It has been a truism that the distribution of income is relatively fixed. The slope of the Pareto curve of income may change slightly in the various stages of the business cycle; but it oscillates about a norm, it does not fluctuate at random. It conforms itself to relative productivity.

Relative income is important socially as well as economically. Income is one of the major yardsticks by which people establish themselves in a social hierarchy; and any attempt to alter the income pattern may be expected to produce serious disturbances. The new situation can persist only if the relative supplies of labour of different grades are correspondingly altered. Otherwise unemployment may be expected.

The distribution of income among wage-earners has been sharply altered since 1939. There was a very strong tendency to give wage increases as so many cents per hour and not as a given percentage of the previous wage. The cost of living bonus was so designed; and its pattern was followed by the large industrial unions when they demanded further wage increases. The total of increases given in this fashion was large enough to narrow sharply the percentage spreads between the skilled and the unskilled occupations. The present situation is one of unstable equilibrium and the study which follows attempts to measure the degree of distortion in the wage structure and therefore to indicate how much change must be made in it before it is again normal. The broad fact is clear; all that can be claimed for this paper is that it helps to give precision to what is now vague common knowledge.