In a democracy there is scarcely any public question of greater
importance than the standard of living of the common people. It is essential
to know the actual level of this standard of living, and whether it is
improving or deteriorating. There can be two types of standards of living.
One is the standard of living of the society as a whole, and the other is the
standard of a group within the society. It is perfectly possible for the
standard of the society as a whole to be improving, while that of one or
more groups within the society is declining. Moreover, if the distribution of
economic power in the society is very unequal, it may happen that the
group, the standard of which is declining may constitute a very large
proportion, even a majority, of the total population.
Our aim is to explore that standard of living of the average
household (the wage earner), taking into account the following factors. First,
indices of price levels are almost always based on the prices of articles most
of which do not enter directly into the budget of the wage-earner’s family.
The increase in prices in recent years has affected different classes of
commodities very differently, and that the commodities, the prices of which
have fallen rapidly are those which belong to the category of luxuries, while
those articles, the prices of which have risen at a rate greater than the
average, are the necessities of life, which constitute the major part of the
workingman’s expenditure. Second, an index of wage levels is likely to be
meaningless because of the extreme difficulty in arriving at anything like an
average of wages.
Uncertainty as to the course of the standard of living of the wageearner’s
family has been due to the lack of a basis of measurement, of a
“yardstick”, which would represent in actual commodities, the elements in
the workingman’s standard, and which could be applied, in connection with
the prices of those commodities at different times and places, to test the
relative level of the standard of living of different groups.