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How can the impasse be settled? One way might be for G.M. to offer a more liberal cost-of-living allowance in return for a lower wage settlement, figuring that inflation will slow during the next two years. Woodcock has hinted at the possibility of such a deal. In a remarkable statement, he expressed his preference for cost-of-living escalators in place of huge wage increases in the later years of a contract. "I believe that if you bargain wages to anticipate an inflation, then you are guaranteeing that inflation," he said. "I am concerned about constantly escalating future wage increases further distorting the economy and possibly leading to a major recession, if not worse."
Prices and Politics. The eventual settlement of the U.A.W. strike will be a bench mark. A settlement in line with G.M.'s offer would provide other companies with an example of successful resistance, discouraging future strikes. On the other hand, a large wage gain would give other unions a new goal to shoot at, and would doubtless be followed by another increase in the price of cars and trucks. Last week Ford, which is still producing cars, as are Chrysler and American Motors, raised prices on its 1971 autos by 4.8%, the biggest increase in 14 years. Ford executives hinted that there might be even higher raises after a new labor contract is signed. Yet the auto industry cannot pass all of its increasing labor costs on to consumers. Detroit is dreadfully frightened that Americans will continue to shift to lower-priced imported autos. U.S. car sales are down this year partly because the U.S. public, hurt by both inflation and unemployment, is hesitant to invest in big-ticket purchases. To fight the price rise, Detroit is automating to the extent of using robot welders on G.M.'s Vega 2300 assembly line. Still, prices continue to climb.
The Administration is resigned to the likelihood that almost any settlement that will bring the men back to work is bound to be inflationary. Government economists have privately voiced hopes that the wage deal would be in the range of 8% to 10%. G.M.'s final offer before the workers went out amounted to 9.8%. At least for now, the Administration has no plans to use its power to try to force a settlement. But if the strike drags on until snow falls, the pickets will be faced with the prospect of doing without strike pay, and part of their anger is bound to be directed at the Government. The public will blame the Administration if widespread layoffs brought about by a long stoppage send unemployment over 6%. Unless there is an unexpected break in the strike before the November elections. Republican votes will be hard to come by in areas where the U.A.W.'s picket lines have disrupted the local economy.
In a free economy, conflicts between powerful competing forces are inevitable. U.S. labor has won many of its greatest advances only after striking. Yet the auto walkout comes at a particularly bad time, when the nation is troubled and its economy is sluggish. If the pessimists are proved correct and the strike drags on, it may well become a cause celebre for organized labor, drawing to the workers' side protest movements of all sorts. The real tragedy of the bitter battle is that it hits the U.S. when the country can ill afford any further social tension.