GUARANTEED WAGES

Labor's 1954 Battle Cry

IN its long fight for more security, organized labor is now poised for an assault on a new objective: the guaranteed annual wage. Though unions have talked about the G.A.W. for years, there was little real enthusiasm for it while jobs were plentiful and overtime commonplace. But now, with unemployment brushing 4,000,000, union leaders in the mass-production industries are ready for the big push.

The push was started by the C.I.O.'s International Union of Electrical Workers, which asked Westinghouse Electric Corp. to guarantee its employees 52 forty-hour weeks a year--or the equivalent in pay. Under the I.U.E. plan, Westinghouse would set aside 5% of its payroll (about 10-c- an hour per employee, or $12 million annually on the present union-covered payroll) until ten weeks' pay for each worker is accumulated. Laid-off workers would be paid out of the fund only after the plan was in effect for a year. In the event of heavy layoffs, Westinghouse would not be liable for payments exceeding 5% of its payroll.

The C.I.O. Steelworkers, next in line, will ask for a guaranteed annual wage when they open negotiations next month. The C.I.O. Autoworkers last week outlined the 52-week plan that they expect to demand when their contracts with car manufacturers run out next year. Dave Beck's A.F.L. Teamsters' Union, third biggest in the U.S., has already signed 29 guaranteed wage contracts, covering 2,857 workers.

Wage guarantee plans are not new. There are more than 200 in operation, most of them management-sponsored. For example, Procter & Gamble Co. guarantees employees a straight 48 weeks of work a year; Geo. A. Hormel & Co. guarantees 52 weeks a year by charging overtime in rush periods against undertime when business is slow; Nunn-Bush Shoe Co. sets wages at a fixed percentage of sales, thereby has given full employment since 1935.

The plans, by themselves, have not stabilized employment. The companies had to stabilize employment first by drastically changing production and selling methods. For example: Procter & Gamble provided warehouses to store its soap and shortening in slack seasons and campaigned to get wholesalers to level out their buying.

These companies have a big advantage over mass-production, hard-goods industries. They make necessities which are easily stored and quickly consumed. Thus, they are not subject to the wild fluctuations of the hardgoods industries, where purchases of new cars and refrigerators are easily postponed in bad times, and great quantities cannot be stored.

For a guaranteed wage plan to work in the hard-goods industries, production would have to be stabilized and buying habits changed. But how? The steel industry, for example, cannot store products because it makes most of them on order to exact specifications. The auto industry could stabilize some 19% of the steel industry (the amount of steel it buys) if it could find a way to get around the public's habit of buying cars in the spring and making the old one do during slumps. To even out buying, C.I.O. President Walter Reuther once suggested a sliding price scale with lower prices in slack seasons. But there is already such a sliding scale because of bigger trade-in allowances and discounts during the winter. And the industry is still subject to the ups and downs of boom and recession, which could easily exhaust G.A.W. funds.

Actually, the strongest union argument in favor of a guaranteed wage in the big industries is that it would keep up buying power, and thus counteract swings in the business cycle. Few union men argue that G.A.W. would guarantee against a depression. But they do argue that guaranteed wage plans would prop buying power enough to check minor recessions.

Businessmen have some strong arguments against G.A.W. in the hard-goods industries. Workers, already tending to lose mobility because of pensions and other benefits, would be even more reluctant to move about. New industries would be hard pressed to find skilled employees, would be more costly to start if wages had to be guaranteed. And G.A.W. could easily accentuate a business decline by saddling companies with heavy fixed costs that would make it harder to fight dropping sales with price cuts.

Nevertheless, both labor and management agree that the guaranteed annual wage is an ideal worth shooting for. For labor, there would be more security; for businessmen, steadier buying power. Furthermore, at Procter & Gamble and other companies, wage guarantees have cut labor turnover, and thereby lowered other costs. The problems in steel, autos, appliances, etc. are far greater. But the success of plans already instituted by far-seeing businessmen, without the prodding of labor, should be an object lesson for those who will soon be prodded by labor for similar plans.

This file is automatically generated by a robot program, so reader's discretion is required.