Part I, Chapter III Nominal and Real Cost of Labor.

ANOTHER distinction which needs to be strongly marked is that between Wages and the Cost of Labor.

In treating wages as high or low we occupy the laborer's point of view; in treating the cost of labor as high or low we occupy the point of view of the employer. Wages are high or low according to the abundance or scantiness of the necessaries, comforts, and luxuries of life which the laborer can command, without particular reference to the value of the service which he renders to the employer therefor. The cost of labor, on the other hand, is high or low according as the employer gets an ample or a scanty return for what he pays the laborer, whether the same be expressed in money or in commodities for consumption, and this without the least respect to the well-being of the laborer.

Now this distinction is not of importance merely because such a distinction can be drawn, and the same object looked at from different points of view. Not only are the points of view here diametrically opposed, but the objects contemplated are not necessarily the same, so that high wages do not imply a high cost of labor, or low wages a low cost of labor. A sufficient demonstration of this, for the present moment, is found in the well-known fact that employers usually take on their lowest-paid laborers last, and discharge them first. The explanation is found in the varying