Gross weekly
earnings
Industry
(1)
(2)
Net spendable
earnings
(3)
(4)
(5)
All manufacturing............................... $26.64 $44.86 $26.37 $38.19 $32.76
Durable goods........... ........ ........... 30.48 51.26 30.18 42.68 37.25
Nondurable goods____________ 22.75 35.18 22.52 30.66 26.15
(6)
(7)
(8)
(9)
68.4
68.2
54.6
44.8
41.4
36.1
24.2
23.4
16.1
13,870
8,397
5,473
£8 selected manufacturing industries1
Newspapers..........................................
Rayon and allied products.................
Machine tools. ....................................
Baking..................................................
Boots and shoes...................................
Electrical equipment.........................
Paints...................................................
Paper boxes................................ .........
Carpets and rugs.................... ...........
Hosiery............... ................................
Chemicals, not elsewhere classified 8_.
Meat packing.......... ............................
Woolen textiles....................................
Blast furnaces, steel works..................
Cotton textiles......................................
Automobiles.........................................
Castings, gray iron..............................
Shirts, etc., men’s ...............................
Planing and plywood................ .........
Shipbuilding........................................
Cars........................................ .............
Women’s clothing, not elsewhere
classified 4*__......................................
Underwear ................................. .........
Agricultural machinery.......................
Castings, malleable.............................
Typewriters.........................................
Locomotives.........................................
Fertilizers............................................
38.15 46.33
27.40 37.22
40.15 55.34
26.46 36.43
19.58 28.33
33.18 48.75
29.86 44.17
22.26 33.00
25.18 37.61
18.51 27.99
33.10 50.34
26.84 41.94
21.78 34.24
33.60 52.88
15.60 24.57
37.69 59.50
30.45 49.50
14.22 23.01
22.51 36.87
37.69 62.91
29.57 49.92
19.47
14.85
29.92
28.42
26.40
34.79
515.71
37.77
27.13
39.75
26.20
19.38
32.85
29.56
22.04
24.93
18.32
32.77
26.57
21.56
33.26
15.44
37.31
30.15
14.08
22.28
37.31
29.27
39.21
32.42
45.41
31.74
24.75
40.88
37.68
28.74
32.75
24.48
42.00
36.16
29.85
43.68
21.52
48.32
41.38
20.17
32.04
50.58
41.64
33.75
27.57
39.72
27.06
21.56
35.40
32.32
24.68
27.83
21.29
36.50
30.76
25.53
38.20
18.94
42.48
35.96
17.95
27.26
44.70
36.22
21.4
35.8
37.8
37.7
44.7
46.9
47.9
48.0
49.4
51.3
52.1
56.3
57.2
57.4
57.5
57.9
62.6
61.8
63.4
66.9
68.8
3.8 -10.5
19.5
1.6
14.2
- .1
21.1
3.3
27.7
11.2
24.4
7.8
27.5
9.3
30.4
12.0
11.6
31.4
33.6
16.2
28.2
11.4
36.1
15.8
38.5
18.4
14.9
31.3
39.4
22.7
29.5
13.9
37.2
19.3
43.3
27.5
22.4
43.8
35.6
19.8
42.3
23.7
113
53
92
263
176
(i2*)
30
86
21
113
121
171
160
503
473
762
78
56
79
(2)
(2)
32.91 19.28
25.44 14.70
51.91 29.62
50.04 28.14
48.14 26.14
63.51 34.44
28.86 «15.55
28.69
22.26
43.00
41.87
40.42
51.02
25.22
24.62
19.60
37.47
36.33
34.95
44.44
21.85
69.0
71.3
73.5
76.1
82.3
82.6
83.7
48.8
51.4
45.2
48.8
54.6
48.1
62.2
230
13
43
26
13
(2)
22
i In ascending order of percent of increase in gross weekly earnings (column 6).
* Not available for publication.
* Excludes paints, drugs, perfumes, soap, rayon, gases, cottonseed oil, and fertilizers.
4 Excludes corsets and millinery.
8 October 1940 substituted for January 1941, to avoid seasonal distortion.
27.7
33.3
26.5
29.1
33.7
29.0
40.5
Spendable Earnings of Factory Workers
9
As might be expected, industries showing the greatest increases
in gross earnings tended also to show the larger increases in net
spendable earnings. This relationship is not uniform, however,
because of the operation of the income tax. Since income-tax rates
are on a sliding scale, the amount of tax liability varies sharply with
the level of income. Thus, the shipbuilding industry, where gross
earnings rose by 67 percent, yielded an increase of only 36 percent in
net spendable earnings per week. The explanation lies in the rela
tively high absolute level of gross earnings at the end of the period.
