no wonder: the failure of GM
Topics: Labor
03 Dec 2008
From: Ervan Darnell
> Now that the car bosses have made their pitch, attention is sure to
> switch to the United Auto Workers. As the union’s leader, Ron
> Gettelfinger, put it “there may be additional sacrifices required” if
> Congress is to cough up. That is an understatement. The problem with
> the deal struck in 2007 to cut the hourly pay and benefits of new
> hires to a competitive $26 from the $75 earned by most existing
> workers is that nobody is going to be hiring at any time soon. If time
> is up for the old Detroit that includes the once-mighty UAW too.
People dispute the $75/hour figure, but since it's reported by the
Economist I'll take it as authoritative (though I believe it does
include benefits).
Even so, no wonder GM is going broke. The UAW has over the years
negotiated a wage well above the average for workers of that skill
level. A competitor can undercut them (and should). Yes, CEOs make a
lot, but whether or not it's justified, one salary doesn't compare to
total labor costs. I have no objection in theory to people forming labor
unions (so long as the law doesn't give them any special advantages),
but they should take their lumps when they price themselves out of the
market. If unions cannot find a way to be reasonable, be rid them.
I guess I have some special dislike for the UAW because they always
argue for wage increases based on "needs" instead of economic reality,
especially that their wage increases often just come out of the pockets
of other middle class people (in the form of higher car prices) and they
assume this never happens. Yes, if the market is working, it doesn't
actually matter what their reasons are, wages will be set accordingly.
[1]
http://www.economist.com/business/displaystory.cfm?story_id=12718590&fsrc=rss
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