I don't really like to think of the current situation facing the "Big Three" car companies in Michigan as a corporate problem. A problem of stagnant technology and collusion to block innovation (too strong an accusation?), a problem of rich, white collar suits sitting in plush Detroit offices who fly expensively to congressional hearings in DC.
I think of the situation in Michigan as an ever increasing problem facing labor in the United States. Michigan's auto industry is possibly the best example around because it is a remaining bastion of 'strong' union protection. Although that strength has been increasingly eroded over the past few decades.
I get frustrated with people who say, "let the Big Three fail". Their failure isn't just about corporate greed or industry decline. It's about possibly millions of people, working people, average people, who derive their income from those three companies. Not only those who work directly for one of the companies and are members of the UAW, but those who work for companies who deliver parts, repairs, IT support and so many other services that depend on the auto industry.
And then there's the thing that hits a little closer to home. The retirees. Those who took their buy-outs. Who made sacrifices in negotiations in order to secure their lives when they would be on fixed incomes. What exactly are we, as a nation, saying about the value we place on the working class when we expensively bail out rich bankers and then let people who have worked their whole lives MAKING SOMETHING go with nothing in their old age?
From the NY Times:
The debate about saving the U.S. auto industry is both highly contentious and, in one area, intentionally dishonest. The claims that auto worker wages are $70 per hour is patently false. Assembly line workers are paid around $26 per hour. Add in the negotiated fringe benefits specific to the worker, and the wage package is close to $50.
What also is under attack, particularly by Southern senators with foreign-owned auto manufacturers in their states, are the “legacy costs” on the corporate balance sheet today. Legacy costs are essentially that which is promised and payable to retired auto workers in the form of pensions and health insurance for the rest of their lives.
It is important to remember that these benefits are not gifts from benevolent employers. They are the product of collective bargaining and represented something of value to the negotiators at the time. Employer-based pensions and health care protection helped to stabilize the work force.
The now-retired union members contributed a significant amount of their available earnings to help pay for these benefits. Over the years workers voted to forgo portions of direct wage increases based on actual productivity gains and often traded part of their cost-of-living increases for the future benefits.
Also missing in this debate is that retirees had the promise of fully paid health insurance altered in 2005, when the companies demanded and the union agreed to have retirees pay a portion of their health insurance premiums and have deduct it from monthly pension checks.
A persistent subtext in this debate for some seems to be “to save the companies, the retirees have to lose their health care protection.” That’s an outrageous proposition. Because of the early-retirement features in the contracts and the companies’ recent tendency to push workers into retirement through buyouts, a large percentage of the retirees are not yet eligible for Medicare. Hundreds of thousands of retired auto workers and their dependents would wind up with no health care protection if the companies were relieved of this responsibility or do not fulfill the commitments they made to the union-run health care trust funds in 2010.
The irony of all this is that the U.A.W. didn’t originally want the companies to be the health care providers. The union over the early years wanted the auto companies to join with the U.A.W. in its call for a universal health care system, along the lines of the Canadian system.
The U.S. auto executives have refused even though in Canada the companies gain an approximate $1,400 per vehicle cost advantage over American production because of the national health system. The answer all along for the Big Three and our retirees is national health care legislation like Canada’s that can be found in HR 676, the Medicare for All Act.
If what some politicians and pundits are advocating happens and approximately one million retired auto worker families are without health care protection, it will just add another layer to the already existing millions of uninsured in this country. U.A.W. retirees have already paid for their benefits, but the real solution is public policy providing health care for all in America.
The amount of health care costs for GM is truly staggering, along the lines of them being a health insurance company that happens to make cars. Fixing the car product to be reliable and innovative will do nothing to change the fact that there are a lot of old people on the books who will continue to have increasing medical costs. Being from Michigan, and loving Detroit as a city despite its reputation (plus car making family members across the state), I don't want to see the good folks there destroyed any further. The fact is, these car companies never should have been self-insurers, but we don't have a time machine. I still don't think universal health care has the momentum to pass in this highly (too highly) individualistic society of ours. Things are not looking good for the auto workers. Even with union strength, I fear their needs will go unheeded.
Posted by: Ellerby | April 24, 2009 at 02:10 AM