The married worker in shipbuilding with average gross weekly earn
ings of $62.91 was liable for income taxes of $5.41 a week; the cottontextile worker, on the other hand, with gross earnings of $24.57, had
a tax liability of only 60 cents per week. This factor explains the
relatively favorable movement of spendable earnings in the lower-wage
industries such as shoes, paper boxes, carpets, hosiery, woolens,
shirts, women’s clothing, underwear, and fertilizer.
SPEN D ABLE E A RN IN G S OF W ORK ERS W ITH O U T DEPEN DEN TS
For the wage earner without dependents, the income-tax liability
at any given level of income is considerably greater and the current
levels of spendable earnings consequently are smaller than those of a
worker supporting a family of four. At the factory average of gross
earnings in October 1943 of $44.86 per week, the worker without
dependents is liable for $7.17 in taxes while the worker supporting
a wife and 2 children pays only $1.73. This contrast in tax liability
has a decisive effect on the net spendable earnings. Out of the
factory average wage of $44.86 in October 1943, workers without
dependents had only $32.76, after deducting for bonds and taxes,
whereas the head of a family of 4 had $38.19 (table 3).
During the period since January 1941 the net spendable earnings
of single workers who earned the average factory wage advanced by
24.2 percent, or just about as much as the rise in living costs.4
Among the 5% million workers in the nondurable-goods industries,
average net spendable income rose less than 18 percent; on the average,
these workers could not maintain their levels of living at their Janu
ary 1941 standards while devoting as much as 10 percent of their
gross earnings to war-bond purchases. A number of well-known
factors account for the relatively poor showing of the nondurablegoods industries. In wartime the pressure of demand for labor is
much less severe in the nondurable- than in the durable-goods in
dustries. Consequently, the hours of work are not extended so
rapidly and wage rates are not raised to the same extent for the pur
pose of attracting labor. A fact that is, at first glance, more puzzling
is that the advance of net spendable earnings for both the durable- and
the nondurable-goods industries (23 and 18 percent) was less than
the advance that occurred for manufacturing as a whole (24 percent).
The explanation lies in the shift of employment toward the higherwage, durable-goods industries. Factory workers taken altogether
have gained more than the average of their gains in the separate
industries, simply because a larger proportion than before are at work
in the industries with the higher wage levels. The industries shown
in table 3 are well distributed through the field of manufacturing,
* The official cost-of-living index which shows a rise of 23.4 percent during this period applies to family
living rather than to the cost for single individuals. No adequate information is available as to the prices
of room, board, and restaurant items that are important in the budgets of single persons.
10
Spendable Earnings of Factory Workers
yet only 8 of these 28 industries provided a rise of net spendable
earnings as great as the average rise of 24.2 percent.
For single workers, even more than for those with dependents,
the changes in net spendable earnings have shown great diversity.
In the newspaper and periodical industry single workers who bought
their quota of bonds suffered an absolute loss of 10.5 percent
(column 8) while in the fertilizer industry they gained 40.5 percent.
The absolute level of weekly earnings has more influence on the tax
liability of single workers than of workers with dependents because
the single worker lacks the benefit of the dependents’ exemptions.
Not only is a large portion of his earnings subject to tax but the
larger taxable income may subject him to a higher tax rate. A
comparison of the woolen- and the cotton-goods industries illustrates
the effect of the earnings average on the tax and hence on the trend
of spendable earnings. In both of these industries gross weekly
earnings rose by 57 percent. For workers with 3 dependents the
changes in spendable income were also very similar, showing increases
of between 38 and 40 percent. However, the average gross wage in
woolen mills was $34.24 in October 1943, as compared with an average
of $24.57 in cotton mills. For a single worker the income and victory
tax on $34.24 per week is about $5; on $24.57 it is about $3. As a
result, the average spendable income of the higher-wage woolen
workers who were single advanced by only 18.4 percent while the
corresponding advance in cotton mills was 22.7 percent.
The position of workers without dependents in machine-tool plants
deserves special comment. The machine-tool industry was among the
first to be affected acutely by the national defense program of 1940.
