Tampa Bay Times from St. Petersburg, Florida • 65

it SECTION PERSPECTIVE t. Petersburg Eimes Sunday, August 5, 1973 Editorials Business hi nflafion: It i Go Mig 0 Yo $ylvl Porter's opposite view, 4-D. The miter is a pwfessor at Stanford University 8 Graduate School Business. Editorial, 2-D. ByDR.JAMESS.KUIN "-The President considers It the nation's "No.

1 problem" a Judgment in "which he is joined by Journalists, politi-' cians, business commentators and vir-lually every housewife. That inflation has been an economic disaster is part the conventional wisdom, subscribed to even by some economists, who ought to better. The fact is that accurate information oh the real impact of the last two dec-; ades inflation upon Americans has been in nnniKipnt. Its neeative effects ahead of union Increases. One reason: Many unions had bound themselves to long-term contracts that could be changed only every second or third year.

Later, union negotiators sought catch-ups, usually winning them, and negotiators began to insist on more flexible wage provisions. Some bargained for annual reopening clauses and others sought short contracts. Many unions showed renewed Interest in cost-of-living escalators to Insure that wages automatically keep up with the consumer price index. The recent infla-Hon accompanying the Vietnam War has accelerated the process, and by 1972, some 4.9-million workers, plus a relatively small number of nonunion employes, were covered by escalator clauses. Service workers a mixed group of 13-million that includes hairdressers, household help, garage repairmen and nurses have gained raises since 1965 well above the average 50 per cent Increase in earnings, though they enjoy few unions to negotiate for them.

Their hourly earnings averaged $3.18 last year, up 55 per cent in seven years. The nearly 14-million government employes have bettered price rises, too. Average pay for the 2.6-million federal government employes increased, 1965-71, by almost 47 per cent, though the price level rose over this period only 28 per cent. In the Sixties, Congress authorized the executive branch to provide salaries comparable to those in private industry. About half the federal payroll is covered.

Since the wage survey on which such increases are based is weighted toward high-wage firms, including large defense contractors, and since it ignores state and local government salary levels, federal pay increases tend to be generous rather than truly representative of wages in the whole labor market. CONGRESS has not entirely ignored the other federal employes. Between 1965 and 1971, wages of 630,000 blue-collar government employes kept just ahead of ECOHOMY- lagged behind the rising price level, shoving the burden of inflation onto workers and decreasing their share of the national income. Since the end of World War II, however, wages in' general have not fallen behind prices. Wage earners have been able to increase their share of national income, from 61 per cent in 1950 to 07 per cent in 1972.

The Increase took place in three inflationary surges, 1950-52, 1955-57 and 1965-72. In fact, the sum of gains during these Inflationary years totals more than the gain over the whole period, because labor's share eroded in the intervening years when inflationary forces lessened. Between 1950 and 1972 production workers in private industry, 49-million persons today, saw their average hourly earnings (adjusted for overtime) increase by 173 per cent, while the consumer price index went up by only 74 per cent. Real earnings consequently increased by nearly 60 per cent over the period. Even during the recent inflation, 1965 to 1972, while prices went up 33 per cent, their earnings rose 49 per cent.

Salaries of the 10-million nonproduction workers managers, professional, technical and clerical employes increased, 1965-72, around 42 per cent, a third mora than the consumer price index. Of course, both groups, production and nonproduction, include workers highly diverse in skills and position. Some do much better in protecting and Increasing their pay during inflation than others. For example, accountants, who are in short supply, made wage gains of 46 per cent, 1965-72, while drafting technicians saw their salaries go up only 37 per cent. THE ABILITY of union members and nonunion workers to get wage increases varied from year to year.

During the expansionary period of the early to mid-1960s, for example, when the Kennedy and Johnson Administrations were steering the economy by wage-price guideposts, non-union wage gains ran "There is an almost total absence of solid, extensive empirical studies about the effects of inflation." -Paul W. McCracken, former chairman of the Council of Economic advisers. Insfdtthe "77ie American economy has become to a larger extent than is generally realized an income-adjusting economy." upon our ability to sell goods abroad we know. We have experienced me mmum in which inflated supermarket prices can wipe out last year's pay raise. And the Nixon Administration's ill-starred efforts to halt inflation are all too familiar -culminating a fortnight ago in a Phase IV that makes not even a pretense of stopping the upward swing in the months ahead.

WHAT THE general does not realize has been summed up very well by Paul W. McCracken, former chairman of the Council of Economic Advisers and a formulator of the Nixon game plan to slow "run-away inflation." There is, he says, an "almost total absence of solid extensive empirical studies about the effects of inflation." Recently, however, a number of economic studies have begun to give us some clues. As yet we are limited to analyses of broad categories of people and economic units, and the complexity of the data is such that initial conclusions must be tentative. But their tendency is unmistakable: Inflation has not been the ogre we have imagined it to be. In the words of Stanford University professor G.

L. Bach, "The American economy has become to a larger extent than is generally realized an income-adjusting economy." In short, viewed through the economist's eye (which scans the world year-to-year, rather than day-to-supermarket day), most Americans have come through the inflation of the past two decades quite well. Wage earners have gained. Most of the elderly have kept up with price rises. The wealthy have lost on some counts and won on others.

Rampant inflation, of the kind that ravaged Germany in the '30s, would of course produce a very different result. But we have been experiencing something else. Since 1950, the broadest measure of change in the price level (the Gross National Product deflator) indicates an average annual increase of 2.76 per cent; since 1965, a yearly increase of 4 per cent; during the past year, 3.41 per cent. By any definition, this has not been rampant. Bach, in the title of a recent study, calls it "The New Inflation." And the new inflation's effects upon major groups of Americans flies in the face of the conventional wisdom.

