The Carter administration's Pay Advisory Committee recommended yesterday that the present voluntary pay standards be allowed to lapse because the program "has lost its capacity to command effective support."
The administration has made no decision whether it will, in fact, abandon the standard before it goes out of office Jan. 20, according to Charles L. Schultze, chairman of the Council of Economic Advisers who has just been named head of the Council on Wage and Price Stability as well. "Our task is to encourage moderate wage and price behavior during an orderly transition," he told the labor, management and public representatives on the committee.
In September, the pay standard, which calls for wage increases to be kept within a range of 6 1/2 percent to 9 1/2 percent, was extended until the end of the year.
After what was likely the advisory committee's final meeting, Schultze told reporters, "We will urge people to continue to observe the [price and pay] standards until the new administration decides what it wants to do."
Neither President-elect Ronald Reagan nor his economic advisers wish to see a continuation of the standards, which were introduced in October 1978.
The Pay Advisory Committee recommendation, which was adopted unanimously yesterday, said the program should be abandoned for several reasons. "Inflation has been too high and enduring and the regulations too complex and artificial," it declared. "The guidelines do not deal with many of the factors which have been responsible for the current inflation, including food, housing, interest rates, energy, medical and other costs."
The statement continued, "Moreover, the program has done little to focus the imagination and creativity of business and labor on genuine problems of individual sectors." Specific inadequacies of the program listed included, among other items, "the inadequacies of any single numerical guideline figure; inequity between cost-of-living adjustments (COLA) and non-COLA treatment; [and] . . . the consequences of compulsion in a 'voluntary' program."