The Wage-Price Spiral

...However, such a formula provides no guarantee of either peace or stability...

...the union puts the figure at better than 3 per cent and insists this has been made obsolete by the vastly increased efficiency of new plants...

...Both have always identified their actions with the national good (in a vein of self-congratulation that rarely stops short of fatuousness...

...If that conclusion is less warranted today, it is not because the Berlin crisis, the resumption of Soviet nuclear testing or the death of Dag Hammarskjold have caused a basic re-evaluation of position by either management or labor...

...The essence of these experiments is the use of neutrals—usually men with long experience as arbitrators —to sit with labor and management and help seek solutions for their most vexing problems...

...This is not meant to suggest that they are heedless of the dangers that beset the free world or bereft of patriotism...

...George W. Taylor of the Wharton School, who spearheads the effort to draft a wage-price policy in the Kennedy panel, believes that a tentative first step might be the preparation for business and labor leaders of periodic reports relating the state of the national economy to the decisions they must make on prices and wages...

...Clark Kerr of the University of California serves as chairman of a special automation committee, the problem of finding new jobs for workers stranded by the closing of packing-houses was eased by the creation of a system of "technological adjustment pay...

...Whatever has been wrong has always been the other fellow's fault...

...As if reaching agreement on these points will not involve trouble enough, the Committee is hoping to address itself to reports prepared by a task force of technicians on the even more explosive issues of national wage-price policy and measures to protect and improve America's position in world trade...

...That means the President's drive will be for steady prices, coupled with wage increases that can be accommodated within the limits of increased productivity...

...The interesting thing about all the, themes under review by the Presidential advisors is the extent to which merely ticking off the list indicates why the Administration believes the conventional processes of collective bargaining need supplementation if they are to function in the best interests of workers, stockholders and the country...

...The evidence is far from conclusive that anything that has happened in collective bargaining— whether its breakdowns, with their attendant cost in crippling strikes, or the leapfrogging of wages and prices in pivotal sectors of the economy like steel—has been nearly as influential in the shrinkage of the dollar as Government deficits, tax and interest rates or other Federal fiscal policies...

...The coldness of the steel companies' replies to the President stemmed from a conviction that the White House was moving toward "jawbone" control of the economy...

...The hope is that the carry-over of mutual understanding will eventually become substantial enough to take the heat out of the negotiations on wages, welfare and other regular contract issues...

...At Armour & Co., where Dr...

...In steel, to take the industry where trouble is most habitual, the companies contend that the long-term improvement in...

...Even if economic revival brings a substantial upsweep in output and jobs, it will be difficult to arrive at a consensus on what it entails to make the common good a more assertive consideration in union-industry decisions...

...The protective measures that can be provided through a labor-management contract need integration with those that fall within the orbit of Government...

...If these succeed, a process of advisory arbitration may become a mainstay of collective bargaining within 10 years...

...Inevitably, in a pluralistic society ideas will differ on prescriptions for economic health and responsible ways of filling them...

...On the contrary, the White House is giving all the quiet encouragement it can to experiments that involve a much more fundamental departure from traditional methods of industry-union negotiation...

...What to do about cushioning the human impact of automation, for example, is a problem that clearly cannot be solved within the framework of a single company or even a whole industry...

...Labor and industry have shown a great incapacity to agree on what yardsticks to use in measuring productivity...

...Another idea—one that has only meager support at the White House but is popular with many liberal Senators—would require public hearings before higher prices were put into effect in major industries...

...Before the War few companies or unions would allow an arbitrator to make binding decisions on grievances arising out of their contracts...

...Unions are more sympathetic, but there is a considerable holdback for fear that the unpopularity of the wage-price spiral will prompt the public members to recommend settlements smaller than those the union could win on the picket line...

...His hold-the-line plea to steel management and labor is the first tile in a mosaic that may change the whole design of collective bargaining in key industries...

...Now such decisions are almost universal practice...

...The biggest handicap the Administration will have to overcome in fostering a wider use of third parties under voluntary auspices is an apprehension on both sides that the whole process will wind up as a disguised Wage Stabilization Board, even though the Government will have no direct part in the proceedings...

...Yet, for all the kinship such responses seem to bear to the late Charles E. Wilson's unhappy remark about what's good for General Motors being good for the country, it is a mistake to write them off as signs of either obtuseness or cynicism...

...Labor is no less emphatic in its view that more money in pay envelopes is the key to market expansion and faster economic growth...

...At the top of the discussion list are proposals already agreed on by sub-committees on how the Government can help promote more harmonious collective bargaining, and what revisions are desirable in the creaky Taft-Hartley Act machinery for coping with national emergency strikes...

...The ingredients of a sound wageprice policy are bound to involve elements peculiar to specific companies and industries, but they must also take account of the national demand for price stability and an expanding economy...

...Industry feels that we are losing our competitive position and jeopardizing jobs because profits are too low and taxes too high to encourage maximum investment in more efficient equipment...

...An even more far-reaching change is being tested at Kaiser Steel under a plan co-authored by Secretary Goldberg before he left the steel union...

