Evening star., 1948-06-01
Living Cost Yardstick
OF General Motors
Could Stine Trade
Pattern to End Strikes
foiIs to MoterioIize,
Stirs Controversies
Bv David Laurence

General Motors settled its labor
dispute on wages one way and the
Chrysler Corp. did it another way.
The so-called pattern" for settle
ment Of wage controversies hasn't
materialized as such and for many
months to come the cost Of liv-
ing" as a yardstick Of measurement
will be debated.
About all that has been settled
for the time being, anyway, is that
a third round" of wage increases
will be given in certain industries
which have not yet succeeded in
iustifying publicly their profit mar
gins or in overcoming the CIO prop
aganda as to the "excessiveness" of
their profits.
The fact of the matter is that
the large producers in the automo-
tive industry made substantial prof.
its last year. To the CIO this meant
an immediate division of those
profits and the fixing of wage rates
accordingly, despite the certainty
that present demand will some day
drop off. General Motors was faced
with q strike that would have cur
tailed profits and complicated the
price situation by providing more
incentives to the black marketeers.
AS long as a new automobile sells
for less than it can be sold by a
secondhand dealer running it
around the block and putting a pre-
MUM price on it due to the scarcity,
the real enemy of price adjustment
is artificial price fixing.
Much to Criticize.
General Motors with all the good
intentions in the world may say
it will not increase prices, but prices
are fixed by the law of supply and
demand. The only way to lick the
black market is by increased pro-
duction. If that doesn't materialize,
prices will rise. Undoubtedly the
General Motors people were influ-
enced by the prospects Of creating
more scarcity through a strike. For
on strictly economic grounds there is
much to criticize in the so-called
cost-of- living yardstick and in the
proposed increase In wages to pro-
vide annual Improvement" in the
standard of living without a guar
antee of higher productivity per
man hour.
The American Federation of
Labor economists disagree with the
General Motors formula amounting
to an 1l-cent increase per hour and
80 does the United Mine Workers
Journal which reflects the John L.
Lewis view. Many industrialists dis
agree, too. The Chrysler Corp.
thought 1t better to make q fiat
increase of 13 cents now than to
deal with a complicated cost-of-liv-
ing formula. which General Motors
adopted And which conceivably
could snuot costs up through the
roof and go beyond II cents an
hour If imitation takes another squirt
upward due to heavy Government
expenditures on armament and the
Marshall Plan.
Caught in a dilemma not Of its
own making, the General Motors
negotiators, on the other hand, un-
questionably sought to avoid re-
sponsibility for initiating the third
round Of wage increases and offered
the cost-of-living formula as bet
ter looking alternative. The Chrys-
Ter people, however, perceived that
an actual increase In wages had to
be given and had in fact offered
six cents an hour before the GIN
settlement was announced.
What 1t Adds Up To.
What it all adds up to is the fact
that the motor industry with its
big profits did not justify in the
the court Of public opinion its large
profits and felt that a strike would
be more costly all around.
So General Motors puts fixed
increase to It's overhead of about
$4,000, 900 a year and Chrysler adds
about s23,000,000. Considering the
difference in size of the two COM
panies the contributions are rela-
lively the same.
But where does 1t put other
businesses and industries? In many
cases the wage increases already
granted have more than offset cost
of-living increases. So here the
labor union economists will fight
bitterly the application of any
cost-of living formula. Theoretic-
ally it implies there should be
wage reductions, which is unthink-
able to labor union leaders. Like
wise there will be employers who
will say they haven't had anything
like the scale Of profits which the
auto producers have enjoyed and
that their margins are, in fact,
narrow Will it cause a lot more
industrial strife and hence bring
on q series of smaller strikes that
will mean scarcities of supplies
needed by the motor industry?
Will 1t bring price readjustments
upward in a few months and de-
feat the cost-of Living increases?
These are matters of grave con-
Germ which the next few months
will bring out into the open. One
cannot overlook the fact that If
. Government bureau can be &C
cepted as authority for data on
fixing wage rates due to cost Of
living, another Government bureau
can be called upon to measure
productivity per man hour and still
another bureau can be asked to
determine fair rate OF profit
and in the the end the system Of
private initiative can be stified by a
Government-regulated economy.
(Reproduetion Rishts Reserved)