It's interesting that while no one knew exactly what the consequences would be if the U.S. Treasury failed to ride the rescue of mismanaged big banks, everyone pretty much DOES know what the consequences will be if Congress stiffs the mismanaged and cash-strapped domestic auto industry. Yet a significant portion of the political establishment, and a preponderance of people within the corporate media establishment, seem to care very little. That's too bad.
It may not be not quite 1 in 10 U.S. jobs that will disappear if these companies go out of business. But it's a heck of a lot of jobs, and not all of them are in the Rust Belt (as if leaving the damage there ought to make anyone feel good).
I worked in Detroit for eight years running communications at Solidarity House, the UAW headquarters. When I showed up there, 26 years ago this month, auto sales were way down and the union had close to 300,000 Big Three workers on layoff, all of them collecting Supplemental Unemployment Benefits thanks to their union contracts. Reporters took the mass layoffs very seriously; so did state governments. Even though the SUB pay was pretty good, everyone wanted those workers back on the lines, making their full wage and paying the taxes that kept all kinds of wheels turning throughout the real economy.
I'm told that today's Big three employ only around 140,000 hourly workers in total. That's shocking, and the numerical diminishment of the core unionized workforce is doubtless one reason so many politicians and pundits seem prepared to let the whole thing go down. Some senators and representatives from states where non-union "transplant" automakers operate (these include Ohio, Tennessee, Kentucky, South Carolina, Virginia, Alabama, and Texas) also seem to think that a Big Three collapse won't affect them. They could not be more mistaken.
Auto and auto-parts manufacturing is an integrated business in every sense. Not only do Big Three-controlled parts suppliers also ship parts to "transplant" factories, but it's still good UAW wage levels that set the pace for base compensation in ALL auto assembly facilities, whether in Michigan or in Alabama. This why keeping those UAW men and women making cars and trucks turns out to be a critical matter for the whole economy. If they are made to punch out for the last time, thanks to Congressional indifference, it won't be just 140,000 hourly wage workers who will stop bringing home $67,500 a year; suddenly there will no longer be any incentive for Toyota, Honda, and Nissan to peg their pay rates to those levels, which they currently do as part of their union-prevention business plans.
And that goes to the core issue. All of the well-paid journalists and B-school types who have been braying that bankruptcy is the way to put things right at GM are really saying that bankruptcy is the way the companies can finally, some 72 years after the first wave of sit-down strikes, wriggle out of their union contract obligations.
Sure they can; that is exactly what they will do in the event of bankruptcy. And then what?
The nation is said to be in need to some bottom-up economic stimulus. And NOW we're going to tear down what remains of the country's manufacturing core? We're going to say good-bye to companies that collectively (and again, because of union bargaining power) provide health coverage for two million people (their direct employees, dependents, retirees, and supplier employees)??
Yes, I know: it drives some otherwise-progressive people nuts that there can be Americans out there who don't have fancy degrees and who don't shuffle paper with uncalloused hands but who can still make $67,500 by bending metal. Everyday manual workers who can actually support a family, enjoy a vacation, and not worry about the cost of getting sick.
I swear I just don't understand the source of the intellectuals' rage about this.
I guess they must prefer the Wal-Mart model, where full-time workers (and Wal-Mart defines "full-time" as 34 hours per week) make just $19,200 annually. Of course it is their privilege to believe that a low-wage economy is the right path for 21st-century America. But then let's hear no more from them about bottom-up economic stimulus. There is no real bottom-up approach that even begins to compare with strengthening, not destroying, workers' bargaining power.
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