LABOR POLICY AND THE OVER-ALL ECONOMY



Over the past decade, average factory earnings have gone up from
$50 to $83 per week—an increase of about 66 percent—while prices of
goods and services to city consumers have risen only 27 percent, and
income and social security taxes have gone up moderately. Thus, real
wages of factory workers, after federal taxes, have increased by approxi-
mately 25 percent. This increase is due entirely to higher wage rates.

At the same time, productivity has been rising, not only in manu-
facturing but in industry in general. Recent estimates made by the
Bureau of Labor Statistics for the Joint Committee on the Economic
Report indicate a rise of about 3.4 percent a year for the postwar
period. For a good part of this period—from 1947 to about 1953—
the rise in
real earnings per hour (that is, allowing for the price
rise) was less than the rise in output per employee hour (that is,
productivity outstripped the real wage rise). These factors remained
in line through 1955, but in 1956 the rise in real wages ran ahead
of productivity.

The same study shows that unit labor costs in actual dollars, non-
labor costs, and prices of end products all increased by about the same
amount—27 to 28 percent—from 1947 to 1956.

Now to return to wages: We have had several rounds of industrial
wage increases, beginning with the removal of wage and price con-
trols at the close of World War II. However, the size of these increases
has varied widely between industries. Typically, they have been greater
in heavy manufacturing industries, like automobiles, steel, farm imple-
ments, machinery—and in mining, construction, and transportation—
and smaller in light manufacturing and in some trade service industries,
such as laundries and restaurants, etc., where, in general, wages have
been comparatively low and businesses have not been so highly profit-
able. Nonetheless, in a tight labor market such as this wages in trade
and service establishments tend to respond to pressures set in motion
by the “pattern” settlements in our major manufacturing industries.

MANY GROUPS GAIN

The tight labor market situation has benefited the unorganized
workers as well as the organized workers, and we have therefore wit-
nessed many substantial increases among the professional and white
collar workers and even in many occupations requiring little skill.

Moreover, long-term contracts for two or three years, such as
those in the automobile industry, have become more general. These
contracts, as a price for their duration, contain an “annual improve-
ment factor,” or guaranteed increase of so many cents per hour for
each year that the contract runs, and in addition, provide a hedge

35



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