These bailed-out workers took a real hit:
Among workers building the Jeep Grand Cherokee here, there are few obvious distinctions. Clutching lunch sacks and mini-coolers, they trudge together through the turnstiles at the plant’s main gate each day to tinker with the same vehicles, along the same assembly line, performing the same tasks. Yet they fall into distinctly unequal classes: About half make $28 an hour or more, while the rest, the recently hired, make $14. This oddity, which could become the norm in much of the domestic U.S. auto industry, arises from the jury-rigged labor agreement that the United Auto Workers, U.S. automakers and the federal government reached during the industry’s near-death experience last year.
“The idea of the UAW and the steelworkers negotiating so that workers could make it into the middle class, of allowing them to make it as manufacturing workers — that is all gone,” Gary Chaison, professor of industrial relations at Clark University. “And it’s difficult to see how they will be able to find their way back.”
The two-tier agreement “effectively ends many of the principles established 70 years ago in the UAW’s birth,” Bill Parker, a negotiating committee leader, wrote in an unusual dissent. “For years, the UAW embodied industrial unionism and the gains of the New Deal. So goes the UAW, so goes the American middle class.”
More here
Davis X. Machina
Welcome to Donner party conservatism.
I can’t beat John Holbo, so I’ll just quote him.
There was a time a UAW worker didn’t have to crouch. Now he or she does. And that is accounted ‘progress’.
Elizabelle
Kay: I am so glad to see you posting threads here. Your comments have been incisive and spot on.
rootless_e
That is a stirring bit of writing. Sadly it’s up to the usual WAPO level of truthiness. The terrible two tiers appeared well before the bailout.
http://detnews.com/article/20070926/AUTO01/709260398/Sides-hammer-out-two-tier-wage-deal
General Stuck
This is not a good situation for all concerned. It seems like a recipe for dissent and disgruntlement that will eventually harm the company and all of it’s workers. You can’t have two people doing the same job with one doing it for half the pay and expect any kind long term productive workforce.
I suspect it will be remedied at some point, if American auto maker management extracts it’s head from it’s short term profiteering ass and become creative thinkers with long term viability as the primary focus. Which of course, is the pervasive problem throughout our business sector, idiots fixated only on the next quarterly profit report, because instead of getting a gazzilion dollar bonus, they might pull a jillion or two, depending on their level of fail.
kay
@rootless_e:
In their defense, it’s in there. This was an expansion of the 2007 agreement, to include a tier system for all in-plant workers.
kay
@rootless_e:
rootless_e
@kay: ok, but the lead is deceptive.
good thing they noticed, maybe too late.
r€nato
@Davis X. Machina:
What boggles and infuriates me, is how many average Americans cheer on the union-busting. Hello, moron, even if you don’t belong to a union, even if your industry’s workforce is not unionized at all… supporting the demolition of the middle class leads to downward pressure on ALL wages and salaries.
People are idiots if they don’t think that Wall Street doesn’t ask itself, ‘why are software engineers getting six figure salaries when we’ve successfully broken the industrial unions?’
And now you have the situation where those jobs were offshored, and now are coming back… only American software engineers are expected to work for something like India salaries.
It’s class warfare. Why do so many middle class Americans want to be on the receiving end of that? First they come for the trade unionists… then they come for the engineers and the account executives and the trainers and all the other people who thought surely it’s only those lazy slobs in Detroit who ‘make too much’.
Violet
From the article:
Aren’t the car manufacturers opening plants in southern states where they don’t have to worry about those pesky unions? Seems like the guy in the above quote is making about what he made in Texas, but he’s closer to his family.
Alex S.
I am cross-reading (bad habit of mine) this post with a post at 538 ( http://www.fivethirtyeight.com/2010/07/labor-force-realighment-and-jobless.html ), and I am also reminded of Jim Webb’s op-ed in the WSJ. There is a sad story in there, but I am not completely convinced of it, yet (about the Democratic Party having abandoned classic workers – who are a dying breed and whose services are only wanted at a wage level too low to make a living in a first-world country.)
