Toledo Union Journal

Dangerous Slowdown In Economy

The nation is facing a "dangerous slowdown" in economic growth because of "restrictive governmental policies" which substitute fear of inflation for measures to stimulate an expanding economy, the AFL-CIO Executive Council warned.

In its report to the AFL-CIO convention the council said that despite the recovery from the 1957-58 recession a growing labor force and rising productivity "endangers the American economy with persistent unemployment of about 5 percent of the labor force."

"There is a real danger," said the council, that the "unbalanced and incomplete recovery of 1955-57 will be repeated, with the possibility of another recession in the next few years, because of government policies to restrict economic growth."

The psychology of fear must be abandoned," the council declared, and replaced by national policies that will produce a balanced 5 percent a year growth rate that should become the "cornerstone of America's economic policy."

Analyzing the campaign against inflation, the report declared that the "real problem has not been inflation but a slow, upward rise in the price level" which has been distorted "into a springboard for a continuing national campaign of fear, tight money and attacks on organized labor and collective bargaining."

The council pointed out that "rising productivity and rapid technological change have offset the costs of wage and fringe benefit improvements;" that the major economic problems have been a weakness in consumer markets and a growing gap between sales and increasing productive capacity.

The slowdown of economic growth that has characterized the past few years, the report said, has had several important effects. It has "contributed to a trend toward relative economic and military weakness in relation to the Soviet Union," it has brought on higher unemployment than in the preceding period, it has contributed to upward price pressures, it has contributed to a loss of revenues and added to labor-management relation difficulties.

This adds up, said the council, to a "shocking state of stagnation" which has helped cut "the rate of national economic progress almost in half."

The underlying cause of the 1958 recession, the report asserted, stemmed from a lack of economic balance which saw productive capacity expand while consumer buying power and family purchases of hard goods and homes lagged.

Trade union strength and collective bargaining helped to keep consumer income fairly strong, despite the decline in output, working hours and jobs. The unemployment insurance system helped keep up income, although badly in need of improvement, and belated government actions provided some impetus for the pickup.

Since the recession a growing labor force and rising productivity pose the problem of creating 3.5 million new job opportunities each year. To obtain this number of jobs, the council warned, real national output should expand by 5 percent a year, "or almost twice the rate of economic growth achieved in 1953-59."

The council outlined a 16-point program to meet the challenge of the cold war, population growth, rapid technological change and newly emerging nations. It included:

Continuing increases in wages and salaries.

Cost-price-profit investment policies based on lower unit profit margins to provide rising profits from growing volume.

An end to the government's restrictive, tight money policies.

A halt to self-defeating attempts to balance the federal budget at low levels of output and income.

Aid for chronically distressed areas.

Federal standards of unemployment compensation to extend duration and raise benefits.

Increase in the minimum wage to $1.25 an hour and extension of coverage to millions now unprotected.

A progressive reduction in the work-week through collective bargaining and amendment of the wage-hour law.

Medical care provisions for social security beneficiaries.

A national, federally aided program for aid to education, housing, health and community facilities, roads, airports and natural resources.