CONTENTS Dr. George W. Taylor, chairman, Wage Stabilization Board__ Eric Johnston, Administrator, Economic Stabilization Agency, accom- panied by Frank Whitehair, general counsel, Economic Stabilization Agency, and Dr. George W. Taylor, Chairman, Wage Stabilization Hoyt P. Steele, vice president, Benjamin Electric Manufacturing Co., Des Plaines, Ill., representing the Chamber of Commerce of the Arthur J. Goldberg, general counsel, CIO, Washington, D. C.‒‒‒‒ Walter Mason, member of the national legislative committee, Ameri- can Federation of Labor, Washington, D. C.---- David L. Cole, chairman, New Jersey State Board of Meditation___. Ira Mosher, president, National Association of Manufacturers, accom- panied by Lamber Miller, general counsel, and Leo Teplow, associate director, industrial relations division, National Association of Page 1 WAGE STABILIZATION PROGRAM THURSDAY, MAY 17, 1951 UNITED STATES SENATE, SUBCOMMITTEE ON LABOR AND LABOR-MANAGEMENT RELATIONS OF THE COMMITTEE ON LABOR AND PUBLIC WELFARE, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in the old Supreme Court room, the Capitol, Senator Hubert Humphrey, presiding. Present: Senators Humphrey, Douglas, and Taft. Also present: Ray R. Murdock, counsel; Mrs. Eve Finnegan, clerk; Jack Barbash, economist; and Thomas E. Shroyer, professional staff member, Committee on Labor and Public Welfare. Senator HUMPHREY. This is the Subcommittee on Labor and LaborManagement Relations and an authorized subcommittee of the Committee on Labor and Public Welfare. The members of the subcommittee will be coming in. Many of them are presently engaged in other committee work. Senator Taft, who is now in the Finance Committee, will be here shortly, and I understand that Senator Douglas, who is in Banking and Currency, will be with us very shortly. First of all, I want to thank you, Dr. Taylor, for taking your time and accommodating this subcommittee by appearing before us. I understand that you do have a prepared statement, and I should like to suggest that you read your statement to us, and that at the conclusion of the statement we shall enter upon some interrogation. I have a series of questions which I have prepared in hopes that we might be able to make a rather clear and detailed record of the program, the accomplishments to date of the Wage Stabilization Board, and its functions. Without any further ado, Dr. Taylor, I would like to have you proceed, giving your name and your position. STATEMENT OF DR. GEORGE W. TAYLOR, CHAIRMAN, WAGE STABILIZATION BOARD; ACCOMPANIED BY JESSE FRIEDIN, CONSULTANT, WAGE STABILIZATION BOARD; AND SAMUEL EDES, ACTING CHIEF COUNSEL, WAGE STABILIZATION BOARD Dr. TAYLOR. My name is George W. Taylor, Chairman of the Wage Stabilization Board. Mr. Chairman, it is a real privilege to appear and discuss with you the plans of the Wage Stabilization Board and some of its accomplishments and to discuss with you some of the problems which must be grappled with in that agency. I think, as you indicated, it would 1 be good procedure, and I would like to read this very short prepared statement to begin with. Senator HUMPHREY. May I just interrupt at this point so that we have it clear again for our record that your testimony before this subcommittee is, of course, supplemental to your testimony before the Banking and Currency Committee, which has jurisdiction over the Defense Production Act and any amendments thereto. However, it is the feeling of the Subcommittee on Labor and LaborManagement Relations as well as the full committee that this subcommittee does have legislative jurisdiction over those aspects of legislation which pertain to basic law affecting the pattern of labormanagement relations, and this applies particularly to the aspect of the wage stabilization program that deals with the labor disputes, in other words, your disputes powers. Needless to say, much of our attention today will be concentrated upon that aspect of your testimony. Dr. TAYLOR. Yes; I so understand this appearance. I would, however, like to go very briefly into the wage stabilization aspects of it as a prelude to going into the disputes side of it. The Wage Stabilization Board was established under the Defense Production Act of 1950 and by Executive Order 10233 of April 21, 1951. The duties assigned to the Board are twofold: First, the formulation and administration of a national wage stabilization policy, and, second, a very limited jurisdiction in the settlement of labor disputes. The Board is a tripartite agency. It consists of 18 members appointed by the President, equally representing industry, labor, and the public. The names of those members and a short biographical sketch are appended to my statement, and I will not read them at this