The Carter administration may relax the 7 percent wage standard in its new anti-inflation plan to avoid a confrontation with organized labor that could destroy the program, administration officials said yesterday.
But these officials cautioned that no decisions have been made and insisted that any changes would affect only the calculation of the increased costs of maintaining existing fringe benefits. The 7 percent standard covers wages and fringge benefits.
Consideration of the change in the pay standard coincided with a warning yesterday from Alfred Kahn, the president's chief inflation fighter, that if the program fails and inflation worsens, the nation will face a "deep, deep depression."
Any liberalization in the rules for maintaining fringe benefits would be a gesture to organized labor in an effort to eliminate some of the objections union leaders, such as Teamsters President Frank Fitzsimmons, have voiced.
The labor leaders have said that salary increases will be sharply limited if workers are to maintain fringe benefits at existing levels.
Nevertheless, a key labor official said yesterday, the changes the administration appears to be contemplating in the wage standard do not go far enough to substantially altar labor's opposite to President Carter's program.
In the standards the Council on Wage and Price Stability published for public comment two weeks ago, the agency said that all increased costs paid by an employer would count against the 7 percent standard.
That includes wage and salary increases, increases in fringe benefits and the higher costs of maintaining benefits.
That includes wage and salary increases, increases in fringe benefits and the higher costs of maintaining existing benefits.
Key labor leaders such as George Meany of the AFL-CIO and Fitzsimmons argue that the White House wage standard is more rigid than those contained in earlier mandatory wage and price control programs.
Council on Wage and Price Stability officials said the "most common concern" of both business and labor, according to comments on the proposed standards, was how to calculate the costs of fringe benefits such as health insurance and pensions.
Labor wants the government to exempt from the program any higher costs required to simply maintain benefits at existing levels, such as higher insurance premiums for the same health care or the extra costs required by the government for financing pension funds.
Administration officials say there are intermediate steps that could be taken besides counting every increase in costs or exempting all existing fringe benefits. Fringe benefits now account for between 25 and 30 percent of total employe compensation.
One official said the administration could approach fringe-benefit costs in much the same manner it treats cost-of-living clauses in labor contracts.
The guidelines assume the cost of living will rise 6 percent next year. Therefore if a contract contains a clause protecting workers against half the rise in the cost of living, the program stipulates that it count as 3 percent of wage costs in determining if a contract is in compliance with the 7 percent standard.
If the cost of living rises by more than 6 percent, the worker is not penalized.
Similarly, the council could figure out some fixed cost for pension or health insurance benefit increases that would be smaller than projected increases. Many unions, such as the Teamsters, claim they are being hamstrung because new federal law requires companies to make large increases in their contributions to employe pension funds to ensure that plans have enough funds to cover their liabilities. But they argue the worker does not receive extra benefits.
The Teamsters have said they will support the President's program only if the White House eases the treatment of fringe benefits.
One top official, who confirmed that the administration is seriously studying the fringe benefit problem, said "that doesn't mean we're going to modify the proposed standards. We still think they're the fairest way to treat them."
But another official said some changes to allay union worries about pensions and health coverage are likely.
Meanwhile Kahn, in a speech to a conference of retailers, said a mild recession would not be enough to end inflation of the voluntary program fails. That is why he said he foresees a deep recession if inflation accelerates.
Earlier, in a breakfast meeting with reporters, Kahn said he would consider using various government controls over oil allotments to convice oil companies to stand fast in the first major labor negotiation next year.
But the refinery workers, whose contract expires in January, are not considered contract pattern setters. The administration is clearly directing its efforts at the 528,000 Teamsters whose contract with interstate truckling concerns expires in March.
Yesterday at breakfast, Kahn suggested that the Teamsters might consider signing a one-year pact if they are afraid they would risk falling behind inflation by signing a normal three-year contract.
The Teamsters' Fitzsimmons had been cool to that idea.
In another development, the chief economist for the nation's second largest bank, Citibank, said that the President's voluntary program is futile. Leif Olsen predicted that inflation would be 8.4 percent next year, and said recent White House moves to raise interest rates "clearly carry the risk of recession."
Brookings Institution economist George Perry, who testified with Olsen before the Senate Banking Committee, predicted a mild recession next year, with unemployment rising from the current 5.8 percent to 7 percent.
The administration projects an unemployment rate of around 6 percent next year.
But Perry warned that if spending and monetary policies get more stringent, "the recession could become much worse."