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be followed. I think the Senator's questions are appropriate, of course.
You seem to have the feeling that the dispute settling is a function apart and unrelated to stabilization of wages and prices.
Mr. PUTNAM. Oh, no, sir. I did not mean to say that if I did.
Senator FULBRIGHT. I believe you said you had no jurisdiction: over dispute settling. Is that correct?
Mr. PUTNAM. I have no jurisdiction over it, but on the other hand, the Executive order under which they operate as a disputes board says that the recommendations they make must be consistent with: stabilization policy. They formulate the stabilization policies and I must approve them as far as wages are concerned.
Senator FULBRIGHT. I understand you did not agree with them in the beginning. You have since become a convert, but in the. beginning you did not agree?
Mr. PUTNAM. In the beginning I said that I felt it was high, but. that was before I had completely seen all the facts of the thing. I prepared some myself—not facts they have given me, but things I have dug up myself since then.
Senator FULBRIGHT. You know the Congress and this committee went to great trouble to try to keep wages and prices tied together. When one went up, the other should also. That was the philosophy of the original bill.
There had been criticism, governor, that in the last war they tried to hold prices down and keep wages up, particularly near the end of the war.
You recall that, do you not? Do you not recall the effort made to take them together? They had difficulty, I agree, but I think that was the spirit of the law, that we should not attempt to hold prices down and let wages go up because it would not work.
Would you not consider that the spirit of the law? Mr. ARNALL. Assuming wages and prices are in proper relationship when you start, what you say is true. But, you see, the fallacy in what you say is that it is based on the assumption that they are in a proper, stabilized relationship, whereas actually either prices may be too low, in which event we raise them under our standards with no reference to wages; or, suppose wages are too low, they raise them, under their standards with no reference to prices. It is not axiomatic that every time you have a price increase you have a wage increase, nor is it axiomatic that
have a price increase.
Senator FULBRIGHT. There is no rule of thumb, I agree with that, There is no automatic way for this to go into effect, but I mean the two should be considered. Mr. ARNALL. There should be some proper relationship, of course.
Senator FULBRIGHT. To give one group authority to recommend wages without regard to prices would violate that clause.
Mr. PUTNAM. I do not think so, sir. That is where I come into the middle of it, to coordinate the two because they are separate. The recommendations for settling disputes must be within wage stabilization policies and the wage stabilization policies are set up by this tripartite board subject to my approval. Prices are governed by Governor Arnall and my job is to coordinate the two and see that they are kept reasonably in balance. And I think we have done pretty well on that. I think the record will show it.
Senator FULBRIGHT. I have one other question. I would like Mr. Feinsinger to tell us what was the main consideration for recommending the amount of the wage increase?
What I have in mind is, was it because they were paid too little under general conditions, or because of their relation to some other group of wage earners? What was the controlling factor in the recommendation you did make?
Mr. FEINSINGER. We made two types of money adjustments. You are not interested in the nonmoney adjustments, I take it, but just the money adjustments?
Senator FULBRIGHT. Do you mean fringe benefits?
Mr. FEINSINGER. The money adjustments are two in kind; adjustments in rate of pay and adjustments in what we call fringe benefits, such as vacation, holidays, and the like.
Senator FULBRIGHT. Those two, as distinguished from the union shop; is that what you mean?
Mr. FEINSINGER. Seniority, and things of that sort, Senator.
Now, Congress told us to stabilize all forms of compensation and that includes fringes as well as rates of pay. That was quite right, because either can add to business costs and add to purchasing power.
Therefore, we have regulations which have been duly approved by the Administrator which apply to increases in rates of pay, and so-called fringe adjustments.
Let me take the fringe adjustments first, because they are easier.
Incidentally, the companies themselves have made no objection to the Board's recommendations on the fringe adjustments except one of them, time and a quarter for Sunday pay as such.
