President Carter's pay advisory committee voted yesterday to recommend standards that could result in wage settlements within the guidelines as high as 9.5 percent, and even higher under some circumstances.
The committee, made up of labor, business and public representatives, had earlier agreed on a permissible range for pay settlements of 7.5 to 9.5 percent. Along with that range yesterday they adopted criteria that would allow pay adjustments above and below the range.
Committee members yesterday predicted that wage settlements "in the normal circumstances should be expected to average about the midpoint of the range", or 8.5 percent, compared to forecasts that pay increases in 1980, without restraints, would average 9.5 percent.
Where a pay settlement lands within that range depends on the normal factors that influence most settlements, including ability to pay, productivity, labor availability and other factors, the 18-member panel said. There appeared to be little in the standards to prevent employee representatives from aiming at the high end of the range.
Allowing for settlements as high as 9.5 percent "represents no restraint at all," said Brookings economist Arthur Okun.
But setting the standards in a way designed to result in an average increase of 8.5 percent is a policy that conforms to the reality that "in 1980 the country is in a period of austerity," the panel said. The guideline during the program's first year was 7 percent, and wages increased an average of slightly more than 8 percent because of exceptions.
Both the labor and business sides of the panel endorsed the criteria, but somewhat less than warmly.
"If it had been any worse we couldn't have taken it, and if it had been any better, we wouldn't have gotten it," said AFL-CIO President Lane Kirkland. And R. Heath Larry, former vice chairman of U.S. Steel, called the package "realistic."
If the guidelines are approved by the White House, they would apply to the second year of the administration's wage-price restraint program. The second year began Oct. 1.
The committee proposal allows pay adjustments beyond 9.5 percent under circumstances including productivity improvements, acute labor shortages, gross inequities or undue hardships. There may also be other circumstances that would justify settlements beyond the range, said committee chairman John T. Dunlop.
Dunlop said any settlement, even those within the range, might be subject to review, but indicated more resources would be devoted to reviewing settlements "on the high side." A subcommittee is developing guidelines for enforcement.
Dunlop said that the standards, unanimously adopted, allow for a greater degree of volunteerism under the voluntary restraint program -- something both labor and business had sought. "The wage and price side is only one side -- and in my judgment quite a small side -- of inflation," said Dunlop.
In another action yesterday the Council on Wage and Price Stability announced that the nation's six major tire manufacturers have all agreed to price restraints to avoid a citation for violating the voluntary anti-inflation program. Specifically the six tire makers agreed to not raise prices to cover increased labor costs created by an agreement with the United Rubber Workers Union that exceeded the voluntary pay standard.
Firestone, Goodrich, and Goodyear agreed earlier this year to restrain prices. Yesterday the Council said that Uniroyal Inc., General Tire and Rubber Company and Armstrong Rubber have also agreed to limit price increases.