Wages and Labor Markets in the United States, 1820-1860.

• Author: Whaples, Robert

By Robert A. Margo.

Chicago: University of Chicago Press, 2000. Pp. xii, 200. $28.00.

The American economy underwent a series of profound changes between 1820 and 1860--including the completion of the Erie Canal, the growth of commercial banking, industrialization in the Northeast, breakthroughs in the mechanization of agriculture, a 10-fold increase in cotton production, the rapid westward movement of population, the construction of over 30,000 miles of railroads, and (after 1845) the highest per capita rate of immigration in the country's history. Yet, our understanding of this period in which the United States experienced the onset of modern economic growth is surprisingly limited. Despite a consensus that per capita GDP rose substantially during this period, there has been considerable debate about whether the standard of living of the average worker rose. As Robert Margo (Vanderbilt) amply demonstrates in his thorough and painstaking review of previous studies, estimates of nominal and real wage trends and movements during this period are generally confined to the Northeast, rest on thin and perhaps unrepresentative bodies of evidence, and often involve questionable assumptions.

Margo scores an economic historian's hat trick: combining extensive data collection with careful, sensible, rigorous statistical analysis and an economically written, knowledgeable, wide-ranging interpretation of the findings. The core of his new evidence consists of newly collected payroll records containing nearly 60,000 monthly observations for civilian workers hired by the U.S. Army at forts and bases around the country between 1820 and 1860. These data are supplemented by evidence collected from the federal manuscript Censuses of Social Statistics of 1850 and 1860. Margo uses these data to construct annual nominal and real wage series for three groups of workers--artisans, common laborers and teamsters, and clerks--in four regions: the Northeast, Midwest, South Atlantic, and South Central. To do this, he uses hedonic regressions that control for fort location, workers' characteristics and occupations, and season before isolating the impact of year dummies on wage levels.

He concludes that in the aggregate, between 1820 and 1860, real wages grew at about 1% per year, approximately the same as the growth rate of real output per worker. Real wage growth was strongest for white-collar workers, but was fairly anemic for artisans in the Midwest and South...