The $40.15 average gross weeldy earnings in January 1941, 51 percent
above the general factory average at that time, reflected the lengthen
ing of hours that had already occurred, as weil as the relatively high
average rates of the highly skilled workers in this industry. By
October 1943 the machine-tool industry had already reduced working
schedules, as the tooling of war factories approached completion.
Reduction of working schedules lowered the average weekly earnings,
not only because fewer hours were paid for but also because a smaller
proportion were paid for at premium rates for overtime. Meanwhile
the wartime scale of operations had made possible, and the shortage
of skilled workers had made imperative, the use of a larger proportion
of routine workers. In spite of wage-rate increases, gross weekly
earnings in October 1943 averaged $55.34, only 37.8 percent above
those in January 1941. Nevertheless, although gross earnings had
shown a net increase much less than the average, they were high enough
to make the machine-tool workers subject to relatively heavy income
taxes; single workers at the average wage of October 1943 were liable
for $10.08 per week. Consequently, the spendable income of single
workers in October 1943 was, on the average, no more than sufficient
to meet the increased cost of the 1941 level of living.
,
Spendable Earnings by Industry9 Compared With Living Costs
W O R K E RS W IT H DEPEN DENTS
A married worker with two children could maintain his pre-war
scale of living, pay taxes, and meet his bond quota if he had an increase
in gross earnings of 40-50 percent between January 1941 and October
Spendable Earnings of Factory Workers
11
1943. The actual increases that occurred in gross earnings exceeded
50 percent in industries which employ the majority of factory workers;
the average increase was 68.4 percent. Consequently most married
factory workers could buy more goods in October 1943 than in January
1941. The average net spendable earnings of a worker with three
dependents, after bonds and taxes, exceeded the cost of a January
1941 standard by $5.65 per week. This outcome of the war is remark
able. Prior to the attack on Pearl Harbor no prospect existed for
even maintaining the living standards of the mass of the workers in
the event of a major war. In the case of most factory workers this
has been done, and more, as a result of more intensive work for longer
hours by a larger labor force.
About one-third of the factory workers are employed in industries
which have provided net gains of $4.50 or more per week in the spend
able earnings of married workers who earned close to the average wage
of these industries. Particularly in the war industries, the married
workers have enjoyed substantial gains in spendable earnings, thus
achieving a real surplus over their former cost of living even after
meeting bond and tax obligations. In general, the married workers
who received as much as a 65-percent increase in gross earnings from
January 1941 to October 1943 retained a weekly $5 surplus of spend
able earnings after bonds and taxes. Gains of this kind occurred
in the shipbuilding, car-building, agricultural-machinery, malleable
castings, typewriter, and locomotive industries. All of these indus
tries were converted to war production. Most favorably situated
were the married workers in the locomotive industry, where gross
earnings rose by 83 percent—from $34.79 to $63.51 (table 3). The
average spendable income in this industry was $34.44 in January 1941
and to meet this scale of living in October 1943 the worker needed
$42.50 (table 4). Actually the average spendable earnings of married
workers in this industry rose to $51.02, even after taxes of $6.14 and
bond purchases of $6.35 per week. The addition to net spendable
earnings of the worker with three dependents averaged $8.52 per week.
The average net gain in shipbuilding, while smaller than in the
locomotive industry, amounted to $4.54 per week. Gross earnings
rose by an average of 67 percent to a level of $62.91 in October 1943.
The cost of a 1941 scale of living was $46.04 in October 1943. Net
spendable earnings exceeded this cost by $4.54, after taxes of $6.04
and a bond subscription of $6.29.
In a few of the nonwar industries the married workers scored gains
in spendable income comparable to those just cited. Women's
clothing was the most important of the industries showing sizable
gains, although not directly involved in war production. As com
pared with the war industries, the women's clothing industry has had
a much lower level of average wages. The cost of living in October
1943 at the scale of January 1941 amounted to only $23.79 per week,
while the net spendable earnings rose to an average of $28.69. Thus,
the married worker at the average wage level for women's clothing
enjoyed a gain of nearly $5 per week after bonds and taxes. One
factor was the comparatively low level of taxes for a worker with
three dependents and an income of $33 a week; total income, victory,
and social-security taxes amounted to less than $1 a week.
12
Spendable Earnings of Factory Workers
Typical of the situation of married workers in many industries was
that of the steel workers, whose gross weekly earnings advanced by
57.4 percent, from an average of $33.60 in January 1941 to an average
of $52.88 in October 1943. In the latter month the cost of a January
1941 level of living was $41.04, while the average spendable earnings
had advanced to $43.68. The average steel worker with three de
pendents thus had a net gain of $2.64 per week after paying about
$4 in taxes and subscribing $5.29 in bonds.