We have a regulation dealing with fringe adjustments which has been duly approved by the Administrator which provides that if an employer wants to make adjustments in his vacations, holidays, and so forth, or agrees with the Union to do it, that will bring his practice up to the prevailing practice in the industry or area, he may do so upon petition. Where you are dealing with a national industry like steel, everybody on our Board, including our industry members, agree that the proper comparison is with other major American industries. Had we considered fringes on an area basis, as also provided under our regulation, there are very few American communities, particularly those in which steel mills are located, which do not already have such fringe benefits.
There is not a single adjustment that we have recommended which puts the steelworkers ahead of workers in other industries. In most respects, it leaves them still behind. I will illustrate.
On vacations, they have 1 week after 1 year of service; 2 after 5, and 3 after 25. "The steel workers asked for many important changes in the vacation period. We recommended only one change.
We reduced the requirement for 3 weeks vacation from 25 years to 15 years, which is certainly well within the practice in American industry, gentlemen.
I can be specific if you like, but I do not think that statement needs corroboration.
Secondly, with respect to holidays, the industry had six holidays named in their contract, but they did not pay anything when the men did not work on a holiday. When they did work on the holidays, they paid time and one-half.
The union asked for eight paid holidays, straight time when not worked, two and a half times when worked. We rejected the demand for an increase in the number of the holidays. We recommended straight time for six paid holidays when not worked, and increased the time-and-a-half premium for holidays when worked, to double time. That is well within the established practice in major American industries.
On shift differentials, in 1944, the War Labor Board of which I was subsequently a member, recommended 4 cents for the second shift and 6 cents for the third shift. Had they put in a percentage differential, there would not have been any problem.
We put in a cents-per-hour recommendation. We recommended, at this time, 6 cents for the second shift, 9 cents for the third shift; & conservative adjustment well within the practice in major American industries.
On the North-South differentials, over the years, United States Steel and Republic Steel have narrowed the 17.5 cents differential down to 10 cents. We merely recommended a further narrowing to 5 cents.
That only affects, I think, those two companies, maybe one or two more; and the cost even as to them is about three-tenths of a cent. There is no objection to that.
The only other fringe adjustment we recommended was time and a quarter to men who have to work on their Sabbath, and that, not to be effective until January 1, 1953, so that the companies have 9 months to reschedule their operations to reduce their cost.
The union asked for time and a half for Saturday as such and double time for Sunday as such. That is standard practice in many American industries.
In continuous operations, it is not so prevalent. The argument of the industry is, if the industry has to work around the clock and 7 days a week, men should not get extra pay for working on Sunday. The answer to that is, if that is the necessity of the industry, the public should pay that cost. If we ask an industry to operate around the clock, if it has to work around the clock, the company should be able to pass off that cost into its profits, but the man should not
No man should be compelled to work on his Sabbath at the same rate of pay he works during the first five days of the week.
We recommended what? Time and a quarter. Aluminum pays time and a half. Glass, some of the major food-processing industries, have a premium.
That is the whole kettle of fish on our recommendations on the fringes. We did not make them retroactive. The total cost for the year 1952, on an annual basis, would have been 5.1 cents; the cost distributed over a 9 months' period is 4.25 cents. The cost of Sunday pay effective January 1, 1953, is, by the company's figures, 3.6 cents excluding, on the one hand, added payroll costs and added pension reserve costs, and excluding, on the other hand, possible reductions in the cost by rescheduling of operations.
There is the picture on the fringes. We were definitely within our established regulations—had the company and the union come in jointly on an agreement, we could and would and should have
approved considerably more on each and every one of those adjustments. i Now, as to rates of pay.
Senator FULBRIGHT. What about the union shop, before you get to that?
Mr. FEINSINGER. I would like to complete the picture on the economic issues because that is what you asked for. I will be glad to digress, if you prefer.
Senator FULBRIGHT. Proceed. : Mr. FEINSINGER. On rates of pay, we recommend 12.5 cents effective January 1, 1952; an additional 2.5 cents effective July 1, 1952. Had we stopped there, we would have been consistent in terms of the length of the contract, with the practice in the steel industry which has been 1-year wage contracts, you see.