time, unless. you care to have that. Senator HUMPHREY. It is not necessary to read that. I do suggest that at the conclusion of your testimony, or at the conclusion of your prepared statement, that we enter into the record the names of the members of the Wage Stabilization Board and such biographical material as you may have prepared. Dr. TAYLOR. Yes, sir. The Board is designed-through the democratic merger of these three points of view-to serve the interests of the country as a whole in discharging the responsibilities committed to it in this critical mobilization period. First, wage stabilization. That is the first of the Board's duties, to stabilize wages. An effective wage stabilization policy is an essential part of the total and many-sided program which is required to curb inflation in a defense economy. What are the precise contributions that can be made by wage stabilization? First, a sound program will operate to minimize frantic bidding for labor. In the absence of wage controls, one firm may bid employees away from another only to have the other raise wages to get its employees back again. Such shifting of workers from job to job in search of ever higher wages would dislocate the total labor force in ways which are costly to employers and serve only to increase the already large excess of purchasing power which underlies the inflation. Wage stabilization can successfully avoid irreparable damage to the defense program from wasteful methods of wage competition in tightening labor markets. Second, such controls serve to maintain normal wage relationships among various groups of employees. The failure to preserve such relationships would constitute a real danger to national unity since it would permit those who are strongly organized or strategically placed to secure wage increases while the wages of those who are less favorably situated-whether organized or unorganized-would tend to lag behind. Some of those effects already have been noted. In the absence of effective wage stabilization the process would continue unabated. Such inequitable results would seriously impair the morale of the Nation's wage earners. Third, such a program is a necessary part of the effort to achieve stability in the cost of living. Upward pressures exerted by unending rises in labor costs and by resulting increases in purchasing power cannot be permitted to continue unchecked. These pressures must be reduced if stability is to be achieved. The wage stabilization program is still in the early stages of formulation. Its development was interrupted in February by circumstances with which you are familiar. More than 2 months elapsed before the Board could be reconstituted. I am happy to be able now to report that the reconstituted Board held its first meeting early last week and that it has been carrying on is duties every day since then. The problems before it are manifold. When it convened, it had a backlog of nearly 1,200 cases awaiting decision. That number is now nearer 1,500. All these cases involve voluntary requests for permission to make wage increases. They are not disputes between parties, management and labor. In more than half of these cases the request was filed by the employer alone; the rest are joint requests by employers and unions. Many require individual case-by-case attention. Others can be treated by general rules. In the brief time in which the Board has been at work it has already provided ways and means to provide answers in about 500 cases. The immediate job of the Board is to provide answers to all questions before it. The Board will continue to devote full time to the accomplishment of its objective. Now, as respects the second function which has been assigned to the Board, labor disputes, I have this to say. In carrying out the mandate of the Defense Production Act to establish controls over wages, limits have necessarily been placed upon the extent to which employers and unions may engage in free collective bargaining over issues involving wages. Such limits make it far more than ordinarily difficult for the bargaining parties to reach agreements. In further pursuance of the act, the curtailment of production for civilian needs and the expansion of production to meet military requirements, together with the necessity to withdraw civilian manpower for military purposes and to increase the over-all working force of the Nation, raises a host of industrial relations problems unrelated to wages. Relations which were otherwise stable will become increasingly unsettled in the rapid change-over from an economy of peace to an economy of preparation. If I might interpolate just there the substance of it is this: That the preparation for defense creates a whole new type of industrial |