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The Defense of Labor’s Living Standards

(28 February 1949)

From The Militant, Vol. 13 No. 9, 28 February 1949, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

An outstanding feature of the capitalist system today is its instability. It staggers drunkenly between boom and bust, inflation and depression. This imposes on the labor movement the need for utmost flexibility and alertness in defending the workers’ living standards. For each spasmodic lurch of the profit system threatens the workers in a special and specific way.

Because of its Marxist understanding of this extreme instability of capitalism in its decline and decay, the Socialist Workers Party since 1938 has put forward a program that anticipates the shifts and fluctuations of the capitalist economy. This program is designed to arm the American labor movement in advance to defend living standards from every capitalist attack, whether through inflation or depression.

Two Key Planks

Two key planks of this program are the sliding scale of wages and the sliding scale of hours. In the “boom” period of skyrocketing prices, the SWP emphasizes the sliding scale of wages to provide automatic wage increases, above the basic union wage scale, for all rises in the cost of living. When the signs of “bust” appear and lay-offs begin, the SWP advances the sliding scale of hours to provide automatic reductions in the work week with no cuts in take-home pay so that available work is divided equally among the workers without loss of weekly income. This is embodied today in the demand for the 30-hour week at 40-hours’ pay.

Against this realistic and realizable program, the pro-capitalist union leaders seek to answer the assaults on living standards with programs based on the myth of capitalist stability, or its possibility. They are constantly caught off-guard by the extreme and rapid gyrations of the capitalist economy. When their own solutions prove obviously inadequate, they sometimes are forced by the pressure of the union ranks to borrow from the arsenal of the class-conscious militants and Marxists. But almost invariably they grasp these Weapons too late or misuse them. Like gun-shy men, they fear these Unaccustomed weapons and don’t know how or when to use them.

Striking Example

We see a striking example of this in the case of Walter Reuther, CIO United Auto Workers President, and the sliding scale of wages contract he signed with General Motors last May. This contract is now being widely discussed in labor circles because under its terms the GM workers in March are expected to get a two or three-cent pay reduction based on a decline in the Bureau of Labor Statistics’ cost-of-living index.

Throughout the war and with renewed urgency at the end of the war, the SWP and increasing numbers of UAW militants urged the adoption of the sliding scale of wages program. Reuther opposed this program bitterly right up to the moment he handed the GM workers his own version of a sliding scale program.

During the previous years of inflation he and the rest of the CIO leaders, as well as-the Stalinists who supplied the “theoretical” arguments against the sliding wage scale, all stressed the false program of the roll-back of prices by the government.

This utopian idea led only to frozen wages on the one hand and ever-rising prices on the other. When the war ended, the union leaders could not hold back the upsurge of the workers, who tossed the price-rollback myth into the ashcan and hit the picket lines for wage gains. Then was the most favorable time, at the very start of the post-war wage fight, that the UAW and the other unions should have fought for the sliding scale of wages.

But the only concern of the union leaders was to get the strikes over with as fast as possible by settling for skimpy flat wage increases. Had they fought for and won an adequate sliding wage scale, the present hourly wage scales would be far higher and higher wages would have prevailed automatically with each rise in the prices over the past three years. Even on the. basis of figures furnished by Reuther’s own research directors, this failure to fight for the sliding wage scale at the most favorable time has cost each and every auto worker alone over $1,000.

Reuther’s faith in the roll-back program – that is, his faith in the capitalist government to stabilize prices quickly at a lower level – meant that each year the auto workers found their real wages, in spite of the bitterly-won wage increase of the previous year, lagging more and more behind prices.

The 1948 GM Contract

It was not until May 1948, late in the inflationary cycle and with signs already pointing to a break in the economy, that General Motors proposed and Reuther accepted a contract containing a sliding wage scale clause, the first of its kind adopted by any major union. Immediately thereafter, the Stalinist-controlled CIO United Elecrical Workers signed a similar contract for its members in the GM Electrical Division.

But, as the May 31, 1948, Militant immediately pointed out, Reuther had picked up the sliding scale program merely to distort and misuse it in reaching an easy deal with General Motors. We wrote, he “accepted the sliding scale program not as a fortification of, but as a substitute for, the needed increase in real basic wages, welfare benefits and grievance improvements.”

In return for the sliding wage scale, Reuther sacrificed the auto workers’ demand for a 25-cent hourly wage increase and took instead a mere six cents raise in the basic scale, plus five cents more for cost-of-living increases during the previous year. Thus, the GM basic wage scale was fixed at least 7-cents below that of Ford and Chrysler workers, which in turn was about 20 cents short of the real wage right after the war. The basic weakness of the GM contract was that it started from a base wage far below what the real wage should have been.

