Chapter 8 of The Wealth of Nations deals primarily with the wages of labor.
Labor wages. In a primitive social state where land is not yet privately owned and capital has not yet accumulated, all the products of labor belong to the laborer, with whom neither the landlord nor the employer has to share.
In this state, the wages of labor will increase with the increase in the productivity of labor caused by the division of labor, but the ** of commodities will become lower and lower, because the amount of labor required to produce them decreases.
Once the land became private property, the landlord demanded that the laborer give him a share of almost everything produced or collected from the landRent became the first item to be deducted from the product of labour spent on the land.
In all crafts and manufactures, most of the labourers need their employers to pay for raw materials, wages, and living expenses before the work is completed, and the employer shares in the fruits of their labour, that is, in the value added by their labour to the raw materials, and this share is his share of profits. If there is no profit, the employer will not be willing to continue to hire workers. So,Profit became the second item to be deducted.
Labor conflicts. Usually, a worker's wages are set out in a contract between labor and management – an employment contract. In the event of a dispute – the worker wants the higher the wages the better, and the employer wants the lower the wages the better.
In the comparison of the number of employers and workers, the number of employers is smaller, the unity is easier, and their union is recognized by law, but the union of workers is prohibited by law.
Moreover, in the face of disputes, employers are always more persistent than workers. Even if the employer does not hire a single person, he can live for a period of time on the capital he has, while a worker may not be able to last even a week if he does not work.
Although employers are in a better position than workers in the face of disputes. But there must also be a minimum standard for labor wages. Because a person who sells his labor must have enough wages to support himself and his family.
The level of labor wages.
The richer the society, the greater the demand for labor and the higher the wages and vice versa.
When the supply of labor in society is greater than the demand, the competition between workers is fierce, and the wages will be reduced. When demand exceeds supply, employers need to pay more to hire workers.
If there is a sudden surge in food prices or a skyrocketing price such as famine, it will raise the cost of living for workers, and the demand for wages will be higher. But at the same time, the demand for labor in the society will also decrease, which will reduce the actual labor force in the society. The reverse is the same.