An Answer to Critics of
Sliding Wage Scale

From The Militant, Vol. 12 No. 24, 14 June 1948, p. 2.
Transcribed & marked up by Einde O’Callaghan for ETOL.

Since their first cautious expressions of “uneasiness” and "hesitancy” about the General Motors sliding scale cost-of-living wage contract, the capitalist press and economists are opening a more direct attack. An example as .Lawrence Fertig’s article in the June 7 N.Y. World-Telegram, headlined: Disaster Held Lurking in GM Wage Formula. Fertig describes the “GM formula” as “inflationary” and “a dangerous plan for all industry to follow.”

Big Business generally is fearful of any proposition based on the principle that every time they boost the cost of living they must boost wages proportionally. They are particularly fearful of this principle today, when war preparations are giving redoubled impetus to price inflation.

Opposition Voiced

At the same tune there are voices of opposition to the sliding scale wage program heard within the labor movement. They range all the way from the treacherous Stalinists, who helped put over the government’s wage freeze during the war, to John L. Lewis, Whose militant leadership of the miners commends his views on the wage question to the most careful consideration.

The Stalinists, as they have done for many years, continue their misrepresentations about the nature of the sliding scale wage program in general and now add falsifications about the GM contract in particular.

There is no lack of bad features in the GM contract: Its freezing of real wages to the depressed level of the 1940 “norm”; its failure to include welfare benefits; its continuation of discriminatory “penalty” clauses; its lack of adequate union security safeguards and grievance procedure; its two-year termination clause.

But the chief focus of the Stalinist attack is the GM escalator clause, which the Daily Worker labels the “wage-cutting escalator clause.” The false impression the Stalinists attempt to convey is that the GM sliding scale provision is primarily designed to cut wages and that it will, in fact, result in lower wages for the GM workers.

They dishonestly ignore the fact that the GM contract provides for unlimited automatic wage increases proportional to all rises in the cost of living during the life of the contract. They stress only the fact that the contract provides for a wage reduction if the cost of living index declines – although they skip over the additional fact that this decline is limited to a total of 5 cents even if prices should fall steeply.

But the Stalinists themselves don’t think prices are going to fall. On the contrary, the Draft Resolution being submitted to the forthcoming National Convention of the American Communist Party by its National Committee, predicts further drastic inflation (Sunday Worker, May 30).

The resolution warns of the “direct inflationary effect” of the Marshall Plan and “swollen war economy” and states that "prices are continuing to soar.”

The conclusive proof that the Stalinists in the UAW and the Daily Worker are raising shyster arguments for strictly factional ends is the fact that the Stalinist leaders of the CIO Electrical Workers have signed a “wage-cutting escalator clause” contract with General Motors Electrical Division identical to the GM contract in auto. The UE leaders have gone further to request a similar agreement from General Electric – but GE has flatly turned it down, offering only a flat wage increase.

The actions of the UE leaders are sufficient to dismiss the Stalinist attacks on the sliding scale wage program as the distortions of hypocritical scoundrels.

On the other hand, the arguments of the June 1 United Mine Workers Journal are valid, insofar as they deal with the admitted defects of the particular contract signed by the UAW-CIO leaders with GM. But Lewis is incorrect when he attacks the sliding scale program as such and the sound basic features of the GM contract.

Safeguards

The Militant has advocated the sliding scale wage . program for 10 years, but always with certain minimum safeguards. We have, for instance, warned that such escalator clauses should not be governed by the doctored consumers price index of the U.S. Bureau of Labor Statistics, but on an index carefully compiled by the labor unions. We agree with the UMW Journal when it says, that the GM contract, based on the government index, “places the auto workers’ wages at the mercy of a governmental statistical index – one repeatedly attacked by the entire labor movement as unreliable.”

We can only ask the UMW leaders, why, if the unreliability of the government index has been so well known for years, they have not established in co-operation with the other unions a reliable index.

The Journal says that the GM sliding scale agreement “is simply another version of the ‘Little Steel’ formula that was imposed on workers during the war by the masterminds of the WLB.”

That is incorrect. The WLB arbitrarily limited the amount of wage increases irrespective of price rises and froze wages at those levels for long periods. It did not provide for automatic wage increases at brief stated intervals for all increases in living costs. That is what the GM contract does.

It is likewise incorrect to state that this is “wage fixing by government formula.” The formula is a voluntary contract between GM and the UAW. The government simply supplies the statistics, it does not determine the use to which they are put. If the statistics were accurate, there would be no cause for criticism. The government cost-of-living statistics, however, are not accurate. Therefore it is the duty of the labor movement to compile its own reliable index.

The Journal claims that “many years ago the type of sliding-scale wage contract that tied wages in with prices was eliminated from the coal industry.” But the GM contract does not tie wages in with the industry’s prices. The sliding scale is based on the cost of living – what the worker has to spend and what he gets for his wages – not on what his particular boss charges for his product.

The weightiest argument of the Journal is the claim that “when workers accept such a formula they agree to forego any absolute advance in their living standard.”

There may be some justification in this argument, in so far as it applies to the particular contract signed with GM, because this contract accepted the depressed real wages of 1940 – nearly a decade ago – as the “norm” for today. But this has 'nothing to do with the sliding-scale principle which is designed exclusively to fortify the basic wages from rising prices during the life of the contract. A sliding scale wage clause, such as we propose, in no sense ties basic wages to the cost of living. It is intended solely to prevent the employer, after the basic wage agreement is signed, from paying the workers in depreciated currency. Naturally, the unions must continue to fight for as high a basic wage as they can get.

At the same time, the unions must demand an additional safeguard, a clause in the contract which says in effect, that the employer must at all times pay the workers not only the minimum basic wage but the full purchasing power of the-wage scale as of the date the contract was sighed. If the cost of living goes up, and the value of the dollar goes down, the employer must pay a sufficient amount, of additional dollars to keep the real wage at the level of the date of agreement ...

Your Shrinking Dollar

This chart dearly shows that today’s prices are far higher than in 1939.
The new peak puts consumer costs 71.9% above ’39. And that means
the 1948 buck is now worth 58 cents in 1939 pennies. Federated Pictures

Higher Basic

This, does not mean that when the contract terminates, the union agrees to continue at the same real wage. It fights, as the miners have done, for higher real wages, for higher basic minimum wage scales. It does not bind itself to long-term agreements but to short-term ones that permit speedy reopening of the wage question whenever the union feels in position to secure higher basic rates. The two-year clause in the GM contract is a serious defect in this respect.

Actually, the experience of the workers in every capitalist country in the world, including the United States, demonstrates that wages always and everywhere tend to lag behind prices in a period of inflation. For example, from July 1945 to March 1948, average weekly money wages of all manufacturing workers in this country rose from $45.45 to $52.25. But the value of these wages in terms of the actual goods they could buy – the real wages – fell from $45.45 to $39.50, and this was in the period of the greatest and most bitter strike struggles this country has known.

The miners, who set the pace for these struggles, have raised their hourly wage rates from $1 in 1941 to $1.63 today. In the same period – the miners will be the first to testify to this – the actual cost of living in the mine towns has risen not less than 100%.

Basic and Bonus

What is needed, therefore, are not only increases in basic wages, but a wage program that ensures that these wages are not promptly dissipated by further price rises. By fortifying their basic wages with a cost-of-living escalator clause, with the necessary safeguards included, the workers can go on from the endless struggle to keep up with prices to the more fruitful fight for a higher standard of living and security.

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