Music Trade Review

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means it is possible to see just what
changes have occurred since 1939.
You will note that increases in each
of these three important indexes, ex-
pressed as percentages, have been as
follows: Average Hourly Factory Wages
have increased 146%. Consumers' Prices
have increased 86%. Factory Output per
Man-Hour, up to the end of 1950, had
increased but 18%.
Your attention is directed again to the
fact that average factory wages in the
past eleven years have increased at the
rate of about 13% a year. Factory wages
have increased eight times faster than
the actual factory output per man-hour.
These facts speak for themselves more
clearly than anything that can be said
in words.
There are some other matters pre-
sented on this chart that may interest
you. For example, in the graph showing
"Actual Factory Output per Man-Hour",
note should be taken that from the be-
ginning of 1941 to 1946, there were two
sets of figures that are represented by
two trend lines. The one at the top repre-
sents factory output per man-hour in all
factories, including those working on
war goods, as computed by the Federal
Reserve Board. The lower line represents
the trend of factory output per man-hour
in a selected list of civilian industries
not directly concerned with war produc-
tion as compiled by the National Indus-
trial Conference Board. It should be
noted that general factory output, in-
cluding the output from war industries
per man-hour, during the war years
never reached an annual average of as
much as 10% above the output per man-
hour in 1939. After 1943 and down to
1946 the average factory output per
man-hour declined steadily to a scant
4% in 1946.
Another trend line on the chart "Nor-
mal Factory Output per Man-Hour",
represents what the factory output per
man-hour would have been year by year
throughout the 11-year period if the
trend of average factory output per
man-hour that had prevailed for 25 or
more years before 1939 had continued
throughout the 1940's. Average increases
in factory output per man-hour in the
preceding quarter century had amounted
to about 2y 2 % a year. If this rate of
increase had continued down to the end
of 1950, the factory output per man-
hour in that year would have been 25%
higher than it was in 1939. The actual
factory output per man-hour, not only
did not keep up with the increases in
average hourly factory wages, but even
fell far short of achieving the normal
factory output per man-hour that had
prevailed in preceding years.
Further evidence on the retarded rate
of man-hour productivity during the
past 11 years, as compared with the pre-
ceding 25 years, has recently come from
Solomon Fabricant of the National Bu-
reau of Economic Research, probably
the best informed student on man-hour
rates of physical productivity in this
country at the present time. In an inter-
view with "Business Week", May 5,
1951, he estimated that productivity
since 1939 had increased only about 1%
per year. The computations presented on
this chart show about 1.6% per year,
per man-hour. The lag in man-hour out-
put during the last 11 years, as com-
pared with the previous 25 years, chal-
lenges the most serious consideration.
It may be of interest to note the ex-
planation for the apparent break in
factory wage rates that occurred at the
end of 1945. Within that year, at the
end of World War II, there was an ap-
parent drop of between 5% und 6%.
This decline in the index was due almost
entirely to the cessation of overtime
pay which reduced the average hourly
rate. However, the average hourly wage
rate soon recovered the peak paid in the
early part of 1945 and, even without
overtime rates, has continued to rise
with startling regularity ever since.
Consumers Prices Leveled Off
The Index of Consumers' Prices
tended to level off during the years from
1943 to the middle of 1946. This oc-
curred in spite of the rapid increases in
average hourly factory wages during
those same years. Advocates of price
control may point to this period as an
evidence of the effectiveness of price
control. Such an explanation would,
however, overlook two important facts.
First, the Consumers' Price Index took
no account of black or grey market
prices that widely prevailed throughout
this period, and, second, prices of still
other commodities were kept down by
the payment of subsidies by the govern-
ment. Such subsidies were generally
used when roll-backs were authorized.
The effect on the price index is highly
illusory. Officially, prices were kept
down, but the government paid the dif-
ference. So while prices during those
years were officially low, the official in-
dex does not actually record what the
trends in consumers' prices were.
A question may be raised as to
whether factory wage rates as shown on
this chart are typical of wage rates gen-
erally throughout the country. This
question can be answered by calling at-
tention to the fact that farm wages, for
example, during the same years showed
an even higher percentage of increase
than factory wages. Retail wage rates
have more than doubled since 1939. The
wages of miners have likewise shown a
considerably higher rate of increase than
those of factory workers. It is difficult to
find any branch of industry in which
wage rates have not gone up as fast as
factory wages. In other words, the index
of hourly factory wages as presented
here seems to be conservatively typical
of wage rate trends within the American
economy during the past 11 years.
(Turn to Pagft 14)
12
THE MUSIC TRADE REVIEW, SEPTEMBER, 1951