Evening star., 1947-12-05
Third Round Boost
In Wages May Break
US. Economic System
Labor Leaders Without
Justification in Plan,
Analysis Of Facts Shows
Bv David Laurence

Analysis Of Facts Shows
By David Laurence
There is absolutely no economic
Justification for third round" of
wage increases such as is being
championed by national union
leaders.
The third round" if forced by
strike threats or work stoppages,
may be the last straw to break the
back of the entire economic sys-I
tenn and bring on a depression. Ma
tional union leaders who do not
wish to inflict on many Of their
members the hardships of unem-
ployment are assuming a tremend-
Gus responsibility when they an
nounce to the country a demand
for a third round" of wage in
creases.
The economic facts show that the
increase in the cost of living from
January, 1941-the date adopted
by the War Labor Board in apply
ing the "little STEEL formula as a
reasonable peacetime balance-has
not been greater than the wage
increases.
Thus the cost of living in Octo-
ber, 1e47, was 62.5 per cent above
January, 1941.
Factory Wages Rise "a Per Cent.
The average hourly earnings of
factory workers for the same base
period rose 81 per cent. The aver
age weekly earnings of factory
workers rose 91.3 per cent.
This means that workers on the
average have had real increase
of 1872 per cent in their hourly
earnings and 1T per cent in their
real weekly wages.
Manufacturers, on the other
hand, have held their prices at
levels substantially below that
which would be natural to charge
under a supply-and-demand influ-
ence. Prices of finished goods have
risen 81 per cent since January,
1941, in the face of 134.6 per cent
increase in raw materials and an
estimated increase of 110 per cent in
raw materials and unit wage costs
combined.
There have been efforts to con-
fuse this picture by focusing only
on increases since VJ-day. But
the whole period from January,
1e41, on must be considered Thus,
manufacturer prices. which had
been held under controls and which
advanced only 81 per cent during
the war, have risen since August,
1945, by 49 per cent. But the rise
Of 40 per cent in prices since the
war has been due to Sc per cent
rise in raw materials and so per
cent increase In hourly earnings.
Facts Fail to Support Claims.
1t Is important to note also that
the price increases reflect not just
the labor costs of one manufacturer
but the increased labor costs Of
other manufacturers from whom
materials or equipment are bought.
The facts taken from Govern
ment bureaus do not bear out the
contention that prices have ad-
vanced faster than the cost of liv-
ing. The index of the cost Of living
includes such items as rents, food
and other necessities. The cost Of
living since VJ-day has risen AZ per
cent, whereas the average hourly
earnings OF workers has risen %
per cent and the average weekly
earnings have risen % per cent.
This difference of five points in
weekly earnings makes good argu-
ment If only the period from VJ-day
on Is taken as a base, but this ig-
nores the substantial advance in
wages In the period Immediately
preceding. It is proper, therefore,
to take the entire period from Janu-
ary, 1941, through October, 1947, as
a base. In that period workers have
had an increase In both hourly
earnings and real wages" far in ex-
cess of the cost of living.
Profits Statement Distorted.
There remains the subject of pro-
fits. On this many distorted state
ments have been made and labor
union leaders would be the first to
protest If companies began laying
off men because they did not have
enough surplus to keep their organ
izations intact when demand falls
off
Industry has been doing remark
able Job of stabilization In recent
months. Industry has been acting
on the assumption that the top has
been reached in prices. Now, il
labor union leaders upset the apple.
cart by demanding another round o1
wage increases, it means that many
marginal companies will be forced
out of business, the big units viii
gobble up the smaller ones, and ir
the end the socialistic cartels o.
Europe may rise out Of the ruin!
of free competitive system il
America