The Price of Peace

The phrase "catchup increases" is being heard more and more these days in labor negotiations. Inflation has eaten away at the dollar so relentlessly that workers are demanding retroactive cost of living increases just to keep even with rising prices. Last week high settlements in the telephone and copper industries and in the postal service continued the trend. And there is little doubt that the philosophy of catching up is playing a major role in the steel talks that are now under way to replace the industry's current labor contract, which will expire this Saturday.

Last week's agreements:

> The telephone contract, between the Bell System and the Communications Workers of America, gives Bell's 400,000 workers an average of 31% in wage and benefit increases over the next three years. In the first year of the contract alone, there will be a 16% jump.

> The postal settlement--the first to be negotiated since the nation's postal system became an independent agency on July 1--gives 750,000 workers 20% in increases over the next two years. Cost to the postal service: $1 billion.

> The copper settlement, between Magma Copper Co. and negotiators for a coalition of two dozen unions, gives 3,000 Magma workers a 31% increase over the next three years. At week's end some 32,000 workers, represented by the United Steelworkers of America (U.S.W.), were still on strike against other copper companies, but both sides were expected to accept the Magma package.

Last Catch? Each of the settlements provides not only an average annual increase of 10% or more but also additional hikes tied to increases in the cost of living. Such figures were hardly a surprise to negotiators at the steel talks. Steel management has recognized that the U.S.W. will hardly agree to anything less than the 31% wage and benefit hikes that it won in the aluminum and can contracts negotiated earlier this year. A tougher question is how much of the increase will be "front loaded" in the first year and how much will be spread over the life of the contract. Officials of the Government, steel management and the union believe that there will be either no strike or merely a short walkout that would scarcely hurt the economy, since steel users have built up a 60-day stockpile.

The steel deal will be the last major union contract negotiated this year, and Treasury Secretary John Connally said last week that he expects it to be the last of the catch-ups. His reason: cost of living escalator clauses have been written into almost every big labor contract negotiated since 1969; and wages in the future will automatically go up along with inflation. As soon as steel settles, organized labor may make a broad-based push for a firm incomes policy to hold down the wage-price spiral. Such an effort is already building. George Meany, chief of the A.F.L.C.I.O., has recently spoken out in support of direct controls. His goal: to safeguard the purchasing power of the dollars that his workers have won at the bargaining table.

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