That Extra Something

Unemployment melted surprisingly in March and made the biggest drop in four years, from 6.1% to 5.6% of the labor force. Labor Secretary Willard Wirtz took little satisfaction from the new statistics. "My feeling," he said, "is about what it would be if somebody's temperature dropped back from 104DEG to 103DEG.'' U.S. labor leaders are in fervent agreement with Wirtz, and their current pattern of contract negotiating is calculated to create jobs by spreading out the available work.

In contract talks opening this week, rubber workers will push tire manufacturers for paid leaves, ranging upward from two months off after seven years' work. The United Steelworkers' big drive will be for three-month sabbaticals every five years after 15 years' service. In Detroit, Walter Reuther has already pressed the automakers to start studying his requests for greater job security in next year's contract. Stymied in its drive for a 35-hour, share-the-work week, labor has turned its efforts to winning bigger and better fringe benefits.

Out of Oklahoma! Fringe benefits became popular in World War II, when the Government's freeze on wages inspired labor-hungry companies to create other inducements; fringes probably got their name as extra trimmings from Oklahoma!'s catchy 1943 song, The Surrey with the Fringe on Top. While wages and salaries have about doubled since 1948, fringes have more than quadrupled, to some $58 billion yearly. They now amount to more than 20% of U.S. industry's payroll costs. Some companies now pay so much of their labor costs in extras that they consider "fringe" benefits a misnomer.

Better than 90% of the nation's blue-collar workers enjoy company-supported health and welfare plans. Besides paying for unemployment insurance and chipping in their share of social security, hundreds of companies now pay up to half of employee life-insurance and medical-plan costs. Also common are a host of fringes that were considered visionary or radical only a dozen years ago: regular three-week vacations, eight or more paid holidays a year, severance pay, company-financed college courses, moving allowances for transferred employees, and layoff benefits that bring payments up to 80% of base wages. Even more liberal extras range from the country clubs for workers provided by Burroughs Corp. and IBM to haircuts for employees of Detroit's Maxon advertising agency and psychiatric care ($2 a visit) for California Retail Clerks and their dependents.

More Than Cash. Both labor and management agree that fringes have advantages over cash. Workers save two ways: they get tax breaks on most fringes, also get health and insurance plans at wholesale group rates instead of retail individual rates. And since employees think twice before giving up such benefits, Kroger Co. Chairman Joseph B. Hall reports that "fringes have cut down our labor turnover." Management also prefers fringes because straight cash raises add automatically to the cost of overtime, incentive and vacation pay. Both sides agree that the voluntary payment of fringes has slowed down inflation, headed off higher social-welfare taxes such as are common in Europe and educated workers in the merits of savings, insurance and regular health care.

Fringes are steadily taking more of the negotiating package, but the common notion that they amount to something for nothing for the workers is contradicted by Commerce Department statistics. They come in lieu of wage increases. Frinee benefits have increased from 3% to 6% of the value of corporate output since 1948, while wages have slipped by 3%. One union leader recently boasted of negotiating an insurance plan that would cost a big eastern company $100,000 a year--but failed to note that it would probably mean $100,000 less in merit raises, because few companies are willing to increase overall labor costs at the expense of profits and dividends. At Lockheed Aircraft, officials figure that rest periods and coffee breaks cost 12-c- an hour, which otherwise could flow into wages.

Running a Risk. The drive for fringes at the expense of take-home pay goes on. As they go into contract negotiations major unions now have their eyes on longer vacations, shorter weeks and more holidays. Unions also want "portable pensions" that permit workers to change employers and still keep their benefits, as some construction workers, boilermakers, teamsters and sailors already can do. One goal, says Al Whitehouse, the Steelworkers' Cincinnati district chief, "is to get pensions up to the same level that a man makes when he is working.'' Such extremes have brought a pay situation in Europe, in which fringes run from 35% to 50% as much as wages--but the wages, by U.S. standards, are modest.

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