The director of the President's Council on Wage and Price Stability said yesterday that AFL-CIO President George Meany may be correct in refusing to pledge labor's support for smaller wage increases to combat inflation.
The AFL-CIO Executive Council Tuesday had voted to reject President Carter's request for a deceleration of wage increases and Bosworth said in an interview that the administration's anti-inflation program might have to be revised as it applies to wages.
many unions, he said, have been locked into two or three-year contracts, adding that it would not be "equitable" to ask those unions that had received moderate wage increases over the past few years to pledge further reductions.
But he said he believes the program makes sense on price increases because companies have had the flexibility over the past two years to raise prices to meet rising production costs.
Carter's program, announced last month, asked business and labor to reduce wage and price demands enough to knock half a percentage point off last year's inflation rate of nearly 7 percent.
Bosworth, a major architect of the program, said it might have to be altered to recognize differences in wage increases received by various unions.
One possibility, he said, would be to change the wage guidelines to ask unions that had received sizable increases to scale down their demands by more than half a percentage point. Unions whose workers had not kept pace with inflation might be asked simply to hold the line.
Two months ago, after a Bosworth memorandum to the President outlining the need to establish an anti-inflation program was leaked to the press, the White House was jarred into action on the program.
The program also set up plans to establish special inter-agency task forces to work on problem areas such as transportation, health care and housing.
The administration has met with leaders of several industries such as steel, aluminum and autos and received pledges of support from corporate executives. General Motors Corp. Chairman Thomas A. Murphy has said that barring a disaster, GM will raise prices less this year than last.
Bosworth said that the sharp explosion in food prices during the first half of the year makes it harder to induce workers and companies to cooperate with the President's program to slowly bring down the rate of inflation.
He noted that although food price increases should stop in a few months, cost-of-living escalators built into many union contracts will boost wages during the last half of the year, putting pressure on industrial prices.
"We'd counted on greater stability in food prices than we got" this year, Bosworth said. Against a 10 percent increase in food prices, anything "we gain in other industries looks trivial." he complained, adding:
Now we're fighting a real air of public skepticism and doubt. They're not willing to take that first step. They want lower prices. But how can we get lower prices until somebody takes that first step."
He said food price increases that trigger cost-of-living rises as well as the increase in the minimum wage that took effect this year will begin to be felt in higher industrial prices in the last six months of the year. He noted that labor costs are about 70 percent of total industrial prices and that without some wage deceleration it will be difficult to get a slowdown in price increases.
Bosworth said that it is "clear" that the way the administration defined the deceleration program "puts labor into a box." He noted that it is difficult for the AFL-CIO to make a committment to reduce all wage demands at the national level.
Bosworth said, however, that Meany did not reject the notion that inflation is a major evil, which Bosworth said he found heartening. "A couple of years ago what labor leaders would have said is 'No, what you've got to focus on is unemployment.'"