Wage-Price Go-Round

January 4, 1960

Reluctant as this column is to engage in prophecy, it is not taking much risk in predicting that when a settlement of the steel strike does come, it will be inflationary.

Even before the strike began the steelworkers were the highest-paid major group of workers in industry, receiving an average of $3.10 an hour compared with average factory earnings of $2.23. The companies have already offered a three-year contract which they estimate will bring the steelworkers an additional increase of 33 cents an hour over the full period; even the union, which turned down the offer, concedes that it meant at least a 24-cent increase. The final settlement will surely not be lower.

But this means an inflationary increase. Because the steelworkers are already far ahead of the procession, the new gain is certain to let loose a tremendous wave of demands for another round of wage increases.

All this does not necessarily mean that the company managements were foolish to put up a fight. They had every reason to think, at the beginning, that their resistance would have the support of public opinion and of the Administration. They were not merely encouraged, but practically enjoined, not to make an “inflationary” wage settlement. They knew what the opposition would be to another price increase. They knew they would lose further markets to foreign producers.

‘NEUTRAL’ GOVERNMENT

As the strike dragged on, the government remained ostensibly “neutral.” It refused to “interfere.” Certainly it did not, as under Mr. Truman, interfere directly on the side of the strikers. But Mr. Eisenhower began to declare that he was losing patience; he rebuked both sides for not coming to an agreement. As he did this even after the companies had made an inflationary offer, the only logical conclusion was that he expected them to make a still more inflationary offer, if necessary, to persuade McDonald to accept; otherwise he would have expressed his displeasure with the union alone.

And all the time he, his officials, and Congress utterly ignored the fact that the Federal government had been tipping the scales in favor of the strikers from the beginning, through the operation of existing laws. The Taft-Hartley-Wagner Act set up the machinery under which the steelworkers’ union was created, and under which it became the official exclusive bargaining agency for the employees. It set up the requirement that the employers must continue to “bargain” with McDonald no matter how unreasonable his demands or his attitude. It made it in effect impossible for the companies to treat the strikers as having quit their jobs and peaceably to hire other workers to take their place, either on the old terms and conditions or on new ones. And the Norris-LaGuardia Act, plus the absence of local law enforcement, removed from the companies protection against the intimidation of mass picketing and the threat of violence.

IN SPITE OF THEM

Without this intervention by the Federal government (an intervention built in for a quarter-century) it is highly improbable that there would have been a 116-day steel strike for such extravagant demands, or even an industrywide steel union powerful enough to choke off the nation’s steel supply at will.

All this is ignored by the Stevensons and Rockefellers who now call for compulsory arbitration. What they are in effect proposing is that if the unions cannot get what they want even with the legislative scales heavily tipped in their favor, a government body should step in and order the employers to pay more. Theoretically, of course, the workers could be ordered to resume work for less than they could obtain from a continued refusal to work (which would be a violation of their basic liberties), but as the proposal comes from the professional “friends” of labor, it is obvious that they do not seriously expect this result. They merely expect additional pressure on the employer.

So we seem to be in for another round of inflation. But Administration officials and congressmen will all talk as if this had nothing to do with the policies they pursued or advocated, but had come about in spite of everything they had done to stop it.