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Look for the Union Label
Author: BobR    Date: 12/03/2008 13:41:55

Once again, the Big 3 auto manufacturers are heading to DC with hat in hand, looking for a bailout. This is generating the usual questions: Should we help them?... How will the money be used to help them survive and thrive?... Who's fault is it that they're failing?....

That last question is important. Without fixing the problem, we're just throwing good money after bad. Naturally, opinions differ as to the cause of the problem. The most popular one is to blame the unions. There is a popular "statistic" floating around about union workers making $70/hr. Here is a refutation to that meme:
According to Kristin Dziczek of the Center for Automotive Research -- who was my primary source for the figures you are about to read -- average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income -- hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.
[...]
But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits -- namely, health insurance and pensions -- and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages -- again, $28 per hour -- and you get the $70 figure. Voila...

There are more details at the link showing how that $28/hr figure is grossly inflated.

Even more evidence that the unions are NOT to blame is the recent news that average total compensation for Toyota workers in a non-union shop in KY is higher than for union Detroit workers:
Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000, boosting the average pay at the Georgetown, KY, plant to the equivalent of $30 an hour. That compares with a $27 hourly average for UAW workers, most of whom did not receive profit-sharing checks last year. Toyota would not provide a U.S. average, but said its 7,000-worker Georgetown plant is representative of its U.S. operations.

So why blame the unions? Unions - for better or worse - are the bane of business management and owners. That's because they use their collective power to demand that they be treated fairly. It seems a bit self-destructive for us non-union workers to denigrate unions when we all benefit from the work they've done, including:
  • A 40-hr work week

  • A 2 day weekend

  • A safe work environment

  • Employer-provided healthcare benefits

  • Child-labor laws

  • Pensions (sadly, on their way out, replaced by 401k matching)

Unions help in other ways as well, including boosting pay for non-unionized workers in the same field (see Toyota example, above).

But let's step back for a moment and look at other businesses that failed: AIG, Lehmen Brothers, banks too numerous to count, ENRON. Did they have unions? No. So why would unions be the problem for carmakers? Also, why aren't all industries that have unions failing? If it's not unions, what do the previous bailout recipients have in common with the automakers?

They have greed, mismanagement, and bloated pay packages for CEOs and other executives.

Executive compensation as a percentage of average worker pay has skyrocketed over the last decade. So has cost cutting, corner-cutting, and lax regulation. The problem isn't the lifeblood of the company (the people doing the work), it's the people sucking the blood out of the company.

There used to be a commercial with a jingle that said "look for the union label", with regards to purchasing clothing. That seems like such an anachronism now. We went from "buy union" to "buy American" to "just go shopping". The middle class has shopped its way out of existence, buying cheap crap from China.

It's nearly impossible to find a union label anymore. It's easy to find people labeling unions, however, and usually with smears and false facts. For the sake of workers everywhere, let's hope we can turn that around.

93 comments (Latest Comment: 12/04/2008 07:20:33 by livingonli)
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