Of Automobiles and Unions

The Senate killed a $14 billion dollar bailout package for the Big Three automakers last night. The reason it was killed; the United Auto Workers refused to give concessions in the form of wage and benefit cuts. I only have one question for the UAW, WHAT???

This is the same UAW that wants the government to bail out the industry so the automakers won’t have to file bankruptcy. Why not? Because under bankruptcy proceedings a judge could order the union contracts to be renegotiated. Wow, so if GM were to file for bankruptcy then they could get out from under their union contracts and become more competitive; sounds good to me so why not let them file bankruptcy? Because the UAW wants its workers to keep their high wages and unheard of benefits packages, that’s why. In a time of economic crisis when most Americans are cutting their spending, conserving and trying to save, UAW wants their members to not have to do that. They should be able to keep spending like its going out of style and enjoying a standard of living we can only dream of.

The average hourly labor costs for the Big Three break down something like this; Chrysler spends about $75 an hour, GM $73 and hour and Ford $70 an hour. The average hourly labor cost for ALL OTHER private sector workers combined is $25 an hour. Is there anybody out there besides me that is surprised, shocked and angry at this disparity? I mean I had heard rumors for years that autoworkers get paid way more than the average working stiff but this is ridiculous! It’s bad enough the CEO’s of these three went to DC the first time pleading poverty while flying in corporate jets but now we see what a racket the auto industry really is.

Now I know there are some out there who will argue that autoworkers don’t really get paid that much and to a point that is true. So let’s do what Paul Harvey always says, no listen to the REST of the story. According to the Heritage Foundation, even though the number they quoted is not an hourly paycheck wage, it is a combination of pay and benefits. Here is a brief breakdown; GM pays about $30 an hour on average while the rest is broken down into medical, dental, life insurance, disability, Supplemental Unemployment Benefits (this is a neat little golden egg, if a worker is laid off he receives his FULL PAY), pension plans for active employees, unemployment compensation and payroll taxes. GM has approximately 3.8 retirees or dependents per active worker but those retirees are not included in that $73 an hour we talked about earlier. No, if they were to include THOSE benefits the labor cost estimate would be A LOT higher than $73 an hour. The UAW, on the other hand, makes the assertion that the labor costs quoted do include those retirees but they have NEVER provided any solid evidence to back that claim.

So why should we the taxpayers have to support those kinds of compensation packages when we only get a fraction of that? Some will argue to me that feeling is sour grapes and maybe it is but I just do not understand how those jobs can justify those wages. I know talented, knowledgeable technicians who make less than $20 an hour. These are people who have been through some of the hardest technical schools in the country and have been in the industry for many years. The average autoworker, on the other hand, does one specific job routine (which usually does not require much in the way of brainpower or education) and is making closer to $75 an hour. So let me ask my first question again, HUH??? My solution to this problem is this; let the automakers go bankrupt. This way they will be forced to restructure in order to cut costs. Yes, that would leave the UAW in the cold and I think that is a good thing. Unions are pricing American labor out of the labor market; companies are outsourcing so they don’t have to pay for that labor. The unions are dinosaurs that have lived past their prime; it is time to put them out of our misery.