...Wars and preparations for war, in what has been a way of life for a generation with the end nowhere in sight, have added to the upward pressure on prices—again without reference to anything labor and management do to swell their wages and profits...

...The responses sent by the major steel producers and the United Steelworkers of America to the Kennedy request for voluntary action to prevent a fresh rash of inflation made it plain that nothing has changed in this regard...

...The three public members of a joint committee to explore long-range issues have been authorized by both sides to make recommendations for the solution of basic contract questions if the parties approach the end of one contract without having agreed on the next one...

...The White House is littered with the wreckage of past efforts to induce our masters of private economic power to give more energetic service to the national interest without the compulsions of wartime controls...

...It has five other public members, plus seven from industry and seven from unions...

...To discuss it now would simply immerse the whole session in an atmosphere of antagonism at least as bitter as that which prevailed when Kennedy and Richard M. Nixon explored the same issue in their televised campaign debates...

...With resourcefulness on the part of the neutral members, the fresh air of reason might be injected into the bargaining procedure without all the rigidity and surrender of independent judgment that arbitration itself would require...

...In the end, it may be necessary to work out inter-industry transfer arrangements covering seniority, pensions and other rights as part of the national adjustment to technological change...

...The question on which labor and management have their most deeprooted philosophical difference— how to stimulate more rapid economic growth—has been put on ice until a later meeting...

...Two years ago a distinguished group of industrialists, union brain-trusters, college professors and labor relations experts, attending the American Assembly at Arden House, concluded their deliberations with the despairing observation that appeals by Government officials for restraint and responsibility in wage and price decisions were unlikely to have much effect on the movement of either wages or prices...

...Each side emphasized its freedom from any culpability for past breaches of the total good...

...A. H. Raskin, for many years chief labor reporter for the New York Times, is now serving as a member of that paper's editorial board...

...Obviously, the Administration entertains no hope of finding a way around such atavistic cleavages by inducing all the decision-makers of business and unionism to enroll in a special New Frontiers School of Economics at Harvard and emerge with a nice homogenized blend of wage-price concepts mixed to conform with the Kennedy appraisal of national need...

...The old notion that there was nothing wrong with a little inflation, provided it did not get much above 3 per cent a year, has been pushed as deep in the Kennedy ash can as it was in the Eisenhower ash can...

...GUARDING AGAINST A NEW WHIRL The Wage -Price Spiral By A. H. Raskin The public interest, too often a stranger at the bargaining table, will get a permanent seat if President Kennedy has his way...

...The discussions proceed on a year-round basis without the gunpoint pressure of strike deadlines...

...output per man-hour has been only 2 per cent a year...

...A policy for fostering the speedier introduction of automated processes and other improvements in technology will be debated, along with suggestions for more satisfactory safeguards against human wreckage and for a more equitable sharing of the fruits of the new technology...

...neither would ever concede that it has put selfish interest first...

...Teamster boss Jimmy Hoffa, that rugged individualist on the union front, has cautioned labor that it will be building on a rope of sand if it relies on politicians for wage increases...

...Behind the President's pressure is a belief that the tense world situation rules out the continued use of economic muscle to resolve disputes in key industries, and that improved devices are needed to guard against any new whirl of the wage-price spiral into outer space...

...Nevertheless, the complexity of the new problems presented by automation and foreign competition, coupled with the manifest determination of the White House to fight any imbalance in either prices or wages, may increase the receptivity of both sides to the third-party approach...

...Strike losses are running at the lowest level since World War II and the general price level has shown a remarkable stability for the last three years, but these facts have merely strengthened the White House conviction that now is the time to retailor the bargaining process along pro-public lines...

...The first real test of the panel's usefulness will come this week when it meets at the White House to try to agree on policy statements for the effective coordination of public and private interests in several crucial areas...

...The Administration's interest in reforming the techniques for giving recognition to the national good does not stop at the stratospheric level of the Kennedy panel...

...The most conspicuous mechanism created by the White House thus far is the President's Advisory Committee on Labor-Management Policy, with Secretary Goldberg as chairman and Secretary of Commerce Luther Hodges as vice chairman...

...If brainwashing is out, what other methods can be used to seek meaningful cooperation at the bargaining table by groups with such conflicting fundamental positions on what is needed for a flourishing economy...

...Neither the company nor the union is obliged to accept the recommendations, but the prestige of the three neutrals will make it hard for either side to explain why they were turned down...

...This helps tide over the displaced until they can be transferred to vacant posts in other cities...

...This from an industry whose postwar prices went up three times as fast as the general industrial price index...

...Many employers, distrustful of any outside intervention in the writing of wage contracts, consider the whole scheme an abdication of bargaining responsibility and a step toward compulsory arbitration...

...The President and his resourceful Secretary of Labor, Arthur J. Goldberg, are aware that the national welfare is likely to prove a somewhat vaporous concept to translate in a period when the under-employment of manpower and resources is a much more severe drain on the country's productive energies than industrial warfare...