Labor Counterpoint

With both feet, Labor and Business agree on full employment. They do not see eye to eye on many a point. Yet they agree not only on the objective but also on the broad terms of how to get it.

This was the news tacitly conveyed this week by a pamphlet sponsored by a major group of labor leaders.

Some of the ablest pamphleteering on full employment has come from the National Planning Association. Hitherto the most publicized pamphlet emanated from N.P.A.'s Business Committee,* but this week its Labor Committee was heard from. Fiscal Policy for Full Employment, written by Dr. John H. G. Pierson of the Bureau of Labor Statistics, shows how in general the views of such laborites as Clinton S. Golden (United Steelworkers), Marion H. Hedges (Electrical Workers), James Carey (C.I.O.), David Kaplan (Teamsters), George Meany (A.F. of L.), Walter Reuther (Automobile Workers), et al., compare with those of such managers as Beardsley Ruml, H. Christian Sonhe, Charles E. Wilson.

The Likenesses of the two views are more striking than the differences. Both sides agree that:

P:Unless new measures are adopted, there will not be a big enough postwar market for goods to keep industry busy.

P:The object of full employment is to provide a big enough market so that private industry can profitably employ those who want to work--not to provide made-work, Government jobs.

P:The way to establish this labor market is by judicious Government spending and by reducing taxes, but there should be no spending for spending's sake.

P:The Government should balance its budget and run a surplus only at high levels of employment.

P:The excess-profits tax ought to be abolished, the tax laws altered so that there would not be any disadvantage in equity financing; social-security taxes should be kept down to a level where they would balance outgo.

The Differences between the labor and business men are chiefly matters of emphasis.

Labor, sticking to the view that the failure of markets to keep industry busy is largely due to "oversaving" by business and by individuals of the higher income groups, would scale its tax reductions so that the low income groups would be the chief beneficiaries. It proposes individual tax exemptions that would free a family of four from all taxes on incomes up to $2,750. But it also proposes to raise $12 billion (about ten times prewar) from the individual income tax--which would mean that tax rates in upper brackets could be reduced very little. It proposes to abolish the excess-profits tax postwar, and provide tax relief for new and small business, but still to raise $7 billion revenue from corporation taxes--which would mean keeping the corporate income tax at around 40%.

When consumer spending falls below a level which will support high employment, the Labor Committee, suggests putting more cash into consumer hands, either through paying back excise taxes or forgiving income taxes which are still to be paid. Conversely, it would pass a graduated spending tax to come into effect if a boom got under way.

Similarly, Labor suggests increasing Government expenditure for housing, health, education, etc., by some $7.6 billion a year for the benefit of the low income groups.

The approach of N.P.A.'s Business Committee is, in general, to keep Government expenditures low and to set tax rates low enough so that they will balance the budget only at high employment; and in time of unemployment to take up as much more slack as may be needed by Government spending (e.g., to stabilize the construction industry). The approach of N.P.A.'s Labor Committee is to keep Government expenditures considerably higher and to set tax rates, except for the low income groups, relatively high; and in time of unemployment to take up more slack by flexing both taxes and Government spending.

These different devices would be as unalike as the springing systems of a Ford and a Buick. But both devices are based on a general agreement about the laws of physics and the objects to be attained: a level of business activity high enough to provide economic opportunity for everybody.

*Notably Ruml-Sonne's Fiscal &Monetary Policy (TIME, Aug. 7). National Budgets for Full Employment (TIME, April 30) was prepared as a basis for further studies by N.P.A.'s Business, Agriculture and Labor Committees.

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