NobodySpecial
@r€nato:
As the sign says, they only call it class warfare when we fight back.
Derelict
Since we’ve set the playing field to “GLOBAL,” American workers are now going to compete with workers everywhere.
And in the grand tradition of capitalism, the work will go to the place with the best natural advantage–namely, the cheapest labor.
So, America: Welcome to the New World where you, too, get to work for 35 cents a day. And you will like it, damnit!
kay
@rootless_e:
Yeah. We agree. I think it is too late. Maybe this will end the persistent myth among media and GOP mouthpieces that Big Labor wield all this fearsome clout and are an effective counter-balance to business and moneyed interests, because that hasn’t been true for a long time.
Sad, but true.
burnspbesq
@Violet:
Substantially all of the assembly plants in the South are owned and operated by subsidiaries of foreign manufacturers. It started with Toyota in Kentucky. They’ve managed to keep the unions out, mostly without blatantly violating US labor laws, by bringing thousands of pretty good jobs to places where there weren’t any good jobs, and by taking reasonably good care of their workers. There are exceptions, of course: the Mitsubishi plant in downstate Illinois was a mess for a very long time. But if you talk to, say, the average BMW worker in Spartanburg, South Carolina, you’re not going to hear a lot of discontent. Being a non-union assembly worker at BMW beats being a non-union checker at Food Lion, or having no job at all.
Ailuridae
@Violet:
Well TX may be an anomaly but most of the southern auto plants are paid for with state level incentives and tax exemptions that are ultimately paid for by the northern states that lose the jobs to them.
Its dishonest to suggest that a state like SC, LA, MS or AL can provide state level tax incentives when those states are basically destitute and completely dependent on the federal government for their existence. They’re basically just digging their financial hole deeper knowing that northern/Blue states will pick up the burden of supporting their insufficient revenue stream.
stuckinred
@burnspbesq: KIA in Georgia.
Ailuridae
@burnspbesq:
FWIW, the Mitsubushi plant in Normal is a UAW plant
Violet
@burnspbesq:
Yeah, I think it’s Toyota that opened a plant outside San Antonio. Probably all foreign car manufacturers.
@Derelict:
Yep. There’s really no way to go back. There will always be jobs that can’t be outsourced, like fixing the roof on your house or cutting down that dead tree in your yard, but most everything else can be done more cheaply elsewhere and Americans will have to compete. Lawyers are already feeling the sting of outsourcing and being a lawyer used to be cushy white collar job.
Personally I’m looking forward to the day that CEOs get outsourced because CEO labor in India or China or Zambia can do the job for a quarter the cost.
rootless_e
@Violet:
Unfortunately, outsourcing is not really based on economics as much as power.
wobbly
This is not a new phenomenon. In 1991, Delco Products Division of General Motors in Rochester, New York was operating with an 11 TIER wage structure, negotiated by the International Union of Electrical Workers, Local 509. I’m not absolutely certain, but I believe Rochester Products Division, represented by the UAW, was doing just about the same thing.
Concession after concession after concession, just postponing the inevitable. Delco is no more, Local 509 is no more, Rochester Products is just another eyesore on Lexington Avenue.
General Motors is doing quite well in China, however.
http://www.sltrib.com/sltrib/money/49979042-79/china-billion-million-vehicles.html.csp
They build there and they sell there. Robert Reich said something recently on ABC’s much despised This Week that he found it truly alarming that American corporations are increasingly “decoupled” from the American economy.
In other words, first the corporations found out they did not really need American workers. Now they’ve found out they don’t need American consumers either.
I’ve met very few American workers or American consumers
who’ve wrapped who’ve wrapped their heads around that simple fact. I haven’t done it myself, actually.
Too depressing.
