I BASIS OF GOVERNMENTAL REGULATION OF LABOR PROBLEMS A. ECONOMIC AND SOCIAL ARGUMENT FOR GOVERNMENTAL REGULATION 1Professor J. B. Clark, in his suggestive study of "Economic Theory as Applied to Modern Problems," enumerates five elements as characteristic of a dynamic society: (1) An increase in capital; (2) An increase in population; (3) Changes in methods of production; (4) Changes in methods of organization; (5) Changes in consumers' wants. Each of these five features of economic progress involves some new problems affecting labor. Many of these, fortunately, solve themselves; many others do not, and the experience of a century has proved that in, at least, many cases some form of legislation is necessary in order to prevent the incidental evils of progress from being perpetuated and aggravated. Let us take them up seriatim. 1. The increase in population often involves a crowding in industrial centers with an increase in disease, which must be dealt with by tenement house laws and sanitary measures. The increase of population combined with modern methods of transportation leads to the amazing migration of modern times, which, in turn, creates new difficulties. To prevent the spread of contagious diseases, to prevent the abuse of the newcomers, some restrictions have to be placed by law, not to stop, but to control this flood of immigration. 2. An increase in capital tends to make large aggregations of wealth, which by their very size weaken the personal element involved in the relation of employer and employed. The simple, almost patriarchal, expression "master and servant," which served as the rubric of the law on these subjects in the time of Blackstone and indeed was not superseded in England as a legal term until 1875, is no longer applicable to modern industry, nor are old methods of bargaining satisfac 1 Farnam, H. W., The Economic Utilization of History, 68-73. Yale University Press, 1913. tory. New machinery must be devised to facilitate collective bargaining and to mitigate the effects of collective disagreement. 3. Changes in the methods of production, involving, as they do, more powerful and more complicated machines, bring many evils. In the early days of the factory system, the displacement of skilled labor by unskilled was the most obvious injury felt by the workers. At the present time we are more concerned, because better acquainted, with the remoter and indirect effects of the age of machinery. We see new causes of accident, new kinds of industrial diseases, combined with a greater difficulty of securing the individual worker against the effects of accident and disease. Long experience has shown that these particular difficulties do not correct themselves, and one of the greatest problems in labor legislation at the present time is, on the one hand, to diminish accidents and disease, and on the other, to provide some form of compensation or some form of insurance for those who are their victims. Still more important, if possible, is the effect of machinery upon children and therefore upon the workers of the future, and this, being comparatively remote and not realized for one or two generations, is the most difficult problem for the individual to solve. Government intervention seems the only agency sufficiently powerful and sufficiently general to save a country from the deterioration of its human capital. 4. Changes in organization tend on the whole to give a new advantage to capital. It is now possible for a single company or combination of companies to spread out over many states or many continents. This, while it makes for efficiency, also creates a power which may be abused and results in a demand for laws putting upon capital new responsibilities in the interests of its employees. It above all points. to the necessity of interstate and international labor legislation. With the aid of the International Association for Labor Legislation, a number of international treaties of great importance have been made, one of the most recent of which is a treaty between France and Great Britain, giving the workers of those countries reciprocal advantages in obtaining compensation for accidents. 5. Changes in consumers' wants create an artificial instability of business, which shows itself in alternating periods of activity and stagnation. The one tends to produce over-exertion, the other, unemployment, and each demands legislation. It will be noticed that in each of these five cases the main purpose of the legislation in question is to prevent some injury to the human beings for whose sake economic progress exists, and on whose efficiency its continuance depends. We should, therefore, add to the five elements of a dynamic society which have been enumerated, a sixth, which has been comparatively neglected in the past, but which may prove in the future to be the most important of all. I refer to an improvement in the quality of the population itself. . . . Many diseases and many accidents are now recognized as clearly preventable. There is every reason to believe that by proper care human life can be lengthened, disease and accidents diminished, and the physical strength of the population improved; but in order to bring about this most important element of progress, the State itself, which alone has an interest extending beyond that of the individual lifetime, must intervene in order to prevent well-recognized causes of retrogression, and also to promote those elements which make for improvement. QUESTIONS 1. Why should the growth of large aggregations of wealth necessitate the development of methods of collective bargaining? 