WAGES: Defense of the Escalator

Are cost-of-living increases granted under union contracts a potent cause Of inflation? Many a businessman insists that they are. But last week, General Motors' Charles E. Wilson, who started the whole argument by granting the first big contract with an escalator clause three years ago, took on his critics with a statement that they would find hard to refute.

Actually, said Wilson, in an open letter to "Mr. X," the escalator clause in G.M.'s contract is "neither inflationary nor deflationary. As a matter of fact, it tends to resist inflation to some extent since wages are only...

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