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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Real Agenda of Auto Bailout Opponents: Gut the UAW, Weaken Unions

Bruce Raynor, president of Unite Here, one of America’s largest trade unions, has a L.A. Times article, “UAW Busting, Southern Style,” that sheds light on the opposition of southern Republican Senators to the Auto industry bailout and really, unions in general. As Raynor explains:

Last week, Senate Republicans from some Southern states went to work trying to do just that, on the foreign car companies’ behalf. Senate Minority Leader Mitch McConnell (R-Ky.), Sen. Bob Corker ( R-Tenn.) and Sen. Richard C. Shelby (R-Ala.) — representatives from states that subsidize companies such as Honda, Volkswagen, Toyota and Nissan — first tried to force the UAW to take reductions in wages and benefits as a condition for supporting the auto industry bailout bill. When the UAW refused, those senators torpedoed the bill.
They claimed that they couldn’t support the bill without specifics about how wages would be “restructured.” They didn’t, however, require such specificity when it came to bailing out the financial sector. Their grandstanding, and the government’s generally lackluster response to the auto crisis, highlight many of the problems that have caused our current economic mess: the lack of concern about manufacturing, the privileged way our government treats the financial sector, and political support given to companies that attempt to slash worker’s wages.

Raynor also cites a “staggering” double standard in the way southern Republicans treat workers in the auto industry, compared to employees in the financial sector, and notes,

In the financial sector, employee compensation makes up a huge percentage of costs. According to the New York state comptroller, it accounted for more than 60% of 2007 revenues for the seven largest financial firms in New York.
At Goldman Sachs, for example, employee compensation made up 71% of total operating expenses in 2007. In the auto industry, by contrast, autoworker compensation makes up less than 10% of the cost of manufacturing a car. Hundreds of billions were given to the financial-services industry with barely a question about compensation; the auto bailout, however, was sunk on this issue alone.

He explains that the UAW has already made major concessions:

Its 2007 contract introduced a two-tier contract to pay new hires $15 an hour (instead of $28) with no defined pension plan and dramatic cuts to their health insurance. In addition, the UAW agreed that healthcare benefits for existing retirees would be transferred from the auto companies to an independent trust. With the transferring of the healthcare costs, the labor cost gap between the Big Three and the foreign transplants will be almost eliminated by the end of the current contracts.
These concessions go some distance toward leveling the playing field (retiree costs are still a factor for the Big Three). But what the foreign car companies want is to level — which is to say, wipe out — the union. They currently discourage their workforce from organizing by paying wages comparable to the Big Three’s UAW contracts. In fact, Toyota’s per-hour wages are actually above UAW wages.
However, an internal Toyota report, leaked to the Detroit Free Press last year, reveals that the company wants to slash $300 million out of its rising labor costs by 2011. The report indicated that Toyota no longer wants to “tie [itself] so closely to the U.S. auto industry.” Instead, the company intends to benchmark the prevailing manufacturing wage in the state in which a plant is located. The Free Press reported that in Kentucky, where the company is headquartered, this wage is $12.64 an hour, according to federal labor statistics, less than half Toyota’s $30-an-hour wage.
If the companies, with the support of their senators, can wipe out or greatly weaken the UAW, they will be free to implement their plan.

The southern Republicans have long parroted the meme that the wage and benefits gains won by the UAW over the years have somehow “artificially” inflated wages of union workers, while non-union southern auto workers receive “fair” compensation. It’s all about blaming the workers, instead of Big Auto’s crappy management. They would like to keep millions of Americans ignorant of the UAW’s historic role as the nation’s cutting edge union in terms of wages, benefits and working conditions, which did more to expand the middle class than has any other institution in American life. As Harold Meyerson explaned in his recent WaPo op-ed, “Destroying What the UAW Built“:

In 1949, a pamphlet was published that argued that the American auto industry should pursue a different direction. Titled “A Small Car Named Desire,” the pamphlet suggested that Detroit not put all its bets on bigness, that a substantial share of American consumers would welcome smaller cars that cost less and burned fuel more efficiently.
The pamphlet’s author was the research department of the United Auto Workers.
By the standards of the postwar UAW, there was nothing exceptional about “A Small Car Named Desire.” In its glory days, under the leadership of Walter Reuther, the UAW was the most farsighted institution – not just the most farsighted union – in America. “We are the architects of America’s future,” Reuther told the delegates at the union’s 1947 convention, where his supporters won control of what was already the nation’s leading union.
Even before he became UAW president, Reuther and a team of brilliant lieutenants would drive the Big Three’s top executives crazy by producing a steady stream of proposals for management. In the immediate aftermath of Pearl Harbor, Reuther, then head of the union’s General Motors division, came up with a detailed plan for converting auto plants to defense factories more quickly than the industry’s leaders did. At the end of the war, he led a strike at GM with a set of demands that included putting union and public representatives on GM’s board….by the early 1950s, the UAW had secured a number of contractual innovations – annual cost-of-living adjustments, for instance – that set a pattern for the rest of American industry and created the broadly shared prosperity enjoyed by the nation in the 30 years after World War II….The UAW not only built the American middle class but helped engender every movement at the center of American liberalism today – which is one reason that conservatives have always held the union in particular disdain.

Meyerson concludes,

In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards – in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build.

With the nomination of Hilda Solis to head the Department of Labor, the incoming Obama Administration has sent a clear signal to the southern Republicans that their plan to gut the UAW and weaken trade unions will be blocked. Solis is a strong champion of the Employee Free Choice Act (EFCA) needed to get more workers union representation and an unflinching advocate of trade union growth. If the Obama Administration — along with a coalition of congressional Democrats and a few moderate Republicans — give Solis the support she needs, a strengthened trade union movement could serve as the engine that drives economic recovery and expanded prosperity.
American progressives and the blogosphere in particular have a critical role in building this coalition. It starts with more effectively debunking, in simple, cogent terms, the GOP’s bogus meme that EFCA is a threat to our national tradition of “secret ballots.” With that accomplished, we can help revitalize the trade union movement and light the path forward to a new era of hope and broadly-shared opportunities.

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