Mr. STEPHENS. I also offer that which I referred to in my printed statement as a more detailed refutation or analysis of the staff report.

ANALYSIS OF STAFF REPORT TO THE SENATE SUBCOMMITTEE ON LABOR AND LABORMANAGEMENT RELATIONS ON THE WAGE STABILIZATION BOARD RECOMMENDATIONS IN THE STEEL DISPUTE

The staff report to the Subcommittee on Labor and Labor-Management Relations (hereinafter called the report) is described in the introduction as a staff analysis of Mr. Feinsinger's testimony to the subcommittee in which he explained the background of the Wage Stabilization Board's "thinking leading to its recommendations in the steel dispute That testimony was given on March 31, 1952. The report is divided into four parts, as follows:

I. The 1952 wage adjustments

II. The fringe adjustments III. The 1953 adjustment

IV. The union security issue

The report is as remarkable for the facts which are not included as it is for the errors in facts which are included. Those errors and omissions are discussed below. The designations used in this analysis are the same as those used

in the report.

I. THE 1952 WAGE ADJUSTMENTS

(a)· Board recommendations

The statement is made that the adjustments recommended by the Board for the year 1952 consist of 122 cents an hour effective January 1 and 2 cents an hour effective July 1, and the report states that for the full year 1952, the recommended adjustment averages 134 cents per hour. The report also states that the union demanded 18% cents per hour and a 1-year agreement, the implication being that the Board recommended far less than the union sought. By arranging the report in the manner outlined above, the staff has apparently attempted to obscure the fact that effective January 1, 1953, the Board recommended an additional 21⁄2 cents an hour which would bring the total wage rate increase recommended by the Board to 172 cents per hour. The staff also ignores the fact that the demand of the union for 18% cents an hour was obviously a bargaining position and, taken as a whole, the Board's recommendation came within 1 cent of what the union originally asked.

(b) Cost-of-living changes

The report assumes that the appropriate base for measuring changes in the wages of steelworkers and in the cost of living is December 1, 1950, the date of the last general wage increase in the steel industry. (With respect to the Consumers' Price Index, the report uses October 1950 as a base on the theory that the index for that month was the latest available when the increase was granted.) The report, therefore, for all practical purposes, accepts the contention made by the union in the course of the hearings before the WSB panel that the base period of January 1950 established by the Board itself as an appropriate base from which to measure such changes, is inappropriate in the case of the steel industry.

Wage Stabilization Board General Wage Regulation 6 (hereinafter called GWR 6) makes clear that the Board, after studying the movement of wages and prices during the period preceding the Korean intervention, concluded that for some time prior to January 1950 both wages and prices were comparatively stable but that after that month, first because of the recovery from the recession of 1949 and later because of economic disturbances resulting from the Korean intervention, both wages and prices began to move up at a rapid rate. The Board concluded that, because of all of these circumstances, wages and prices were in reasonable balance in January 1950, except in certain rare cases where because of depressed economic conditions in an industry or because the industry was seasonal in character or for certain other reasons, the wages in that industry were abnormally low relative to the cost of living in that month. The soundness of the Board's conclusions in that regard is shown in schedule A attached hereto which compares movements of average hourly earnings in various industries, as reported by BLS, and changes in the Consumers' Price Index during 1948, 1949, and 1950.

As the tables in that schedule show, there were substantial upward wage movements and an upward trend in the Consumers' Price Index during the period from January 1948 to January 1949. During the period January 1949 to Jan

uary 1950, however, there was no significant change in wage levels and the Consumers' Price Index declined to a point slightly below the level of January 1948. Between January 1950 and January 1951 there were again large increases in the wage level and a substantial rise in the Consumers' Price Index.

As was pointed out by the companies in the evidence which they presented to the WSB panel, the wage position of the steelworkers relative to the cost of living in January 1950 was not inequitable. The companies showed that as late as September 1949 the Presidential Steel Fact Finding Board had found that the steelworkers' wages had kept pace with changes in the cost of living and that, at least as of that date, the relationship between their wages and the cost of living was equitable. Since the Consumers' Price Index declined between June 1949 (the last date as of which wage and price data were available to that Board) and January 1950, while steel wages were stable, the relative position of the steelworkers clearly did not decline after that Board had made its findings. Accordingly, the union's argument to the effect that January 1950 is an inappropriate base date for the measurement of changes in the cost of living was clearly unfounded.

The evidence presented by the companies also showed that the general wage increase of 16 cents per hour granted to the steelworkers on December 1, 1950, was, at least to a considerable degree, prospective in character since it was far larger than any wage increase which could then be justified either by the increase which had taken place in the cost of living since the last general wage increase in the steel industry in July 1948 or by the increase in the cost of living since the fact-finding board had examined the steelworkers' position in 1949.

For those reasons a comparison between changes in the cost of living and the movement of steelworkers' wages following the general wage increase in 1950 does not give an accurate picture of the general relationship between the earnings of steelworkers and the cost of living. Schedule B attached hereto shows the movement of the BLS Consumers' Price Indexes for certain selected dates beginning in January 1950, and schedule C shows average straight-time hourly earnings of employees in the steel-producing industry for the same dates. As can be seen from the data in those schedules, if the Board's own base period of January 1950 is used for purposes of comparison, the wage increase recommended by the Board brings the steelworkers' earnings to a point substantially above that which can be justified by changes in the cost of living.

