Knowledge that Transforms

1ASED on admittedly scarce stuidies, the prevalent feeling concerning movements in occupational wage differentials in the United States seems to be that there has been a trend toward a narrowing of the percentage differential between skilled and unskilled workers during the past half-century, and that this trend is accentua,ted in boom periods of full em.ploynment and reversed in depressions.2 Thils article has a threefold purpose: to indicate some of the failings of the studies made thus far on this topic, to sketch briefly the results of an empirical study of changes in occupational differentials, pointing out an important exception to the conventional mode]. (the depressionof I929-33), and to analyze changes in the occupational wage structure which have occurred.

textabstractAlso in: Horst Hanusch (Ed.), The Legacy of Joseph Schumpeter, Vol. 1: Intellectual Legacies in Modern Economics, Edward Elgar, Aldershot, 1999, pp. 23-25

IT has become evident, from the discussions of the last few months, that the major unresolved question of mobilization policy in the United States is the role that should be assigned to direct price and wage controls. The disagreement holds, especially, for conditions of considerable but still limited mobilization. Given expenditures on the scale of those being made prior to the Korean War expenditures, it will be wise to recall, that were more modest in their achievement than in their volume there was effective agreement that direct controls were unnecessary. For full mobilization, a loose euphemism for what a country does if it has a full-scale war on its hands, there is something close to agreement that comprehensive controls over prices and wages are necessary or at any rate inevitable. But in mid-December, as this is written, plans are still being based on an intermediate situation. The transfer of resources to military use that is now in prospect promises to enforce an actual and perhaps a substantial reduction in civilian consumption. But it is not assumed that this will proceed to the point where, if the maximizing of military potential were the only criterion, the reduction in civilian living standards would have to stop. In this situation as the President indicated in his speech announcing the declaration of a state of emergency the decision has been taken to invoke direct controls. It would not appear, however, that this decision is based on an agreed or even a clear view of the role of these controls in the strategy of defense against inflation. This becomes evident from even a brief review of the discussion of recent months.

EGIONAL differences in per capita income have been the object of continuing speculation, and several attempts have been made to isolate and measure the factors with which the differences are associated.' A more precise knowledge of these factors will contribute to our understanding of the forces which determine a particular income aggregate. Moreover, the policy implications of regional differences in per capita income, particularly regarding the expanding field of federal contributions to state and local government activities, requires a thorough analysis of the sources of these differences. The Census of Manufactures, 1947 required, for the first time, each manufacturing plant to supply information on production worker manhours as well as on the number of employees, wages, salaries, products, and other familiar measures of manufacturing.2 The availability of information on both man-hours and wages of production workers permits computing their average hourly earnings by detailed industrial and geographic classifications. This provides an opportunity for a more precise analysis than heretofore possible of the regional differences in manufacturing wages and in their effect on per capita income. In the present article, an attempt is made, first, to measure the differences among states in production-worker hourly earnings which are associated with differences in the composition of the state's manufacturing activity and, secondly, to measure the differences in production-worker hourly earnings associated with the differences among states in the wages paid production workers in the same industry. These differences are then related to the per capita income of each state and geographic division.