uniformly. The
general direction of wage change is marked, but there is nevertheless
considerable variation in the amount of wage change.[44] These
variations in wage change are to be explained by the fact that the wage
earners tend to fall into groups whose economic fortunes are in some
measure independent of each other. They therefore are only slowly
affected by changes in each other's position.

On the other hand, since the increase in expenses of production in most
industries tends to lag behind the rise in the price obtainable for
products, profit returns increase during such periods, especially in
industries in which the wages bill is an important part of the expenses
of production. To quote Mitchell again, "The net resultant of these
processes is to increase profits. Of chief importance is the fact that
supplementary costs rise slowly in comparison with the physical volume
of business.... In many instances prime costs also lag behind selling
prices on the rise...."[45]

The definite exception to this last conclusion is when the rise in
prices is caused by general lowering of the productivity of industry.
And so also it may be said that to the extent that higher prices are
merely a mark of an increased cost of labor, or a drop in the efficiency
of industrial enterprises, it does not follow that profits are growing.
It is generally held that there is such a falling off in the efficiency
of industrial enterprises, and an increase in the cost of labor in a
period of very rapid business expansion and rising prices--especially
toward the end of the period. Mitchell writes: "... Prosperity is
unfavorable to economy in business management. When mills are running
overtime, when salesmen are sought out by importunate buyers, when
premiums are being offered for quick deliveries, when the railways are
congested with traffic, then neither the over-rushed managers nor their
subordinates have the time and the patience to keep waste down to the
possible minimum. The pressure which depression applies to secure the
fullest utilization of all material and labor is relaxed, and in a
hundred little ways the cost of business creeps upward."[46]

Then there are the indirect effects of the process of price change
upward. Since profits generally are large, production tends to be
stimulated and the volume of production increases. The turnover of
industry is quickened somewhat. Plants are more fully utilized, and
unemployment is small.