Fight for the Annual Wage

The battle lines formed last week for the greatest labor-management struggle in years. The issue was the guaranteed annual wage, a proposition to which C.I.O. President Walter Reuther said that his auto workers are "irrevocably committed." The auto industry is just as strongly opposed--at least to Reuther's plan.

With new wage negotiations only two months off, the war of nerves is already underway. Wildcat strikes and work stoppages plague the auto industry. A rumor, apparently planted by the union, that both G.M. and Ford would settle for some sort of guaranteed annual wage before negotiations start, was spread by such scattered sources as Columnist Drew Pearson, Gossipist Leonard Lyons and the newsletter of Manhattan's Chemical Corn Exchange Bank. The rumor was vehemently denied by management, and G.M.'s Labor Negotiator Harry Anderson even hustled to Manhattan to straighten out the bank.

To show their strength, the auto workers have already raised $12 million toward a strike fund of $25 million. On their part, the auto companies are turning out cars at the rate of 161,500 a week, just below the 1950 peak, in order to have as many as possible ready for spring and summer--just in case.

Actually, World War II and the postwar boom virtually gave the auto workers a guaranteed annual wage for the past 14 years (average pay last year: nearly $5,000). Now, with signs of a return to seasonal buying, they are fearful that the sharp seasonal ups and downs which harassed the auto industry in the prewar period will return. The bargaining will begin in April, though the U.A.W. contract with G.M. does not expire until May 29, with Ford on June 1, with Chrysler Aug. 31. Ford and G.M. are the key targets, and U.A.W. is sure to play off one against the other. While Ford would be under strong pressure to settle any strike before losing too much ground in its race with Chevrolet, G.M. might be under similar pressure from its stockholders.

"Morally Right." To Walter Reuther, the auto workers' demands are "economically sound, morally right and socially responsible." He claims that the U.A.W. can produce dollar figures on the auto industry to prove "excess profits" and ability to pay for G.A.W. But so far, the auto workers have talked only in generalities.

What the U.A.W. wants is a guarantee of a weekly wage for 52 weeks a year for all its hourly paid workers. If a man is called in one day and then laid off, says Reuther, he should get paid for the whole week. If he is notified in advance of a one-week layoff or more, then he should get enough to "maintain the same living standards as when fully employed." The payments, says U.A.W. with a hint to employers, should be integrated with state unemployment-compensation benefits so that "employers can reduce their liabilities by effectively working toward the improvement of state laws."

The auto workers reason that a guaranteed annual wage would put a curb on "irresponsible production scheduling," make employment even through the year. To keep sales constant, U.A.W. would like the auto industry to give dealers more incentive (i.e., greater profits) to sell cars in the normally lean winter months, less for summertime sales. After all, argues the union, most auto executives and white-collar workers have what amounts to a guaranteed annual wage. Why not one for the production-line employees too?

Flattened Curve? One big trouble with the auto workers' G.A.W. is that there are so many possible variations that no one knows just how much it would cost. Automen have had actuaries working on the project for two years, and reckon the cost might run as high as $5 billion in the first year. But the biggest problem is the one the union also fears the most: seasonal fluctuations in auto sales.

Automen themselves would like to flatten out the sales curve (last week Ford was sponsoring radio ads urging motorists to buy their new cars now, instead of waiting for warmer weather). But they are not sure that it can be done. Even in recent years of relatively mild ups and downs, 25% more cars have been sold in the second quarter than in the first quarter. Consumers already have an incentive to buy in the winter, with the chance at bigger discounts and trade-ins. And what the union seems to forget is that any greater profit for dealers who sell cars in the winter would have to come straight from the companies' own earnings. While G.M. and Ford have had fat earnings, Chrysler was barely running in the black last year, and the other companies were running in the red.

Reflecting the industry's skeptical view of G.A.W., Ford Industrial Relations Boss John Bugas said last week: "We'd be very happy if only somebody would come up with a good plan for G.A.P., or guaranteed annual profits."

Compromise Ahead ? The auto industry experimented with a form of G.A.W. in the past. In 1939 G.M. had a plan under which workers who were laid off could draw against their future salaries, then pay it back in weekly deductions when they went back to work. But the plan was not liked by the union because of its paternalism, and was dropped when wages were controlled during World War II. Nevertheless, it looked last week as if the union was willing to strike for its own brand of paternalism unless management compromised on some form of G.A.W.

This file is automatically generated by a robot program, so reader's discretion is required.