I guess it’s post recipe time? Cat blog? Anyone?
burnspbesq
@Ailuridae:
Which didn’t keep a pervasive climate of sexual harassment from developing at the Normal plant. The allegations in the two lawsuits in the 1990s were enough to turn anyone’s stomach.
burnspbesq
@wobbly:
Having been schlepped around Dongguan, China in a Chinese-manufactured GM van, I can assure you that that is a product that cannot, under any circumstances, be sold in the US market. The quality simply is not up to what US consumers expect.
rootless_e
@wobbly:
It’s worth reading Immelt’s interviews
http://money.cnn.com/2010/07/15/news/companies/Jeffrey_Immelt_GE.fortune/index.htm
Mnemosyne
@rootless_e:
I’m not sure that’s an argument against it ever happening, given the ongoing corporate consolidation where you can end up with CEOs at various divisions of the company. I’m guessing that GE’s CEO would leap at the chance to get someone cheaper to run, say, NBC Universal.
Violet
@rootless_e:
The two are related.
Ailuridae
@burnspbesq:
Err, what? You were making a point about non-Union plants in the South having no problems taking care of their workers. You cited the Normal Mitsubishi plant as an exception to that and I pointed out that its not really an exception as its not a non-union plant.
rootless_e
@Violet: Often, it seems to me that US firms have outsourced on culture alone: that is, management is convinced that labor costs dominate production costs, and since they don’t actually understand the process by which the firm produces whatever it is that it produces, they go with the peer pressure and outsource. I
Kyle
@Alex S.:
The other side of that coin is the white working class who abandoned the Dems because, after titanic efforts over decades to raise their standard of living lowered their economic anxieties, they started voting for the Repigs who were shouting “Jeebus, guns, n*99ers”.
It’s difficult for me to feel sorry for people who are so attached to their social prejudices, fears and superstitions that they vote against their own economic interests, then bitch about their lowered standard of living. If you hate being screwed by corporations, stop voting for the corporate whore even if he claims to believe in the same specific brand of invisible sky-daddy that you do.
wobbly
@rootless_e:
Does it matter? Chinese working for GM make crappy cars that Chinese consumers buy.
GM makes money.
I went to work for General Motors in 1976, and the first thing my IUE Local 509 comitteeman told me was:
“General Motors isn’t in business to make cars. General Motors is in business to make money.”
rootless_e
@wobbly:
Yeah, that’s what they said, but they didn’t make money either – except for their bankers and managers. Imagine that.
rootless_e
@wobbly: Robert Reich can kiss my ass. I’m so tired of his fake labor militant act and making things up approach to mere facts.
Davis X. Machina
@rootless_e: Not strictly true — GMAC made lots of money.
dre
rootless_e:
My understanding, though I can’t recall where I read it (book? article? here?), is that CEOs didn’t decide this was the way to go because the cool CEO in the next block did it first. Rather,their Wall Street masters told the CEOs that their evaluations of their company’s stock depended on evidence that they had outshored jobs, etc.
Wall Street has been the gift that’s been giving for decades now. I’m pretty sure they were talking about two-tiered wages in the late 1980s. They were certainly moving shops from the unionized midwest to the south back then.
KG
@wobbly:
Well, yes and no. The US population still makes up about a quarter of the world population. And a great deal of wealth is concentrated here (side question: where would you rather be “poor”, in the US or in China?). It would be foolish for mega-corps to ignore the US. But it would also be foolish for them to ignore the rest of the world.
I’ve kinda taken a bit more of a holistic approach to trying to understand economics because so much of it is inter-connected. Supply and demand, management and labor, etc. I am not a big fan of the zero sum game that a lot of people play, and think that there is a better balance. Maybe it’s just naiveté on my part, but I really do think that it is possible to do things that result in benefits to all sides.
Davis X. Machina
People often do things that aren’t strictly rational, or net-advantageous, for religious reasons. I think this is the case here, with worship of The Market*. It’s capital acting in parallel to the workers voting against against their self-interest, as sketched by Franks in What’s the Matter With Kansas.
