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A second reason is that, in my opinion, any board dealing with matters of this character should proceed in a judicial manner, gov. erned by fair and generally applicable rules and base its awards on a careful appraisal of the evidence presented in the case in relation to the established rules.
In my opinion, bargaining, which in my judgment, also played a big part in the Wage Stabilization Board's recommendations, is not the way to interpret and apply rules considered necessary in the interest of all people in a period of emergency.
Bargaining with respect to rules which should apply fairly to all, can mean only, as pointed out, I believe, by Mr. John Č. Bane, industry panel member, in his recent testimony before the Senate Committee on Labor and Public Welfare, that the Board's rules will mean one thing in a case involving a weak, relatively nonmilitant union, and something else when the union is aggressive, powerful, and particularly, perhaps politically influential.
Had settlement been possible, it could have been reached in bargaining directly between the parties involved.
It was not. My view is that a matter of the importance of the steel dispute required, as was promised, fair and equitable recommendations based on regard for fact-adherence to, and not evasion of, defined rules. It should not have been a matter for Board bargaining.
Now, as to the Board's rules. My first comment, perhaps, is better classified under Board powers rather than rules. It is that I beliere that a board appointed to develop sound stabilization policies should not have given a disputes function.
You all know, of course, how this came about, by Executive order, following a recommendation, opposed by the industry members of the Advisory Board on Mobilization Policy, about a year ago.
The recommendations and order followed, as you will recall, labor's walk-out from the Board because of disagreement with a regulation adopted by a public and industry majority. One price of labor's return was dispute powers for an enlarged board. The price was paid, and it was my view a year ago that such a grant would mean the end of effective wage stabilization.
It is my conviction today. I hope I am wrong, but one fact of life developed so far in my attempt to understand how to get along with unions is that, with a court of higher appeal available, settlement at the bargaining level is not possible unless at the level management concedes what the union considers its minimum and what it may hope to get from such higher authority.
Take the union-shop issue, for instance. The major steel companies have been and are opposed to the idea that they shall interfere with the free exercise of an employee's own will with respect to membership in a union as a condition of employment.
Can it be that, as a part of its interest in the Board having jurisdiction over disputes, the steelworkers had in mind that that which had happened on this issue would come to pass ?
In my opinion, development and administration of equitable wagestabilization policy is not possible when the Board which engages in such efforts is also engaged in handling threatened strikes in vital industries in an emergency period.
At least, it is not possible if the Board conceives its role as that of a participant in the bargaining process in which it must face the economic strength of the union which can easily overpower the Board's stabilization rules.
Now, as to what more properly qualifies under the caption “Rules" or “Board policy."
In my testimony on April 22 before Senator Murray's Labor Committee, I quoted freely from an August 31, 1951, report by the former Chairman of the Wage Stabilization Board, Dr. George W. Taylor.
I shall not repeat those quotations here. My purpose then was to trace in Dr. Taylor's language the origin and development of Board policy in order to better understand the use or misuse of that policy in the steel case.
Dr. Taylor characterized 1949 as a year during which wage rates Nineteen-fifty was characterized as a year in which an unstabilizing of wage relationships occurred. During that year wage increases were sought and obtained, ranging from, as Dr. Taylor said, 5 cents at the beginning of the year to 16 cents at the end in steel and, in January 1951, 20 cents in coal.
On January 25, 1951, the Government moved in and stopped all wage changes with a general freeze, after which the Board began the task of “restoring reasonable equity among the scrambled wage relationships” that had developed during the preceding year.
"Some firms,” wrote Dr. Taylor, "had anticipated the freeze and gave generous pay boosts."
One provision of one regulation, said Dr. Taylor, was to take care of the kind of a situation in which wages paid by an industry or a company were abnormal or grossly out of line with their normal relationships in the base period of 1950.
Such a situation could not be found in steel. In September 1949 a Presidential board had found, with respect to the union's demand at that time for a wage increase, that steelworkers' wage relationship with the wages of employees in other industries and with the cost of living was equitable.
In addition, it must be remembered that the steelworkers received on December 1, 1950, a wage increase of 16 cents an hour, the highest for 1950, as referred to by Dr. Taylor.
Dr. Taylor recognized this fact, apparently, because with respect to out-of-line wage relationships he wrote that "relatively few industries were found in this situation," most of them seasonal industries.
Later in 1951, Dr. Taylor reported, another regulation was adopted, No. 8 specifically, which approved the operation of escalator clauses and thus related the wages of an important group of workers to the cost of living as of a base date which did not limit them to the maximum 10-percent increase from the base date, January 1950.
Were regulations 6 and 8 applied in a judicial atmosphere to steelworkers, the increase permissible, on the basis of the BLS Consumers' Price Index for February 1952, would be less than 7 cents per hour.
The Board, however, recommended increases totaling 1712 cents per hour, more than twice as much as is permissible under the BLS revised index for either January or February 1952 and almost twice as much as was permissible had the old unrevised and less accurate index of the Bureau been employed.
Having ignored the guides provided by its own regulations, we find the Board seeking to justify its action by saying that regulations 6 and 8 have no application in a dispute case and that the Board is free to take whatever action it sees fit and deems to be fair, equitable, and not instabilizing.
In its presentation of the case, the union declared that it could justify 34 cents an hour increase in wage rates alone because of the interpretations which it believed could be attached to various sections of these two regulations, 6 and 8.