T able 4.— Spendable Weekly Earnings o f Factory Workers, October 1943, Compared
With Earnings Required To M aintain January 1941 Living Standard
WAGE EARNER SUPPORTING AN ADULT AND 2 CHILDREN
Percent
of in
crease
in gross
weekly
earnings,
January
1941- October
1943
Industry
(1)
All manufacturing...........................
Durable goods..........................
Nondurable goods.....................
28 selected industries1
Newspapers.................... ................
Rayon and allied products.............
Machine tools..................................
Baking.............. ................................
Boots and shoes...............................
Electrical equipment___________
Paints............................................ —
Paper boxes......................................
Carpets and rugs.............................
Hosiery_______________ ______
Chemicals, not elsewhere classi
fied*..............................................
Meat packing...................................
Woolen textiles.................................
Blast furnaces, steel works..............
Cotton textiles................................
Automobiles.....................................
Castings, gray iron..........................
Shirts, etc., men's............................
Planing and plywood......................
Shipbuilding.......................... .........
Cars...................................... ...........
Women's clothing, not elsewhere
classified *.......................... ...........
Underwear........................................
Agricultural machinery..................
Castings, malleable..........................
Typewriters...........-.........................
Locomotives_____ ______ ______
Fertilizers.........................................
Earn
Addi
ings re Net
Bond
quired spend tion
(+ ) to pur Taxes:
to
able
or
de
chases
Income,
main earn ficiency at 10 victory,
tain
ings,
percent
and
(
)
of
living
spend of gross social
level of Octo
able
ber
earn
security
Janu
1943
earn
ings
ary
ings
1941
(2)
(4)
(3)
(5)
(6)
68.4
68.2
54.6
$32.54
37.24
27.79
21.4
35.8
37.8
37.7
44.7
46.9
47.9
48.0
49.4
51.3
46.61
33.48
49.05
32.33
23.91
40.54
36.48
27.20
30.76
22.61
39.21
32.42
45.41
31.74
24.75
40.88
37.68
28.74
32.75
24.48
52.1
56.3
57.2
57.4
57.5
57.9
62.6
61.8
63.4
66.9
68.8
40.44
32.79
26.61
41.04
19.05
46.04
37.21
17.37
27.49
46.04
36.12
69.0 23.79
71.3
18.14
73.5 36.55
76.1 34.72
82.3
32.26
82.6 42.50
83.7 * 19.19
Employment
(in thousands),
December 1943,
in—
Simi
Speci lar
in
fied in dustries
dustry
(a)
(7)
(8)
$4.49
5.13
3.52
$2.18
3. 59
1.00
13,870
8,397
5,473
13,870
8,397
5,473
—7.40
-1.06
-3.64
- .5 9
+.84
+ . 34
+1.20
+1.54
+1.99
+1.87
4.63
3.72
5.53
3.64
2.83
4.88
4.42
3.30
3.76
2.80
2.48
1.08
4.40
1.04
.74
3.00
2.07
.92
1.10
.73
113
53
92
263
176
(’)
30
86
21
113
264
93
512
481
403
698
144
211
52
396
42.00
36.16
29.85
43.68
21.52
48.32
41.38
20.17
32.04
50.58
41.64
+1.56
+3.37
+3.24
+2.64
+2.47
+2.28
+4.17
+2.80
+4.55
+4.54
+5.52
5.03
4.19
3.42
5.29
2.46
5.95
4.95
2.30
3.68
6.29
4.99
3.30
1.59
.96
3.91
.60
5.25
3.18
.54
1.06
6.04
3.29
121
171
160
503
473
762
78
56
79
(2)
M
973
212
160
1,205
522
803
255
99
119
1,305
427
28.69
22.26
43.00
41.87
40.42
51.02
25.22
+4.90
+4.12
+6.45
+7.15
+8.16
+8.52
+6.03
3.29
2.54
5.18
5.02
4.81
6.35
2.89
.92
.63
3.61
3.30
2.90
6.14
.77
230
13
43
26
13
(2)
22
701
52
333
110
152
(*)
22
$38.19 +$5.65
42.68 +5.44
30.66 +2.87
SINGLE WAGE EARNER WITH NO DEPENDENTS
All manufacturing............................
