Bailout: Should We Or Shouldn’t We?
The UAW is making more concessions to help their industry. President Ron Gettelfinger says his members will sacrifice job security provisions and financing for retiree health care.
Currently, the average U.A.W. member costs G.M. about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions. Toyota, by comparison, spends the equivalent of about $45 an hour for each of its employees in the United States.
Base wages between the Big Three and the foreign companies are roughly comparable, with a veteran U.A.W. member earning $28 an hour at the Big Three compared to about $25 an hour at Toyota’s plant in Georgetown, Ky. (Toyota pays less at its other American factories.)
But the gap in labor costs becomes larger when health care, particularly for thousands of retirees and surviving spouses, and job security provisions are considered.
Mr. Gettelfinger said Wednesday that the union would suspend the much-criticized “jobs bank” program, which allows laid-off workers to continue drawing nearly full wages.
He also said the union would agree to delay the multibillion-dollar payments to a new retiree health care fund that the automakers were scheduled to start making next year.
Beyond those two concessions, Mr. Gettelfinger said the U.A.W. would be open to modifying other terms of its contracts. Changes could include reductions in wages, health care or other benefits, and would require approval from union members.
Is there enough public support to help these workers now?
Alan,
I do not support the bailout, neither for the financial industry nor the private companies. I asked my representative to vote “NO”.
These companies made their own decisions and they should live with those decisions. Nobody helps me when I make bad decisions.
We should let them fail and start over again. We learn by experience not by letting someone pull us out of the hole without learning the hard lessons.
I am not confident that we will ever get out of this mess.
December 4th, 2008 at 1:04 pm
My question is why was congress so eager to bail out the white collar workers (Wall Street) with no accountability, but not so much the blue collar workers?
December 4th, 2008 at 1:53 pm
“Currently, the average U.A.W. member costs G.M. about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions.”
Only if you include all the retirees (roughly one retiree for each active employee) in your calculus can you get to $74. As discussed before, $74/hr is typically a number only the rightwing press uses to prove how rich and fat UAW people are.
Of course, it’s nonsense.
Rick Wagoner makes (or did make) $3.5M/year as the CEO of GM. Jack Smith (Wagoner’s predecessor as GM CEO) is retired and still presumably drawing a GM check.
Assuming Smith’s check is the same as Wagoner’s, would it make any sense to lump Smith’s retirement check into Wagoner’s pay and claim GM’s CEO is costing them $7M/year?
December 4th, 2008 at 3:19 pm
Although I don’t personally like government bailouts, I do think this one is critical to the U.S. economy. Not only are the Big 3 jobs in jepordy but tied to the auto industry are approximately 3 to 5 million other related jobs. We just cannot afford to let that happen. I think that in the end Congress will give the auto industry the money, or should say, lend the money.
December 4th, 2008 at 3:41 pm
I don’t know Willy, there are a lot of jobs tied to the Airline industry too, and yet we let them go into bankrupcy without a thought. There are still airlines and people can still fly in a plane. Do you think that all 3 auto companies will just disappear?
The Big 3 claim that bankrupcy is not an option because people would not buy a car from a company in bankrupcy because of fear that the warranty might not be honored if it went out of business. Frankly, the CEO’s begging for bailouts because of how dire their financial situation is doesn’t inpire alot of confidence in their future either.
December 4th, 2008 at 5:29 pm
I don’t support any bailout of the AIG golf/spa club – but the Republicans forced that one through – but I do support the LOAN to the AMERICAN auto industry because as a patriot, I have a little slogan “COUNTRY FIRST” – you may heave heard it – unlike say Senator Richard Shelby – the best politician money can buy – whose pockets are lined with backhanders from sweetheart deals to Honda, Hyundai and Daimler paid for with gasp – U.S. taxpayer’s money.
December 4th, 2008 at 5:47 pm
No bailout. Let them restructure.
December 4th, 2008 at 6:59 pm
I agree, Jake. It seems congress had no problem bailing out the banks, but are dragging their feet helping the American car companies. Too many people will lose their jobs if they let these companies tank.
December 4th, 2008 at 9:03 pm
Letting them file for bankruptcy does not mean they will tank. It does mean that the unions will lose a LOT of their power…whcih by the way the economist on the hill today told them if they don’t change they will fail regardless of how much money you throw at them.
they are broken the way they are, they can’t compete with their mindset, and it will be a total waste of money.
The first bailout didn’t help and neither will this one.
December 4th, 2008 at 9:15 pm
T. Mason:
Who do you think will suffer if you let these companies go bankrupt? The CEO’s? Trust me, you don’t have to worry about them. They have tbeir golden parachutes (much like your heroes in the banking industry). No ma’am.
It’s a sad day when people blame the unions for the screwups of the CEO’s.
December 4th, 2008 at 9:35 pm
Look, This isnt a class issue (white collar vs. blue) so don’t turn it into one. Bank Bailouts i understand… our money being loaned for us to use through banks, AIG… i have some problems with…. but The Big Three? Why bailout big businesses which can’t self sustain? Bail out or chapter 11 employee cuts will occur either way so that arguement is void. Why should the big 3 (private business) get a bail out? only because they are so large… what about the small companies? If the big three go under then smaller companies will fill the created void. These companies have grown too large to sustain (along with many other areas of america).
