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David Coolidge

Mass Action Is the Key to Wage Boosts

What Is the Meaning of Roosevelt’s Decree?

(19 April 1943)

From Labor Action, Vol. 7 No. 16, 19 April 1943, p. 1.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The “Hold-the-Line” decree issued by Roosevelt last week should serve as a clear and unmistakable notice to the trade union that if labor is to get wages anywhere near what is required to keep pace with the increase in the cost of living, organized labor will have to fight with increased determination. The fight will have to be waged by mass action and through mass formations. Even a hasty reading of this decree on wages and prices should make this clear to any worker.

The decree says that all government bodies having supervision over wages “are directed to authorize no further increase in wages or salaries except such as are clearly necessary to correct substandards of living ...”

An exception is made in cases where wage rises have not been made in accordance with the Little Steel formula.

The most important exception made, however, is the so-called “anti-inflationary” proposal of the WPB discussed in Labor Action last week. This permits Economic Stabilization Director Byrnes to authorize “reasonable adjustment of wages and salaries in case of promotions, reclassifications, merit increases, incentive wages or the like, provided that such adjustments do not increase the level of production costs appreciably or furnish the basis either to increase prices or to resist otherwise justifiable reduction in prices.”

The Scheme Behind “Incentive Pay”

It is extremely difficult to determine exactly what this paragraph means. Wages may be increased provided that such rises, however motivated, do not cause prices to rise pr do not interfere with price reductions. Also the wage increase must not increase production costs “appreciably.”

Employers always contend that wages are the chief item in what they call “cost of production.” In attempting to reduce the cost of production they therefore always begin with efforts to cut wages. They don’t include interest due bond holders and banks in the cost of production. They don’t include dividends paid out as part of cost of production. They don’t even include the big salaries paid company officials as part of cost of production. They only bring in the big salaries when they boost the “average wage” by including the big salary along with the lowest wage in arriving at the “average wage.”

The bosses have a very definite idea about this; they know what they are doing. They know, even if the workers do not, that labor is the chief producer of wealth. There are millions of workers. If their wages are raised to higher and higher levels the profits of the corporations will be reduced and dividends will have to be lowered. This is what the bosses are interested in, and this is what Roosevelt is interested in. He is the protector of the profits of the boss.

The position of the government and the bosses is that wages must be raised only after they have worked out a scheme that will increase production out of proportion to the slight increase in wages. To increase production in this way means an increase in profits. An increase in profits means that the corporation can pay bigger dividends and bigger salaries to corporation executives.

This scheme right now is what Roosevelt in his new decree calls “merit increases” and “incentive wages.” Bosses always advocate the “merit system” and “incentive system.” From their point of view they are correct. Their business is to get more profits. If the managers of industry don’t get profits out of the business the owners of the industry – the bondholders and the big stockholders – will kick them out and put in executives who will.

The Roosevelt decree also says that wage increases must not tend to raise prices or interfere with the reduction of prices. Here Roosevelt again intends to make labor bear the main burden. The bosses say that they can’t reduce prices because wages are too high. If the workers demand higher wages the bosses immediately demand an increase in prices. No responsibility at all is placed on the bosses for today’s high prices. Every worker should know that the cause of high prices is not the wages he is paid. And even if this were true that would be no valid reason for the woefully inadequate wages being paid today.

As far as the bosses are concerned, their demand for high prices is similar to their demand for low wages: they want to increase profits. They make all sorts of plans and enter into all manner of agreements and combinations that have no relationship to the wage rate, for the sole purpose of maintaining or increasing prices. Du Pont and General Electric, even after the U.S. entered the war, maintained their agreements with German firms for the purpose of perpetuating a price monopoly.

But under this latest Roosevelt decree all of this is ignored and labor is told in effect that the only way to ward off chaos is to hold wages down – or for the workers to toil harder and longer so that the boss may get more profits.

To make certain that the bosses have their way, the decree virtually chains the workers to their present jobs. The chairman of the War Manpower Commission is authorized “to forbid ... the acceptance of employment by a new employee” except by permission of the government, at “a wage or salary higher than that received by such new employee in his last employment unless the change of employment would aid in the effective prosecution of the war.”

This is simple and direct enough. It means that workers must remain in their present jobs unless the government decides that they should work elsewhere. They can’t leave their present jobs for a new job in another plant or industry unless the government says yes. This is “our system of free enterprise,” 1943 model. This is the labor front, American style for 1943.

It is significant that in this decree Mr. Roosevelt did not discuss profits. He took up this matter in a mild sort of way in his statement on the Public Debt Act of 1943. This was the act to which Congress attached the rider repealing the executive order limiting salaries, to $67,200 flat. In this statement the President said that “practical limitations ought by appropriate taxation to be placed on all income, earned and unearned. I urged and would have welcomed a special tax measure applicable to all excessive incomes from whatever source derived in place of the flat $67,200 salary limitation. ... I still hope and trust that the Congress, at the earliest possible moment, will give consideration to imposing a special war supertax on net income, from whatever source derived, which after the payment of all taxes exceeds $25,000.”

Everybody Got Something – But Labor

The act that Roosevelt was discussing was a bill to extend the public debt limit to two hundred and ten billion dollars. This was the act to which Congress attached the salary rider. Roosevelt said that he did not veto the bill but permitted it to become law without his signature because the Treasury had advised him that to veto the bill would interfere with financing of the war. “I am accordingly allowing the bill to become law,” says Roosevelt, “without my signature in order to avoid embarrassment to our war financing program.” He says further, that “it would have obviously been unfair to stabilize wages and yet leave salaries free to rise to $67,200.”

This is a very lame excuse for not vetoing this bill. Congress attempted to kill three birds with one stone. These representatives of the bosses took a general sock at Roosevelt, they raised the salary limit from $25,000 to $67,200 annually and they voted the war credits. Roosevelt put a ceiling on present low wages and tied the workers to their present places of employment. Everybody got something from the deal except labor.

Suppose Roosevelt had vetoed this bill. Would the war financing program have been embarrassed? Of course not. Congress must vote the money to prosecute this war; it can’t, escape this task. The bosses, can’t escape. They must fight the war and try to win. Everything they have and all they hope to gain all over the world would be jeopardized by refusal to supply the necessary money.

All that could possibly have happened would have been passage of the bill by Congress over Roosevelt’s veto. Either they would have done this or the salary rider would have been taken off. Little time would have been lost because Congress must act in this matter of financing the Second Imperialist World War.

It is easier, however, to fight labor than to fight Congress and the bosses. This would not be true if labor would issue its own Hold-the-Line decree. Labor is in the majority, but a working class majority is no good if you don’t use it!

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Last updated: 23 May 2015