The wage-price freeze

THE waves are continuing to r slosh about following President Nixon's dramatic announcement of drastic changes in the management of the American economy.

the ensuing time has been characterized in this industry by general optimism as to the wisdom of his moves accompanied by a good deal of confusion as to how it all translates into e.veryday operations.

While the Office of Emergency Preparedness and the Cost of Living Council strive to answer the million and one still unanswered questions regarding the wage-price freeze, the following information has been developed:

Prices

As of August 16, no seller of goods or services, except certain raw materials and agricultural products, may raise the price above the highest price charged for a "substantial volume" of your goods or services for the 30 day period ending August 14.

"Substantial volume" is defined by the OEP as:

"A ceiling price i;s the price at or aboue which 10/o ol the actual transactions during the base period, were rnade, except that in the case ol increases in posted and, ellectioe

For moreinlarmstion

I I you haae lurther questions, and, utho doesn't, the Oftice ol Economic Prep,redness to call in your area is listed below,-Editor.

Don Eddy, Dir. (Colorado, Montana, Utah, Wyoming), Federal Regional Office Bldg., 7lO, Denver, Colorado 8O225. Tel.: (303) 2378271 ; TWX 910-937-0731.

Creath Tooley, Dir. (Alaska, Idaho, Oregon, Washington), Federal Office Bldg., Room 1095, 909 lst Avenue, Seettle, Wash. 98104. Tel.: (206) 442.4552.

Ralph Burns, Dir., (Arizona, California, Hawaii, Nevada), 450 Golden Gate Avenue, Room 2029, San Francisco, Calif. 94102. Tel.: (4rs\ s56.7746.

prices during the base period, the base period itsell uill be considered, to hanse begun at the time ol the increase in posted, and ellectiue prices,"

What it means is that if you had announced a price increase prior to August 14, but had made only a few sales at that new price, figure your ceiling price on the affected products as the efiective date of your announcement. This becoines the first day of a 30 day period during which a substantial number of transactiohs (IO% or more) would be counted to establish your price.

Story d] s Glqnce

A brief rundown on hoil President Nixon's wage-price freeze affects your business . also a quick look at the import situation plus the names and numbers for your area of the government offices involved.

It is being widely assumed at this time that good faith and an honest effort to comply should carry you over the rough spots. There is sorne counsel that a reasonable and normal markup is good evidence of your efiort to comply with the president's "voluntary'' 90 day freeze. In any respect, make sure you save and set aside price records such as invoices, catalogs and the like for the period July l5-August 14. If you are working from a different time for your base price, ad. just these dates accordingly.

There is a little discussed provision of the enabling legislation stating that prices and wages need not be established at levels less than those prevailing on May 25, 1970. It is conceivable that on some items the prices of May 25, 1970 may be higher than the 30 days preceding August 14, 197I. If this is the case, use the higher price.

I{ the item wasn't sold during the base price periodo go back to the first 30 day period when sales occurred and use that as the base price. At present, commercial market reports cannot be used as they present an average price. Several industry associations are attempting to efiect a change in this ruling so mills without records for the time in question can use them as a guide.

Dealers, wholesalers and distributors who had announcements of price increases from their suppliers efiective before August, 14, but who had not in turn raised their prices appear caught in an especially sticky situation. It seems the supplier price increases qualify under the freeze but the wholesalers and distributors cannot sell for a higher price to compensate for their increased costs.

A similar situation occurred in 195I when President Truman instigated a wage-price freeze. It took five months that year to get a special section included that finally gave relief to those caught in the squeeze.

Wages

No wages or salaries can be increased during the 90 day period for any reason whatsoever, nor can additional benefrts be given employees. The only way around is through a bona fide promotion to a new position at a higher salary. If the promoted employee is not re. placed in his old job it will be tough to prove that the promotion was really what it was claimed.

Overtime or extra work at the regular base rate is presently the only way to fatten up the wallet and stay within freeze rules. It is not allowed for an employer to reduce the official work day from 8 to 7 hours and count the last hour as overtime as a direct means of increasing compensation.

Imfort Tax

Field surveys in the West show that generally the importers are passing on the ll/a import tax. In many cases importers say it is a case of economic necessity. Resistance to the passed-on ten percent has been negligible so far.

It is developing that the up-to(Continu.ed on Page 35)