Guideposts for Hardhats

In his battle against inflation, President Nixon has shunned the ultimate weapon of a wage-price freeze. "Such controls treat symptoms and not causes," he has argued. Besides, he says, they do not work, are inequitable and incompatible with a free economy. Last week Nixon bent his principles to fight raging inflation in the nation's largest industry. Carefully avoiding rigid controls, the President imposed what he called a largely voluntary "system of constraints" designed to stall the wage-price buildup in construction.

Although the constraints may very well fail, Nixon picked the right target. Building costs have jumped 12% during the past twelve months, partly because the unions in 1970 won pay increases averaging 18.3% for the first year of their new contracts. The high settlements have become a source of envy and a goal for other unions.

Bit by bit in recent months, the toll of inflation has dragged a reluctant Nixon toward an incomes policy. In his latest move, the President established a guidepost for construction wage increases: about 6% a year. His executive order called on labor and management to set up "craft dispute boards" to review collective-bargaining agreements in each of the 17 construction trades. The boards' findings will be scrutinized by a twelve-man Construction Industry Stabilization Committee drawn equally from labor, management and the public. The 6% ceiling is somewhat elastic; it could be higher in some places if "equity adjustments" restore traditional pay differences among crafts. Should the reviewing authorities find any increases to be too large, the Government may refuse to award federal building contracts in the affected locality, or it may ignore the new rates in determining fair wage standards for federal projects.

The President set no criteria for contractors' price increases. Instead he bucked the job to a new Interagency Committee on Construction, which will also devise standards for management pay, bonuses and stock options. As a concession to labor, Nixon rescinded his mid-February suspension of the Davis-Bacon Act, which requires that local "prevailing wages" be paid on all federally aided construction. The suspension enraged the nation's 3,500,000 hardhats, while contractors complained that it would have scant effect on this year's wage contracts.

Nixon's new plan pleased contractors, though they would have preferred a wage-price freeze. In a public statement, the building unions denounced the order as "fundamentally unfair in applying strict controls to wages and a vague procedure with respect to profits and prices." Privately, union leaders were somewhat more conciliatory, offering to give the plan a fair trial. Many labor chiefs are embarrassed at some of the extravagant pay increases won by headstrong local union leaders, but under the Landrum-Griffin Act they have little power to intervene. Their publicly stated indignation at Nixon's plan is partly a gesture intended to show militant members that they put up a fight.

Fragile Guidelines. The Administration also indulged in some face-saving by claiming that suspension of the Davis-Bacon Act had softened union opposition to wage-review boards. In fact, union leaders had said that they would make no deal at all until the President restored Davis-Bacon. Still, in negotiations with Labor Secretary James Hodgson in February before Davis-Bacon was rescinded, the construction labor chiefs expressed willingness to accept an even tougher Government program. They were willing to take a wage-price freeze for 30 days or so, while a wage-review board would be established and given power to enforce or even impose settlements. What the union leaders refused to do, for fear of reprisals from militant members, was agree to the Administration demand that they promise to sit voluntarily on the board. When they balked, Nixon suspended Davis-Bacon, and tension rose between the Administration and the hardhats.

To win union agreement to the latest deal, Hodgson had to promise that the White House would not even temporarily freeze wages and prices. Nor would the unions consider any plan that had real enforcement muscle, such as the use of court powers to slap down any increases above the guideline. As a result, Administration officials are dubious that the new Nixon plan will check labor's appetite for fat raises. Indeed, some union leaders have told Hodgson privately that they will go on strike for pay increases of at least 10% during the first year of any new contract. The test will probably come within 60 days when some construction local is asked in the name of economic stabilization to accept a smaller pay increase than it wants. If the system breaks down at this point, Hodgson warned last week, the White House will be ready to take stronger steps. "This Administration is determined to stabilize the industry," he said. "If one method fails, others will be tried."

Other labor settlements could also shatter construction's fragile 6% wage guideline. The United Steel workers, for example, recently won a three-year 31 1/2 pay increase from the can industry. Last week Union President I.W. Abel vowed that his members will accept nothing less from the steel industry this August. Having adopted an incomes policy for construction, President Nixon will face intense pressure for similar action in other areas.

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