4: The Degradation of Labor
The phrase "degradation of labor" is meant to describe the situation of a worker who has moved from an occupation in which he was highly productive and well compensated to another in which he is less productive and more poorly compensated. Ideally, men seek to improve their service and compensation over the course of a career, but things do not always work out in that manner.
A sudden disaster in trade and production may render a company or an entire industry moot, and the workers once settled in their positions must migrate to "more fortunate localities" or start anew in a different trade. Labor also yields to the balance of supply and demand, such that a sudden increase in population or decrease in industry will yield a situation in which laborers, however productive, must accept a lower wage.
While the marketplace rights itself, the restoration of equilibrium takes time - and there is a danger that workers will leave a market. Even when equilibrium has been restored, some who have dropped down the social ladder will simply come to accept their new rung, and in their dejection ignore the opportunities to restore their former status. It is also lost in the aggregation of the market that the misfortune of others is not restored when the market restores equilibrium: a societal balance may mean that the misfortunes of some are countered by the fortunes of others - and while the market may regain itself, certain people never shall.
He then portrays a scenario in which wages I a market were reduced, bur prices remained the same. In such an instance, the most able men would emigrate from that market for opportunities that remained elsewhere. He reckons that those who remained would have less income to afford the necessities and conveniences of life, and that the lowered wage would leave them more irascible and perhaps, in time, less healthy for their inability to obtain the goods to sustain their health. In such an instance, the employer would not enjoy additional profits from the savings he has in wages, as this would be counterbalanced by a decrease in the productivity of his workers.
This notion of degraded labor is not merely a theoretical fancy, as there were in the author's time "great bodies of population" in England which had been pauperized by industrialization and immigration and once-productive towns laid waste by economic upheaval. (EN: Neither is this isolated to the author's time, as globalization has caused most manufacturing to move out of the US between the 1970s and the present day. Consider the collapse of Detroit in the early twenty-first century.)
Adam Smith regarded the wages of labor to be the means by which employers act as consumers in the labor market and signal to workers (sellers) as to the kinds of labor they need. Labor that is valued or in short supply commands a premium, and the higher wages encourage workers to develop the skills necessary to earn a higher wage. However, this is subject to the inefficiencies of delayed communication: the kind of labor that is in greatest demand now may not be in such high demand in future - such that by the time workers gain the skills, the demand will be diminished.
(EN: We see this very often, even in the modern market, where college students are encouraged by current market demand. Guidance counselors and advisors tell them about the shortage of accountants, computer programmers, and the like - and there is a massive influx of students preparing themselves for those industries, such that four years later, a horde of them graduate and saturate the market, driving the price of that kind of labor down.)
This was especially visible in terms of the movement of laborers, whether domestics or immigrants, in large masses: a given location would become an industrial center, many factories would open, and would attract workers with offers of good wages. Workers would arrive in droves, crowding the area to the point of overpopulation - living in makeshift quarters in a locality where sanitation services were ill prepared for the increase in population, and living in "beastly" conditions as a result.
Walker also mention the trends that become self-perpetuating. When people are downtrodden, the economic forces are more likely to keep them down or push them lower than they are to raise them up. When factories close, workers are out of a job - the market becomes glutted with labor and wages diminish. The unemployed worker drowns his sorrows in whiskey and becomes all the less employable - or even if he doesn't, he remains unemployed and his skills become duller and his attitude becomes worse, making him less desirable to employers, etc.
It is seldom considered, and even more seldom complained about, that the opposite is also true, and that a boom economy reinforces its own success with mounting successes. There is little pity for people who are fortunate. As such most legislation attempts to address the negative turns in economic conditions.
Legislation, itself, becomes harmful when it takes the form of charity. The unemployed workman is not only suffering financial hardship, but emotional as well. He has in effect been emasculated, and to be offered charity (and to accept it) makes him feel all the more helpless, weak, and despondent. For a time, charitable assistance can be accepted by a worker who sees it as a temporary solution to a temporary crisis, but over time it becomes poisonous.
(EN: Walker does not go further down this slippery slope, but other economists have pointed out that unemployment not only diminishes production, but consumption - such that the entire market suffers when the workers who were once purchasing stops doing so. The landlord, the grocer, the barber, the tailor, and shopkeepers of all manners lose their income as well. The dole may prop them up for a time, but then there is the argument that it is artificial and unsustainable. In all, the problem is rather vicious and there can be no simple solution to economic downturns.)