President Carter's chief inflation fighter conceded yesterday that the administration's anti-inflation effort is likely to place an unfair burden on federal employes.
Nothing that the White House Tentatively plans to limit federal wage increases to 5.5 percent this year, while wages and prices in the private sector can go up 7 percent or more under administration guildelines, Alfred E. Kahn, chairman of the Council on Wage and Price Stability, said, "I don't think as a long-run proposition it is fair to set stricter limits for federal workers."
Meanwhile Kahn's office announced that Sears Roebuck and Co., the nation's largest retailer, had agreed to roll back recent price increases in its stores and catalogue to stay within the voluntary price guidelines.
The council also announced it will start investigations of two paper companies that it believes may be violating the voluntary guidelines. It is the first formal enforcement action since the price guidelines were established last year.
On pay for federal employes, Kahn said no anti-inflation program will work "if the burden is not distributed evenly." He said he gets frequently suggestions from the public to fight inflation by holding down federal pay. "The simple answer is, it's unfair."
Federal employes get a general pay boost each October in an amount determined by the president. Last year Carter set the increase at 5.5 percent - below the rate of inflation-as a model to encourage moderation in private wage settlements.
The administration has said it will hold the general pay raise to 5.5 percent again this year, and yesterday after Kahn's remarks, the White House Press office said Carter has not changed his position on the issue.
The congressional budget committees have planned for a 5.5 percent increase in their initial blueprints for the fiscal year 1980 budget.
Kahn, an outspoken economics professor who has developed a reputation for not ducking tough question, was asked at a luncheon with reporters about the fairness of contrasting public-private wage limits. He grimaced, stalled for a-few seconds, and then answered.
"The consideration is a genuine one," he said. He said he recognized the argument that federal workers should set an example for the private sector, but said he was concerned about "unequal burdens," because private wage settlements are exceeding the federal model.
He noted that, even if the general pay raise is held to 5.5 percent, many federal workers will actually receive higher increases because of promotions and grade advancements. Those additional raises might bring the total federal increase over 7 percent , he said.
But he added, "As compared with workers in private industry, who may be benefiting from agreements giving 7 percent, and who get [merit] raises too, I think there may be some unfairness still."
On the price front, Kahn's office said yesterday that in addition to Sears, one smaller firm, De Anza Corp., a California trailer park operation, had agreed to cut prices to stay within the voluntary 7 percent guide lines. The two paper companies charged with "possible noncompliance" of the price guidelines are Crown-Zellerbach, a San Francisco based paper and wood products firm, and Hammermill Paper Co. of Erie., Pa.
Kahn said his office has been reviewing the books of several paper producers because of recent sharp price increases in the industry. He said one big paper firm, Scott, had rolled back prices in response to the inquiries.
Crown-Zellerbach and Hammermill will have 10 days to produce new data showing that their price increases did not exceed the guidelines. If they fail to satisfy Kahn's office, the two firms stand to be declared ineligible for federal contracts, although the legality of that sanction or any other, for failing to meet voluntary standards is in question.
No details of the Sears rollback, which was agreed to after Carter personally interceded with corporate officials, were made public.