Wage Freeze?

It was as if a speaker at a meat packers' convention had come out foursquare and hearty for vegetarianism. With predictable indignation, labor leaders at last week's A.F.L.-C.I.O. convention in Atlantic City pounced on President Richard James Gray of the 19-union Building and Construction Trades Department for making a proposal that he himself conceded was "most unorthodox." The proposal: a one-year voluntary wage freeze to keep prices from rising to the point where demand declines and sagging demand causes unemployment.

Ridiculous & Irrelevant. Jowly old (71) Bricklayer Gray has long been a dissenter among labor leaders. He backed Eisenhower for President in both 1952 and 1956. During the great McCarthy noise, he was the only labor leader of note to go on record with a resounding good word for the late Senator from Wisconsin. But never had Gray dissented with such devastating effect as he did in urging a labor-sponsored wage freeze just as labor leaders were getting ready for a big wage-boost offensive in 1958.

The A.F.L.-C.I.O. summoned up its chief economist, Stanley Ruttenberg, and he called the Gray idea "ridiculous." Federation President George Meany accused Gray of adopting the "big business" thesis that wage boosts cause inflation, added that the wage-freeze idea is irrelevant to the current economic picture, because inflation has halted and a downturn has set in. Following the line of A.F.L.-C.I.O. economic orthodoxy, Meany argued that deflation is caused by a shortage of consumer purchasing power, and that therefore wage boosts are needed to combat the downturn.

Despite all the ridicule heaped on it at Atlantic City, Gray's basic idea--that it is to labor's interest to show moderation in wage demands--made considerable economic sense. The nation's laws give Big Labor what amounts to a monopoly power. Using that power, labor can force wage increases that outrun increases in productivity (real output per man-hour). And wage increases that outpace productivity tend to push prices up, whether the economy is inflating or deflating.

Prices & Featherbeds. In the U.S. economy, labor productivity has hardly increased at all over the past two years. The No. 1 task of organized labor in the year ahead is not to use monopoly power to force wages up but to join in promoting the increased productivity that makes possible higher wages without higher prices. The need for increased productivity is nowhere more obvious than in Richard Gray's featherbedding building trades, which deliberately hold back output per man-hour through restrictive rules; e.g., painters must use brushes, not sprayers.

At least as important as federal credit curbs in holding down demand for housing is the fact that the wages of bricklayers, carpenters, et al. ($2-$5 an hour) have far outrun their productivity, pushing the prices of houses far out of line. To keep housing prices from getting further out of line is clearly to the interest of the building trades. That is what Richard Gray was trying to say, and it was precisely what needed saying.

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