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For the UAW, Obama Spares the Rod

Here's this from the New York Times story today:

"Although some observers of the auto industry have attributed Detroit’s troubles in part to generous wages and health benefits for assembly line workers, the president made no mention of those factors. 'The pain being felt in places that rely on our auto industry is not the fault of our workers, who labor tirelessly and desperately want to see their companies succeed,' he said."

First and foremost, the President makes the fundamental mistake of equating "workers" with "unions." The gap between them was established long ago, about the time unions started caring more about themselves and their own self-preservation than the workers they were compelled by law to represent.

Second, look at this chart, which sums up the gap in compensation between the Detroit 3 and the so-called "transplants." It was taken from Chrysler's submission to Congress late last year. Note the compensation rate of over $70/hour, with a wage rate of $26/hour. The Toyotas and Hondas of the world (Honda alone directly employs some 27,000 US workers) have similar wage rates but a compensation rate of about $45/hour - $25 less than their Detroit 3 competitors. The gap is something the UAW loves to brag about but which is dragging under the Detroit 3.

Yet late last year, the UAW made clear that concessions were "out of the question.... 'Workers and retirees have already made significant sacrifices,' said UAW lobbyist Alan Reuther at the time, 'We feel we've already stepped up.'"

If so, that's not clear to anyone else, certainly not the overwhelming majority of taxpayers who can only dream about the lifetime benefits that the UAW enjoys. The truth is, the companies couldn't afford those promises when they made them and the UAW knew it.

According to the Times story, Obama said there had been, "A failure of leadership" in the industry. He is right, but he should acknowledge what everyone else has figured out, i.e., that this failure sat on both sides of the bargaining table.

The UAW should take its medicine. For starters, Gettlefinger must go.


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Comments (1)


The compensation rates for the Big Three will always be much higher because these companies provide more generous health care coverage than Toyota or Honda does to its US employees. Also, lest you forget, The Big Three still pays traditional pensions to their retirees and will to most of current workforce under a UAW contract. New hires, should there ever be any, have only a 401K. So-called legacy costs and healthcare costs make an extreme difference, but a necessary one.

Ordinary American workers deserve to collect their bargained wages under a UAW contract, just like Rick Wagoner walked away, today, under his "employment contract." What was it, $20 million? Where's his sacrifice?

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