In addition, it provided for the possibility of a cut-back in wages of up to five cents an hour if prices declined instead of rising. This meant that the GM workers took the risk of losing the additional five-cent “cost-of-living” increase that had brought their net increase to 11 cents. This risk was further increased because the upward or downward revisions were to be based on the index of the U.S. Bureau of Labor Statistics, which notoriously underestimates rises in living, costs, instead of on an index compiled by a union-farmer-consumer agency. Moreover, the hands of the GM workers were tied by a two-year contract, instead of the customary one-year clause, leaving them helpless to revise the wage clause in the event of a sharp change in the economic trend before expiration of the contract.

In spite of its obvious defects, the GM sliding scale contract did partially demonstrate the advantages of the principle of the sliding scale of wages if properly applied. Within three months of the contract’s adoption and for the past six months, the GM workers have enjoyed an additional raise of three cents an hour, bringing their total wage increase to 14 cents, one cent higher than the Ford and Chrysler increase.

It is at this point, however, that the weaknesses of Reuther’s version of the sliding wage scale are becoming apparent. The instability of the capitalist system is beginning to make itself felt again by a lurch in the direction of deflation and economic decline. Prices have begun to sag a bit and mass unemployment is starting to loom as a prospect for the coming period. The GM workers face a wage cut, due – we repeat – not to the sliding scale principle but to Reuther’s false application of it.

Stalinist Demagogy

This has offered the enemies of the principle of the sliding scale of wages, particularly the Stalinists, an opportunity to renew their assault upon the sliding scale program as such. George Morris, the Daily Worker’s anti-Trotskyist hatchet-man, repeatedly attacks the obvious defects of the Reuther sliding scale program in the light of the pending GM wage cut. Morris falsely attributes these defects to the correct principle of the sliding scale of wages.

Morris, of course, doesn’t remind the workers of the bankruptcy of the roll-back program that the Stalinists, along with Reuther and the CIO bureaucracy generally, counterposed for six years to the sliding wage scale program of the genuine CIO militants. Above all, he skips over the Stalinist war-time “incentive wages” program – that is, the program of fixing wages according to production speed-up as opposed to wage increases based on the needs of the workers.

But the Stalinist arguments, with their typical falsifications and distortions, are suspect from the outset because they omit any reference to the Stalinists’ own use of the sliding scale of wages program. Why doesn’t Morris attack the Stalinist leaders of the UE who borrowed Reuther’s version of the sliding wage scale and incorporated it intact into their contract with the GM Electrical Division last June? Why doesn’t Morris attack the French and Italian Stalinist union leaders who, under pressure of the workers, have made the sliding wage scale a major demand of the recent strikes? The failure of Morris to condemn these Stalinist applications of the sliding scale principle shows that his attacks on the sliding scale program are nothing but hypocritical lies.

New Trend Appearing

We Trotskyists are not fetishists on slogans. Our program is rounded and takes into account different aspects. Each aspect of our program is designed to defend the workers from capitalist attack under specific conditions. Thus, the present period is giving indications of a shift in the American economy that necessitates a corresponding change in emphasis in the program to defend labor’s standard of living.

The ominous increase of unemployment and part-time employment is one significant sign of a possible depression, which now indicates the need for a program to combat lay-offs and wage cuts. That is the program of the sliding scale of hours.

The Next Steps

First of all, we urge the labor unions to mobilize immediately for a nationwide struggle to achieve the 30-hour week, six-hour day with no reduction in weekly wages. The unions must intensify their fight for an increase in mass purchasing power by a substantial fourth-round wage raise and at the same time demand in every contract a clause providing for an automatic reduction in hours with no loss of take-home pay whenever the employers claim they have insufficient work to keep everyone employed.

It is instructive to note that Walter Reuther, who opposed the sliding scale of wages when it was most timely, now fails to offer any program to safeguard the auto workers against layoffs. When questioned on Feb. 20 about a program on lay-offs, he is reported to have said that the 30-hour week at 40 hours pay is “idealistic and a dream at this time.”

That is the typical answer of a pro-capitalist union bureaucrat who fears every new prospect for labor struggle and who is hoping against hope that capitalism will stabilize itself in time and reduce the necessity for renewed class battle. The thousands of auto workers who have already been laid off, however, and the thousands more who see in these layoffs the image of their own future don’t think the fight for the shorter work-week “idealistic.” They think it far more “idealistic” to wait for capitalism to “stabilize” itself. From this point of view, the SWP program of the sliding scale of hours is realism personified.

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