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Albert Gates

CIO Report Shows Validity
of Labor’s Wage Demand

(23 December 1946)

From Labor Action, Vol. 10 No. 51, 23 December 1946, p. 3.
Transcribed & marked up by Einde O’Callaghan for ETOL.

LAST week the CIO made public its wage demands for the coming year on the basis of a special report prepared for it by Robert R. Nathan, former Assistant Director of Reconversion, who now heads a group of private consulting economists. The report strengthened the position of the labor movement that real wages had declined compared to the mounting cost of living at a time when profits have reached a record high in American economy. Nathan’s report contained three important contents on which the CIO bases its present demands:

  1. “The purchasing power of by far the greater number of American families has been falling recently month by month. Meanwhile ... corporate profits after taxes, have risen about 50 per cent.”
  2. “On the average, in all manufacturing, an increase of about 21 per cent in weekly earnings – without any increase in prices – would have been required in October 1946 to bring real weekly earnings back to the January 1945 level. By the end of 1946, with the present trend of prices, an increase of about 23 per cent will be required.”
  3. “On and after taxes, basic ... corporate profits are approaching $15,000,000,000, fully one and a half times the level of the best war year.”

These astounding facts are not exactly new. The report of Economic Outlook which we reviewed in Labor Action last week, fully documented the facts about profits, wages, prices and the decline in the living standards of the majority of the people. The CIO, however, in order to forestall any charge that its report was “slanted,” hired the former government economists to prepare an impartial report on the economic situation in the country. The figures of the Nathan report are not at all refuted by industry, the daily press, or the leading pro-industry columnists. Instead, they slyly evade the real issues and quite hysterically seek to prove why the wage demands of the CIO cannot be granted.

Profits Hit Record High

Unable to deny that profits are at or near a $15,000,000,000 level, the profiteers and their spokesmen have marshaled a half-dozen reasons why the present wage demands should not be granted. The fundamental concept which guides the thinking of industry, the press and the reactionary “experts,” is that large and secure profit is basic to the health of the economy; the interests of the workers and the overwhelming majority of the people should and must be subordinated to the height of profit; labor should be thankful that such large profits do go to industry, otherwise the big plants would shut down and large-scale unemployment would follow. Thus, the interests of labor and the mass of people are tied to the well-being of the capitalist class.

In concretizing their opposition to the Nathan report and the CIO several lines of argument are taken which reveal the basic strategy of big business in the coming struggle over wages:

  1. While profits are higher than they have ever been, they are not uniform for all industry. Some industries have higher profits than others, some have none at all.
  2. If the present wage demands of the CIO are granted, these will be followed by price increases which will wipe out the increases, further heighten price levels and act as a barrier to increased production.
  3. Marginal producers, low profit industries, small plants, unable to grant “justifiable” wage increases, will be driven out of business and start a spiral of unemployment.
  4. The way to insure prosperity is to keep wage levels where they are, permit prices to fall by competition and increased production, and allow the natural process of readjustment to stabilize the present unbalance in the economy.

The “Plight” of Big Business

The fallacies in these arguments are immediately clear to the naked eye. No one has asserted that present high profits are uniform for all industries. The demands for higher wages are not based on such an assertion. Obviously, some enterprises have higher profit than others. By and large, however, the mass of profits are concentrated in the large monopolistic enterprises (which are the real enemies of small and marginal businesses), employing tens of thousands of workers, the majority of whom are on the payrolls of precisely those companies upon whom the CIO is making its demands. And even if some of these do not show as high profit as others, it should be borne in mind that it is not a question of the profit level of last month, this month, or the next, but of the conditions of monopolistic enterprise over a period of several years when profits have been high and constant, and when enormous reserves were piled up – all at the expense of labor.

The threat of industry that if it grants new wage increases, it will immediately increase prices correspondingly and thus shift the cost of wage increases on the workers and the mass of people, would mean the continuation of a basic capitalist policy. Up to now, big business has been acting in collusion with the government to rob the people. Last year when the 18½ cent raises were granted thousands of workers, these increases were swallowed by general price increases over arid above the highest wage increase granted. The “little-publicized” report of the OPA, reported by Philip Murray, pointed out that:

“For manufacturing as a whole price increases from January 1945 to September 30, 1946, averaged more than ten times the amount necessary to offset wage increases with no squeeze in profits.”

No squeeze indeed! On the contrary, profits were even larger. This fact alone shows why the general strategy of the UAW in the GM strike was absolutely correct. The struggle for wages today cannot be made without simultaneously including the demand that prices not be increased. The difficulty of the GM strike was that the rest of the labor movement did not get behind the UAW. Both Murray and Lewis, in steel and coal respectively, demanded their wage increases without the slightest concern about the price increases demanded by the steel and coal barons. Only those with short memories have forgotten how the steel and coal industries were given excessive price increases to overcome the pitiful wage increases they agreed to. If the CIO does not press the demand “wage increases with no increase in prices,” they will not have achieved their goal in the impending struggle. This demand has to become the watchword of labor in this period.

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