Unstabilized Wages

When Franklin Roosevelt said last April that wages would have to be "stabilized," he left the thorny details up to his War Labor Board. Last week, after six months of moiling and toiling, WLB finally produced its formula. It satisfied no one, left the Administration about as far from a realistic labor policy as it had ever been.

Little Steel Test Case. Before WLB was the "Little Steel" wage dispute, brewing and bubbling since last February. The C.I.O. wanted $1 a day more for its 157,000 Little Steel workers. A WLB fact-finding panel, considering only the simpler arithmetic of the demand, found that the companies could afford it: they are so busy now with war orders that all but $2,850,000 of the $47,500,000 annual boost would have come out of excess-profits taxes.

Now WLB itself had to decide: 1) how much the workers were really entitled to; 2) how much they could get without adding unbearable pressure to the inflationary forces already at work in the U.S.

Formula for Future. Reasoned WLB: the real wartime increase in living costs started at the beginning of 1941, reached 15% by the time the President announced his anti-inflation program in April. Therefore U.S. workmen should have had a 15% pay rise in that period to maintain their standard of living. But only that period should be considered; for what has happened since, only workers at substandard wages can ask relief.

Having evolved this formula, WLB promptly violated it. To Little Steel's workers it gave a 44-c--a-day increase, raising their wages 17.4% over the January 1941 level. Explanation of the additional 2.4%: 1) living costs had risen faster in steel towns than in the nation as a whole; 2) the workers deserved a little extra because their wage demands were presented before "stabilization" began, and could have been negotiated before any restraints were placed on wages.

Thus WLB's decision was less a workable policy than a compromise between the workers' demands and the danger of inflation. Little Steel workers will get $8,000,000 in back pay and an additional $21,000,000 a year in future wages. The Wall Street Journal estimated that WLB's formula, if applied to all industry, would raise the purchasing power of U.S. workmen by $3,500,000,000 a year--enough to blow Price Boss Leon Henderson's ceilings to smithereens.

For the solution of how to keep the ceilings intact, WLB now passed the buck to Congress. Board Chairman William Hammatt Davis said that obviously standards of living must be cut--but the knife should be Congress' taxing power, not WLB's power to negotiate wages.

Dissenting Opinions. Not even WLB liked its compromise. The four labor members voted against the decision, holding out for the $1-a-day that C.I.O. wanted. The four employer members joined the four representatives of the public in voting yes--but with reservations. Wrote Employer Roger D. Lapham: "Management has plenty to learn in dealing with labor. Management must learn a technique and philosophy now foreign to the great majority in its ranks.

"Labor leaders must learn that their high, wide and fancy decade is about over and the World War we are now engaged in is actually going on.

"In these days, industry has had taken from it the right to do business as usual.

"Labor leaders still demand privileges and favors because they have given up the right to strike. This is plain bunk with a capital B. What citizen has a right to strike* in a war for his country's existence?"

Inevitable Answer. Every economist knew that the U.S. standard of living had to come down, that any wage increases could only force the living cost higher, could result in no real gain to the workers. But few men in Washington dared say so.

One who dared was young Richard V. Gilbert, long sympathetic to labor, now Leon Henderson's Director of Research in the Office of Price Administration. He went last week to an aircraft-wage conference on the West Coast, preached some elementary facts:

"Before the end of the war the living standards of the American people will be reduced below the level prevailing at the bottom of the great depression. No group can improve nor avoid a reduction of its living standards except at the expense of other groups.

"Those groups which are actually on a bare subsistence level cannot in fairness and common sense be expected to take any cut in their standard of living. But the rest of the people must accept curtailment of its living standard each according to his capacity.

"While under ordinary circumstances collective bargaining should determine distribution between labor and management of their joint products, these are not normal times and the profits are not normal profits. [They] are not labor's to demand or industry's to give away; they belong to the Government."

Gilbert's talk was too strong for the other Government officials and labor leaders at the conference. The meeting fizzled out.

* Brief wildcat strikes occurred last week at American Magnesium Corp., Curtiss-Wright Corp., the Ford Wilson Run plant, and at war factories in Everett, Mass., Providence, R.I. and Pittsburgh.

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