Mea culpa. I’ve been in a rut
(though not of the elk-ian sort); I spend too much time reading about and
reacting to tweets from the child-like creature professing to be our national leader.
So I’m taking a vacation by giving up reading news about our president’s
tantrums for the summer starting today
on our 241st birthday. 4 No Trump is now for me more than a bridge bid. I’m
following Gideon Litchfield’s apt suggestion
to ignore this man-child’s paroxysms. According to Litchfield, a normal US
president is like a creature in the middle of a lake, his every move creating
far-reaching ripples that people pay attention to. Our current leader is like a
rock in a stream; he creates turbulence and is to be avoided, but everything
flows on around him.
Instead, I’ll focus on
something apart from the hugely disturbing, corrosive and sad politics of our
president.
Say for example, how long have workers’ wages been the bee’s
knees?
It’s not a question that’s occupied
my or likely your forebrain that much. But it does have implications beyond the
biological superfamily Apoidea, where
bees reside. To be clear, bees indeed have segmented legs that include knee
joints. Praise bee. The idiomatic phrase “the bee’s knees” became popular in
the 1920s and refers to something being of high quality or excellence.
Not just the bee’s knees are
excellent. There are close to 20,000 known species of bees that are found on
every continent except Antarctica, in every habitat on our planet that contains
insect-pollinated flowering plants. Many bee species are eusocial, living in
cooperative, communal groups (e.g., hives) headed by a female queen bee. Bees
pollinate more plant species than any other pollinating animal, including ants,
butterflies, bats and hummingbirds.
It is estimated that about one-third of the human food supply depends on pollination, most
of which is accomplished by bees. And unlike any other pollinator, bees
(specifically the most well-known type, the European Honeybee) produce wondrous
honey as well as beeswax and royal jelly. Royal jelly isn’t served on Prince
Charles’ UK muffins in the morning; it’s a honeybee secretion used in the
nutrition of larvae, as well as adult queens.
In 2013 more than 2.6 million
bee hives produced about 149 million pounds of honey in the US according to the
National Honey Board. What state produces the most honey? Although it’s
unlikely, if you picked North Dakota you’d earn a B++. Bee statisticians estimate
that in order to produce 1 pound of honey, 2 million flowers must be visited,
which takes a hive 55,000 miles
of flying. That’s a lot of flying without any frequent-flyer miles. An average
worker bee makes only about 1/12 teaspoon of honey in its lifetime. Thanks guys.
Bees have been making honey
for well over 100 million years. Humans have enjoyed a long, positive
relationship with honeybees; except when we misbehave and get stung. Depictions
of humans collecting honey from wild bees date to 15,000 years ago; efforts to
domesticate them are shown in Egyptian art more than 4 millennia ago. Jars of honey
were found in the tomb of Tutankhamun. The Greeks treasured honey; Virgil and
Pliny wrote about beekeeping 2,000 years ago.
Onward to wages. Economists
generally define wages as the regular payment provided at a fixed rate to labor
for services undertaken. For employers it is the cost of using labor, as
opposed to using the other two factors of production, land and capital. Wages
are determined by several factors, principally the demand and supply of labor
as well as labor productivity - the output produced per person-hour worked. Sounds
fairly simple, but it usually it isn’t.
One continuing issue
regarding wages is how has the premium paid for higher-skilled, more-productive
laborers compared with lower-skilled workers over time. This concern has risen
in importance as uneasiness about technological displacement of middle-skilled
workers has grown and the wages provided to lower-skilled workers and others
have stagnated. I wrote about the controversy surrounding how the rise of
artificial intelligence (AI) may affect workers’ jobs when I examined
robots, blacksmiths and the future.
The seminal efforts of
Professor Gregory Clark at UC/Davis offer an intriguing perspective on the
premium paid to higher vs lower-skilled workers. I have found Prof. Clark’s
deep excursions into quantitative economic history fascinating. His captivating
book, A Farewell to Alms, offers
insights based on the extensive empirical data he’s collected about the world’s
economic history including why the great “divergence” of the Industrial
Revolution happened first in England and not, for example, China.
Prof. Clark has recently
assembled an impressive dataset of wages in England from the end of the 12th
century through current time. With almost 800 years of English data (!), he
compared skilled-worker craftsmen’s wages with that of common laborers from the
middle ages through the Industrial Revolution and beyond. What his data show is
that except for two periods of significant change, the recent rise in the wage
premium for skilled and college-educated workers is historically unusual, as
shown in the chart below from The
Economist.
Sources: The Economist
and Prof. Gregory Clark
The chart shows two large changes
in the skilled-worker wage premium. The first dramatic decline happened in the
14th century, when average life
expectancy at birth was about 31 years. [Interestingly, this short expected
lifespan basically was unchanged since Classical Greece – the 4th and 5th
centuries BC, when it was ~28 years – and that of 17th century England at 35
years.] With such a short lifespan and when interest rates were high a worker’s
taking on an apprenticeship (often 7 years long) to become a skilled craftsman
had a high opportunity cost. Fewer men became craftsmen and the
craftsman-to-common-laborer wage premium grew until the early 1300s. Thus, from
the mid-1200s through the beginning of the 14th century craftsmen’s wages were
indeed the bees’ knees. It wasn’t to last.
The bubonic plague (Black Death)
cast its very dark penumbra on England and the rest of Europe, starting in the
mid-14th century and continuing sporadically through the mid-17th. After 1348-49
when the plague first struck England, its population dropped by one-third precipitating
reductions in interest rates and significantly adding to the already outsized challenges
of living. Apprenticeships became more alluring both financially and because
there were far fewer skilled workers. From the chart, the increased supply of
skilled labor relative to common laborers soon reduced the wage premium ratio
and kept it around 1.50 until the late 1600s.
The second big change happened
during the 18th and 19th centuries. The craftsman/laborer wage premium rose at
the beginning of the 18th century and stayed high until the beginnings of the
Industrial Revolution in the mid-1700s. Skilled workers’ wages were the bees’
knees then. However, the Industrial Revolution was a game-changer for virtually
everyone in England, and soon thereafter the rest of Europe, America and the
world. For the first time in history structural technological change created
widespread job displacement and opportunities.
In a real sense the
Industrial Revolution was realized by the coincident mechanization of
agriculture. The Agricultural Revolution allowed land-owners to reduce their
field labor and still increase output via improved labor productivity. The enormous
increases in agricultural labor productivity were realized by adopting a series
of new technologies that coincided with the Industrial Revolution including the
cotton gin, iron/steel plows and mechanical reapers. By the 1990s, farm labor
and land productivity had increased 100-fold in 150 years.
The decline in the craftsmen/laborer
wage premium started in England as the newly-mechanized textile industry hired
unskilled laborers – most often from farms – to replace artisan craftsmen in
new factories. Industrial machines could be operated by workers with far less
training than craftsmen. Average daily income in 1861 England was 14 pence for 10
hours of work or about $336 in today’s dollars. The modernization and
automation of British industry steadily became more widespread in the 1800s. The
skilled-worker wage premium dropped, as shown in the chart, and didn’t start to
recover until the mid-20th century.
Most recently, wage premiums
during the past 40-50 years have been directed to college graduates, as I’ve
discussed before.
As the number of college degree-holders continues to climb, it’s unclear how
long this premium will last. The multi-century historical wage data discussed
above show that wage premiums awarded to more skilled labor eventually subside.
Even the bees’ knees ultimately crumple.