The report also assumes that the unrevised Consumers' Price Index is a better measure of changes in the cost of living than the interim revised index which was issued in the fall of 1950, with data going back to January 1950. BLS announced at the time it issued that interim revised index was it was based upon consumption patterns which were determined by studies carried on in various cities in the postwar period and, consequently, that it is far more representative of current consumption patterns than is the old index which is based on consumption patterns in the period 1934-36 at a far lower level of consumer incomes. BLS also announced that it was continuing to price the old index only because a number of labor agreements contained cost-of-living escalator clauses which depended on that index and that some of those agreements did not contain any provision for revising such clauses in the event that the old index is dropped. It is obviously absurd to argue that movements of consumers' prices are better me sured by an obsolete index than by an index which is based upon comparatively modern consumption patterns.

The report further assumes as to the escalation clause which the parties might have adopted in 1950 that the parties would have agreed to use the old index rather than the revised one and that they would have agreed further to use the index for October 1950 rather for some later month as a base for future adjustments. Assumptions as to what the parties to that agreement, both of whom are on record as being opposed to automatic escalation provisions of any kind, might have included in an escalation provision if they had adopted one puts the whole matter in the realm of pure conjecture. Assuming, however, that the parties had adopted such a provision, it is extremely unlikely, first, that the parties would have agreed to use an obsolete index simply because other companies had adopted it at a time when it was the only one available and, further, that they would, in December 1950, have adopted October 1950 as the base for future increases when it was clear that the general wage increase then being granted was to a considerable degree prospective in character and, consequently, could be expected to compensate for increase in consumers' prices in what was then the near future. Using as a base date the date when the increases were granted (December 1, 1950), or using any of the next 3 months after October 1950 makes a substantial difference in the amounts of wage increases which

would have been necessary to compensate the steelworkers for changes in the cost of living.

If the parties had set up a normal cost-of-living escalator clause covering the year 1951, the total increase to date using the revised index and a December 1950 base date would have been 9 cents per hour. Using the old index the increase to date would have been 10 cents per hour. If a January 1950 base date had been used, the increases would have been 6 cents or 7 cents per hour, respectively.

From all of the foregoing, it is perfectly clear that the union and later the Board sought by selecting October 1950 as a base period to build up as far as possible the amount of general wage increase which could be justified, however tenuously, on the basis of changes in the cost of living.

Perhaps an equally serious matter is the fact that the Board in making its recommendations and later in justifying them completely ignored the decline in consumers' prices which occurred between January 1952 and February 1952. The Board's recommendations were made March 20, 1952. The February Consumers' Price Index was published on March 21, 1952. It is inconceivable that at the time the Board made its recommendations it was not aware of the fact that the February index would be considerably below the January index. If the February index is used instead of the January index as a terminal point for the type of calculations which appear in the report, the amounts to which the steelworkers would be entitled on the basis of changes in the cost of living is reduced appreciably. The effect of that change is shown in schedules B and C hereto.

Actually, under the Board's own GWR 8, the steelworkers are entitled to a wage increase on the basis of changes in the cost of living of 3.5 percent (using the revised index) or 3.7 (using the old index) of average straight-time hourly earnings which were estimated by the Board to be $1.81. Those increases are 6.3 cents and 6.7 cents, respectively.

From the foregoing, it can be seen that the Board in making its recommendations with respect to wage increases has gone far beyond the basic regulations which it established for the purpose of stabilizing general wage movements. As the Board explained when YWR 6 and GWR 8 were issued, the purpose of those regulations was first to permit workers in industries which had lagged behind others in the wage movements after January 15, 1950, to catch up to those other industries and, second, a proper wage balance having been reached by means of the catch-up arrangement, to prevent deterioration of wages by increases in the cost of living. Those are the only general policies which have been adopted by the Board for the purpose of regulating general wage increases and their violation by the Board in a case as important as this would seem to indicate that so long as the Board has the power to make recommendations in dispute cases, there cannot be any effective wage stabilization.

(c) Wage changes in related industries

As in the case of comparisons between changes in the earnings of steelworkers and the Board's recommended wage increase with changes in the cost of living, the Board and the staff have made comparisons between wage movements in the steel industry and in other industries from December 1, 1950, rather than from some earlier date. As was stated above, the Board selected January 1950 as the base period for measuring changes in wages and consumers' prices because, for a substantial period prior to that month, there had been no general changes in either wages or prices. For that reason, it is appropriate to use that month rather than any other as a base period for comparing changes in wages as be tween industries. The period following January 1950 was characterized by comparatively large increases in wages, the timing of such increases being dependent in large measure on the termination dates of collective bargaining agreements or the dates on which bargaining with respect to wages could commence. The fact is that the basic purpose of the Board's General Wage Regulation 6 was to provide a formula which would make possible the elimination of wage inequities which resulted from those varying dates. By the terms of their agreements with the respective companies, the steelworkers were not able to bargain with respect to wages until November 1950. By that time there had, of course, been substantial wage movements in various industries, none of which in any major manufacturing industry, however, was as large as the increase granted to the steelworkers in December 1950. There are set forth in schedule D attached hereto general wage rate increases granted by various representative