Workers' insecurity of income has not been given the attention it deserves in the standard of living debate. Despite steady improvements in material living standards from 1830 to the First World War, as measured by average full-time wages or earnings, a large share of manual workers in Britain continued to experience “acute financial” distress at some point in their lives (Johnson 1985, 3). The examination of long-term trends in wage rates masks workers' income losses due to unemployment and sickness, and it tells us little about their ability to cope with these periodic losses of income.

Workers dealt with financial insecurity by saving, by insuring themselves against income loss through membership in friendly societies and trade unions, and by applying for public and private assistance when necessary. The relative importance of these coping strategies changed significantly from 1830 to the eve of the First World War.

INTRODUCTION

The trend in working-class living standards from the Great Exhibition to the eve of the Second World War has generated relatively little controversy compared to the debate over living standards during the industrial revolution. Most economic historians agree that real wages increased significantly from 1851 to 1913, and continued to increase during the interwar period. However, despite these achievements, the social surveys of the late Victorian and Edwardian eras revealed high rates of urban poverty and ‘a working-class stunted and debilitated by a century of industrialism’ (Hobsbawm 1968: 137). This suggests that, as with the period 1780–1860, one might reach a different conclusion about trends in and levels of working-class living standards depending on what type of information is examined.

Economic historians measure movements in living standards in various ways, by examining trends in real wage rates or incomes of workers (or more rarely households), national income per capita, life expectancy at birth (or at other ages), infant mortality and height by age. These measures can to some extent be grouped into economic indicators of material living standards – real wages, per capita income – and biological indicators – life expectancy, infant mortality and height by age, which are sometimes said to measure ‘quality of life’. Biological measures suggest a somewhat less optimistic assessment of the trend in working-class living standards than do wage series, at least up to 1900. In order to determine the extent to which living standards improved from 1860 to 1939, it therefore is necessary to examine trends in both economic and biological indicators for the working class as a whole and also for occupational subgroups of the working class.

Historians have yet to determine the precise role played by outdoor relief in agricultural parishes. This chapter provides an economic explanation for the adoption and persistence until 1834 of policies granting outdoor relief to able-bodied laborers, and for the regional nature of outdoor relief. I concluded in Chapter 1 that rural parishes adopted outdoor relief in response to the decline of cottage industry and laborers' loss of land in the second half of the eighteenth century. These changes in the economic environment forced farmers to alter their implicit contracts with labor. I show in this chapter that the dominant form of the new implicit contract differed across regions, because of differences in the magnitude of seasonal fluctuations in the demand for labor. In the grain-producing south and east, seasonal layoffs and outdoor relief became integral parts of the labor contract, while in the livestock farming southwest and north, full-employment contracts were dominant. Labor-hiring farmers were able to choose a profit-maximizing implicit contract because they dominated parish politics.

The chapter is organized as follows: The effect of seasonality on the agricultural labor market is discussed in Section 1. Section 2 presents evidence of the magnitude of seasonal fluctuations in labor demand in early-nineteenth-century England. Section 3 describes how poor relief was financed and offers estimates of the share of the poor rate paid by labor-hiring farmers. A model of profit maximization by farmers is developed in Section 4 and used to demonstrate that implicit labor contracts that included seasonal layoffs and outdoor relief provided the lowest cost method, to farmers in grain-producing parishes, for securing a peak-season labor force.

The debate over the economics of the Old Poor Law began before the adoption of the famous relief scale at Speenhamland in 1795 and has continued to the present day. There have been three distinct phases to the debate. The first, which involved the building up of what I shall call the traditional critique of the Old Poor Law, began sometime during the second half of the eighteenth century and culminated in 1834 with the Report of the Royal Commission to Investigate the Poor Laws. The literature during this period focused almost entirely on the supposed disincentive effects on labor supply (and the subsequent effects on wages, profits, rents, and morals) created by the policy of granting outdoor relief to able-bodied laborers. It made no attempt to discern the reasons why the system of outdoor relief had been adopted in the late eighteenth century, or why it had continued to exist for more than 40 years.

