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The job of the Price Commission, headed by former S.M.U. Business School Dean C. Jackson Gray son Jr., was complicated by the Pay Board's long struggle to formulate wage guidelines. The commission, composed of seven public members, could hardly lay down price rules until it knew what wage increases would be permitted in Phase II. At almost the last moment, the commission decided to let prices rise only enough to reflect actual increases in costs, minus any rises in workers' productivity—and then only if the price hikes do not fatten company profit margins. Some economists think that this tough-sounding rule will prove to be an administrative nightmare. Alan Greenspan, a member of TIME'S Board of Economists, fears that many firms that maintain only hazy running measures of their productivity and profit margins will have little idea when they decide on price boosts whether they are acting legally or illegally.
Three Tiers. The Government will monitor both wages and prices by dividing the economy, like Caesar's Gaul, into three parts. Firms with annual sales of at least $100 million, which include all of FORTUNE'S list of the 500 largest U.S. corporations plus 800 others, and employee groups of at least 5,000 members will be required to notify the appropriate Government board 30 days in advance of raising wages or prices and obtain approval. The second tier of economic units, firms whose sales are between $50 million and $100 million annually and employee groups numbering 1,000 to 5,000, must report increases but do not need to wait for permission to put them into effect. The remaining thousands of employers and millions of workers, while bound to the same criteria as everyone else, will be subject only to spot checks by the Internal Revenue Service.
The monitoring system clearly is aimed primarily at massive corporations and huge labor unions. That is partly due to the President's abhorrence of creating an OPA-style bureaucracy large enough to keep check on everyone. But it also reflects the belief of many economists that it was big business and big labor—which have somehow grown powerful enough to resist normal market forces even in a recession—that created the need for controls. By reining in tightly on a relatively few large units, these economists predict, the Government should be able to restrain the rest of the economy as well. There is some doubt, though, that the 3,000 IRS agents detailed to investigate violations of Phase II rules will be anywhere near enough to do the job effectively.