Remarks at a White House Dinner for Labor Leaders.

I INVITED you here for the same reason I invited the business leaders last week-to ask your continued cooperation in strengthening the economy of our country, and to praise and thank you for the exercise of good judgment and patriotism unexcelled in our economic history.

Our task is a three-way effort, for in America capital management and labor are not bitter antagonists. They are partners-and Government is the friend of all.

The good sense and public spirit of business and labor, and the goodwill of government, are bulwarks of a growing nation and an expanding economy.

We are gratified with the progress our economy is making, but we are not satisfied. Unemployment is much too high, despite the fact that 900,000 new nonfarm jobs have been added in the last 3 months. There is too much poverty in the midst of plenty; while our cup is running over, more than 30 million Americans have not tasted its contents.

We have talked a great deal about full employment in America, but we have done too little to achieve it.

As a Congressman I voted for the Employment Act of 1946. It was originally called the Full Employment Bill, but the word "Full" was dropped from the title. Unfortunately, it has also been dropped from the thinking--and especially from the expectations--of too many people.

As a result, 4 to 5 million people are out of work in this country all the time, while across the Atlantic such levels of unemployment among our allies are a matter of ancient history.

We, too, much catch up with modern history. The time has come for labor and government and business to agree that we are going to achieve--and keep--full employment.

The tax cut will keep production and incomes going up and the unemployment rate coming down, but these are not enough.

We must create stronger domestic and foreign markets for our products--for these in turn create new jobs.

To drain shameful backwaters of poverty and concentrated unemployment, we must press our war on poverty forward to total victory.

As the strong thrust of an expanding economy swells our tax revenues, and as we are able safely and prudently to pare our defense expenditure, we will be able to devote new resources to important public programs. And, as I told the business leaders last week, we may even be able to afford another tax cut in a few years.

We surely do not want this promise of progress to be threatened by inflation. As demand increases and unemployment fails, managers will be tempted to raise prices-in spite of already high profits and continuing excess capacity; and unions will be tempted to force wages up faster than productivity--in spite of already high wages and continuing excessive unemployment.

I do not believe labor or business want a renewed wage-price spiral any more than Barry Goldwater wants to run on the same ticket with Nelson Rockefeller. For such a spiral steals savings, eats away at real wages, bleeds the meager income of our older citizens, gives orders and jobs to foreign competitors, and undermines the soundness of the dollar.

In the last few years--thanks to a wage-price level which enabled us to make a better mousetrap and sell it abroad competitively-we have been regaining our competitive edge in international markets. While wholesale prices rose in France, Italy, Britain, and Japan, ours actually moved down a bit from 1959 to 1963. But these countries are making strong efforts to stabilize their prices. To improve our competitive position and end our balance-of-payments deficit and gold outflows, it is vital that we hold the line on our own prices over the period ahead.

We have an excellent chance now to win back some of the markets we lost by price increases prior to 1959 and to earn back some of the jobs we need to restore a better level of employment at home.

I don't have to remind you that that opportunity could be lost if prices start to rise significantly. The case for tightening credit and boosting interest rates would become stronger, and the result could well be a slowdown in the rate of economic expansion.

To help avoid that situation we have set forth wage-price guideposts as an essential part of our defense against inflation. The guideposts are sensible and fair. They are in the public interest, and while I cannot-and will not force anyone to follow them, I can call them to your attention and ask for your cooperation.

Just as last week I asked business leaders to hold the price line or actually cut prices and share their gains in productivity with consumers, so this week I ask you to do your part to hold wage increases in line with the productivity gains of our economy.

Any increase which does cause or contribute to inflation will not benefit labor. In the expansion period that lasted from October 1949 to July 1953, average weekly earnings after taxes in manufacturing rose more than 23 percent. But prices were rising too, and the real gain was only 9 percent. In the present expansion period-from February 1961 to March 1964--weekly earnings after taxes have risen by less-- only 14 1/2 percent. But corrected for price change, the gain this time has been substantially greater--10.3 percent.

Healthy economic expansion without inflation serves labor as it serves the whole community. The continuance of such expansion is possible. The issue is in your hands and the hands of business.

I know we're always tempted to blame the other side for irresponsibility. Labor says business is out of step and business says labor is at fault and both say the Government is to blame. But all of us are responsible.

Corporate profits after taxes are running $31 billion this year against $22 billion in 1961. Annual labor income is running about $60 billion above its level 3 years ago, and there is room for satisfactory wage and fringe increases within noninflationary limits.

You must remember, and we must never forget, that the economy cannot absorb big cost increases and big price increases without endangering our progress.

And we must remember, too, that there is only one test for all of us: What is best for America is best for us.

The agenda of unfinished work in America is long.

We need civil rights legislation to insure that all Americans are treated equally.

We need medical care under social security to give our older citizens a fair chance to stay well.

We need a successful war on poverty to lift 9 million American families to full membership in our society.

We need a food stamp program so no American child goes hungry.

We need a housing program that will provide a decent home for every American family.

We need a Federal pay raise to allow the biggest business in the country to hire competent workers.

We need an increased area redevelopment program to provide more jobs. And if all that we do with the help of the private sector cannot employ all our people, the Government will have to do for people what private enterprise fails to do--we will step up our programs of public works.

This country is going to meet these challenges. We are going to do all these things. We are going to write a record of which our children's children will be proud--and we want your names engraved on the honor roll of those who went all the way in helping to write that record.

Help us to do these things. Help us as we build the great society America can, and will, be.