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B.C. LUMBER WORKER

From Page 1

“Profits Hike Prices”

The “Worst Hoax”

In its well-organized and well-
financed propaganda, the em-
ploying interests, are insistently
dinning into our ears a theory
which in my opinion, is the worst
hoax every foisted upon the Can-
adian public.

They call it the wage-price
spiral. By placing the word
“wage” in front of the word
“price” they hope to create the
impression that high wages have
always preceded and caused high
prices.

This is utter nonsense. I
propose to show by reference
to official statistics this eve-
ning, that it is the high-price,
high-profit policies of big busi-
ness that haye been mainly re-
sponsible for our economic
troubles during the past year.
Big business has been unwill-
ing to acknowledge its guilt
and is for this reason spread-
ing its poisonous propaganda
attempting to conyince the
people that the unions have
caused the economic downturn
experienced last winter.

Employers’ Argument

The big business argument
goes something like this. Wage
increases, they claim have ex-
ceeded the rise in productivity
and have therefore led to ad-
vances in overall business costs.
These cost increases have been
reflected ‘in higher prices. Con-
sumers have not been able, so
they allege, to purchase goods
and services at the high prices
at which they have been offered
for sale, and this has resulted in
an over-supply.

Business interests have only
told a part-of the truth. It is
true that price raises have caus-
ed a lack of balance as between
supply and demand. This has
naturally resulted in contracted
economic activity and extensive
lay-offs, What is not true, and
can be proven to be untrue is that
union-negotiated wages have
started this downward spiral
experienced in recent months.

When we take a backward
glance at the unemployment
which existed last February, al-
most a million jobless in Cana-
da, and six million in the United

States, we realize the losses sus-
tained by the Canadian and Am-
erican economies. As a matter of
fact what was experienced in
the last quarter of 1957 and the
first quarter of 1958 was the
culmination of unsound policies
followed during the preceding
five years. In this period we
moved away from full production,
full employment policies. This
has been costly, much more cost-
ly than the remedies proposed
by organized labor.

$90 Billion Lost

Our leading economists tell us
that in this five year period on
this continent we suffered about
ten million man years of unem-
ployment in excess of the min-
imum unemployment.

This means that in both coun-
tries, following exactly similar
economie policies, as a people
we lost over $90 billion worth
of production that we might have
otherwise enjoyed. No one needs
to be a skilled economist to ap-

WAGE RATES HAVE RISEN SLOWLY
COMPARED WITH INTEREST RATE GAINS

Rate of Increase in Average Hourly Earnings of Production Workers
‘ond in Interest Rotes, 1952~Oct.1957, in Current Dollars

up
69%

uP
40%

up
38%

o

Rate of Increase in Profits and in Average

Wage Rates UP 6.0
Profits

Wage Rates
Profits

at ae

UP 7

AUTOMOBILES
AND PARTS:

up up up
25% 27% 31%
Reto Building
Monufocluring Trade Construction

Sort Term Corporate State and. 9.12Month
Business Bonds tocol Federal
loons Bonds Obigations

UP 3.1%

TOTAL WAGES HAVE RISEN SLOWER
THAN DIVIDENDS AND INTEREST

Average Annual Rates of Growth in Total Wages and Solaries, Dividends and
Personal Interest 1953-1957, in 1956 Dollars

UP 5.6%

UP 6.5%

Wages ond
Salaries

Dividends

‘ota: Deps. of Labor ond Treasury: ond Ooard of Govemors, Federal Reserve System.

Personal
Interest
Income

Conference On Economic Progress

DUNCAN BUSINESS GUIDE

LOUTET AGENCIES LTD.
INSURANCE AND REAL ESTATE

Duncan
Lake Cowichan

J. Lindsay Loutet
Gordon R. Loutet

131 Jubilee St.
S. Shore Road

™ HANEY BUSINESS GUIDE
“ESQUIRE” MEN’S WEAR

(Graham Mowatt)

Complete Stock of Work and Dress

Clothing

“THE STORE WITH THE POPULAR BRANDS”

HANEY

Phone 1600

PORT ALBERNI BUSINESS GUIDE

MacGREGOR’S MEN’S WEAR
For Everything A Man Wears

xx WORK, SPORT or DRESS +

WOODWARD STORES

(PORT ALBERNI) LTD.
“YOUR FAMILY SHOPPING CENTRE”

Closed Wednesdays All Day

BRITISH COLUMBIA

We Can Afford
To Sell Tho
BEST For LESS!

eS Hours: 9 - 5:30

preciate fully that we got into
this difficulty because the pur-
chasing power of the consumers
has not kept up with the increased
productive power of our mills, our
factories, and our farms, We
must remind ourselves here that
the great bulk of the consumers
are made up of the salary and
wage earners. Consumer buying
power could have kept up with
the improved ability of the ec-
onomy to produce only if wages
had risen faster and prices had
been kept down, This loss of pro-
ductive values set back the av-
erage family by $2,000.

