2008-11-18

Defend the UAW

To hear the talking-heads tell it, the source of the Big Three's problems is job security and a living wage. The UAW is taking a beating in the press over the proposed auto bailout, and this meme has infected way too many people. Most news segments I've seen on CNN and MSNBC have included attacks blaming the UAW. Do a twitter search on UAW, and you find a torrent of anti-UAW postings.

This is a very dangerous slope we're on. The right sees a chance to destroy the very concept of job security and it's making huge gains in dominating the political discussion. Instead of people saying auto-workers deserve job security, they're saying, "we don't have job security, why should they?" As the UAW goes, so will the rest of the industrial unions. Economists like Jeffrey Sachs are worried that if the govt. doesn't help the Big Three we're going to lose our domestic manufacturing base. I'm worried that we're going to see all manufacturing jobs go the way of hamburger-flipping, with disastrous consequences for the middle class and income inequality.

Non-union manufacturing plants already pay higher entry-level wages than their union counterparts as a result of UAW concessions, and are actually putting downward pressure on non-union wages. The entry-level hourly wage at a union plant is $14, compared to $16 at a non-union plant. The only thing left for them to give away is what remains of their health coverage and pensions. What the public is demanding is that auto-workers who have given their lives to the Big-Three lose their jobs, lose their benefits, and retire to the poor-house.

Recent contractions in demand have already led to massive job-losses, on top of the negotiated job-losses over the past two decades that have made the industry insanely-productive. The UAW has accepted changes in manufacturing and management practices that have drastically reduced the number of unionized auto workers (a majority of the American industry is non-union), and have made working in an auto-plant unbearably stressful.

One of the reasons the Big Three is on verge of collapse is due to these concessions. They operate on a "just in time" system, meaning that parts arrive from suppliers exactly when they are needed at the assembly line so that there is little wasted storage space, materials, or labor time. During the last big GM strike, the UAW was able to strike one supplier and bring most of the company to a halt as a result. Now, if that same supplier is unable to obtain financing to maintain operations, the end result is the same (and GM is in the same financing boat meaning it can't lend cash to help the supplier stay afloat either).

All of these concessions have certainly made the Big Three more "competitive," so all that is left is to jettison the several billion in legacy costs--meaning health care and pensions for current and future retirees. Most if not all of the Big Three's foreign competitors come from countries with significantly stronger social safety nets, including single-payer health care. If you really want to make the auto industry competitive, don't force it into a bankruptcy it will never recover from, nationalize the legacy costs instead. It's a no-brainer. Most people support universal health coverage. How about calling for that, instead of just calling for the heads of auto-workers? If you think the economy is in trouble now, just wait until you fire the only secure workforce the country has left.

The UAW has made plenty of mistakes, including supporting the Big Three's efforts to avoid emission controls, but most of their mistakes have entailed offering too many concessions, not too few. If the popular mood is to put the UAW up against the wall, the country will only succeed in shooting itself in the foot.

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1 comment:

D Keane said...

AWESOME. was looking forward to your take on this.