Word: wages
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Dates: during 1970-1979
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Conciliatory Step. Meanwhile, Carter made a halfhearted and probably ill-advised attempt to persuade the steel industry to cut back its announced price increases (see ECONOMY & BUSINESS). Taking a conciliatory step back from his campaign talk. Carter later reiterated that he would not seek authority to invoke wage and price controls ("I believe in the free-market system") but might try to establish voluntary guidelines in close consultation with industry and labor...
...Power. The increase seemed to catch Washington off guard. President Ford ordered an investigation by his Council on Wage and Price Stability. Acting Director William Lilley III asked National for production, cost and profit-and-sales data and said the market appears to be no stronger than last summer. COWPS, however, has no power to do anything except complain-and perhaps pass the buck to President-elect Jimmy Carter, who is committed to trying to get industry and labor to follow voluntary wage-price guidelines...
Peculiar Inflation. If successful, this approach would markedly lower the inflation rate. A 6% wage guideline would be 1½ points lower than pay boosts have lately been averaging. As for prices, the consumer price index rose slightly less than 4% in October, but over the past year it has gone...
...that, guidelines in the past have succeeded-at times, for a while. Their history goes back to John F. Kennedy, who in 1962 established a system relating price and wage increases to worker productivity. The eventual guidelines: 3.2% a year for wages, zero average for prices. After Kennedy won a celebrated confrontation with steelmakers and got them to cancel a price boost, inflation rates stayed low until the Viet Nam War touched off a boom that overwhelmed the guidelines...
Other economists, however, believe guidelines can work. Using econometric models of the 1960s, Williams College Economist John Sheahan concluded that "there was a convincing case that wage behavior in manufacturing became more restrained in the four years [after the establishment of the guideposts] than in the preceding decade." He drew upon independent studies by Harvard's Otto Eckstein and the Brookings Institution's George Perry...