The economists also tell us,
that in order to restore reas-
onably prosperous activity by
1960, we must raise wages and
salaries on this continent by a
sum of over $45 billion. They
say in other terms that we must
raise the average family income
about $2,065 above the 1957
level.

We should note that what has
actually happened in the last five
years, in order to determine who
is to blame. Until the last quar-
ter of 1957, the wholesale prices
of industrial goods rose 10%.

Adding fringe benefits to wages
the unit costs of labour rose a
bare 2%. Labour costs average
only about 25% of total costs.
This means that the 2% increase
in wage and fringe costs amount-
ed to only one-half of one per

PROFITS OF LEADING CORPORATIONS
HAVE RISEN FASTER THAN WAGE RATES

Hourly Earnings of Production Workers:

in Key Industries, First Three Quarters 1956- First Three Quarters 1957 4

4 In Current Dollars : <

PROCESSED FOODS /RON AND STEEL | PETROLEUM PRODUCING 1
AND KINDRED PRODUCTS AND REFINING ” ‘ i

VIS:

Mi

Wage Rates UP 44%
Profits UP 9%

ALL MANUFACTURING

UP 68%
UP 22%

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to TES p,
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Wage Rates UP 5.6% ; WageRates UP 4.8% | Wage Rates UP 5.1%
Profits UP 17% H Profits UP 7% { Profits UP 8% '
H t
enutactuig inden, prot fo paroleum prodveng Qratiig. 3
enol Esty Bonk of New York.

Conference On Economic Progress

Clear Proof

One thing is very clear by
an examination of the record.
One-half of one per cent
of total costs could not pos-
sibly be responsible for the ten
per cent increase in the whole-
sale prices. Indeed labor costs
have lagged behind productiv-
ity. The American Bureau of
Labour Stastistics dealing with
American wages which are
higher than in Canada, stated
“The index for unit labour costs
was lower than the price index
for every year prior to 1956.

Wages Trailed Prices

Business Week said “One ob-
vious way to determine which
caused which would be to mea-
ure whether labour costs or prices
moved up first. Subjected to this
test, unit labor costs seemed to
have followed prices uphill
through most of the post-war
years, particularly in those years
when the inflationary heat was
most intense.”

In fact the true picture
throughout this five year period
was one of wages lagging be-
hind non-labour costs, and prices
and real wages trailing increased
productivity. The facts demon-
strate, that labour got the short
end of the stick. The purchasing
power of the workers did not
keep pace with the expanding
output of the economy.

Let us note how the large
corporations fared, on the whole,

In this same period the total
cash flow to corporations that
is what corporations received in
profits after taxes plus the
amount they set aside for de-
preciation, rose 9%. During
this same period, disposable con-
sumer income, the amount that
consumers can spend to purchase
the items in their family budgets
inereased only 20%, Here is
where the gap developed.
Profits Caused Inflation
The price inflation from early
1956 onward was not due to ex-
cessive wages or consumer buy-
ing power, relative to the pro-
duction and supply of goods,
From January 1956 to November

was not justified by business
costs in the form of wages. Net
profits after taxes would have
been ample, without these price
boosts. Price increases hiked ,
profits on the average about 8% 4

in total manufacturing.

Price increases hiked profits 1
in the leading industries as fol-
lows, petroleum, 9%; autos and 5

parts, 17%; iron and steel, 22%;
tobacco 18%; drugs, soaps and
cosmetics, 18%; electrical equip-
ment, radio and TV, 32%; food

products and beverages, 7% after °
a hike of 27% in 1956,
Fabulous Profit >
Since 1956, the steel industry
has raised its prices no less than 7

22 times. Their prices have been
increased $3.00 for every $1.00 p,
increase in labour costs. Profits
have tripled. Since 1939 the prof- yy
its of U.S. Steel per man hour
have gone from 13 cents to $1.80
or an increase of 1284%,

The $6 a ton increased price
on steel last year which helped
to plunge this continent into a
recession, enabled U.S. Steel to
push its profits to an all-time
peak of $319 million as com-
pared with the previous peak of —
$370 million. If this increased
price had not been given effect,
the profit in 1957 would still
have been at an all-time high of
$390 million.
The same story is true for the
leading manufacturers of cars.
General Motors’ profits reached
the staggering high of 79% of
total investment in the first nine
months of 1956. Wholesale
of cars rose 10% and held their
own throughout 1957, while sales
output, and employment dropp
Nevertheless, with output
80% of capacity prices were
being set high enough to
a profit of 20% on investment.
Prices on the 1958 models of the
so-called low-priced cars _Wé
from $85 to $135. The maxi
increases in labour costs
same cars amounted to
Material s
about $12 a car. This m

2.8%, but

rose almost

1957, industrial
AY < i
et 4