Evening star., 1946-01-20
Consumer Will Foot
Only Part Wage Rise
Writer Explains Why Peace in
Industry Soon Is Desirable
BIZ Raumond Moley

Industry Soon Is Desirable
By Raymond Moley
Wage increases coming out of current
strikes. which seem very large in many
industries, will have some influence on
prices, but not as great as generally has
been predicted.
1t is possible now to predict, some
what roughly, what increases there will
be in pay after the current wave of
strikes has passed. The man in the
street, whatever his station, also wants
to know what effect those increases will
have on prices. That, too, can be pre-
dicted within certain broad limits.
Wages in some well-organized and
prosperous trades will increase on an
average of 1913 per cent. Workers in
less strongly unionized industries, like
packing house workers, will get in
creases Of 10-15 per cent. Two-thirds
Of the workers who are nonunion will
get something less than 10 per cent.
And the long suffering white-collar
workers will get least Of all-many of
them nothing.
In estimating what influence pay in
creases will have on prices, we must re-
member that wages and salaries are
only a fraction of what a price must
cover. On the average In American
manufacturing industries, wages and
salaries account for about so per cent
OF costs. The other so per cent con-
sists of capital costs, depreciation, inter-
oct M, 5varya aefv
penses, materials and taxes. Among
these categories, the interest rate items
generally are falling. Over the past
two decades, the interest rate has
dropped about two-thirds. That helps
the price situation. A part of the tax
item has been scrapped, and that also
helps. 1t is probable that the unit profit
on many commodities will decline as
soon as the "cost plus" system of the
war has been replaced by the competi-
'tion which characterizes our normal
economy.
There also will be large increase in
the productivity Of each employed per-
son, in both agriculture and industry.
Much OF this increase in efficiency will
come from new methods and machinery
devised to meet war demands. More
over, in certain instances, like the
kaiser-Frazer automobile business, COM
panies will have brand-new plants pur-
chased at very low prices from the Gov
ernment.
In many manufacturing industries,
"know-how" has increased so much
that prices will rise, in percentage,
only one-third Of the wage increase
| percentage and still leave the same net
profit. In steel, for example, this prob
ably will be the case, and steel prices
go into large proportion OF the prices
OF the things we buy.
The cost of living concerns not only
manufactured articles, but agricultural
| products as well. There the increase of
emclency will give the consumer a big
bonus without making the farmer any
poorer. Secretary of Agriculture Clin-
ton Anderson says that prices of agri-
cultural products will fall Is per cent.
The humble hen will be busy, and Sec
retary Anderson says we shall have so
many eggs that the Government win
have to support prices.
Rents probably will remain fixed for
some time, so that big item in living
costs will not 60 much higher.
| But the measure Of the consumers
! well being will be governed not only by
prices. He will get better stuff for his
money. Low-priced commodities long
absent from the shelves will reappear.
Sitter competition will take care of that.
thus, If We take into consideration
all OF these elements-the relative pro-
portion of wages in costs, cheaper in
terest rates, greater efficiency, improved
plants at lower prices, improved prod
ucts and more abundant labor-the con-
sumer will emerge with only a minor
fraction OF wage costs on his cost-of.
living BILL
But before we cheer too loudly, let 1t
be added: This bright prospect is
assured for only year or so. If labor
misunderstands the reasons why pay
boosts have been possible this time, we
may get another series of demands,
strikes and near strikes late this year
or next year. At that time, many of
the factors which have enumerated
no longer will be present. Excess profits
taxes can be cut only once War plants
at bargain price are available only
once. The great backlog of deferred
demand will be consumed. And efficiency
cannot be increased in peacetime at the
wartime rate.
In year, only few general classes
OF commodities will remain scarce
housing and some consumer durables,
And competition for jobs will be stiff.
The market will set drastic limits on
labor demands. And however strongly
labor may be organized and whatever
alliances it may have with Government.
the market will prevail. 1t will be in
the interest of all concerned-labor. the
consumer and management-if we settle
down shortly for long stretch of indus
trial peace.
as 1882, so that his services might
I