The second, or neo-traditional, phase of the debate was ushered in by the publication of John and Barbara Hammond's The Village Labourer in 1911, and includes the Webbs' English Poor Law History (1927; 1929), and Polanyi's The Great Transformation (1944). Rather than simply focusing on the economic effects of outdoor relief, the neo-traditional literature provided explanations for the system's adoption and persistence. The Hammonds, the Webbs, and Polanyi accepted several of the major tenets of the traditional analysis, however, so that their work should be considered extensions of the traditional literature rather than early pieces of revisionism.

The Royal Poor Law Commission viewed outdoor relief as a rural institution, and most historians, myself included, have focused their analyses on poor relief in agricultural parishes. But outdoor relief also played an important role in the manufacturing cities of northwest England. Along with industrialization came business cycles and the problem of how to deal with cyclical fluctuations in the demand for industrial workers. Manufacturers used the Poor Law as an unemployment insurance system: Workers not needed during downturns were laid off or put on short time, and collected outdoor relief. Because a large share of the poor rate was paid by non-labor-hiring taxpayers, by laying off workers manufacturers were able to pass some of their labor costs on to others during downturns.

However, there was a problem with using the Poor Law as an unemployment insurance system. Parishes were obliged to relieve only those paupers who had their legal settlement in the parish. In the first half of the nineteenth century, 50% or more of the work force in most industrial cities had been born, and were legally settled, elsewhere. Industrial cities not only were under no obligation to relieve nonsettled workers, they had the right to send any nonsettled applicants for relief back to their parish of settlement. A city's policy concerning whether to remove or relieve nonsettled able-bodied applicants depended in part on the political power of its manufacturers. Manufacturers supported granting relief to nonsettled workers during downturns, to ensure that an adequate work force would be available upon the return of prosperity.

During the last third of the eighteenth century, several changes took place in the administration of poor relief, the most important of which was the widespread provision of relief outside the workhouse to able–bodied laborers who were unemployed or underemployed. The changes in relief methods led to changes in the economic role of the Poor Law in rural parishes. A knowledge of the methods of relief that were adopted, the time when they were adopted, and the changes in the economic environment that brought about their adoption is essential for an evaluation of the economic role played by the Poor Law from 1795 to 1834, the so-called Speenhamland era.

This chapter provides the background necessary for an evaluation of the Old Poor Law. It is divided into three sections. Section 1 describes the methods used to relieve able-bodied laborers from 1780 to 1834. I conclude that the major function of poor relief was the provision of unemployment benefits to seasonally unemployed laborers. Section 2 focuses on the timing of the adoption of policies granting poor relief to able-bodied laborers. The year 1795 was not a watershed in the administration of poor relief; real relief expenditures began increasing rapidly at least 20 years before the famous meeting at Speenhamland, Berkshire. Section 3 discusses two important changes in the rural economic environment that occurred during the second half of the eighteenth century, and presents evidence that these environmental changes caused the sharp increase in real per capita poor relief expenditures. The conclusions concerning the methods of relief used, the timing of their adoption, and the reasons for their adoption are considerably different from those reached by the traditional literature.

One of the most often heard contemporary criticisms of the Old Poor Law was that the granting of outdoor relief to able–bodied laborers promoted population growth. The aspect of outdoor relief that supposedly had the strongest effect on the rate of population growth was the payment of child allowances to laborers with large families. Like most parts of the traditional critique of the Old Poor Law, the hypothesis that child allowances caused population to increase has been challenged by revisionist historians. In particular, two papers by James Huzel (1969; 1980) have led Joel Mokyr (1985b: 11) to conclude that “the demographic argument against [the Poor Law] has been effectively demolished.” The judgment is premature. This chapter uses Huzel's data source to demonstrate that, when other socioeconomic determinants of fertility are accounted for, the payment of child allowances did indeed cause an increase in birth rates. Malthus was right.

The chapter will proceed as follows: Section 1 reviews the historical debate over the role of poor relief in promoting population growth. The administration of child allowance policies, and the economic value of child allowances to agricultural laborers, are discussed in Section 2. A cross-sectional model to explain variations in birth rates across southeastern parishes for 1826–30 is developed in Section 3 and estimated in Section 4. Section 5 tests whether child allowance policies were an endogenous response to changing demographic patterns. Some implications for the role played by poor relief in the fertility increase of the early nineteenth century are given in Section 6.