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Bailout Failed!

December 12th, 2008

The bailout of the Big Three was shot down in the Senate. The UAW refused to lower their wages (which are currently about $69 an hour including benefits) until 2011. That was not good enough for the Republicans and a few Democrats in the Senate. They wanted to bring the wages down in line with that of the Japanese automakers in 2009. Their American workers are getting paid around $48 an hour including benefits.

It seems to me $100,000 a year, which is what $48 an hour works out to, to work in a factory would be pretty good. It certainly seems reasonable to me. I have worked on both ends of the spectrum. I spent a few years doing very hard manual labor as a roofer. Then I went through college and now I work very hard as a software designer. Neither the roofing, (I’m told from people who have done both that factory work can’t compare), nor the highly specialized work requiring a college degree that I do now paid me anywhere near that figure. Somehow though, the UAW would rather be out jobs than make a measly 6 figures. As I have said before, these companies deserve to fail.

I really don’t understand how these companies managed to agree to the deals that they did. The other companies, in the same industry, are paying their workers $43680 less each year. Every employee! This is the same job. Anybody have any ideas as to why the cars they sell are so expensive? Anybody? Anybody?

I certainly can’t pin all of the failures of the Big 3 on the UAW. Clearly there are other issues that I have outlined in other posts, but the UAW is a big part of the reason this industry is failing. Today, they were the reason the auto bailout failed in the Senate. On the bright side, Capitalism Wins! For now. I leave you some bailout humor, and a question - any bets on how long until the bill is revived full of pork?

Author: Derek Clark Categories: Finance, General Politics Tags: ,
  1. terry
    December 12th, 2008 at 00:29 | #1

    Most of what the republicans are saying about UAW members earnings are crap - that $ per hour figure they’re quoting involves every single expense in having an employee not just wages. After retiree medical benefits are deducted there’s only a $4 per employee per hour difference between ford and honda. Ford and the UAW already worked out a plan to shift the responsibility for retiree benefits to the union.

  2. December 12th, 2008 at 00:38 | #2

    “that $ per hour figure they’re quoting involves every single expense in having an employee not just wages”
    I clearly stated in the article that both of those numbers include benefits. Those benefits are a cost to the employers. There is no way to get around that. You can’t just say, well without them the pay is close. The numbers I gave for both employers were including benefits.

  3. Rick Cain
    December 12th, 2008 at 01:07 | #3

    Uhm, wait a minute. Unions didn’t put the big 3 into financial crisis. They put together whatever car was designed by the company.

    Has anybody ever considered the real fault are the brainless executives that ignored market trends and continued to sell unsuitable vehicles?

  4. December 12th, 2008 at 01:21 | #4

    Rick, yes I have. Read this article http://geekpolitics.com/the-big-failed-three/ where I discussed many of the problems with the big 3. However, clearly the contracts with the unions were poorly negotiated by the management compared with other similar jobs. This has also played a role in the situation they are in now.

  5. matt
    December 12th, 2008 at 10:10 | #5

    Having done both factory work (for Honda, in Troy, Ohio), and every sort of construction work, I have to disagree with your subjective statement that factory work “cannot compare” to factory work. Although hard work, roofing in construction does allow a degree of autonomy and a workspace as safe as you choose to have it be. There is heavy lifting and hot temperature involved, but there is rarely (although sometimes) the level of background noise, chemical pollution, and constant work of factory work. 16 hour days on a roof give sunburn, 2nd degree skin burns, the possibility of a fall, heavy lifting in shingles (or tiles or tin, depending on the roof), but factories will have similar hazards. Indeed, I saw more accidents in 6 months of factory work than i saw in the previous 7 years on the construction site. The conditions at a factory are unremittingly bad, and rarely change. Still, I agree that $48.00 an hour is a great wage, but working for Honda, I made roughly 40.00 and hour less than that, because i was a temp worker (something that many japanese companies use extensively, to reduce costs and liability). I would suspect from your statement about working in roofing versus factory work that you didn’t work at an automotive factory, which DOES involve very heavy lifting, and awful conditions, nor did you work in industrial roofing (which is probably safer and less labor than residential roofing). Please be more aware of your claims, and their directness of experience, especially when making radically subjective claims.

    Regardless of all this, the unions were PRIMARILY responsible in the downfall of the factories, right behind the corrupt and greedy and nearsighted executives in charge of the corporations (have you ever looked into the gutting/raping of Chrysler by Daimler during the first part of this decade?). Greed, whether at 50 billion or fifty bucks an hour, is still greed.