Wage Control

Report Outline
Economic Controls in War Mobilization
Wage Control Experience in World War II
Effects of Wage Control on the Economy
Special Focus

Economic Controls in War Mobilization

Direct controls over wages and prices are in prospect for the near future if higher taxes and indirect controls over money and credit fail to restrain inflationary pressures of the mobilization program. Preliminary planning for wage control began on Nov. 28 with the first meeting of the new Wage Stabilization Board headed by Cyrus S. Ching, director of the Federal Mediation and Conciliation Service. Ching said at a press conference the following day that the board was still “in the process of exploring” but that the turn of events in Korea added urgency to its deliberations. Appointment of Michael V. DiSalle, mayor of Toledo, as Director of Price Stabilization on Nov. 30 completed the top level organization for imposition of controls. No advance announcement of a date on which they will go into effect is to be expected, but it is obvious that machinery for the enforcement of controls can hardly be put in working order before the end of the year.

Any scheme of wage control must operate under the Defense Production Act, which virtually compels simultaneous wage stabilization in any industry designated by the President for price stabilization. Denounced by the administration as unworkable, the provision tying price and wage controls together was inserted by Congress to prevent repetition of an alleged World War II practice of squeezing the profits of industry by controlling prices while permitting wages to rise. In his message of July 19 requesting emergency legislation, President Truman did not ask immediate powers over either wages or prices. Subsequently he urged that, if such authority was to be included in the law, it “be written in a form which allows wide discretion and flexibility as to the method and place and timing of application.”

Proliferating Controls in a Semi-War Economy

A steady rise in prices, the appearance of shortages of materials and of certain types of labor, and the development of a new round of wage increases already have forced the government to invoke some of the economic controls which Congress authorized on a stand-by basis. The consumers' price index of the Bureau of Labor Statistics rose from 170.2 on June 15, just before the Korean war, to a record high of 174.8 on Oct. 15. Average weekly earnings of production workers in manufacturing increased from $58.85 to $61.98 in the same period; average hourly earnings from $1,453 to $1,497.