Durable goods...........................
Nondurable goods.....................
68.4
68.2
54.6
$32.54
37.24
27.79
$32.76 +$0.22
37.25
+.02
26.15 -1.64
$4.49
5.13
3.52
$7.62
9.03
5.51
13,870
8,397
5,473
13,870
8,397
5,473
21.4
35.8
37.8
37.7
46.61
33.48
49.05
32.33
33.75 -12.86
27.57 -5.91
39.72 -9.33
27.06 -5.27
4.63
3.72
5.53
3.64
7.94
5.93
10.08
5.72
113
53
92
263
264
93
512
481
28 selected industries1
Newspapers......................................
Rayon and allied products...............
Machine tools______ ___________
Baking..............................................
See footnotes at end o f table
13
Spendable Earnings of Factory Workers
T a b l e 4 .— Spendable
Weekly Earnings o f Factory Workers, October 1943, Compared
With Earnings Required To M aintain January 1941 Living Standard—Continued
SINGLE WAGE EARNER WITH NO DEPENDENTS—Continued
Percent
of in
crease
in gross
weekly
earnings,
January
1941October
1943
Industry
(1)
Boots and shoes.................. ...........
Electrical equipment— ....... .......
P aints.................................... ........
Paper boxes.................. ..................
Carpets and rugs.............................
Hosiery...........................................
Chemicals, not elsewhere classified3
Meat packing..................................
Woolen textiles...............................
Blast furnaces, steel works.............
Cotton textiles................................
Automobiles........................... ........
Castings, gray iron..........................
Shirts, etc. men's....................... —
Planing and plywood.....................
Shipbuilding...................................
Cars.................................................
Women’s clothing, not elsewhere
classified *.................................. .
Underwear....................................
Agricultural machinery.................
Castings, malleable..................
Typewriters........................ ...........
Locomotives...................................
Fertilizers......................................
Earn
Addi
Employment
ings re Net
tion
Bond
(in thousands),
quired spend (+
)to
Taxes:
pur
December
1943,
to
able
or de chases Income,
in—
main- earn
ficiency at 10 victory,
< -) of percent and
living ings,
spend of gross social Speci Simi
level of Octo
able
earn security fied in lar in
ber
Janu
1943
earn
ings
dus
ary
dustry tries®
ings
1941
(2)
(3)
(4)
(6)
(5)
(7)
(8)
$23.91
40.54
36.48
27.20
30.76
22.61
40.44
32.79
26.61
41.04
19.05
46.04
37.21
17.37
27.49
46.04
36.12
$21.56
35.40
32.32
24.68
27.83
21.29
36.50
30.76
25.53
38.20
18.94
42.48
35.96
17.95
27.26
44.70
36.22
-$2.35
-5.14
-4.16
-2.52
-2.93
-1.32
-3.94
-2.03
-1.08
-2.84
- .1 1
-3 .5 6
-1.25
+.58
-.2 3
-1.34
+.10
$2.83
4.88
4.42
3.30
3.76
2.80
5.03
4.19
3.42
5.29
2.46
5.95
4.95
2.30
3.68
6.29
4.99
$3.93
8.48
7.43
4.98
6.02
8.92
8.80
6.99
5.28
9.39
3.18
11.08
8.60
2.76
5.84
11.92
8.71
176
0
30
86
21
113
121
171
160
503
473
763
78
56
79
0
0
69.0
23.79
71.3
18.14
73.5 36.55
76.1
34.72
82.3
32.26
82.6
42.50
83.7 519.19
24.62
19.60
37.47
36.33
34.95
44.44
21.85
+.83
+1.46
+.92
+1.61
+2.69
+1.94
+2.66
3.29
2.54
5.18
5.02
4.81
6.35
2.89
4.99
3.29
9.14
8.80
8.37
12.08
4.13
230
13
43
26
13
0
22*
44.7
46.9
47.9
48.0
49.4
61.3
62.1
66.3
67.2
67.4
67.5
57.9
62.6
61.8
63.4
66.9
68.8
403
698
144
211
52
396
973
212
160
1,205
522
803
255
99
119
1,305
427
701
52
333
110
152
0
22
* Industries were grouped on the basis of similarity of experience with respect to earnings, not with re
spect to product.
* In ascending order of percent of increase in gross weekly earnings.
* Information not available for publication.
* Excludes paints, drugs, perfumes, soap, rayon, gases, cottonseed oil, and fertilizers.
