Connecticut western news., 1922-12-21
KEEP THE COSTS DOWN l.. > SAYS ROGER W. BABSON Warns Against Fixing Wage at Crest of
 Wave
GAINsT INCREASES
High Costs Mean No Divi-
 dends and All Investors z Know It

Know It
 Commenting on the present scar city of skilled labor in certain lines, Roger W. Babson today, issued a distinct, warning to both executives and investors who would base future plans on present conditions
 "The last six months of 1922 have been marked by scarcity of labor in many lines", says Mir. Babson, particularly common labor and the skilled building trades. Employ ment conditions the country over have improved in these months. There has, therefore, been a general tendency on the part of labor to seek increased wages, and on the part of emp ployers, even when they did not see the way clear to raise wages, to consent to their stabiliza- tion at the present or the preceding levels. This situation is likely to con tinue for the first six months of 1923, going far enough to cover the usual wage settlements which come up in the spring.
 Employers, therefore, are going to be confronted with demands>which if granted, will of necessity mean increased production costs. In 1917 and 1918 we were in a similar posi- tion. Labor was getting scarce; business was running along briskly, and the demand for increased 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 A be charged up to the consumer. This advice, the business men of the country cheerfully took, even to the extent of improving upon it.
 "At the present time, my advice is directly opposite. Under no com ditions should wage rates be in creased, if it is at all possible to avoid it. A wage rate, once estab- lished, is a millstone about un em- ployer's 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 re- sumed. The employer who has al- lowed himself to be- weighted down with increased wage ratss will find himself at disadvantage when the downward tendency is resumed.
 "If, therefore, you must pay more for your help, in order to secure labor and keep the peace", continued the Statistician, "do it by some kind of bonus which will be eliminated automatically when the turn comes, Tn 1917 and 1918 you could pass the cost on to the public, but that time has gone. The public is not looking for goods at any price; it is looking for goods at lower price, and if your goods are put into the market on the basis of increased production costs, they will not find a ready sale,
 Furthermore, investors are go- ing to be extremely cautious about putting their funds into industrial enterprises. They are going to ask ,a great many perplexing and ern- harassing questions First among these IS going 70 be the question as tn how far the particular plant has got it's production costs down to a permanent level. These questions are going to be asked strictly from the dividend-paying basis. On all sides the proft-making possibilities of productive enterprises are going to be curtailed. Your normal mar gin of profit in the years just ahead of us is going to be very much less than it ahs been for the last five years. Any element, therefore, which tends to increase production costs is going to add to the embarr- assment of your company. For this reason, investors are going to look beyond the advertisements as to the assets and income and things of like kind. They are going to ask to see your wage sheets anu to demand nl- formation as to how the wage levels unGel which you are operating cor respond with those of six months
 Continued on page B