2. Is governmental regulation of labor problems necessary to supplement collective bargaining or to control it? 3. Should the state interfere more freely in behalf of employees who cannot bargain collectively than in behalf of those who can? 4. "Harmful labor conditions will be corrected if competition is allowed free play; those that are inefficient will be eliminated by the employer in his desire for more efficient production than his competitor; those that are too burdensome upon the employee will force him to seek other employment." Do you agree? B. GOVERNMEntal RegulaTION OF LABOR PROBLEMS AS AN APPLICATION OF THE POLICE POWER "There can, of course, today be no reasonable doubt of the right of the State to legislate under the old established heads of the police power, for the protection of the employees of the business as well as of the general public, and these would include not only safety, health, morals, and decency, but also the protection against fraud, 2 Freund, Ernst, "Constitutional Limitations and Labor Legislation," in Proceedings of Third Annual Meeting of American Association for Labor Legislation, 1909, pp. 60-63. and certain forms of oppression and exploitation which the history of legislation has treated as equivalent to fraud. If it were possible to establish that the various forms of statutes relating to the payment of wages were aimed merely at the suppression of fraudulent or unconscionable practices, they would clearly fall within the principle of the traditional exercise of the police power and the case would be plain. Without very much fuller data than seem to be available concerning conditions in different industries and localities, it is difficult to pass final judgment on the character and effect of the practices which the statutes sought to abolish. . . . However this may be, the controlling fact for the purpose of understanding the decisions is that the courts declined to see in the forbidden practices merely an unconscionable form of oppression or exploitation, but treated the matter as one of fair controversy between employer and employee. The legitimacy of this point of view assumed or conceded, the conflict of decisions turns upon a very important issue. The problem would be this: If the old established landmarks of the police power are abandoned, at what point is the right of the owner to control his own business and the relation to his employees secure from legislative interference? The Granger cases had established the principles that certain classes of business of a monopolistic character were subject to control in the economic interest of the general community. Was there an analogous principle according to which the employment of labor might be regulated in the economic interest of the employees? To some of our courts this undoubtedly seemed to be the issue involved in the legislation, the validity of which was contested before them, and it is easy to gather from the tone of the decisions that they considered a determined resistance to the new principle necessary. Some of the adverse decisions certainly lend themselves to the construction that the principle was repudiated without any qualification. In annulling the statutory requirements, they did not rely upon the hardship or injustice they inflicted upon the employers. . . .... On the other hand, the courts which have sustained the statutes in question have done so in a half-hearted way without committing themselves to more than the particular provisions absolutely required. They stand apparently upon no principle but the equities of the legis lation, and while recognizing limitations, refuse to define them. It would be pure speculation to attempt to predict upon what principles limitations will be eventually worked out. The difficulty of assigning limits to the power, once it is recognized, may serve to explain the uncompromising stand taken against its recognition at the outset in so many jurisdictions. . . . . QUESTIONS 1. List the various subjects of governmental regulation suggested to you in Section IA, supra. How many of them can be brought within "the old established heads of the police power"? 2. If the state goes beyond "the old established landmarks of the police power," under what head of governmental activity would you classify its action? 3. Do you think any legislation which aims at equalizing the bargaining power of employer and employee is a justifiable exercise of the police power? 4. Can you suggest proper limits to the power of the state to interfere with the "right of the owner to control his own business and the relation to his employees"? C. DISTRIBUTION OF REGULATORY POWER BETWEEN THE FEDERAL GOVERNMENT AND THE STATES "It needs only a statement of the labor problems which have been detailed, to show that the solution in the main must depend upon the legislation of the several states. The only direct legislative power of the Federal Government in dealing with the relation of employer and employee, apart from its control of the District of Columbia, the Territories and dependencies, is in its right to regulate commerce among the states and with foreign nations. The difficulty growing out of this complexity of our Federal system in the enactment of wide extended and far reaching social legislation, is inherent in the very nature of our government. It is in signal contrast with the facility with which such legislation can be enacted by the Parliament of Great Britain, where there are no constitutional restraints upon legislation imposed by rigid fundamental law. . . . This difficulty is still more complicated by the tendency in our recent constitution-making to expand our rigid state constitutions far beyond the range of fundamental laws, limiting the scope of legislative power. They have become, in fact in some cases, veritable codes of 3 Judson, Frederick N., "Problems of Labor Legislation under Our Federal Constitution," in Proceedings of Third Annual Meeting of American Association for Labor Legislation, 1909, pp. 78-83. |