<Excludes corsets and millinery.
5 October 1940 substituted for January 1941, to avoid seasonal distortion.
The married workers who received less than a 40-percent increase
in gross weekly earnings after January 1941 faced a net loss in spend
able earnings as compared with living costs. In the rayon (chemical)
industry, for example, gross weekly earnings rose by 35.8 percent,
from $27.40 to $37.22 a week. The cost of a $27 standard had ad
vanced to $33.48 by October 1943, while net spendable earnings
averaged $32.42. There was a net deficit of about $1 a week to the
average married worker, who had paid $1.08 in taxes and subscribed
$3.72 in bonds.
WORKERS WITHOUT DEPENDENTS
The average rise in the spendable income of factory workers with
out dependents has been about the same, since January 1941, as the
rise in living costs. The second section of table 4 shows a calculated
addition of spendable earnings over the cost of a 1941 living standard,
amounting to 22 cents a week, after the deduction of $7.62 for taxes
and $4.49 for war bonds. This apparent addition to spendable
earnings is within the range of error of the estimates.
A single worker without dependents could pay his taxes, buy his
suggested quota of bonds, and maintain his pre-war scale of living
if he had an increase of about 60 percent in his gross weekly earnings.
14
Spendable Earnings of Factory Workers
In cotton goods this position was approximately achieved. As a result
of a 57%-percent rise in the average of gross earnings, the average of
net spendable earnings rose to $18.94 per week by October 1943, or
slightly less than the current cost of the $15.44 scale of living in
January 1941. Cotton-mill workers enjoyed a relatively favorable
trend of earnings from their low average level of 1941. However,
only about one-fourth of the single workers who remained attached
to their respective industries had a net addition to spendable earnings
in October 1943 above the cost of their 1941 level of living.
The case of the newspaper workers is an extreme one, as has been
noted previously. Gross earnings in this single case did not advance
as rapidly as living costs, yet taxes of $7.94 per week were due on the
average earnings of $46.33. After deducting these taxes and a bond
subscription of $4.63 per week, net spendable earnings for the single
worker amounted to only $33.75, or $12.86 less than the current cost
of the average pre-war scale of living of newspaper workers.
In the steel industry (blast furnaces, steel works, and rolling mills)
the half million workers had average gross earnings of $52.88 in Octo
ber 1943, slightly above the average for factory workers generally.
These gross earnings had advanced by 57.4 percent since January
1941. After taxes of $9.39 per week and bond purchases of $5.29
per week, the net spendable income of steel workers who had no
dependents averaged only $38.20. Meanwhile increased prices had
raised the co^t of the workers’ former scale of living from $33.26 in
January 1941 to $41.04 in October 1943. Spendable earnings for
the single workers fell short of maintaining their pre-war scale of
living, by $2.84 a week. A similar situation was faced by single
workers in the textile-machinery, steel-casting, machine-shop, and
rubber-tire industries which, with steel works, employed 1% million
wage earners.5
The experience of shipyard workers was even more remarkable in
some respects than that of the steel workers. Shipyards are noted
for increasing their wage scales to attract labor and for paying pre
mium overtime rates to a considerable proportion of their workers.
Hence, a substantial advance of spendable earnings might well have
been expected. Actually the gross earnings of shipyard workers
advanced by 66.9 percent to an average of $62.91 in October 1943.
However, earnings of $62.91 subjected the single worker to taxes of
$11.92 and in addition he was expected to subscribe $6.29 to war
bonds. The remaining spendable income of the average shipyard
worker who had no dependents was $44.70. Meanwhile a scale of
living which cost $37.31 in January 1941 (corresponding to average
spendable earnings at that time) cost $46.04 in October 1943. Thus
the spendable earnings of a shipyard worker without dependents
fell short of meeting the cost of his pre-war scale by more than $1.00
a week. The former standard of living could be maintained, of course,
if the worker refused to subscribe for his whole quota of bonds. On
the other hand, the cost-of-living calculation as presented cannot
take account of the extra costs faced by a worker who migrated into
a shipyard community from a distance.
8 Column 8 of table 4 shows the employment in industries which had an experience closely similar to that
of the industry named in the stub of the table. A total of 104 manufacturing industries yielded information
on weekly earnings which could be compared. The 28 industries listed in tables 3 and 4 illustrate the whole
range of experience in the broader list of 104 industries. Detailed figures relating to the remaining industries
will be supplied on request
@FedFRASER