*It’s good to see the Golden Calf make a comeback late in the series, just when you thought the character had been written out.
General Stuck
@Kyle: Welcome to the Idiacracy.
sneezy
@KG:
WTF? It’s more like 4.5%.
demo woman
Shirley Sherrod’s message got lost in the black/white issue. It’s a have/have not issue. The media pretends its a race issue because they don’t want to report the truth. Four Hundred families control the wealth in our country. They want their tax cuts and they certainly don’t want to spread the wealth. If they keep the message on race that ignores the larger point.
KG
@sneezy: shit, sorry, thinking GDP for some reason
Corner Stone
@Violet:
I think we all know the CEO is the indispensable position in the company.
Don K
@rootless_e:
I won’t speak to other industries, but after almost 30 years in the auto industry I can say the execs know their processes and where the costs come from (over the years the execs have been guilty of many things which I won’t go into here for lack of space, but not knowing their costs isn’t one of them).
Labor costs aren’t the dominant variable cost of a car (although with the cost of providing 30 and out retirement and complete medical and dental care after retirement they’re larger than you might think), but they’re the most controllable one. Steel costs whatever it costs. The same for glass, wiring, tires, iron or aluminum for engines, etc. People are the variable cost with the largest variance from place to place, whether within the U.S. or worldwide.
The UAW’s ability to negotiate above-market wages and benefits came about in a time (say 1955-1976) when the U.S. manufacturers consistently held 85-95% of the U.S. market, and imports were regarded as quirky cars bought mostly by the oddball fringe of car buyers. Once that era was over (due to a combination of self-inflicted wounds and improved imported cars), the UAW was reduced to trying as best it could to preserve what it had.
Unfortunately for the Detroit Three and the UAW, there weren’t enough car buyers willing to overlook cost issues and (hopefully past) quality issues to allow the Good Old Days to continue.
Corner Stone
@r€nato:
They were offshored, executives received a fortune in bonuses for cost reduction, then the layered overhead became apparent and they tried desperately to keep round-robining those tasks to cheaper cost jurisdictions.
But eventually it could no longer be ignored that the work was not actually being done in a more cost efficient manor by offshored labor.
So they brought those jobs back to a depressed labor force and told the people they hired how lucky they were to have a job at 2/3rds what they used to make.
Funny, but somehow the executives never had to give back their bonuses.
Malron aka eclecticbrotha
As rootless pointed out, the two-tired system began before the government bailout. As kay explained, its buried in the article she linked to. Ford began to institute it as part of their bargaining agreement reached with UAW in 2007. As one member of the Big Three goes, so go the others as far as pay scales go.
A lot of attention was paid to the obstruction of southern senators who openly did the bidding of foreign auto companies by trying to prevent the bailout, but I do want to draw attention to something else. Think back to the disingenuous bullshit that was promoted by the southern senators like Shelby – and repeated endlessly by the media – about UAW workers making $70 an hour to sit on their asses and sweep floors when the Auto bailout was being considered. Think back to the way so-called “real progressives” liked Markos Moulitsas openly cheered the idea of letting the Big Three auto companies fail on the front page of The Great Orange Satan. Add in the fact that very few “real progressives” fought for saving the jobs of a strong and loyal part of the Democratic base, mainly because many of them couldn’t get past the “$70 an hour” deception. Think of how the UAW president came off as weak and ineffective pushing back against the perfect storm of bullshit that was raining down on his organization. That’s how the UAW ended up with such a shitty deal.
Corner Stone
@Don K:
I don’t understand this paragraph.
sneezy
@KG: @sneezy: shit, sorry, thinking GDP for some reason.
No problem, it happens, and you’re right that US GDP is around 25% of world GDP. And McArdle readers can be glad that you didn’t try to blame it on your calculator. ;-)
Corner Stone
@NobodySpecial:
How would we know?
