Builders' Wages in Southern England and the Southern Low Countries, 1346 -1500:A Comparative Study of Trends in and Levels of Real Incomes
The traditional and almost universal method of expressing real wages is by index numbers, according to the formula: RWI = NWI/CPI: i.e., the real wage is the quotient of the nominal (money) wage index divided by the consumer price index, all employing a common base period (here: 1451-75 = 100). This method is very useful in comparing long-term trends, and in ascertaining whether changes in nominal (money) wages or changes in the price level were paramount in determining changes in real wages. But it does not permit us to make any judgements about the levels of real wages and thus does not permit us to make comparisons of real wages amongst different regions. This paper presents a new method of presenting and comparing real wages, and one that may also be independent of any common base period. This particular paper compares the actual changing levels of real wages for building craftsmen and their journeymenlabourers in southern England, Flanders, and Brabant, in the late medieval era (1346-1500): and the real wage is expressed here as the number of very similar 'baskets of consumables' that a craftsmen and his journeyman could each purchase with his annual money wage income, based on 210 days of employment each year. Using the working papers for Phelps Brown & Hopkins' very famous price and real-wage indexes for England (1264-1954), which were presented only in disembodied index numbers, I was able to compute the annual values of all commodities in their 'basket of consumables' and thus the total value in pence sterling. Herman Van der Wee had constructed a price-index for the Antwerp region (1400-1700), with annual values in pence groot Brabant (but still converted into index numbers); and I have produced a similar price index for Flanders (1348-1500), with annual values in pence groot Flemish. All three baskets have very similar contents. All wages and prices are expressed in terms of quinquennial (five-year) harmonic means The results of this comparative analysis are best expressed in the nine graphs that accompany this paper. But some brief conclusions may be stated here. First (as I had contended in two recent articles) the Black Death did not usher in a 'golden age of the labourer' in either England or Flanders, but was instead followed by a quarter century of falling real wages, because rampant inflation erased and countered the gains in nominal (money) wages. Real wages rose in the very late 14th and early 15th century because of a combination of institutional wage-stickiness and deflation. In the Low Countries, beset with war-induced and very inflationary coinage debasements, real wages again fell until the late 1430s, rising thereafter only with monetary stability, deflation, and 'wage-stickiness'; but then falling once more from the 1460s, because of warfare and debasement-induced inflations (to the 1490s). This evidence refutes the almost universally accepted axiom that the real wage is determined entirely by the marginal revenue product of labour. I do not, however, completely rule out the role of changes in productivity, though I offer the hypothesis that regional differences in Total Factor Productivity (and some degree of factor immobility) must be called upon to explain marked differences in real wages. The most striking difference is that, at the time of the Black Death, real wages for master building craftsmen in southern England were only a third of those enjoyed by master craftsmen in Bruges; but by the 1480s, when inflation was far more serious in Flanders than in England, that gap had narrowed to just about 80 percent of that for the Bruges craftsmen, still the best paid in north-west Europe. In Bruges, the craftsmen's journeymen did not fare as well, however, earning only half the master's wage, while the English journeymen came to earn two-thirds of their masters' wage by the 15th century -- and sometimes, during periods of severe debasement-induced inflations in Flanders, the English journeyman's real wage was slightly higher than that for his Bruges counterpart. In general, English building craftsmen fared better than their counterparts in Antwerp, earning somewhat less in the early 15th century, but more in the last third of the century, when inflations from severe coinage debasements again reduced real wages in the Low Countries.
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- Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
- K. N. Chaudhuri, 1968. "Treasure and Trade Balances: the East India Company's Export Trade, 1660–1720," Economic History Review, Economic History Society, vol. 21(3), pages 480-502, December.
- John H. Munro, 2000. "The West European Woollen Industries and their Struggles for International Markets, c.1000 - 1500," Working Papers munro-00-04, University of Toronto, Department of Economics.
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