THE CARTER ADMINISTRATION'S plan for steel imports has one indisputable virtue: It is, at least, preferable to any of the other solutions under discussion. It is especially preferable to import quotas, which a lot of people in Congress loudly demand. As protectionist devices go, the administration's formula for reference prices is the least bad of all possibilities.

The possibilities do not, unfortunately, include doing nothing at all about steel imports. The steel industry, you can argue, has brought much of its current trouble down on itself. But it's impossible not to feel deep concern for the people and the communities now being hit by layoffs and shutdowns. There is a limit to the rate at which people can change their lives, and whole regions their livelihoods. The disruption now threatens to go well beyond the normal effects of business competition. The struggle for world steel markets is becoming increasingly desperate.

The reference, or trigger, price system aims at the right target - not at imports in general, but at imports sold below the cost of production. The major offenders currently are not the Japanese producers but the Europeans, who have enormously expanded their shipments to the United States over the past year. With slow economic growth throughout the world, the demand for steel is slack. But in most countries, notably in Western Europe, the mills are under great pressure from their governments to keep producing, even at loss, to avoid more unemployment.

The American steel companies have contributed to their own vulnerability to foreign competition. Their present state seems, at first glance, inexplicable. Steel prices have been going up much faster than the inflation rate, yet steel proifts have sunk dangerously low. Why should costs rise so much faster for the stee-makers than for other American industries? The President's Council on Wage and Price Stability has pointed to one answer - the consistent pattern of extraordinary rapid wage increases in steel over the past decade. The average wage in American industry has just about doubled since 1967, but steel wages went up 142 per cent - faster than in any other major industry.

If the administration were now to give the domestic steel industry total protection from more imports, through quotas, it would be an invitation to intolerable inflation. Wage boosts and price boosts would chase each other up the spiral with no restraint from foreign competition. Reference pricing is an intricate strategy to keep foreign prices from going unacceptably low, without letting American prices go unacceptably high.

The reference price system establishes the cost of producing steel by the most efficent foreign producer - that is, Japan - and adds the cost of shipping it here. Any steel coming into the country at less than that price would automatically be subjected to investigation for dumping, which is illegal. The cost of producing steel in Europe is roughly the same as in the United States; in Japan it is less, but, with the recent rise of the yen, the difference is hardly enough to cover the cost of transporting it to California. Under present costs and exchange rates, it will be difficult for any of the foreign mills to expand sales here. But if the American producers let their costs get out of hand again and keep making wage settlements far above the national pattern, they will again find themselves undercut on prices.

Any final judgment on this plan will have to wait until the administration publishes the actual reference prices, perhaps around the end of the month. If they are too high, they will merely constitute a license to the American mills to raise prices without fear of their overseas competitors. If the reference prices are too low, the series of mill closings will accelerate. Under the guise of a statistical computation, the Carter administration is now trying to find a balance between economic efficiency and social stability.