Corner Stone
@KG:
That’s an interesting question. Can I choose Thailand?
Corner Stone
@Kyle:
Hmmm…
Ailuridae
@Malron aka eclecticbrotha:
Err bullshit
And it wasn’t just media matters/boehlert and C&L, it was destroyed as complete BS here and by atrios and by digby and at openleft and at angry bear and, well, fucking everywhere.
Also the UAW had already agreed to the part of the deal that kay linked before the bailout (and it was started by Ford who didn’t take bailout cash) so its impossible to argue the reason for the two tiered system is that during the bailout discussions there wasn’t sufficient progressive pushback against the $70/hour lie.
zattarra
The UAW has been the only thing holding up wages in the Southern non-union auto plants. The manufacturers there have tried their best to keep the UAW out by providing comparable wages to what the UAW contacts get. And comparable benefits to active workers. What they avoid are the legacy costs, the job banks, the grievances and all the rest that make the UAW a horrible organization to work with.
And I’ve been in these southern plants, talked to the people there as the Big 3 were dying. They thought it was great that GM was going to go away, it meant more cars for their companies. They don’t grasp that as soon as the UAW at the Big 3 goes away they are going to watch their wages and benefits crash because there is no reason anymore for their employers to pay them well.
As I explained this to people there you could watch a light bulb turn on and they realized that they only get a good deal in order to keep the UAW out. But nobody in Kentucky or Georgia or Texas is explaining that to these folks. They are in for a rude awakening.
rootless_e
@Don K: Labor costs are the simplest to control variables, once you have sufficiently free movement of goods and capital. But cost accounting and understanding the production process are different things. For example, Roger Smith made a huge investment in a really stupid robotics program that was focused on breaking the skilled trades not on reducing production costs, improving quality, or making production more agile. GM closed highly profitable and efficient US plants for internal or external political reasons. Any idiot can reduce production costs on a spreadsheet by replacing supposedly interchangeable labor hours for those of a lower rate. It takes work and risk to reduce production costs by e.g. replacing steel with composites, reducing weight, improving engines, rationalizing the assembly process, making smart decisions about IT and so on. When management is accountants, they are only able to substitute ingredients, not vary the recipe.
HRA
I finished growing up in a city with a Bethlehem Steel plant up the road from a Ford plant. Neighbors, friends, co-workers all had either once worked at one of these plants or had relatives who worked there. Two points that began to be talked about in earnest about the steel plant were “ships are coming at the lakeside dropping off steel made in Japan for our plant” and “the BFOs will be the end of Bethlehem Steel here”. Both of them in time were found to be true.
“After the bitter and prolonged 116-day strike of 1959, American steel companies, including Bethlehem, were beleaguered by competing foreign companies, mainly in Japan and Europe, by competing materials such as aluminum (cans) and reinforced concrete (construction and bridges),116 and slightly later by competition from mini-mills–small, specialized steel facilities that operate with non-union labor and only a tiny fraction of conventional steel companies’ managerial and administrative costs. (The mini-mills, one Bethlehem ex-worker said, rather bitterly, had “fewer white-collar workers and no country clubs, executive jets or . . . Taj Mahal-type offices.”117) Nevertheless, during the 1960s and 1970s, Bethlehem sought to expand and modernize by building a new, integrated works at Burns Harbor near Chicago and by belatedly replacing some of its open hearth furnaces at various facilities with Basic Oxygen Furnaces (B.O.F.’s), first developed in Austria in 1952, which are more economical and need smaller work crews than the open heaths. ”
http://www.jarodkearney.com/id15.html
My experience with Ford was in processing TRA for them when they were laid off. TRA is the Trade Readjustment Allowance.
