Prices, Profits, and Wage Control

August 25, 1941

Report Outline
Inflationary dangers in the defense boom
Prices, Cost of Living, and Price Control
Wages and Profits in Defense Emergency
Wage Controls in Belligerent Countries
Special Focus

Inflationary dangers in the defense boom

President Roosevelt warned Congress, in a special message, July 30, asking for enactment of price-control legislation, that “inflationary price rises and increases in the cost of living are today threatening to undermine our defense effort.” More vigorously worded warnings of the economic dangers inherent in the defense boom and of the imminence of a runaway inflationary movement, barring the prompt application of corrective restraints, have been uttered by Leon Henderson, administrator of the Office of Price Administration and Civilian Supply.

Henderson told an audience at Atlantic City, July 14, that the “honeymoon months” of the defense boom were drawing to a close, and that a protracted period of higher prices and of shortages was at hand. Appearing before the House Banking and Currency Committee to testify on the price-control bill, August 5, the administrator declared that the United States stood “at the brink of inflation.” He referred to the fact that total payroll disbursements had reached an all-time peak and asserted that they constituted “the most dynamic and volatile element pressing on prices.”

Close Relationship of Wage Control to Price Control

Despite the importance of wages as an element of cost, and thus of price, the administration's price-control bill specifically excludes wages as a subject of control. Before the House committee, August 7, Henderson conceded that it was obvious “that a price inflation cannot be curbed if wages or any other cost is allowed constantly to rise.” He contended, however, that “the mechanism of price control is completely unsuited to the control of wages and salaries.” After mentioning progress toward wage stabilization in the shipbuilding industry through regional pacts, and predicting extension of such methods to the aircraft and other industries, he added: “I am not blinking at the fact that as we get forward in the program, the emergency will call for more rather than less special kinds of treatment, including the mediation board, stabilization pacts, or legislation to limit what wages can be, and thus take it out of the area of collective bargaining,”

ISSUE TRACKER for Related Reports
Cost of Living and Wages
Apr. 17, 2020  Inequality in America
Sep. 08, 2017  Universal Basic Income
Apr. 08, 2016  Future of the Middle Class
Apr. 18, 2014  Wealth and Inequality
Jan. 24, 2014  Minimum Wage
Jun. 19, 2009  Rethinking Retirement
Mar. 06, 2009  Middle-Class Squeeze
Mar. 14, 2008  Gender Pay Gap
Dec. 16, 2005  Minimum Wage
Sep. 27, 2002  Living-Wage Movement
Apr. 17, 1998  Income Inequality
Oct. 27, 1978  Wage-Price Controls
Jun. 16, 1978  Military Pay and Benefits
Mar. 23, 1966  Rising Cost of Living
Oct. 25, 1961  Price-Wage Restraints in National Emergencies
Jun. 21, 1961  Wage Policy in Recovery
Jun. 11, 1958  Prices and Wages in the Recession
Sep. 18, 1957  Control of Living Costs
Nov. 02, 1955  Wages, Prices, Profits
Jan. 26, 1954  Minimum Wage Raise
Jan. 02, 1954  Cost of Living
Jan. 21, 1953  Guaranteed Annual Wage
Dec. 17, 1952  Future of Price and Wage Controls
Nov. 19, 1951  Fringe Benefits and Wage Stabilization
Dec. 06, 1950  Wage Control
Jun. 13, 1949  Wages in Deflation
Jun. 04, 1947  Guarantees of Wages and Employment
Oct. 29, 1946  Decontrol of Wages
Dec. 01, 1945  Minimum Wages
Sep. 29, 1945  Wage Policy
Oct. 27, 1944  Wage Security
May 17, 1943  Incentive Wage Payments
Aug. 25, 1941  Prices, Profits, and Wage Control
Apr. 28, 1941  Wartime Changes in the Cost of Living
Sep. 21, 1940  Two Years of the Wage-Hour Law
Nov. 01, 1938  Industry and Labor Under the Wage-Hour Act
Jan. 20, 1938  Wage Rates and Workers' Incomes
Apr. 11, 1935  The Cost of Living in the United States
Sep. 01, 1930  Wages and the Cost of Living
May 24, 1930  The Anthracite Wage Agreement
Feb. 20, 1925  Measure of Recovery in Profits and Wages Since 1920–21 Depression
U.S. at War: World War II