ABSTRACT
It is sometimes thought that light can be thrown upon it by comparing the capacities of workpeople employed in occupations or firms where the earnings are high and low respectively. The fact that workpeople in high-wage districts are, in general, more capable than workpeople in low-wage districts does not prove that high wages cause high capacity; for there is available the alternative explanation that high capacity causes high wages. In places and occupations, where wages are low because low-grade workpeople are being “exploited” by employers and paid less than they are worth, there is no reason to expect that the forcing of the wage rate up to a fair level will cause any of the people affected to lose their jobs for any length of time; for it will not pay employers to dispense with their services. Consequently, all that has to be considered is the direct effect upon the capacity of the people who actually receive the better wage.
