Effects of North-South Wage Uniformity on Southern Coal Production

Abstract

The North-South wage differential has been a major characteristic of the geographical wage structure for many decades. In spite of some recent movements toward uniformity under the pressures of legislation, unionism and full employment the percentage wage gap for industry as a whole has continued with remarkable persistence.' There has resulted a lively speculation concerning its causes and effects. Attempts have been made to explain the differential in terms of differences in capital-labor ratios, productivity, cost-of-living, transportation costs, labor demand and supply, and union organization. However, recent studies, most notably those of Professor Richard Lester, have raised serious doubts concerning the validity of some of these traditional beliefs.2 Surveys conducted by Professor Lester indicate that the use of machinery and electricity per man-hour in southern industry equals that in similar operations in the North. The cost-of-living for average families in southern cities is only 3 to 4 per cent below the cost-of-living for families in northern cities of comparable size. Inter-regional concerns reported that labor efficiency in southern plants was equal to or above the level of efficiency in northern plants. On the other hand, labor supply and demand, transportation costs, and company and union wage policies appear to be more significant explanations of North-South wage relationships. Doubts concerning the reasons for North-South differentials have inevitably given rise to controversy over the results likely to follow a narrowing of the wage gap. In the past this controversy has centered primarily on the effects of minimum wage legislation.3 Some have contended that the location of industry, production and employment in the South would be adversely affected by a rise in southern wage rates, while others have discounted these ill effects. Continuing pressures for higher wage minima as well as union policies of wage uniformity