The Carter administration, bowing to organized labor, intends to announce today a bigger-than-expected liberalization of its new wage guidelines designed to enable large unions-such as the Teamsters-to negotiate fatter new contracts in 1979.
In essence, it will allow big unions to ignore all or part of the cost of maintaining previously negotiated health and pension benefits when they calculate the 7 percent increase in total wage and fringe benefits.
The changes will come just a day before Teamsters and trucking industry representatives exchange initial bargaining proposals for the union's contract talks, which are expected to be the first-and possibly most crucial-test of President Carter's guideline effort to control inflation.
Barry P. Bosworth, director of the Council on Wage and Price Stability, expressed optimism yesterday that the Teamsters would stay within the guidelines, telling a briefing that "the chances of getting them to go along are quite good."
Some labor analysts familiar with the new guidelines said the changes would allow significantly larger increases than the council's original recommendations. One outsider described them as "big enough to drive a truck through."
Reaction from organized labor was mixed. Although the changes were not expected to satisfy the AFL-CIO, there were some indications that the liberalization might millify the Teamsters and other key unions. (ALF-CIO President George Meany has branded such changes "mere tinkering.")
In the case of the Teamsters' contract proposals, due out tomorrow, both the union and management negotiators have agreed to postpone any discussion about wages until after they have time to study the new guidelines. Teamsters President Frank Fitzsimmons said. "I can't agree to follow what I don't know."
Today the administration also plans to announce a tightening of its price guidelines to discourage companies-if they have suffered sharp increases in costs-from taking advantage of a loophole in the original price guideline that would have allowed them to reap extra profits.
Although the changes in the wage guidelines were not designed solely to assuage the Teamsters, the union had complained tha the 7 percent limit the White House originally set was not realistic. The Teamsters say new federal pension rules alone will require a 2 percent boost.
As described by administration sources, today's announcement is expected to say:
Unions will be allowed to exclude from the 7 percent limit the entire increase in the cost of maintaining previously negotiated pension benefits, including those stemming from requirements of the new federal pension law.
Increases in the cost of maintaining current health benefits must be counted as part of a new wage settlement until they reach a level 7 percent above their cost in the previous contract; cost increases above 7 percent are exempt from the guidelines.
The 7 percent wage guideline won't include the cost of providing federally mandated increases-higher Social Security taxes, the January boost in the minimum wage, and changes in pregnancy leave and the mandatory retirement age, among others.
Also expected are changes in guidelines affecting other, smaller business and occupational groups:
The administration will ask physicians, lawyers, dentists and architects to limit increases in "professional fees" to 6.5 percent next year. Physicians' fees, in particular, have been rising sharply for several years.
Guidelines will be altered to allow retailers to remain technically within the guidelines if they raise prices by more than the original standard would have allowed, provided they limit their markup on goods to the same as last year's.
Salesmen and others on commission will be allowed an increase in income of more than 7 percent if it stems from bigger sales volume, rather than a boost in their rates or fees.
The administration also will ask public utility commissions and other state regulators to consider the guidelines seriously in setting utility rates next year. The Interstate Commerce Commission already has promised to take the guidelines into account on its own decisions.
The change in the price standard would seek to discourage companies with sharp cost increases from using a loophole in the current guidelines to reap extra profits. The loophole stemmed from hasty drafting of the guideline in mid-October.
Under the current standard, firms may choose either to hold next year's price increases to half a percentage point below their average hike in 1975-76, or merely hold their profit margins level instead. Officials fcared that this latter option could allow runaway hikes in some cases.
The change to be unveiled today wuld partly close this loophole by adding a compled new formula designed to limit profit increases for frims that choose the so-called "profit margin" test.
Under the guideline, firms wuld have to calculate the ratio between their total pretax profits and their overall sales volume. The increase in this figure over 1975-76 levels would be limited to 6 per cent.
Several administration officials conceded yesterday that the pricing changes the White House is expected to announce today were complicated and likely to require further interpretation. One knowledgeable official conceded that "these are so complex, I can't understand them myself."
However, planners said they consider the changes essential to the success of the guidelines in initial weeks. The revisions were based on compaints by both business and labor during a one-month comment period.
Meanwhile Alfred E. Kahn, President Carter's anti-inflation czar, continued his battle with state legislators wover what he terms excessive pay increases they have given themselves.
Kahn telephoned Illinois Gov. James R. Thompson to say the administration expects the pay hikes to be brought into line with the guidelines, despite Thompson's statements earlier that his legislature would not retract them. Other states and cities also are involved.