Inadequate Indicators

In wage negotiations, a key statistic for comparing different industries usually is the Government's figures on hourly earnings. But last week U.S. Steel Corp., the nation's largest steel producer, questioned the accuracy of the figures. Said its annual report, in which Chairman Roger Miles Blough reported a 15 1/2% drop in earnings because of the steel strike: the Government's "widely quoted data on average hourly earnings are no longer representative of total employment costs" and are "completely inadequate as an indicator of an hour's work."

Blough and fellow steel executives charge that the steel industry's average basic wage rate of $3.10 quoted by the Government does not include such important fringe benefits as vacation pay, sickness and hospital insurance and unemployment benefits--all of which add "a startling 65%" to Big Steel's basic wage rate. "Until Government data fully recognize all fringe costs, their use for measuring the cost of wage settlements, or for making interindustry cost comparisons, is not only inappropriate but may result in misleading conclusions."

The Bureau of Labor Statistics partially agrees with U.S. Steel, next month will begin an important new survey among 7,000 manufacturers to discover the cost of fringe benefits to workers. But Government economists do not necessarily go along with the implication that any change will show wage hikes outrunning labor productivity. Actually, productivity is expected to keep pace with steel costs at least during 1960 because the new steel contract does not call for wage increases until December.

Since U.S. Steel's statement followed a warning issued by Wheeling Steel Corp. that steel prices "eventually" will have to be increased, it was taken by many as a softening preparation for future industry price hikes. Big Steel denounced the "pyramiding of employment costs," warned that unless it is checked, "a cost-covering increase in the general level of prices must follow." But Roger Blough repeated his earlier assurances that the nation's biggest steel producer plans no price hikes "for the present."

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