THE TRUCK OPERATORS' lockout brings a pause to the negotiations over the Teamsters' contract. That gives the embattled Carter administration a brief opportunity to think about an unthinkable question: Are its wage guidelines still serving any useful purpose at all?
The union and the trucking companies are said to be very close to an agreement, and that agreement is in the neighborhood of a 30 percent increase in earnings over three years. That's quite a bit more than President Carter's guideline of 7 percent a year. In an effort to rescue the principle of the guidelines, the White House has been going through a rather undignified process of elaborating definitions and bending rules to exclude various parts of the settlement from the guideline computation. It is difficult to believe that this excercise will evoke anything more than general cynicism regarding the usefulness of voluntary restraints in dealing with a large and powerful union like the Teamsters.
But it would be a great mistake to attribute the erosion of the guideline wholly to the character of this particular union. When Mr. Carter first set the 7 percent limit last fall, the administration expected the inflation rate to be declining by this time. Instead, it is rising. To protect union members from unexpected surges of inflation, the administration made an ingenious proposal for wage insurance. But Congress mistrusts the idea and the wage insurance bill appears to be dead. Meanwhile business profits are up significantly and, while profits do not affect the negotiations directly, they certainly influence the atmosphere in which the negotiations take place. Above all else, the administration did not expect the economy to keep running close to full capacity all winter. When production strains its capacity, it generates a kind of inflationary pressure that guidelines cannot be expected to withstand.
Wage guidelines are most effective in those situations-to take two examples, Britain and Canada in 1975-where runaway wage settlements are clearly leading the inflation. But in this country, currently, it is not wages that are generating the inflation. Wages are only following a trend that is being set by other forces like the rising prices of food and oil. Restraint in wage increases is highly desirable. But it will not be rewarded with large and prompt improvements in the inflation rate.
It is a principle of economic politics that a government ought never promulgate a guideline that is in danger of being broken at its first test. Mr. Carter's 7 percent rule looked like a pretty good bet last fall, but it hasn't worked out. The administration has tried desperately to accommodate the rules to the Teamsters' contract that seems to be emerging. It would be wiser, we think, to disassociate itself from the outcome altogether, to denounce any settlement approaching 10 percent a year, and turn its attention to the deregulation of the trucking industry. That might mean the end of the wage guideline. But no guideline at all is better than a guideline known mainly for its exceptions.