Wage Policy in Recovery

Report Outline
Brakes on Wage-Price Increases
Three Decades of Ascending Wages
Current Conflicts in Wage Policy
Special Focus

Brakes on Wage-Price Increases

Satisfaction over multiplying signs that the country is fast leaving the recession behind is currently clouded by fears that too vigorous a recovery will set in motion a new inflationary surge. The risks in the situation have impelled the Kennedy administration to make special efforts to prevail on labor and management to keep wage-price levels steady as business activity expands.

Unless restraint is exercised, administration economists have warned, inflation may wipe out a large part of the gains in national income and individual purchasing power to be expected from economic growth. First indications of the effectiveness of such warnings and appeals in an important sector of the economy will be given by the negotiations for new labor contracts with automobile manufacturers that are scheduled to open at the end of the present month.

Government efforts to persuade business and labor leaders voluntarily to forgo price and wage increases have not been conspicuously successful in the past. Current appeals, therefore, are being greeted with a certain degree of skepticism, Edwin G. Nourse, first chairman of the President's Council of Economic Advisers after its creation early in the Truman administration, observed recently, for example, that “Already union leaders are busy preparing wage demands, and industrial price-makers are planning markups that will short-circuit the administration's full employment program into a new inflation game,” However, such factors as continuing heavy unemployment and the price competition that is coming from imports of goods produced in low-wage countries may dispose both labor and management to give more than passing attention to voices now urging moderation.