With organized labor at its side, the Carter administration announced yesterday a revised wage-price program to begin Sunday, with a slightly relaxed price guideline and a new tripartite Pay Advisory Committee to help set and enforce wage standards.
The plan was accompanied by a new "national accord" between the White House and organized labor that both sides said would guarantee labor -- often at odds with this administration in the past -- a stronger voice in setting a broad range of economic and energy policies.
In another concession to labor, the White House said the pay committee would be headed by former labor secretary John T. Dunlop, an experienced negotiator who served as director of the Cost of Living Council in the Nixon administration.
The impact of yesterday's announcement was primarily to strengthen the wage-price program and the administration politically. It comes at a time when the economic news has been mostly bad, and when Sen. Edward M. Kennedy (D-Mass.) has begun seriously talking about challenging the president for next year's presidential nomination.
There was little actual change in the voluntary wage and price guidelines, which have been outpaced by a 13.6 percent inflation rate so far this year. The Council on Wage and Price stability will continue to administer the program.
President Carter put in a brief appearance along with AFL-CIO secretary-treasurer Lane Kirkland to announce the new arrangement. Kirkland likened it to the "social contract" that labor and government some times have reached in the United Kingdom.
Kirkland told reporters it would help ensure that the austerity that Carter has asserted the nation must accept is shared evenly by all segments of the population.
However, the AFL-CIO leader warned that labor's participation in the guidelines program would last only as long as the administration kept its part of the broader accord strengthening labor's political leverage.
The revised guidelines program calls for two new advisory bodies to help set policy on wages and prices:
A 15-member Pay Advisory Committee, made up of five members each from labor, business and the administration, with responsibility for setting specific wage standards and for deciding whether individual pay settlements violate the guidelines.
A less-powerful five-member Price Advisory Committee, made up entirely of members from the public. This group will help set pricing rules, but will not sit in judgment on individual cases.
The White House announced it is relaxing its wage and price guidelines slightly in recognition of this year's higher-than-expected inflation rate, but will tighten previous "loopholes" that gave some firms and unions an advantage.
PRICE: Under the previous price standard, firms were supposed to hold 1979 price increases to half a percentage point below their average companywide price increases for 1975-76. The maximum price rise without special exception was 9.5 percent.
The new standard says that average increases for 1979 and 1980 combined should be equal to the average for 1975-76 -- meaning if a firm stayed below that 1975-76 target last year it may exceed the target in 1980. It also reduces the maximum price hike to 8.5 percent.
PAY: Technically, the administration is retaining its current 7 percent pay standard until the new Pay Advisory Committee recommends new guidelines, which probably will come by the end of October.
But the Council on Wage and Price Stability already has said it will allow 8 percent pay raises for workers not under cost-of-living clauses.
Partly to allow the pay committee more flexibility, officials set no limits yesterday on how high a pay standard the panel could recommend.
White House inflation adviser Alfred E. Kahn said the impact of the changes in the price standard would be to set as a goal as average price rise of 6.75 percent across the economy in 1979-80, compared to a 6.25 percent goal before.
Although inflation now is running at an overall 13.6 percent annual rate, price increases in the sectors covered by the guideline have been substantially lower. Much of this year's surge has come from food and energy, which are exempt.
Treasury Secretary G. William Miller, who announced the new program in a briefing room filled with top administration officials, said the accord also had the endorsement of the United Auto Workers and the Teamsters.
However, administration officials conceded they had not consulted widely with business leaders, whose support for the new pay and price committees still is in doubt.