English-American Wage Gaps

Although wage gaps among the industrializing states were low, transportation costs sustained significant wage gaps between England and the United States. When American industry started to develop in the early nineteenth century, the wages of adult laborers were much higher in the United States than in England or other countries. Table 11.5, based on work by Nathan Rosenberg (1967), shows pay differentials classified by various skills for the years 1820 through 1821. Across all skill categories listed, wages were higher in the United States than in England.

By and large, these pay differentials are attributable to the fact that a floor under the remuneration of labor in industry was set by rewards in agriculture. Well into the 1800s, there were no insuperable obstacles, either of distance or expense, to obtaining a fertile farm in the United States. Output per worker in agriculture was relatively high, and the course of agricultural technology in the early nineteenth century increased output per person. Moreover, farmers in America, who ordinarily owned their own land, received, in addition to their own wages and those of their families, elements of rent and profit that in England went to the landlord. Therefore, U. S. land abundance added to the apparent wage gap between American and English workers, making the income or wealth gap between typical workers larger than the wage gap.

International labor mobility, at least in the early nineteenth century, failed to close these observed wage differentials. Sharp increases in immigration in the late 1830s and throughout the 1840s and 1850s led to a narrowing of the wage differential between American and English labor; even so, the floor for U. S. industrial wages was, according to a consensus of voluminous testimony, still relatively high in 1860.