THE CARTER ADMINISTRATION is apparently going to go ahead with its attempts to punish several companies for having violated the wage guidelines. Now that the Supreme Court has refused to hear the labor unions' challenge to the administration, the White House knows that it has at least the legal authority to windraw contracts from offending companies. But the wisdom of this course, as a matter of policy, is quite another matter. The administration is likely to demonstrate little more than the impossibility of sustaining a 7 percent wage guideline in a time of 14 percent inflation.
The immediate issues are the contracts that United Airlines signed with its mechanics, after a strike of nearly two months, and the contracts negotiated between the rubber workers and several large companies. The administration believes that it cannot afford to let oversized, highly publicized contracts of this kind pass without challenge.
But just how oversized are these contracts? In the case of the rubber industry, the increases work out to about 8 percent a year for three years. As one labor economist, Daniel J. B. Mitchell of the Brookings Institution, pointed out in congressional testimony last week, over half of the contracts signed since the begining of the year appear to be over the guideline. The statistics on hourly earnings of workers, union and non-union together, include a rise of more than 8 percent in the first three months of this year, and that number does not include fringe benefits.
There is still need for a guideline. Wages are not causing inflation in this country, but they are the means of transmitting it from one year to the next. The administration is trying to hold pay increases below the inflation rate, to get the trend pointed downward again. The only other way to do it is to load the full cost of a slowdown onto the most vulnerable people in the work force, through high unemployment.
Guidelining is clearly right in principle. But no voluntary system will work when the inflation rate is double the wage guideline. Neither will it work in the administration generates by punishing some, but only a prominent few, of the violators. To serve usefully in the rough weather ahead, a guideline system will have to be more flexible than the present one - and less dependent on threats than on cooperation.