Last year's record plunge in family buying power has many employers worried, as big unions plan to recoup that loss when their contracts come to the bargaining table next year.
A Census Bureau survey of family income, conducted nationwide in March of this year, found that while the median income rose in 1980 to $21,020, a 7.3 percent increase, double-digit inflation caused a net decline of 5.5 percent in buying power. The reason: inflation, as measured by a 13.7 percent jump in the consumer price index between during 1980.
Median income differs from average income: The median is a midpoint with half of the nation's families reporting incomes over $21,020 a year and the other half incomes below that level.
The Census Bureau reported recently that the sharp drop in 1980 was the first statistically significant annual decline since 1974-75 and the largest since 1947.
The government report noted:
* Another 3.2 million persons were added to the number with incomes below the poverty level ($8,414 in 1980 for a family of four, up from $7,412 in 1979) to bring the total up to 29.3 million or 13 percent of the population.
In 1980, 19.7 million whites, 8.6 million blacks, and 3.5 million Hispanics were listed as below the poverty level. The number of children under 18 in families below the $8,414 annual income level rose from 10.2 million in 1979 to 11.4 million last year.
Of the four major regions of the country, only the Northeast did not show a significant increase in the number below the poverty level last year.
* The decline in real family income was spread widely over geographic, racial , and ethnic lines. Whites remained in the higher-income brackets: a $21,900 median compared to $14,720 for Hispanics and $12,670 for blacks.
Farm families suffered the most with a 14.8 percent decline to $15,760, compared with a 5.3 percent drop to $21,150 for urban families.
* According to the Census Bureau, those living in fixed incomes, mostly retirees, showed no significant change in buying power from 1979, largely because social security benefits are linked to the consumer price index and increases are made annually.
For their part, unions argue that workers must recoup losses of buying power when new contracts are negotiated. Cost-of-living adjustment (COLA) contracts covering more than 5 million unionized workers, particularly those in major industries where negotiations are scheduled next year, have offset some of the impact of inflated prices. For example, 21 cents an hour was added to an average steel workers' pay Aug. 1 as an adjustment to increases in the government price index.
However, unions already preparing for bargaining next yar contend that COLA gains have been substantially less than losses of buying power.
And they see no significant improvements in 1981 figures. Real income dropped 0.8 percent in July although paychecks showed a small increase in the month. AFL-CIO complained that "inflation has now jumped back into the double-digit column . . . sending the buying power of the average worker's paycheck tumbling."
As AFL-CIO assesses propects, a 1.2 percent jump in the consumer price index for July could mean a 15.2 percent inflation rate in 1981, although the Reagan administration is sticking to a prediction of a rate slightly under 10 percent this year.
Whatever the actual rate of increase for 1981, the rise will be a major factor when auto and other unions bargain in 1982. Wage demands will be high at a time employers are trying to hold down labor cost increases and are being encouraged to do so by the administration.