Attention liberals: crushing the UAW will not solve the auto industry’s problems. And for all of you who say “let the Big Three fail and fund retraining for the workers,” what exactly are we going to retrain them to do when there are no jobs in their states? Also, did you know that the “Job Bank” that you so despise actually allows workers to take classes and get an education? Are the Big Three US automakers guilty of putting all their eggs in the same SUV? Definitely. Are their labor costs way out of line with non-union automakers in the U.S.? Not so much anymore. You can read David Moberg’s post-mortem on last year’s UAW contract. The company off-loaded retiree health and pensions onto the union, and got lower wages for new hires and “non-core” workers.
If there is going to be a bailout for the Big Three, let’s pray it isn’t the no strings attached Hank Paulson variety. It has been a long time since the U.S. had anything like an industrial policy. This may be a moment of leverage. If the companies want help, they’ll have to reinvest and reform. And while we’re at it, how about health care reform? That would radically restructure the “labor costs” of the automakers and everyone else.
But let’s take a moment to think about the underlying weakness of our economy. It is not that banks and credit card companies can’t, or won’t, loan. The problem is that for the past 30 years wages have not kept pace with inflation, and now the average family is tapped out and over leveraged with debt. Forcing across the board cuts on a key sector of the workforce will not reverse this trend. What can reverse the trend? Raising wages, a lot. How can we do that in a hurry? One word: Unions.
Update: The New Republic has a good piece on why a structured bailout is better than bankruptcy for the Big Three, for autoworkers, and for the rest of us.