The Carter administration launched its new inflation-fighting alliance with business and labor yesterday by issuing a stern warning against pressures for a wage "catch-up" with soring energy and housing prices.
The warning came in the face of union demands for "equity" in bearing the costs of inflation, and it underscored the difficulties the new joint Pay Advisory Committee confronts in groping for a consensus on wage restraints.
As the 18-member panel was sworn in and indicated it may do more than just fine-tune the existing guidelines program, top presidential economic advisers cautioned against bowing to excessive wage catch-up pressures.
Acknowledging that wages trailed far behind energy and housing costs in pushing up costs, Charles L. Schultze, chairman of the President's Council of Economic Advisers, said a policy of containment is needed to keep energy and housing cost increases from spilling over into the economy as a whole.
Even with such an effort, inflation, now running at 13 percent annually, is unlikely to fall back to its 1975 level of 6 percent to 6.5 percent, said Schultze. But without it, the country is in danger of sliding into "semipermanent, wide-spread double-digit inflation,", he said.
Alfred E. Kahn, head of the Council on Wage and Price Stability, said wage increases "markedly in excess of productivity" -- which actually declined about 1 percent over the past year -- can contribute to the "inflationary spiral . . . and frustrate our efforts to dampen it down."
Said Kahn: "I ask you only to consider whether it is possible for the American people as a whole to catch up with the increase in prices that are the consequence of our energy problem and the increased cost of current home purchases."
There was no immediate response from the labor delegation, although one member, United Steelworkers of America President Lloyd McBride, whose union faces industrywide contact bargaining early next year, said his foremost concern is "equality of sacrifice."
Although the committee's first session was largely procedural -- including a personal send-off from President Carter at the White House -- Chairman John T. Dunlop and others indicated the panel will explore more than just tinkering with guideline numbers.
"Let's begin at the beginning," said AFL-CIO Secretary-Treasurer Lane Kirkland, a chief architect of the White House-AFL-CIO "national accord" on economic policy that led to creation of the pay committee.
The committee is mandated to look at several specific guideline problems, but Dunlop said it also "may want to suggest a somewhat different approach" than the current program as a whole, which included a guideline of 7 percent a year for wage and benefit increases that unions found unpalatable and sometimes breached.
The committee's powers are only advisory, with final decisions left to the president. But political realities -- including labor's power to torpedo the whole effort by walking out as it did with the Nixon administration's pay board in the early 1970s -- indicate its recommendations will be given "very, very serious consideration," as Kahn put it yesterday.
The panel had been charged with coming up with guidline-revision recommendations by Oct. 31, but its start was delayed, partly by the administration's problems in rounding up business participants. Dunlop indicated yesterday the committee might make piecemeal recommendations, although Kirkland appeared to favor a top-to-bottom review before decisions are made. The committee's next meeting is Oct. 29.
In a review of the guidelines' first-year results, CWPS Director Robert Russell told the panel that contracts covering 1.3 million workers had been found in compliance, while contracts covering 200,000 had been cited for probable violation. Agreements covering another 1.5 million workers are under review, he said. Among 1,300 compliance forms filed by nonunion firms, 1,200 were found acceptable. Of 762 requests for exemptions, 448 were approved, he added.