The Relation between Wages and the Increased Cost of Living: An Analysis of the Effect of Increased Wages and Profits upon Commodity Prices

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PART II. PROFITEERING AND LABOR COSTS BY INDUSTRY GROUPS

PROFITEERING IN THE SUGAR INDUSTRY.

The course of the sugar market during and since the world war furnishes a conspicuous example of the excessive burdens which have been imposed upon consumers since the beginning of the war through the artificial stimulation of prices.

After an increase of from 75 to 100 per cent over the pre-war period the retail price of sugar abruptly advanced, in 1919, to around 18 to 20 cents per pound, an increase over pre-war prices of about 14 cents or nearly 300 per cent.

As contrasted with this enormous advance in prices there was an increase in the labor cost of producing a pound of sugar during the same period of not more than 2 cents, which represents less than 15 per cent of the increased cost of sugar to the consumer over the prewar period and only about 18 per cent of the advance in the wholesale price of sugar over pre-war prices. It should be pointed out that the labor cost here mentioned is the entire labor cost, including both agricultural labor required to produce the cane and beets and factory labor in the refineries.

An examination of recent Government reports on the cost of production of sugar shows conclusively that advances in labor costs have been a factor of relatively slight importance in the increased cost of sugar to the consumer. The extensive tables given in these reports have been condensed into the following table, which shows the changes in labor costs in relation to total costs and prices. The figures represent cents per pound:

Items 1913-14 1916-17 1917-18 1913-14 1916-17 1917-18 1913-14 1916-17 1917-18
Agricultural
labor0.5050.9661.0851.471.5221.9391.5431.7642.552
Factory labor0.1350.1360.1910.2750.2840.3930.2640.2710.410
Total labor0.651.1021.2761.7451.8062.3321.8012.0352.962
Total cost2.70*3.65*4.93*4.124.365.504.484.796.84

Wholesale price3.876.286.424.867.528.134.717.717.79
Retail price4.68.29.34.68.29.34.68.29.3
____________________
*
Includes duty 1 cent per lb.

-25-

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