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Sunday, December 14, 2008

The war on blue collar America

On Thursday, Dec 11th, the US Senate, lead by the Republican party, declared they could not lend to GM 15 billion dollars without additional conditions. One of the leading opponents of the auto bailout, Sen. Jim DeMint (R-S.C.), said: "Year after year, union bosses have put their interests ahead of the workers they claim to represent. Congress never should have given these unions this much power, and now is the time to fix it."

One of the pet peeves by Republicans is that UAW workers cost GM and Chrysler 73 bucks an hour, and UAW workers should get paid more in line with BMW, Honda, and other manufacturers in the USA.

Lets take a closer look at the real numbers shall we? 73 dollars x 40 hours x 52 weeks = $151,840 a year.

According to the New York Times, here is the breakdown of the $73 bucks an hour:

INCLUDING Vacation, OVERTIME, sick pay, and normal pay, average pay is 40 bucks an hour.
The second category is benefits, like health insurance which equals 15 bucks an hour (remaining 18 bucks is in existing retiree benefits).

Honda’s or Toyota’s (non unionized) workers make about $45 an hour, and the difference is mostly from benefits.

So what we are talking about here is 10 bucks an hour per worker "gap" of too much pay (not including the existing retiree beneifts), and its mostly benefits such as healthcare, which is about $800 per car "too much cost".

So what is it that is "destroying" American car companies, and what should be done about UAW too much cost?
1) Kick all retirees to the curb, get on medicare. If needed GM can go bankrupt to release from their obligations.
2) Union workers in UAW cut pay by 10 bucks an hour to match companies like Toyota. (My only beef with this is, is GM UAW workers located in similar cost areas such as Toyota in Indiana.)

That is what the "extra" UAW costs boils down to, those two solutions.
Item 1, if done, will basically ADD cost to the taxpayer (yet once again), and reduce quality of life for UAW workers. (which is OK, since we all are going to face that) And I am guessing here, but the same senators are likely AGAINST medicare. So what they really want is UAW to walk away from paying retiree's health benefits AND to eliminate Medicare.

The second, well, seems, punitive? Lets take a look at the government "cash giveaway" for white collar workers & businesses.

First, there is GM execs, why not start with capping their pay (including bonuses) to a multiplier with it's workers? say 10x the pay of its lowest full time employee pay? Where's the outrage of the Republican Senate on white collar pay and restrictions, as compared to other workers?

For example, Lehman paid 6 Billion dollars in bonuses in 2007, and bankrupt in 2008. Heck, that bonus alone is almost 1/2 what GM needs as a bridge loan.

Next there is the FACT that the US government has spent between direct debt and debt obligations over 4 trillion dollars. Now I have a hard time understanding what that means.
Lets take a look. The graph below shows government projects INFLATION ADJUSTED in the history of America compared to the cash-give away with almost NO strings attached to white collar pay.

From WebSurfinMurf's Financial Blog

WOW! Talk about expensive? Yea, that EXTRA 10 bucks an hour those UAW workers make, that's the problem!

And to put fuel on this fire, the US government REFUSES to reveal or explain who it gave 2 TRILLION dollars to, in exchange for "illiquid assets". With all this money flying around, I am not sure in the graph above if the 2 trillion is part of the graph or in addition to.

Besides the government debt spending, it is also insuring 8 Trillion dollars of debt, that theoretically, could hit the US government's bottom line.

Putting all of this into context, the Republicans rejecting a 15 billion dollar bridge loan to "ensure" the government doesn't put good money after bad, to me seems so hypocritical.
If this was the 50's through 70's, there would be huge protests and political movements.

But it isn't, and until the middle class gets more politically involved through organizations that fund influence in congress, and pays closer attention to voting for government that represents THEIR interests, then the American public "deserves" the assault on the middle class.

As Winston Churchill said “You can always count on Americans to do the right thing - after they've tried everything else.”

Check out Market Ticker for a similar rant on the wrong doings of government & business.

UPDATE 12/15/08: Wording to try to limit white collar pay who receive government funds has been circumvented, once again mainly due to Republican President, GW Bush.
UPDATE 12/17/08: Now it looks like before Bush leaves office, they will negotiate with the auto-management to enter bankruptcy, allowing these companies to walk away from their previous employee obligations. I now believe this will be the direction that happens.
I would be OK with this IF the same aggression was pursued against financial companies.

Funny Comic
Matt Bors

UPDATE: 1/29/09 - Robert Reich, US 22nd labor secretary, on Unions
UPDATE: Video 1/5/09, a tad bit melodramatic and over the top, but at its heart, it tells the message.

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