Labor

Month in

Review

Inflation alert. The President's Council of Economic Advisers sounded its second "inflation alert" early in December. "The fiscal and monetary policies that for years had overheated the economy with excessive demand have been corrected," the Council reported, "the acceleration in the rate of inflation has been halted, and there is evidence that the price level is rising less rapidly." Nevertheless, the statement added, "the rate of inflation remains higher than had been expected at this stage in the transition from the inflationary boom. At the same time there is considerable slack in the economy. . . .”

To deal with these new circumstances, the Council prescribed economic policies that, on the one hand, "aim more vigorously at expansion" and, on the other hand, "intensify steps to strengthen resistance to cost and price increases."

The chief concern about the "process now under way," the report said, "is the failure of the average rate of increase of wages to slow down in response to the slack in the economy, the squeeze on profit margins, and the decrease in the rate of price increase that has already occurred."

"It is entirely natural, given our recent experience," the report continued, "that wage decisions made now for the future should embody some explicit or implicit allowance for future inflation. But to embody in wage agreements covering 2 or 3 future years provisions for wage increases which assume that prices will continue to rise at recent peak rates is not a reasonable response to our present situation. If it were done generally, it would be a recipe for permanent rapid inflationand also for persistent unemployment, because the government would be bound to try to check

the inflation by generally restrictive policies."

The alert generated both applause and condemnation. Among the critics, AFL-CIO President George Meany denounced the statement for "placing the major burden" for fighting inflation on workers. "The fact is that workers and wages did not cause this inflation and they have not profited by it," Mr. Meany declared.

Presidential actions. President Nixon followed up the inflation alert with specific anti-inflation actions in two areas. He ordered the Interior Department to take over from the States responsibility for regulating production of oil and gas on all Federal offshore lands and permitted purchase of more crude oil from Canada. "Taken together," the President told a meeting of the National Association of Manufacturers in New York City, "these actions will increase the supply of oil and can be expected to help restrain the increase of oil and gasoline prices."

Mr. Nixon also ordered an immediate effort to broaden the structure of collective bargaining in the construction industry, where "wage settlements are more than double the national average for all manufacturing, at a time when many construction workers are out of work."

The President warned that "unless the industry wants Government to intervene in wage negotiations on Federal projects to protect the public interest, the moment is here for labor and management to make their own reforms."

Mr. Nixon called his actions "not a move toward controls." On the contrary, he said, "these are moves away from the kind of Government controls that cause artificial market shortages."

A review of significant labor events

during the past year:

industrial relations, employment, prices, and a summary

of key court decisions ROBERT W. FISHER

and the

economy in 1970

FORTY YEARS ago, Joseph A. Schumpeter described economic slowdowns as "good cold baths" for the economic system. Viewing slowdowns as inevitable in a decentralized economy, the great AustroAmerican economist argued that they were uncomfortable in the short run but beneficial in the long run. Whether that is true or not in today's economy, present problems rather than future benefits had the most effect on 1970 labor events. The U.S. economy suffered chills in economic growth and employment in 1970, primarily because of Federal anti-inflationary policies. Despite these policies, however, consumer prices rose more than 5 percent over the year although there was some easing in the rate of increase.

For the first time in a decade, the increase in jobs trailed far behind the increase in the civilian labor force. Prior to last year, annual job growth matched, roughly, or outran labor force growth, resulting in a steady decline in unemployment down to an annual low of 3.5 percent of the labor force in 1969. But during 1970, unemployment rose steadily, averaging 4.5 percent in the first half and about 5.5 percent in the second.

This article reviews some of the significant labor events of 1970, among which are developments in the year's collective bargaining, trade union activity, and significant decisions of the U.S. Supreme Court and the National Labor Relations Board.

