The Labor Month in Review

DURING the month, labor interest centered on the Wage Stabilization Board, which began hearings on an accumulation of nearly 3,000 wage-increase applications. In two major decisions, cost-ofliving adjustments were approved when achieved through formal wage-reopening clauses, and "annual improvement" increases were approved, provided no price rise resulted.

While the new WSB attempted to decide cases under regulations issued by the old WSB, Congressional Committees debated wage and price controls, with the Defense Production Act expiring June 30, 1951. United Labor Committees mobilized opinion favoring extension and strengthening of controls.

The 26-month dispute between the Railroad Trainmen and the Nation's carriers was ended.

Employment continued high. Construction was active. The price advance was slowed; prices for consumer goods rose fractionally, while those for raw materials in organized exchanges declined.

Escalators and Reopening Clauses

The new Wage Stabilization Board in the meatpacking wage case held that workers and companies which have wage-reopening clauses in their contracts should be able to make cost-of-living wage adjustments.

In its first major case, the WSB approved 9 cents of a negotiated 11-cent hourly wage increase for employees of the major packing companies. The Board's vote was 8 to 4, with industry members dissenting. Additional wage adjustments of job rates to widen differentials averaging about 2 cents an hour were referred to a special panel. The WSB majority stated: "We are fully aware that this decision looks in the direction of a general policy."

Escalator clauses in the auto industry, with quarterly cost-of-living revisions based on changes

in the BLS Consumers' Price Index, brought a 3-cent hourly raise to approximately a million workers when the CPI advanced to 184.6 (184.5 for the unadjusted index used in the contract) for mid-April.

Arguments were presented to the WSB that deferred wage boosts, arranged in contracts to become effective at future dates, should receive approval as an alternate method of wage adjust

ment.

Annual Improvement Increase Approved

Annual improvement wage increases provided by agreements signed before January 26, 1951, were approved by WSB unanimously; firms which require price increases, however, were excluded from the permission extended by WSB.

At WSB hearings on the productivity pay raise issue, the National Association of Manufacturers opposed the position taken by spokesmen of General Motors and the UAW-CIO. GM stated it could pay the increment without raising prices; other auto makers anticipated they would have to apply for price increases. The NAM argued that productivity wage increases should be permitted only within the limitations of established wage stabilization policies.

GM and the UAW-CIO joined in urging that the annual improvement increase was not inflationary. In return for a 4-cents hourly increase each year, the UAW-CIO accepts introduction of new machinery and production methods.

The WSB decision affected 335,000 GM workers under 95 contracts with 17 international unions; most of the remainder of the auto industry has similar arrangements. Tandem adjustment patterns for wages of office and professional employees in most plants traditionally have followed wage increases of production workers. Thus, over a million workers are covered by the WSB ruling, provided no price advances result.

Farm Labor and "Exempt" Industries

WSB decided not to require review of any wage increases up to 95 cents an hour for farm labor. Above the 95-cent hourly rate, provisions of Regulation 6 will be effective.

A special WSB panel investigated problems of

stabilizing wages in industries which have no price controls; "exempt" industries include railroads, shiplines, public utilities, newspapers, periodicals, radio, and motion pictures.

Trainmen's Contract

The 26-month dispute between the Brotherhood of Railroad Trainmen and the Nation's railways was ended with the signing of a contract on May 25. Hourly wages of yardmen were advanced a total of 33 cents and those of roadmen 18.5 cents.

The 3-year pact includes a cost-of-living escalator, establishes the 40-hour workweek in principle for yardmen, but postpones its operation until January 1952 or later, and sets a moratorium on proposals for changes in wages and working rules. The contract received WSB approval.

Controls and Stabilization Debated

Continuation of the Defense Production Act after June 30 was debated in Washington. President Truman, supported by administration leaders, recommended renewing and strengthening the act. Labor officials affiliated with the United Labor Policy Committee stressed the need for controls and emphasized "equality of sacrifice." The AFL Executive Council resolved that, while it would normally be the first to oppose controls, the peril to national security and world peace impelled it to favor economic controls.

Opposition to controls was voiced by UMW president John L. Lewis and by AFL Carpenters president William Hutcheson, as well as by representatives of several important industry and management groups.

WSB Chairman Taylor explained to Congressional Committees that Regulation 6 was but one part of the entire stabilization picture. Under it, he said, any increases up to the 10 percent catch-up level may be made by agreement; wage increases over that mark must be submitted to WSB for review.

Both ESA Director Eric Johnston and Mr. Taylor assured Congress that WSB has no intention of rushing into the dispute settlement field. Disputants will still be required to exhaust collective bargaining, mediation, and arbitration. WSB will not, they made clear, replace either collective bargaining or Taft-Hartley Act provisions.

United Labor Committee

"Grass roots" labor support for the ULPC program was mobilized through formation of United Labor Committees in at least four States and seven cities.

