Union demands mil put heavy strain on Administration wage guidelines
Of all the challenges to the Carter Administration's program to stop inflation, the most daunting is next year's tidal wave of labor negotiations. Even before the President announced his program of voluntary wage-price restraints, the 1979 bargaining calendar looked rugged. Next year, contracts covering 3.7 million workers expire, compared with roughly 2 million in 1978. In an era when industry is struggling to hold down costs and union members have seen inflation eating up their wage gains, the stage is set for confrontation. Says John Gentry, labor relations adviser to Alfred Kahn, the nation's top inflation fighter: "Adding the guidelines to that lineup can only make bargaining more difficult."
Crucial, too. For the moment, industry officials are going along with the price guideline, which calls for companies to hold price boosts half a percentage point below the average for 1976-77. But their compliance is not likely to last if unions push wages and benefits up beyond the 7% a year average permitted by the guidelines. Says one Administration official: "Ninety percent of the program will depend on holding down wage increases." Gentry adds: "Companies can agree to abide by the program now and always raise their prices later if things go bad. But a union that takes a three-year contract now under the guidelines would be locked in."
Complicating the Administration's problems are two other factors. One is that, in the words of Audrey Freedman, senior research associate of the nonprofit Conference Board, "the coming year opens a three-year bargaining cycle dominated by fear—on the part of all employees, union and nonunion alike—that inflation will overwhelm wage increases." Thus union members think that they ought to get the biggest raises possible to protect themselves against an inexorable rise in prices. The Administration has sought to counter that fear by ballyhooing a proposal to Congress to grant income-tax rebates to workers whose wages rise slower than prices do. But Congressmen worry that such "real wage insurance" would be inordinately expensive, and union leaders, planning their strategies, have no assurance that it will be in effect as they go to the bargaining table.
Second, the Administration's relations with organized labor are at an abysmal low. Both union and Government insiders sum up the attitudes of President Carter and AFL-CIO Chief George Meany in four blunt words: "They hate each other." Meany bitterly complains that the guidelines press down on wages more than on prices, and calls for mandatory controls on both. In the latest round of hostilities, Carter last week crossed Meany's name off the list of Government-approved directors of the Communications Satellite Corp. (COMSAT), which prompted Meany's heir apparent, AFL-CIO Treasurer Lane Kirkland, to fire off a letter to Carter announcing his resignation from two Government advisory committees.