Growth, prices, unemployment

In the first half of 1970, the economy, in real terms, stood still. Growth resumed in the third quarter but only at an annual rate of 1.4 percent. In current dollars, GNP rose from $951.7 billion in

Robert W. Fisher is an economist in the Office of Publications, Bureau of Labor Statistics, and associate editor of the Monthly Labor Review.

the fourth quarter of 1969 to $985.5 billion in the third quarter of 1970 (seasonally adjusted at annual rates).

With the economy still at a high level but chugging along slowly, the rate of increase in consumer prices slowed down in the first three quarters. The improvement was reflected in changes in the seasonally adjusted annual rate of increase by quarter: 6.3 percent in the first, 5.8 percent in the second, and 4.2 percent in the third. Generally, month-to-month increases in the Consumer Price Index were larger in the first half than in the second half. However, the increases in September and October matched the earlier level of month-to-month rises in consumer prices. (The course of the 1966-70 inflation is shown in chart 1 and recent changes in the CPI in table 1.) Reduced economic activity, brought on by efforts to retard price advance, caused unemployment to rise more sharply than forecast at the beginning of the year. Sharp cutbacks in defense also contributed to the rise. Table 2 shows the rising trends in unemployment by sex, age, and race; table 3 shows the trend by job sector. The following are quarterly rates of unemployment for selected occupational classes:

December 1969 to 4.2 percent in November 1970) while teenagers rates increased less sharply. As a result, teenagers' unemployment rates became four times rather than six times as great, proportionately, as men's.

Unemployment rose despite a tapering off in the growth of the labor force. In 1970's first half, the civilian labor force averaged about 1.2 million more than in the second half of 1969, although the increase in jobs aborted midway through the period, resulting in a sharp rise in unemployment. Growth in the labor force started moderating in the second half in view of slackened job prospects but the leveling in employment growth in that half resulted in a continued though slower rise in unemployment. Joblessness averaged 5.2 percent in the third quarter and the highest unemployment rates since January 1964 were reached in October (5.6 percent) and November (5.8 percent). (Data are seasonally adjusted.)

Chart 1. Consumer Price Indexes commodities and services

At the year's beginning, men, women, and teenagers each contributed roughly a million persons to unemployment. By November, unemployment of men had risen by almost three-quarters to just under 2.0 million; of women by about two-fifths to just under 1.6 million; and of teenagers by almost one-quarter to about 1.3 million (seasonally adjusted data). Thus, the economic slowdown affected men more than either women or teenagers in terms of jobs. The job slowdown probably had its sharpest effect on women and teenagers by keeping them from entering the labor force or causing them to leave it. (Also, the men's labor force hardly grew despite large reductions in the Armed Forces.)

Federal policy

Throughout the year, the Federal Government concentrated on ways to reduce inflationary pres

sures without precipitating recession. Fiscal policy continued restrained but the softened economy reduced tax receipts, contributing to a $2.8-billion deficit in fiscal year 1970 (instead of the small surplus forecast). Monetary policy was relaxed somewhat in the face of extremely tight money in some private sectors.

PRODUCTIVITY COMMISSION. At midyear, the President announced a new, 23-member National Commission on Productivity with the principal duties of studying ways to restore productivity and cost stability and reviewing and issuing "inflation alerts" to be prepared by the Council of Economic Advisors. The membership ranged from George Meany, AFL-CIO president, to James P. Roche, board chairman of the General Motors Corp. George P. Shultz, who moved at midyear from Secretary of Labor to first director of the new Office of Management and Budget, was named commission chairman. Six members each represented the public, labor, and business, and five

members represented the Federal Government.

In its first meeting the commission decided to leave the issue of "inflation alerts" to the Council of Economic Advisors. The first "alert" was a historical review of the sources and the course of the current inflation. The second alert, issued in December, focused on "cost-push" inflationary pressures.

