Perth Amboy evening news., 1922-12-23
Keep Costs Down SAYS
Roger w. b TODAY

WELLESLEY HILLS Mass, Dec.
23.-Commenting on the present
scarcity of skilled labor in certain
lines, Roger w. Babson, today, is
sued a distinct warning to both ex-
ecutives and investors who would
base future plans on present con-
ditions.
THE last six months of 1922 have
been marked by q scarcity of labor
in many lines" SAYS MI. Babson,
particularly common labor and the
skilled building trades. Employ
ment conditions the country over
nave improved in these months.
There has. therefore. been a gen.
cral tendency on the part of labor
to seek increased wages, and on part
OF employers, ever when they did
not see the way clear to raise wages.
to consent to their sterilization at
the present or the preceding levels.
This situation is likely to continue for
tho first six months of 1928. going
Tar enough to over the usual wage
settlements which come up early in
the spring.
Employers. therefore, are going
to De confronted with demands
which, If granted. will of necessity
mean increased production costs. In
1e1! and 1918 we were in a SIM
liar position. Labor was getting
scarce; business was running along
briskly, and the demand for in
creased wages was insistent. At that
time. my advice to business men
was that they should make terms
with labor as quickly as possible, so
as to keep their factories running
and turn out the stuff. The costs
were to be charged up to the con-
sumner. This advice. the business
men OF the country cheerfully took,
even to the extent of improving
upon Il.
Eat the present time, my advice is
directly opposite. Under no con1i-
tons should wage rates he increased.
IL it Is at all possible to avoid it. A
wage rate, once established, is a
milestone about an employers neck.
The fundamental long swing tendency
of wages and of commodities is
downward. This present stiffening
of conditions is but an eddy in the
main stream. A year from now,
perhaps, the lower price tendency
will again be resumed. The en-
ployer who has allowed himself to
be weighted down with increased
wage rates will find himself at a dis
advantage when the downward ten
dency is again resumed.
IF. therefore, you must pay more
for your help. in order to secure
labor and keep the peace" con-
tinued the ~statistician, do it by
some kind of a bonus which will be
eliminated automatically when the
turn comes. In 1917 and 1918 you
could pass the cost or to the public,
but that time has gone. The public
Is not looking for goods at any price;
It is looking for goods at a lower
price, and If your goods are put into
the market on the basis of increased
production costs, they will not find
8 ready sale.
Furthermore, investors are going
to be extremely cautious about put
ting their funds into industrial en-
terprises. They are going to ask a
great many perplexing and embar-
RAISING questions. First among
these Is going to be the question as
to how far the particular plant has
got its production costs down to a.
permanent level. These questions
are going to be asked strictly from
the dividend-paying basis. On all
sides the profit-making possibilities
of productive enterprises are going
be curtailed. Your normal mar
gin Of profit in the years just ahead
Of us is going to be very much less
than it has been for the last five
years. Any element, therefore.
which tends to increase production
costs. is going to add to the embar-
rassfnent of your company. For this
reason, investors are going to look
beyond the advertisements as TO the