The Kentucky ULC held mass meetings in four cities and sent a delegation to Washington to inform their Congressmen that they support strengthening amendments to the Defense Production Act and the six-point ULPC program. Economic Trends

Total nonfarm employment was at an all-time high for the season, 45.9 million during April; a slight decline in metalworking employment reflected cutbacks in consumer durable goods. The workweek for the 13 million production workers in manufacturing plants averaged 40.8 hours in April. Gross weekly earnings of factory workers averaged $64.22, $7.29 over the April 1950 average. The hiring rate of 45 per 1,000 employees in manufacturing plants was the highest since April 1947; the lay-off rate of 9 per 1,000 employees was the lowest since April 1945.

Dollar volume of construction continued high even though expenditures for home building declined, contrary to seasonal trends. Expenditures for all construction rose 6 percent from April to May; this was an unseasonally small rise. Public and industrial construction made substantial gains. Employment of 2.45 million construction workers in April made this the highest April on record. Housing starts in May rose 10 percent over April. Costs of building materials held steady; construction wage scales continued to move upward.

Retail prices of consumers' goods did not change markedly during April. Inventories of apparel and housefurnishings continued high; sales were slow as many consumers seemed to have committed purchasing power to pay for goods bought on installments during the winter.

The end of May was featured by a price war starting in New York department stores after the Supreme Court invalidated certain features of price-fixing legislation, and by a gasoline price war on the East Coast. Prices in primary commodity markets, particularly for grains and natural fibers, declined further during May as weather reports indicated an improved crop outlook and buying interest subsided.

ROLLIN H. SIMONDS*

LABOR AND MANAGEMENT naturally have a common interest in the reduction of industrial accidents. Labor's interest is the more direct since serious industrial injuries mean pain, perhaps permanent partial disability, even death and, commonly, some financial loss, despite workmen's compensation. Nevertheless, experience has shown that management should promote and sustain a safety program if it is to be effective. There is nothing particularly appealing about safety to the worker. He will generally "take a chance," on the theory that nothing is likely to happen to him. Similarly, the general public must be forced by police regulations to drive at a safe speed and to forego the temptation to pass a car while approaching the brow of a hill; fortunately, it is not equally difficult to control the activities of workers in plants, mines, stores, and other places of business.

Still, workers commonly suffer about 2 million disabling injuries a year, of which more than a tenth cause some permanent impairment. Not only would it be possible to eliminate a considerable portion of those accidents, but entirely practicable means are known and in use for the purpose. Many individual firms have proved that, through an effective safety program, their accident rates can be cut 50 percent or more.

Further, the frequency and severity rates of injuries, as compiled by the National Safety Council from the reports of its members, indicate that the accident experience of an industry results from at least two factors: the natural haz

ards of the industry, and the degree to which management has been impressed with the importance of operating safely. High injury rates in mining and lumbering undoubtedly reflect in part certain inherent hazards, but the automobile, chemical, and steel industry rates, for example, are below those of other industries which appear to offer fewer natural hazards. Such industries (and many others) have achieved good records because a considerable number of their large companies have devoted the attention and money necessary to bring about safer conditions and practices.

All this does not mean that labor has no part in safety promotion. Many labor leaders recognize the importance of accident reduction to members of their unions. Unions can insist that management eliminate certain obvious danger spots, and they can endeavor to educate their members to the facts that accidents may happen to them, and that in most cases an accident involves some unsafe action by an individual. However, in the opinion of the writer of this article, safety is not something that can be bargained for very satisfactorily.

High levels of management must be sincerely and sufficiently interested in accident reduction so that a serious concern for safety will filter down through the foremen to the many workers. They must also authorize adequate expenditures for safety.

That raises the question as to how and why such serious management concern over accidents is to be achieved. The first obvious answer is that most

managements are honestly interested in the welfare of their employees and, also, feel that a large number of accidents may have a bad effect on their public relations. History has shown, however, that the greatest stimulus has been management's growing realization of the costliness of accidents.

Since most business is competitive, management must always consider the probable effect of any proposed action on profits. If adequate money is to be spent for machine guards, good housekeeping, methods of instruction, and safety education, it will be, on the whole, because managements are convinced that such expenditures will not entail loss of money.

For this reason, it is of real importance to be able to estimate with reasonable accuracy the cost to a firm of its industrial accidents. When those costs are known, an executive is in a position to balance the cost of a certain fraction of his company's accidents against the cost of safety measures calculated to eliminate that portion of the accidents.

Most managements are aware of the insured cost of their accidents, i. e., the premiums they pay for workmen's compensation insurance; or if self-insured, payments in claims under workmen's compensation laws for medical care and compensation payments, and the cost of handling those matters.

Obviously other costs-such as property damage and interference with work processes-are incurred by a company because of its accidents. For lack of a means of estimating those costs, it has been common practice for business executives to disregard them when considering the money benefits of a safety program.

