10 AN HOUR: The Probable Steel Settlement

10¢ AN HOUR

To clear the fog of conflicting claims surrounding the steel negotiations, President Eisenhower last week considered having the Government prepare its own “impartial” statistics for the public’s guidance. But the Labor Department and other Government agencies quickly let it be known that they wanted no part of the job. Reason: they know that even statistics on such an apparently simple factor as productivity are open to wide interpretation. No matter what figures the Government settled on, federal economists feel, they would favor one side or the other, add heat rather than light to the debate between management and labor. Said a Government labor expert: “Preparation of a factual Scoreboard by the Government would not help to settle any issues but would only involve the Government in a hideous hassle. It would be murder.”

In their battling over steel negotiations, both management and labor naturally pick the figures that best prove their case. Determined to hold fast against any wage hike, industry points out that the steelworkers’ average hourly wage of $3.08 is higher than in all but a handful of U.S. industries (coal, glass, construction). According to industry statistics, postwar wage costs have risen nearly twice as fast as the cost of living. Replies the union: average earnings do not mean anything, because the majority of steelworkers have to work at incentive pace and on undesirable shifts and normal off-days to achieve that level. What really counts, says the union, is the industry’s minimum wage of $2.13 an hour, which is equaled or exceeded by nine major industries and is 11¢ lower than the auto industry. Besides, steelworkers rarely work a full work year; they have averaged 40 hours a week in only one year in the last 13. ∙ Industry insists that workers do not deserve a raise because their wages have already outrun gains in productivity, which the industry calculates has risen at an annual rate of 1.5% a year since 1940. The union disputes this by using a productivity figure of 3.2%. The reason for the difference is that management uses steel shipments per man-hour to arrive at its figure and the union uses output per man-hour, while each selects productivity figures over different periods. This is just the sort of thing that caused Government agencies to shy away from choosing a set of statistics.

When it comes to steel industry profits, a key point in the argument, management and labor find it even harder to agree on the facts. Last week the Government announced that the steel industry’s near-record first-quarter profits of $374 million after taxes represented 11.7% of stockholders’ equity, higher than in U.S. manufacturing as a whole (10% of equity); second-quarter earnings are expected to be even rosier. But the Government’s report also pointed out that over the last ten years steel has not done as well as other industries, and steel companies complain that their present good showing is largely the result of stockpiling in anticipation of a strike. Their big argument is that profits are not even enough to pay for expansion and modernization; U.S. Steel alone has borrowed $600 million for its expansion program in the last five years. It is largely this investment, rather than any effort on the part of unionists, says industry, that has increased efficiency and profits.

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So many figures are being bandied about by both sides—all interpreted in different ways—that many experts now consider them a public exercise in gamesmanship, with little use for any eventual settlement. “The figures are phony on both sides,” says a Washington economist. “We are not paying any attention to them. This thing will be decided on the basis of what industry can give and save face and what Dave McDonald can take and save face.”

Last week no face-saving formula had been agreed on, and both industry and labor were bracing for a strike. But the inescapable fact that the industry is making a lot of money and the steelworkers are so well paid that the rank and file are not interested in a big wage boost (TIME, June 15) gave hope that they would be able to make a reasonable settlement. Union Boss David McDonald, estimating that a contract change already offered might amount to 6¢ an hour, has rejected this out of hand. But the feeling grew on both sides that the industry might be willing to give a 10¢-an-hour wage hike, plus other benefits over the course of the three-year contract. The union could dress this up to look like more by announcing the total package. Industry would probably absorb part of any increase and cover the rest by putting through a price rise of $3 or $4 a ton. Many economists would not consider such a settlement inflationary. They feel that the whole effect on the economy of steel price hikes has been vastly overrated—and that the consumer feels such hikes far less keenly than rises in food, clothing and transportation.