Impact of World War II on Internal Wage Rate Structures

Abstract

Internal wage problems were brought into sharp focus during the years 19421945 by the conditions of a wartime labor market. Acute labor stringency placed management under severe pressure to rationalize wage structures in the interest of reducing turnover and dissatisfaction. The stabilization program of the National War Labor Board gradually closed the door on general wage increases, forcing both management and labor to turn increasingly to specific internal rate adjustments. At the same time management's normal resistance to wage increases dissolved as price competition was replaced by fixed price or cost-plusfixed-fee war contracts. The period is thus a fruitful one for the study of wage rationalization and of the difficu ties in reconciling interplant wage level stabilization with widespread internal adjustments. In this paper, a review of wage rationalization during this period will be largely confined to four types of problems: (1) specific individual or job rate inequities (2) differentials between men and women, (3) differentials between incentive and nonincentive workers, and (4) individual worker advancement. The discussion of wartime stabilization as it affected internal wages will be limited to three major aspects of the National War Labor Board's program: (1) substandard policy, (2) cost of living adjustments, i.e., Little Steel Formula, and (3) labor market area bracket policy.