Its like Forrest Gumps Momma said…. “Dying is a part of livin”
December 4th, 2008 at 11:32 pm
I blame the CEO’s, but I cannot go on without putting blame on the UAW also. When you have benefits such as the auto workers and their retirees with their health plans and basically full pay for two years if they become laid off, etc. adding up to over $80 and hour, no wonder the industry is in such trouble. I do admit that the brass at the big 3 also signed the deal with the union, and that is where I put some blame on the companies.
They have to get the benefits back in sync with the economy to where they don’t have an immediate disadvantage with the foreign auto makers.
December 5th, 2008 at 8:27 am
Yes ,bail the big 3 out. To many jobs at stake.
December 5th, 2008 at 8:36 am
I agree, Steve. Because the first to go would be the workers.
December 5th, 2008 at 1:42 pm
What really gets my goat is how conservatives are so willing to let the big 3 go under but nowhere near this level of outrage for bailing AIG or the banks. This idea that we have to stop this bail out stuff right before we aid the American companies who are inter-linked into our country in multitides of ways. The industry can’t be allowed to die without doing serious harm to our continued strength as a nation.
Bottom line is that cons see an oppurnity to destroy or cripple a huge union and they can’t pass it up. Let’s remember that people have the right under the Constitution to organize and form unions. The only recourse for an enemy of the unions is to cut off their arm to stop the ‘infection.’ I question if Romney or any big fan of letting them die really wants the loss jobs and national wealth but they are willing to accept these as costs of destroying the union. It’s sick really. Cons are calling for people to lose their jobs and have one of our most robust industries crumble all in the name of ideology.
December 5th, 2008 at 2:59 pm
Eric,
As painful as the big 3 going under would be, it is NOTHING compared to the global disaster AIG going under would be.
Which is why we need more regulation, there shouldn’t be ‘can’t fail’ businesses.
(I, personally, support US Gvt. involvement in keeping the big 3 from going under, by the way)
PS. I really like how some folks who are opposed to universal health care are also berating the big 3 for providing health care to their employees.
December 5th, 2008 at 3:05 pm
People keep talking like ‘letting them fail’ would mean the companies would cease to exist. Most every airline has gone through bankrucpy and yet they still exist and they still have their unions. They have restructured, combined and the weaker ones have gone away. Hopefully, the remaining companies are stronger. The auto industry needs the same thing.
I think Ford’s strategy should be to oppose the bailout. People are saying GM will fail before the end of the month without one, but Ford will be OK until 2010. Wouldn’t Ford’s business gain substantially if GM went into bankrupcy or failed? Just a thought.
December 5th, 2008 at 4:41 pm
1) Jeffrey Sachs of Columbia University’s Earth Institute made an articulate and compelling case today as to why Washington should support the U.S. domestic auto industry. Alan, he would make a great guest on your radio show.
2) I find it ironic that one of the numerous casualties of a failed U.S. domestic auto industry would be the loss of car dealerships in communities across the U.S. — the dealerships which generously support their local softball leagues, boy scouts, girl scouts, hospitals, churches, etc — all those “family value” type things the Republicans love to talk about when they are running for office. And now, at best, so many of them have entrenched themselves in a laissez-fair attitude regarding the Sunnami effect of their non support of the U.S. domestic auto industry.
I guess they were talking about white collar banker family values.
December 5th, 2008 at 6:23 pm
You tell me any other job where you continue to get paid by your employer when you aren’t working? How about having a job bank? You don’t wanna blame the unions? Bull.
Letting them file for chapter 11 doesn’t mean they will pass in the wind. They will have to restructure.
December 5th, 2008 at 10:34 pm
No!
They, and the related industries will have to figure it out on their own.
If we do, where does it stop? Will we REALLY get our money back in a reasonable amount of time? And WHY in the F%^K are they just now coming to the table for help when all along the companies have been failing? The dumba$$ people making the decicions for these companies obviously didnt treat their survival like a cancer patient; there was no preventative action taken. They have waited too long, provided nothing for consumers except crap that you MUST buy a warrantee. Now it has left them the only choice but to ask for a stupid large amount of money when as I say, could have been less painful if they took action long before.
I live in a state where we are really hard-up for money if you will. People here bust their ass day in and throughout the night, on the hardest most unforgiving days of bad weather making SH$T money compared to the Union workers. If you notice, Mainers don’t complain much about that sort of thing.
The union drove our papermills out of business. The cars produced are terrible in relation to what they cost for the quality. Yes I understand about the many tied to the industry, but its time. The hand is falling on the childs ass ! They must learn from it and make changes for the better without multi BILLION $ pillow!
Sorry, but I do not favor a bailout. We will figure out how to get through it, but a bailout to these guys is not fair. What about every other business going down. Yes I understand your companies will have the largest impact as opposed to others.
December 7th, 2008 at 11:45 am