ABSTRACT
The problem of explaining the structure of wages (that is, the relationship of one wage rate to another) is among the most complex and controversial matters that a labor economist must address. This type of wage difference is considerably harder to explain than is the difference in the wages paid to perform jobs having equivalent skill requirements when they are performed under different conditions, even in a competitive market. It also differs from the union–nonunion differential which, as was examined in chapter 12, comes into existence between equivalent jobs when unions are able to intervene by insulating the wages of their members from market forces. This differential is unrelated to differences in the skills of the workers who are covered. Skill differentials which manifest themselves as occupational wage differences exist in addition to and apart from union–nonunion wage differentials. Nevertheless, the principle that different skills and occupations should be remunerated at different wage rates owes much to the commitment to the principle of skill differentials in pay by the American Federation of Labor (AFL), the Congress for Industrial Organization (CIO), and their subsequent merged organization.
