The Daily Alaska empire., 1937-03-22
The Wage-price Spiral
(New York Times)

tNeW 1Ofk llHeSJ
 Immediately following the increase of steel wages the United States Steel Corporation announces an increase in steel prices effective April necessary to cover increased of production due to labor ad vances." The corporation explains that the basic labor rate with the latest increase 42 per cent higher than that prevailing in 1926 As compared even with the 1929 high level of 50 cents the rate will be 62i1 cents an hour In addition there has been 32 per cent in the price of scrap iron, 50 per cent increase in the cost of copper 50 per cent Tor lead and zinc and smaller increases in other supplies Therefore steel is be marked up from $3 to $8 ton At the same time this announcement, buyers of machine tools and other equipment express fears Of an early price advance while the belief that the mills will follow the example of the steel industry and increased wages has been leading already heavy anticpatory increases in the buying of cotton cloth.
 These developments to indicate the begin ming of a price spiral Such spiral could have several results Wages might advance more rapidly than prices in which if industrial tvity maintained labor could achieve net gain in its position. What is probable. the advance both wages and prices might be irregular in which the gains and losses of various groups would be more difficult to calculate. For example, rise in steel prices must rise in the prices of com modities in which steel enters. The railroads may find it still difficult to buy new equipment, thus reducing the number of possible jobs in equipment manufacture; automobiles may be higher in price than OtnerWlSe, building costs VIII pc Hgner must eventually higher rents. But if the tex tile workers have the purchasing power of their wages reduced by higher rents steel workers may have to pay higher their clothing because of increased tex tile wages. eS 2i' ss-
 Another possibility is that higher wage rates will not be absorbed by the marginal firms in some indus tries. and cannot be passed in price advances be- cause of the falling off in volume of sales In that the higher rates may act to retard re-em- poyment. Average hourly earnings in manufacturing in January according to the National Industrial Con- ference Board were 639 cents hour, increase of 83 per cent over the rate in 1929. At the same time the cost of living in January still 12.9 per cent below that of January 1929 that the advance in real hourly earnings substantial one But against this must be counted both shorter work week and less employment, so that, for example cording to the United States Labor Bureau total manufacturing payrols in January actually Ills per cent lower than in January of 1929
 It has been increasingly the fashion in recent years discuss abors position if the worker could not get except at the expense of capital, as if the whole question were one of fair distribution of existing income and if granting living wage to the poorest paid workers primarily moral or legislative issue All this has not only created need
 less bitterness at times but has deflected attention from the fact that labors income must depend pri- marily on production Higher wage rates with a shorter working week and no increase in efficiency, whatever they may mean n dollars must less real income for workers. The analyses of national in come published yearly by the Department of Com merce make this vivdy clear In 1885 labor received 673 per cent of the national income compared with 655 per cent in 1929 It's relative position had ad- vanced But the total income paid out to every in 1885 only 681 per cent of the 1929 figures, the total compensation of employees was only 70 per cent of that figure. The real gains of labor must come from an increase in the national output.