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Inflation has become a favored topic of conversation. People seem to have a pecking order of complaint about which price rises are most aggravating. They are, in approximate rank, the increases in food, taxes, mortgages and rents, med ical care, home repairs and, finally, everything else. Because beef prices have climbed 8% to 10% in the past year, more and more people are shifting from steak to hamburger. When the Michael Satchells of Kansas City, Mo., had their first daughter 21 years ago, the doctor's bill was $150, and the labor room cost $25; when their first son was born this month, the doctor charged $200, and the labor room was $45. Around Boston, admission tickets to drive-in movies recently went from $1.25 to $1.75; in Manhattan and Chicago's Loop, movies commonly cost $3. Detroit's automakers will lift prices on the 1970 models this autumn.
Today, inflation hurts almost everyone, but some are damaged more than others (see box, opposite page). The impact falls most notoriously on those who have the most meager means to withstand it—the poor, the black and the aged. It cheats the thrifty, taking money from every owner of a U.S. savings bond and every depositor in a savings account. Speculators in stocks and real estate often profit from inflation, but bondholders can lose fortunes if they have to sell their securities. The recent plunge in bond prices, caused by increasing interest rates, has reduced the value of many pension and profit-sharing funds, much to the dismay of workers nearing retirement.
Prices and taxes are rising so fast that, despite full employment and increasing pay, the typical American is hardly better off than he was in the mid-'60s. Corporate profits are no higher than they were three years ago, when inflation took hold. In 1968, consumer prices rose 4.3%, the swiftest leap in 18 years, and many family incomes failed to match the pace. Economist George Frey of the Manhattan consulting firm of Lionel D. Edie & Co. figures that the standard of living for U.S. workers has remained at the same plateau for three years. During that period, prices rose by an average 3.3% a year, and taxes of all kinds paid by a typical worker with three dependents jumped by an average 15% annually. His average pre-tax earnings went up from $95.06 a week to $108.73, but after his paycheck was gutted by taxes and inflation, his real purchasing power advanced only 80, from $78.53 to $78.61.
As is usual in any price-wage spiral, labor has come in late for its share of inflation's dubious rewards. Now unions are trying to catch up by wringing huge wage increases from employers. Conservative Economist Milton Friedman argues that these increases are only another reflection of inflation, not an initial cause of it, though there is no doubt that big increases keep the spiral going. Cement workers have just won 20% increases in wages and benefits in contracts covering the next two years. Three maritime unions have accepted a threeyear, 35% raise from Eastern and Gulf Coast shipping lines. Striking Kansas City plumbers and pipefitters settled for a 35% increase over three years; it will raise a plumber's pay to $9.21 an hour.
Revolt of the Craftsman