We recommended an 18 months' contract because we thought it was good for the industry, good for the union, and good for the American public. Both sides indicated that they would like a longer term contract, with no wage reopener, although most industries today provide for quarterly cost-of-living adjustments and others would open at the end of each 6 months.
We recommended an 18 months' contract, no strike permissible during the entire period, and for the extra 6 months, we paid 2%, cents, effective January 1, 1953, plus the Sunday pay that I mentioned previously.
Now what does that add up to and under what regulations did we recommend it? What were the equities in the case?
First, our cost-of-living regulations; second, comparison with other American industries. What they have gotten since any base date you want to mention, and particularly since December 1, 1950, which is the last time the steel-workers got a wage increase, or January 15, 1950, or January 15, 1951.
Now, the president of the United States Steel Corp., although arguing against any wage increase and any price increase, stated on December 21, 1951, before the case was certified to the Board:
Undoubtedly, the union is entitled under existing the Wage Stabilization Board formula to ask for some increase in wages to cover increases in the cost of living since the present wage scale became effective.
Now, if he meant what he said, you take the wage rate they negotiated on December 1, 1950, and you take the last Consumer's Price Index which was available on that date, and that was October 15, 1950, do you know how much they would have been entitled to by the time that the Board issued its recommendation?
They would have been entitled to an immediate wage increase of 16 cents per hour.
The increase which we actually recommended for 1952 averaged over the whole year, and including consideration of all of the equities of the steelworkers and all of the arguments of the companies, was just 2 cents less than they would have received had they had an escalator clause when they negotiated their last contract.
In addition to that, you cannot name a single major American industry, or specifically, the electrical industry, the automobile industry, the meat-packing industry, the rubber industry, the nonferrous metals industry--name all you like, there is not a single industry
which has not in the same period voluntarily granted a higher increase to their men than we recommended for the steelworkers.
We have the records, if you want to go into them, and I can support my thesis.
The industry has admitted increased productivity in the past 2 years. We took that into account, but we did not allocate any specific amount to it. Why not? We did not want to establish a productivity policy in this case.
The very least we could have recommended on cost of living is 9 cents, forgetting about the increase in the Consumer's Price Index from October 15, 1950, to January 1951. Making the steelworkers take that loss, the very least we should have recommended is 9 cents; 4 cents for productivity, if we had wanted to recognize it as such, and something to maintain the prior differentials between job classes although there is an argument on that.
In the past, you see, the companies and the union have used part of their money to spread across the board, Senator, and part of it to maintain the spread between classes.
We could have gone the other route and said 9 cents cost of living, 4 cents productivity, three-quarters of a cent less than the average we recommended.
If you take the auto workers' contract and apply that to the steelworkers, gentlemen, I would like to tell you how much the steelworkers would have been entitled to, had they and the companies come in and asked for approval. About 34 cents an hour. That is including the May 1952 productivity increase, to say nothing of the May 1953 productivity increase.
Do not forget we have buttoned up this steel contract, if our recommendations are accepted, until July 1, 1953. And no matter who else gets what, whether cost-of-living increases, productivity increases, interplant inequities, fringe adjustments or what not, the steelworkers will not be entitled to come in and ask for adjustment, and I think that is a magnificent job in terms of industrial peace and stability.
Senator Moody. Mr. Feinsinger, do you mean the General Motors contract?
Mr. FEINSINGER. I mean the General Motors contract. If the steelworkers had that contract.
The CHAIRMAN. Senator Bricker.
Senator BRICKER. You mentioned that you followed the direction of Congress in this law. Will you cite to us the provision in the law which authorized you to go into the fringe benefits?
Mr. FEINSINGER. In vacations?
Mr. FEINSINGER. Yes, Senator. Titles IV and VII of the Defense Production Act.
Here, I would like to compliment Congress in the hope that eventually, when the dust has settled, the compliment will be returned. Congress did a good job in laying down the framework of wage and price stabilization.
Title IV grants authority to stabilize wages, salaries and other compensation and section 702, definitions, subsection (e), reads as follows: