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Henry Judd

An Analysis of Statistics

How Rising Costs Wipe Out Wage Raises

(2 September 1946)

From Labor Action, Vol. 10 No. 35, 2 September 1946, p. 3.
Statistics prepared by Gertrude Blackwell.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Bureau of Labor Statistics, a branch of the government’s Labor Department, maintains What it calls a Consumers’ Price Index. This index is based upon the prices of twenty-eight (28) basic commodities – the various staples, and necessities people in the United States live on from day to day. It reflects price changes as they take place in both wholesale and retail (primary) markets, and is one of the sources for the what’s-what on prices.

This Consumers’ Price Index of the Labor Department is a system of comparison, based upon 100 for the price averages of these twenty-eight basic commodities over the four-year period of 1935 to 1939. Or, in other words,

100 equals average price rate from 1935 to 1939

How does this Consumers’ Price Index stand today, in August 1946? This will give us an idea of how prices have gone up in post-war America and prices, as we know, mean the cost of living, our living standards.

Here’s the dope on prices – again using the governmental Bureau of Labor Statistics.

In July, 1945 – shortly after the abolition of OPA and before its reestablishment in its present impotent form – the index stood at 129.4. That is, according to the government, there had been a price increase of 29.4 per cent (over the 100 average of 1935–1939) since the war began in 1939.

By July 15, 1945 – this same price index had gone up to 140 – an increase of 40 per cent (!) over the index of 1939.

And finally, to top it off, the index stood at 141.8 on August 1 of this year – its all time high, but still going higher. Thus, again according to official government sources, the cost of living has risen almost 42 per cent in the last seven years.

The same source of information (Bureau of Labor Statistics) likewise indicates the following cost of living increases over recent years. They are worth reporting:

A 50 per cent rise in the price of food from 1939 to April 1946 – from 95.2 to 141.7 on the index scale.

An 84 per cent rise in the cost of cotton clothing, a 48 per cent rise in that of woolen clothing, and a 45 per cent rise in silk and rayon articles – a general clothing increase from 106.5 to 154.3 on the index scale, covering the same period from 1939 to April 1946.

A general cost-of-living rise of 20 per cent since the OPA went out of existence on June 30, 1946. OPA, as everyone knows, is in its new form, nothing but an institution of the government for “legalizing” price increases for manufacturers (coffee, last week, 10 to 13 cents more per pound; canned fruit, last week, 1 to 7 cents more per can; 10 to 15 per cent rise in cotton goods, etc.).
 

Labor and Gov’t Statistics

Both the CIO and AFL have challenged the above statistics, furnished by the government, as being on the conservative side. This index, says the labor movement, does not take into account such factors as the lowered quality of goods, the scarcity of low-priced goods, compulsory changes in living habits due to housing shortages and the necessity to eat out, etc. Nor does it measure any changes in total family income costs. The Bureau of Labor Statistics has admitted these criticisms. We give an illustration of the difference in approach of labor economists and government economists in measuring living costs. Obviously, the labor men have the more accurate figures since they are more real, and based upon effects upon workers – that is, the masses of American people.

According to both organizations (AFL-CIO) as compared with the government, the following changes occurred in living costs from January 1941 to January 1944.

What About Wages?

But what about wages? Haven’t they, too, gone up? The chart above indicates a wage average of $23.19 in January 1939, mounting upwards to $43.00 in July 1946. That represents an increase of 85 per cent for industrial wages, over the past six and a half years – truly a magnificent advance!

Labor Action would be the last to deny this general wage increase for large numbers of factory workers, primarily due to the organizing activity and strength of the unions. Even if we discount about half of this 85 per cent wage increase (because of the corresponding 40 per cent price increase, according to the government, over the same period), we still have a substantial increase in real wages for living standards. Even if we discount more than half of this wage increase (because of the weighted conservatism of government statistics), we still have a substantial increase in real wages since 1939 – a phenomena not known in any other major country and testifying to the strength and determination of the American labor movement.

This is only one side of the picture, Whereas the rise in the cost of living applies to all workers, the people as a whole, the available figures refer to only one section of the working class, the organized workers. To get a complete picture of the situation, it must be remembered that two-thirds of all wage earners received less than $3,000 per year; that one-third of the nation live under sub-standard conditions!

But, despite all this, look at the story in Post-war America! Wages are today frozen, by government fiat and labor leadership conservatism. But prices (living costs) steadily mount and mount. And weekly wage averages, for many reasons, have sunk steadily – out of the $50 weekly average, into the lower $40 bracket. In a word, the living standards of the American worker are under sharp attack and are being driven downwards. That is the partial story of our statistics. That is the false promise held out in post-war America – a promise redeemable only through the militant action of the labor movement in its self-defense and protection. On the price front, for lowering of cost of living; on the wage front, for raising the standard of living.

 
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