Certainly, in my opinion, rules susceptible to such extreme flexibility are not designed in the interest of stabilization and go far toward converting in a time of emergency our traditional principle of rule by law to rule by the whim of a board, which the record, I believe, will show traded with labor on recommendations for which it would vote “aye.”
Time will not permit further attention to this aspect. The committee can, however, learn more in this connection from the transcript of the April 15, 1952, hearing before Senator Murray's Committee on Labor and Public Welfare and testimony of Mr. Bane, industry member of the special panel, in the transcript of April 23, 1952.
Expressed briefly, the President of the United States and Mr. Feinsinger can assert that the steel recommendations conform to the Board's policy. But conformance to policy, which can be interpreted as broadly as it has been in the steel case, can be, and is, unstabilizing because the policy as interpreted is just that.
Just one more point. Another regulation-13, I believe -permits the application of certain so-called fringe benefits, provided they do not exceed prevailing industry or area practice.
The amount of money involved is not calculated against the permissible wage increases under regulations 6 and 8. In the steel dispute, for instance, a number of so-called fringe benefits were recommended—one, for instance, penalty overtime rates of pay for work on Sunday despite the fact that no prevailing pattern for such is to be found in continuous-process industries.
My next heading is “Extension of controls?" The immediate question before this committee, as I understand it, is what Congress should do about wage-price controls after June 30.
My own conclusion, based upon my experiences in the current steel dispute and my observation of the manner in which controls were operated in the closing months of World War II, is that they should not be extended.
In that respect, I am in agreement with Prof. Sumner H. Slichter, of Harvard University, who last week stated that "the steel case sharply illuminates the discriminatory differences between wage-stabilization policies and price-stabilization policies” and that "it would be better for the country to run the risk of some inflation than to impose controls as discriminatory and unjust as those embodied in present wage.price policies.”
The fact is that it is not possible to control only a part of the economy, and the Board's recommendations in the steel case make it clear that there is no longer any control over wages.
Were the recommendations merely catch-up?
May I turn now to that portion of my statement concerned with whether the recommendations can be regarded as merely permitting steelworkers to catch up with workers in other industries.
Mr. Feinsinger has so declared. The President of the United States said, among other things, in his radio address to the Nation on the night of April 8:
In the steel case the Wage Board recommended a general wage increase averaging 1334 cents an hour in 1952.
Obvionsly, this sets no new pattern and breaks no ceiling. It simply permits the steelworkers to catch up to what workers in other industries have already received.
We do not believe that the facts support this declaration. What are the facts? · I mentioned a few minutes ago that steelworkers received an increase of 16 cents per hour on December 1, 1950. It was referred to in Dr. Taylor's report, which I also mentioned, as the largest increase occurring in that year.
That increase in steel compared favorably with those which followed, including increases to employees in other industries, where escalation clauses resulted in increases flowing from the inflation.
Government officials now, however, are declaring that the increase recommended by the Board in steel is justified because of these increases in other industries following steel's last round.
There is, in our opinion, no basis for this catch-up theory. To the contrary, the facts prove, we believe, that a more appropriate characterization is “leap ahead."
The charts which I will now present show the past relationship between wages in steel and several of the Nation's principal industries.
The industry groups shown are those which Mr. Feinsinger selected for comparison with his Board's recommendations for the steel industry.
Mr. Feinsinger, however, in certain of the industries referred only to a wage-rate increase in one company; and, in others, the industry. The steel case is an industry case.
The industry groupings are those established by the Bureau of Labor Statistics. The earnings data which the charts reflect are compiled monthly by the Bureau on a uniform, comprehensive basis.
The charts will reflect changes in both straight-time hourly earnings and average hourly earnings.
I will, of course, indicate which is which as the charts are presented.
Straight-time hourly earnings, as compiled by the Bureau, include basic hourly rates, incentive earnings, and shift differential or premium payments. Average hourly earnings include the same components plus premium pay for overtime and for holidays worked.
The Bureau furnishes a series of adjustment factors by which straight-time hourly earnings are calculated from average hourly earnings. These adjustment factors have been used in determining the straight-time hourly earnings which will be shown.
These adjustment factors were published in 1942 and 1950 in copies of the Bureau's Monthly Labor Review. The factors consist of a series of percentages by which average hourly earnings may be adjusted to produce straight-time hourly earnings, depending on the average number of hours worked per week.
The Bureau has been careful to point out the limitations in the use of these adjustment factors. These limitations are minimized for the purpose at hand, which is to show changes in straight-time hourly earnings as between various industries over a period of time.
May I emphasize that each chart of average hourly earnings and straight-time earnings which follows is on a uniform basis as between the industries shown and reflects official Government figures.
Here, in chart 1, is shown the picture as painted by Mr. Feinsinger of wage increases granted by selected companies in industries since the date of the last steel wage increase. None is shown for steel. Naturally this is so since he took a starting point 1 minute after the December 1, 1950, steel increase to begin the comparison.
The figures for companies in the auto and farm-machinery industries do not include the latest 3-cent cost of living increase March 1, 1952, for those companies. However, the March cost of living index, if continued into the coming months, would eliminate 2 cents of this 3 cents increase.
Mr. Feinsinger's wage increase figures besides starting with an unfair pin point date—Décember 2, 1950—represent the changes in base rates only for selected companies within each industry. In the next chart are shown the increases in average hourly earnings in the same industries using Bureau of Labor Statistics comprehensive data.
So that there will be no misunderstanding of my reasons for introducing average hourly earnings into this discussion, I want to describe briefly those reasons.