“Trade Readjustment Allowance (TRA) is a special program created by the federal government to retrain workers who were either laid off due to increased imports or whose employment was moved to Canada or Mexico. TRA benefits may be payable to eligible workers following exhaustion of their unemployment insurance benefits, if they are participating in, or have completed an approved training program. Workers may also be eligible for training, a job search allowance, a relocation allowance and other reemployment services. Contact the Claims Processing Center for your area or a Job Service office for additional information regarding these programs.”
http://uid.dli.mt.gov/uid/tra.asp
PurpleGirl
Remember that the Southern states have mostly been “right to work” states with laws that made it very hard to organize labor unions. Of course, “right to work” was a nice bit of Orwellian language.
Corner Stone
@zattarra:
I’ve had this conversation across many industries, Xerox being one specific company.
Guy there I dealt with had nothing but contempt for unions. Never could understand wage pressure, and how it lifted boats of people even not in the union.
mai naem
The article talks about how the Obama and Bush people leaned on the UAW to decrease wages. Hmmmm…. I guess the same didn’t apply when it came to Wall Street fatcats. I guess you can’t lean too hard on them. Ohhhh, nooooo, the world can’t do without them.
BTW when did $28 bucks an hour become so much money. You are talking less than $60k a year. You take out basic middle class expenses(mtge,food,car,gas,utilities, insurance) and you are already at $35K and you haven’t even taken out taxes. It’s okay money but it isn’t anywhere close to $100k/year.
Interrobang
I was for GM going away, but don’t call me a “progressive”; I’m a good old fashioned leftist. Also, the reason that I want GM to go away (still do, thanks) has nothing to do with my putatively thinking that autoworkers were making $70 an hour, and more to do with thinking GM is a serial corporate criminal that should have been dechartered back in the 1940s.
Frankly, I think (being a leftist and all) that since the world runs on cars, paying autoworkers $70 an hour for doing such an indispensible job is not unreasonable. What I do find unreasonable is that the world runs on cars to begin with; and GM’s anticompetitive practices and general business skullduggery had a lot to do with creating that state of affairs. That’s why they “should have been dechartered in the 1940s” for committing repeated corporate crimes that were detrimental to the public welfare. It probably would have been a good idea to prevent GM — a classic Gilded Age trust if there ever was one — from ever forming in the first place, but things were different in 1909.
Tangentially, but not that much, never ever give the benefit of the doubt to a corporation whose name begins with “General,” especially in matters having to do with competition.
rootless_e
@mai naem: in reality, team Obama forced unprecedented concessions from bondholders.
Shell Goddamnit
@rootless_e:
I guess for this we should be grateful: the administration may have taken actions that will (most likely) eventually permanently reduce the wages of autoworkers across the country, but they also gave the bondholders a haircut.
DickSpudCouchPotatoDetective
Great thread.
Bill H
@rootless_e:
And grocery workers came up with it in 2006.
foo
I think we should pay these workers a living wage, $50/hour.
By we, I mean the consumers who buy chrysler cars. Oh wait, I forget, Americans don’t buy American cars, in particular Chrysler, which is why it went bankrupt.
Maybe the govt should pay them this money or maybe the readers of balloon-juice ? I mean, we readers concur that this is wrong, so why don’t we correct it ?
Let’s all buy a chrysler car as our next car !
Riiight. I salute you, Patriotic American !
Of course, you gleefully bought and are posting on a outsourced chinese made computer, outsourced keyboard, outsourced mouse, outsourced display, and talking on outsourced phone but so what ? Nothing wrong with using a gleefully bought outsourced computer to bitch about outsourcing.
It is services we care about, not the x100,000 times greater damage that patriotic americans (like us) cause by gleefully buying and supporting outsourced manufacturing (which is in Taiwan and China, not the small outsourced service sector in India).
Oh wait, look, dell has a great deal, they are selling a new outsourced machine+monitor for $699 !
General Stuck
@DickSpudCouchPotatoDetective:
Yep,. We got a wobbly, a sneezy, stuck, spud, derelict, rootless, and of course a corner stone. I suppose Kay can be our Snow White, or thereabouts.