Uninsured Cost Elements

It was precisely this lack of effective measurements which led to the study reported here. A thousand case studies, representing a variety of industries (and chosen from more than 2,000 included in the over-all study) were analyzed to find the relative importance of 10 different elements of uninsured cost. The results appear in the accompanying tabular statement as percents of total cost for first-aid, doctor's, lost-time, and noinjury cases.

(1) Cost of wages paid for time lost by workers who were not injured involves those who stop to watch, assist, or talk about the accident, or whose work is delayed because of damage to equipment or for lack of the contribution of the injured worker. This element accounts for a maximum of a fifth of the total costs in only one group (namely, lost time).

(2) Cost to repair, replace, or put in order material or equipment damaged or disarranged occasionally entails several man-hours of work in order to repile a big stack of materials disturbed by a truck. For example, in calculating the amount of property damage, it is important not to overlook salvage value and to charge only for the estimated worth of the damaged equipment in cases where it is replaced by a more useful piece of equipment of a different type. As the tabulation shows, such costs are the major item in no-injury accidents (81 percent).

(3) Cost of wages paid for time lost by an injured worker, other than workmen's compensation (covered by insurance or self-insurance), includes time usually lost on the day of the accident. That loss occurs between the time of the injury and the time the worker is clocked out in more serious cases, or while a worker is visiting the dispensary for treatment. It may also include payment of wages during the waiting period before compensation payments are required. This element accounts for 22 to 27 percent of the

total in first-aid cases, in doctor's cases, and in lost-time cases.

(4) Extra cost due to overtime work necessitated by the accident is the difference between normal wages and overtime wages for the time needed, and any extra cost for supervision, heat, light, cleaning, etc., that is necessitated by the overtime work. If there is a loss of paid time during normal working hours, that is included under other cost elements. The maximum cost in this class amounts to 5 percent of the total in lost-time cases.

(5) Cost of supervisor's time required, when an accident occurs, comes out of the foreman's time needed for other duties. He receives no extra pay for adjusting the accident situation but uses time which would otherwise be devoted to such important activities as planning work, improving methods, and instructing workers. This is a relatively small element in the injury classifications; it probably enters into the no-injury accidents to a slight extent also.

(6) Wage cost due to decreased output of the injured workers after their return to work sometimes arises. For example, an injured employee (returning to work at his previous rate of pay) is estimated by his supervisor to be producing at only 60 percent of his normal output for a day or a week. Then the accident should be charged with 40 percent of the injured worker's wages for the appropriate time. This cost amounts to a maximum of 6 percent of the total in both doctor's and lost-time cases.

(7) Cost of learning period of a substitute worker is a factor when an accident necessitates hiring a new worker or transferring one. Frequently the new worker's output is below normal for his wages. In addition, the time of others. may also be required to give the worker training. In large companies it is found that there is not, generally, a significant variable expense for the hiring of new workers needed because of accidents. It does not appear that there would be a significant reduction in employment department expenses if there were a 50-percent reduction in accidents, because such hiring is so small a part of the total. A learning-period cost appears only in the losttime cases, and represents 4 percent of the total.

(8) Uninsured medical cost borne by the company is usually for medical services given at the

plant dispensary. It may be asked whether this is a variable cost-it is only those costs that vary with the accident experience of the company that are wanted here, because it is only the variable cost that management should balance against the cost of accident prevention in getting a bedrock estimate of the effect on profits. There are other reasons for preventing accidents, other ways injuries affect profits, but this cost analysis is confined to those for which it is practical to make a money estimate. In small companies, where the superintendent or other supervisor handles first-aid, there is clearly a variable cost. In large concerns the medical department has many duties such as ministering to nonindustrial injuries and illnesses, education in accident prevention and personal hygiene, elimination or control of health hazards, medical records, supervision of plant sanitation and health measures. Of course, there

is a discontinuity in the relationship between size of the medical department and number of injuries, because nurses and doctors cannot be hired in infinitely small units.

While a change in accident frequency may not alter the cost of operating the medical department, it nevertheless may change the time available for those other activities. To check this point, questionnaires were sent to safety directors, personnel managers, medical heads, and superintendents. Of 311 replies, 270 agree that if accidents were reduced, the medical department would make valuable use of the time saved for preventing illness absenteeism. This cost is particularly important in the first-aid cases, amounting to 60 percent of the total cost.

(9) Cost of time spent by higher supervision and clerical workers on investigations or processing compensation application forms excludes time employed primarily for accident prevention, in this discussion. Claim settlement is occasionally rather costly. This element is relatively largest in the doctor's cases, representing a third of the total.

(10) Miscellaneous unusual costs must be shown clearly and justified by the investigator on individual accident reports. Among such possible costs are: public liability claims, cost of renting replacement equipment, loss of profit on contracts canceled or orders lost if the accident causes a net long-run reduction in total sales, loss of bonuses