JOB BIAS. Although Federal equal employment opportunity policies were formulated to help minorities get a better deal in job opportunities, stress was placed upon the idea of these programs contributing to a reduction of inflationary pressures by expanding manpower utilization and training workers from untapped sources. One such Government program-the "Philadelphia Plan" to promote employment of blacks and other minorities on federally assisted constructionsurvived an emasculating legislative rider in the U.S. Senate early in the year and its first court test in March.1

In January, the U.S. Department of Labor announced its intent to promulgate Philadelphia-type plans in 19 major cities. All cities were invited to develop their own "home-grown" solution. Chicago and Pittsburgh-scenes of tumultuous 1969 demonstrations-and Boston, Denver, Kansas City, and St. Louis developed voluntary plans. In June, the Government instituted a plan in Washington, D.C., which applied to all construction jobs when the parties failed to agree despite public prodding.

Early reports had indicated that the Philadelphia Plan was falling short of its goals, but the U.S. Labor Department reported in September

that the plan's first-year goals had been exceeded. 4 months ahead of schedule.

The Justice Department filed the first Federal suit to end job bias against women (who are a majority of the population but a minority of the labor force). The suit sought to end practices that consign women to lower paying and less desirable jobs, force them to meet higher qualifications for the same job, deny them equal promotion and overtime opportunities, and in general exclude them from "men's jobs." The suit ended in a "consent decree" in early December.

OTHER ACTIONS. The anti-inflation drive also figured in exploration of ways to promote broaderbased bargaining in the construction industry. To formulate plans, a Construction Industry Collective Bargaining Commission was formed, headed by Professor John T. Dunlop. Efforts were also made to promote coordinated bargaining among nonoperating railroad unions. Expanded unemployment insurance was enacted but it would have. no effect until 1972.

Collective bargaining

The year linked rising prices, which absorbed workers' real earnings, to faltering economic activity, which retarded employers' profits, creating a setting conducive to collective bargaining deadlocks. Through their representatives, many of the 5 million workers bargained for in 1970 under major agreements (affecting 1,000 workers or more) expressed desires to recoup inflationary losses sustained over the 1967-70 period and to hedge against future losses. Employers dug in

because of rising labor and other costs and uncertainties and alarms about rates of profit.

Bureau of Labor Statistics data for the first 9 months of the year showed that about 1 out of every 333 hours of total working time (0.30 percent) was lost in 1970 (excludes interstate trucking stoppage), compared with about 1 out of every 435 hours (0.23 percent) in the same period in 1969. About 2.5 million workers were involved in 5,035 stoppages in effect during the 9-month period with a loss of about 41.5 million man-days. This compares with 2 million workers, 4,818 stoppages, and 31.5 million man-days lost in the comparable 1969 span. Part of the difference in time lost may be attributed to the much heavier bargaining load in 1970 compared with 1969-about 5 million workers compared with 2.7 million. Larger strikes in 1970 also contributed to the difference.

Settlements in 1970 outstripped those in recent years. The wage and benefit increase in key settlements (affecting 5,000 workers or more) concluded in the first 9 months of 1970 averaged 10.0 percent compared with 8.1 percent in 1969. Reflecting workers "catchup" desires, first-year wage and benefit adjustments averaged 14.7 percent in 1970 compared with 10.8 percent in 1969.3

Settlements by sector continued to show nonmanufacturing industries (particularly construction) outdistancing manufacturing. The increase in wages over the life of the contract averaged 11.6 percent in nonmanufacturing (14.4 percent in construction) compared with 6.4 percent in manufacturing in 1970. First-year wage increases averaged 16.0 percent in nonmanufacturing (17.5 percent in construction) compared with 8.5 percent in manufacturing.

The course of collective bargaining in some of the significant stoppages of 1970 is discussed in the following sections. In 1970, as in most years, not much of total worktime actually was lost to such stoppages, but they could be costly in the shortrun in particular industries and localities.

Some big strikes

FEDERAL WALKOUTS. Postal workers staged the first large-scale work stoppage in this century in the Federal Government. The strike, which began in New York City in March and spread to