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Busting The UAW November 20, 2008

Posted by Kate Ryan in Economy, National Politics.
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One of the most-repeated points in support of auto industry bankruptcy that I have heard is that bankruptcy would allow the auto makers to negate labor contracts and long-term legacy costs (pensions and health care).  The theory is that paying lower wages and benefits and phasing out pensions in favor of 401Ks would magically make the Big Three profitable.  This approach lays the blame for the problems of the auto industry at the feet of the unionized workers – the members of the UAW.

What balderdash!

The Big Three and many of its suppliers have been at war with the UAW for several years.  Generally, the union has not been on the winning side of the equation.  For the American auto worker, the past five years has been a merry-go-round of give-backs, concessions, lay-offs, and buy-outs.  There have only been decreases to the wage and benefit packages that the automotive workers have received – but has the price of a car gone down?  Of course not.  Any savings were passed on to the fat cats at the top in the form of bonuses or to the stockholders in the form of dividends.  Yet, the unionized auto worker is being demonized for having a decent wage, health insurance, and a pension.

On the Newshour with Jim Lehrer on PBS last night, GM CEO Rick Waggoner explained that his company has spent the past three years shoring up the pensions so that they are fully funded, they have worked with the UAW to create savings wherever possible, and have trimmed their workforce and excess capacity.  What they need now is cash to continue operating.  How is that the fault or responsibility of the Union?

When the Republicans on Capitol Hill steadfastly refuse to approve these loans – knowing the consequences to middle-class America – it becomes clear that this is all about busting the Union.  The UAW is one of the few left with a robust membership.  It would be a great legacy for the free-marketeers to take it out.

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