Wages and Markets in the United States, 1820-1860 (review)

Wages and Markets in the United States, 1820-1860. By Robert A. Margo (Chicago, University of Chicago Press, 2000) 200pp. $28.00

The extraordinary economic, social, political, and demographic changes that occurred during the four decades prior to 1860 posed new and significant challenges for labor markets as mechanisms for allocating a fundamental input to the production process: Industrialization unfolded in the Northeast; westward migration more than tripled the geographical size of settled area; the era of immigrant America began in the 1840s; and substantial business cycles appeared on the scene. All of these developments occurred while the North and the South inched closer to the Civil War. This book considers the performance of labor markets under these dynamic conditions.

Margo measures and analyzes trends and patterns in real wages (nominal wages adjusted for price-level changes) as one aspect, or component, of the standard of living. He also considers labor-market efficiency between the agricultural and nonagricultural sector, as well as across geographical areas. Special attention is given to wages in the California gold rush, which were affected by the confluence of several large labor-market shocks worthy of additional study.

Like most examples of high-quality research in economic history, this book skillfully analyzes credible new data on a misunderstood but important aspect of our economic past. The major data sources are Reports of Persons and Articles Hired, which document the wages by occupation of civilians hired at military posts. The Manuscript Schedules of Social Statistics for 1850 and 1860 provide information on average monthly or daily wages for various types of labor (with and without board). Both sources provide considerable more detail than heretofore assembled about antebellum wages by region, year, and occupation.

Although the evidence assembled prior to this book is scanty, it suggests that wages generally rose, in the neighborhood of 1.2 to 2.5 percent per year, but at fluctuating rates (possibly including some declines) from 1820 to 1860. Margo's work places the actual figure at about 1 percent, slightly below rates accepted by conventional wisdom. He also finds greater variability than previously thought, with reversals occurring in the mid-to-late 1830s, and then again from the late 1840s to the mid-1850s.

Based on data for 1850 and 1860, labor markets operated efficiently, at least across the farm and non-farm sectors. After adjusting for differences in the cost of living across counties in the cost of board, the ratio of farm to non-farm wages was less than 10 percent in 1850 and under 4percent in 1860 within eight states that were studied. Thus, economic growth was not impeded by broad sectoral imbalances in the allocation of labor. But regional differences in real wages generally exceeded those across sectors, amounting to 30 percent, for example, for artisans in the Midwest compared with the Northeast. Margo traces the origin of the North-South gap in real wages, which is well known for the postbellum period, to the 1830s.

This book sets a standard for historical study of labor markets in its ambitious program of data collection and thoughtful analysis. It will become essential reading for labor economists interested in the evolution of American labor markets, and it will appeal to a broad audience of historians and economists who want to understand a crucial phase of American economic development.

 

Richard H. Steckel
Ohio State University

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