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The Pay Board will have 15 members—five each from management, labor and the public at large. They will establish yardsticks for permissible increases in wages, salaries, pensions and other fringe benefits, bonuses, salesmen's commissions and the like. A committee within the board will formulate rules for executive pay boosts. Meanwhile, the Price Commission will do the same for prices and rents. The commission will consist of seven "public" members.
What sort of people will Nixon choose for the crucial posts of "public" representatives on the Pay Board and Price Commission? Judges? Lawyers? Professors? Labor arbitrators? Over the weekend, Nixon men gave the first hint. They named to the Pay Board William G. Caples, president of Kenyon College in Ohio and a former vice president of Inland Steel. Otherwise, Administration officials have been silent. They will say only that they are looking for "tough" people. They are much clearer about whom they do not want: anyone like the Rev. Theodore Hesburgh, president of Notre Dame, who is regarded in the Nixon White House as a wishy-washy liberal.
TWO: After devising general rules, the Pay Board and the Price Commission will weigh particular increases case by case.
An unspecified number of the largest companies and unions will be required to give prior notice of any planned wage or price hikes. Those raises will take effect only if the new bodies approve. A larger number of somewhat smaller but still sizable companies and unions will have to report, probably quarterly, any pay or price boosts they make. The board or commission can order rollbacks of any increases deemed to violate the general standards.
One crucial question is what will happen to wage increases coming due under existing contracts? Some 2,100,000 workers are scheduled soon to get increases averaging 7.6%, which Administration economists figure is too high. Labor leaders, invoking the sanctity of contracts, are threatening to fight in court any attempt to scale down these increases. Connally's position: the Pay Board will decide on each increase, with the understanding that any outsize boosts allowed in a given industry will have to be balanced later by below-guideline increases for other workers. "To the extent they permit large raises," says Connally, "others will have to be smaller."
THREE: The Price Commission will have authority to order a price rollback by any company making "windfall" profits.
What is a "windfall" profit? Connally defines it as an extraordinarily large profit arising out of the operation of the program of wage-price restraints, but confesses that he is unable to offer any examples of how a company might make such a profit. His vagueness is likely to stir suspicion that this part of the control program is merely a verbal sop to union leaders who have been howling for some limit on corporate earnings. One possible example: a company that had raised prices just before the freeze, had a wage increase scheduled under a previously signed union contract delayed by the freeze, and has been keeping as profit the money that would otherwise have gone into pay envelopes. There is also a question as to whether the Administration has the legal authority to order price cuts as well as stopping price increases.