THE LARGEST economic group in the nation is composed of the 82-million employed persons of the labor force. In past inflations, usually during periods of war, employers were able to raise prices rapidly while granting wage increases slowly. As a result, labor's income Collides their white knight northward to the Potomac with high hope. But Reed never became the environmental voice he was in Florida. He was overshadowed by William D.

Ruckelshaus at the Environmental Protection Agency (EPA) and Russell E. Train at the Council on Environmental Quality (CEQ). Reed was the only member of the Interior secretariat held over in Nixon's second Administration. But promotion has passed him by. He would have liked, it is said, 'the undersecretary's job.

But it went in Reed 'is a happy inflation, rising 31 per cent, ine oou.uw postal workers fared a bit better, their pay up by 46 per cent over the same period. On the state and local levels, the Increasing labor militancy of public employes may have contributed to pay raises. A more basic cause, however, has been the need of government to attract personnel: Employment has doubled from 5.3-million in 1957 to 10.6-million in 1972. City employes' average earnings, 1965-71, rose from 45 to 53 per cent depending on occupation. In 9 of 11 cities thus far studied by the Bureau of Labor Statistics, municipal workers in clerical, data processing and maintenance-custodial jobs now hold pay advantages over their counterparts in private industry and the federal government.

Of the 82-million people in the labor force, we have accounted for 74-million the remaining 8-million are those in agriculture and among the self-employed. The government does not collect easily interpreted statistics on their labor earnings, for wages and business income are usually mixed together we do not know what effect inflation has upon many of these people. The data are clear, however, for the larger portion of wage earners: Their pay has more than kept up with the pace of inflation we (See INFLATIONS) and Ichabod Nat Reed: His With Nixon's G. L. Bath -Stanford University professor Timet Art by Jo Tonetll 'Nature But in years to come, he said, a bid for elective office is 'highly possible, highly possible." He's 40 now, and he doesn't have to work at government.

He never did. REED IS a millionaire who could be very comfortable managing his family's real estate and hotel holdings on Jupiter Island in Hobe Sound and raising limes. But he is also an amateur botanist, ichthyologist, biologist, fisherman and hunter hobbies that Gov. Farris Bryant appealed to in 1962 when he named Reed co-chairman of the Florida Board of Antiquities. The board deals with the disposition of treasure found beneath Florida waters.

But it was Gov. Claude Kirk Jr. who hooked Reed and reeled him into full-time government. Kirk named Reed his environmental assistant at the magnami-nous salary of $1 a year, and gave him wide responsibility for dealing with environmental deterioration in Florida. Reed dealt with it energetically.

He arranged federal-state water quality enforcement conferences for Escambia Bay, lower Biscayne Bay, and Dade County. He worked for a new water schedule for Everglades National Park, establishment of Biscayne National Monument, and selection of 22 new state parks and wilderness areas. He presided over hearings to establish air quality regions. He fought the Everglades Jetport and the Cross-Florida Barge Canal. When Gov.

Reubin Askew ousted Gov. Kirk, he kept Reed on. ON MAY 11, 1971, four months after he had ordered the Cross-Florida Barge Canal project halted, President Nixon appointed Reed an assistant secretary of Interior. The canal decision was the environmental summit of Nixon's presidency, and Florida environmentalists sent environmental people but he won't quit. "I am totally convinced," Reed said in a recent interview, "that there must be environmental Republicans, and that our record is far better than our critics would have it.

"There are a number of things that interest me enormously Big Cypress being one of them which have great import in Florida. I have set no time limit. I think when one accepts a position with the federal government, one serves until one is no longer useful, which I think everyone finds is after awhile. I don't believe my 'awhile has come yet." And what of politics, of a campaign in Florida next year for governor or senator? Is there a possibility of that? "No, there is none," Reed said. "None whatsoever." By CHARLES STAFFORD Tlmtl Burtiu WASHINGTON Stubbornly, Nathaniel Pryor Reed refuses to admit it; but he is a lonesome bureaucrat, a lamb who bedded with wolves.

He is an environmentally concerned man trying to preserve nature in an Administration whose very nature is to be more concerned with commerce. As though his title of Assistant Secretary of the Interior for Fish and Wildlife and Parks were not burden enough, the Nixon White House has laid on Reed's shoulders a weight of underfunded work and over-political aides. YET, TO his credit, this happy combination of Mark Twain and Ichabod Crane has shouldered his burdens and is pursuing his goals with remarkable energy. It might well be costing him support within his Florida constituency the combination of Mark Twain ill perspective Still, as one environmental leader suggested, there is small profit in being the chief environmental spokesman in an Administration that approved the Alaska oil pipeline, granted the auto industry a delay in meeting air pollution standards, and has used what some conservationists believe is a phony energy crisis to justify proposed off-shore drilling for oil. IN THIS atmosphere, Reed remains where he is, seeking to meet the increased responsibilities placed on him by (See REED.4-D) stead to John Whitaker, vice president of International Aero Service Corp.

before joining the White House staff in Nixon's first Administration as a deputy assistant to the President on environmental matters. The directorship of EPA, vacant since Nixon threw Ruckelshaus into the breach as acting director of the FBI in the post-Watergate crisis, could also have given Reed more prominence. But that plum, too, escaped him when the President announced July 26 he was giving the job to Train. DRILLING IN OUR GULF An editorial, pag 2-D. PATTERSON COLUMN The guests had stayed too long, 2-D.

JOSEPH KRAFT How come the new Watergate finds? 2-D. POYNTER COLUMN The case for campaign reforms, 3-D. TRIAL RUN Pinellas testing new Florida law, 3-D. EIIRLICHMAN'S ADVICE Answering readers' request, 3-D. THE WEEK AHEAD Calendar of news that's coming, 3-D.

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