At Cornell University’s School of Industrial and Labor Relations, a required first year course is labor history. You learn about the guilds, about the rioters and the Pinkertons hire to beat them, about the horrific treatment of industrial workers in the age of Robber Barons and the birth of unionism. As my girlfriend at the time proclaimed one day after Roger Keeran’s class, “I want to be a Wobbly!”
The problem is that was history, a different time and different circumstances, long before the Wagner Act was born and the AFL-CIO flexed its might. A great many arguments about what we should do today are grounded in things that happened many years ago, ignoring everything that’s happened since. It’s true for civil rights. It’s more true for unionism.
The average price of a new car today costs more than $48,000. That’s a lot of money any way you cut it, and that’s for the basics. Some will argue that the cost is due to greedy corporate overlords who want to pocket millions at the expense of both the consumer and the worker. But the absurdly high compensation for executives doesn’t compare with what the unions did to the American auto industry. Remember when the Big Three almost went bankrupt under the generations of accumulated pension costs as they became unsustainable, regardless of what the CEO was paid?
The United Auto Workers contract expires this September 14th, and the UAW is almost certain to call a strike.
The United Auto Workers union and the three Detroit automakers have less than two weeks to negotiate a new labor contract, and a strike of some sort seems increasingly likely.
The union’s president, Shawn Fain, has primed rank-and-file members to be prepared to walk off the job if the union’s long list of demands for improved wages and benefits are not met.
Joe Biden, the most union-supportive president ever according to his self-description, has endorsed the UAW.
There are political stakes as well. President Biden has declared that “the U.A.W. deserves a contract that sustains the middle class” and has named a White House liaison to the union and the automakers.
Then again, the union has yet to endorse Biden, as his EV initiatives conflict with the interest of union jobs, requiring fewer workers to manufacture the far more expensive vehicles. No union president wants to tell a significant percentage of his members that the wage and benefit package for which they went out on strike is huge, but they won’t have a job after next Friday. That’s not a good pitch to pay union dues for the absurdly high salary paid union bosses.
What’s unfortunate is how few seem to connect the dots between the competing interests of labor and management, and how they affect the overall economy and the cost of cars. It’s not as if autoworkers aren’t being paid pretty well already, even if it could be better. There are a few lawyers who would be pretty darn happy to get a comparable salary.
To argue that they should be paid more is fine, but to assume that the money for any increase in wages and benefits will come from a reduction in executive compensation is foolish. The monies spent on management isn’t the problem. Some argue that the cost should come out of profits, as if automakers should be run as charities or non-profits for the benefit of the workers. That’s not how it works or could work, fantasies aside.
Where is the right balance, the tipping point between workers being fairly paid while corporations are able to generate sufficient revenue to survive? That’s the point of strikes, where the enterprise fails to produce its products such that the business ceases to earn revenues and profits, while the workers stop getting paid. Pain is spread across both sides so that each has the motive to reach a resolution that’s better than the alternative, the strike.
But where does that leave the rest of us? What happens to those of us who have to buy cars? There are two ways for automakers to generate revenue. Sell more cars or charge more for each car sold. If possible, they want to enjoy both, although people have never tended to be all that elastic in their auto purchasing and while car dealers were selling cars over sticker when there were supply chain shortages, they’re now making better deals, even if not as good as the incentives before the pandemic. Either way, the money comes from consumers. If wages go up, so too will the cost of a car to pay those wages. That’s how it works.
“President Fain has declared war, and that usually means there’s going to be a battle, and that battle would be a strike,” said Sam Fiorani, the vice president of global vehicle forecasting at Auto Forecast Solutions, a market researcher. “The U.A.W. leadership is in a position now where they have to prove to the members that they are fighting for them, so it’s pretty unlikely there won’t be a strike.”
The president supports unions, and supports the UAW’s demands, even if he isn’t talking about how autoworkers are earning more than you are and still want more. Don’t blame autoworkers. If there’s more to be had, who can blame them for wanting it? Don’t blame the UAW, as this is the reason for its continued existence, to generate union dues for its leadership’s new curtains.
Nobody is arguing that autoworkers shouldn’t be paid a decent wage, but they’re not Wobblies. But cars cost a lot of money, and for the people who need cars, that money has to come from somewhere. And when their wages increase to pay for cars, so too does the cost of the goods and services they provide. There was a myth that Henry Ford increased the wages of his workers so they could afford to buy the cars Ford manufactured. It’s a nice thought for this Labor Day, but it was only a myth. The economics didn’t work.
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Too many cars, not enough bars.
Too many cars, not enough parking spaces, Long Island Expressway-breath!?!
Too many cars, not enough careful drivers.
We park on the driveway, but drive on the parkway. Go figure?
The cost of cars is a complex subject. The consensus view (for what it’s worth) is that 10 to 15 % of average car production cost is labor cost (including not just labor costs for each car but also amortized long term labor costs like pensions). That is probably much lower than the percent of production costs attributable to government regulatory requirements. For example, the CAFE fuel regulations alone are estimated to increase the cost of an average new car by $4,000 to $7,000, which is comparable to or more than labor costs. NHTSA safety requirements also impose a significant cost, and who knows what the impact on costs will be of the various EV production requirements coming from both state and federal government requirements. As you note, labor costs are restrained by market-driven contract negotiations.
The same cannot be said for the government-imposed costs.
The Venn diagram of people who want government to regulate vehicle safety, emissions, mileage, as well as better pay and benefits for workers, as well as lower priced vehicles is likely to be very close to a single circle.
The US is on the verge of outlawing the sale of cars with gas engines. For upper middle class, mostly white, suburbanites, with garages to charge those cars in, that will be somewhat inconvenient but manageable. But roughly a third of us live in cities and in multi-family dwellings where garages and driveways are scarce and those people are disproportionately black and brown. Wait until those people realize that they are being shut out of driving. And as those people decide to keep their old ICE cars as long as the Feds will let them watch union jobs in the auto industry collapse.
If only we had a viable alternative Party for those who will want to punish the Democrats.
There are a great many progressive causes that are in inherent conflict. If you don’t waste too much time thinking about how you get there, or the interrelationships between the myriad “good things” you want to see happen, you can avoid having to confront these conflicts and obsess only on preferred outcomes.
We will see if auto workers of today have the fortitude to sustain a strike. The whining, pissing and moaning over foregone income starts the first week, and is another giant difference from the early days of organized labor. The membership may be very militant about calling strikes, but most of them can’t manage to weather a long one.
All else aside, the Wobblies had great songs.
But as we know today, everything the Wobblies ever claimed to have done, produced or built was actually the work of the black slaves who built America.
The UAW has about half as many members as it did in 1983, and private-sector union members are only about 6% of the workforce. Except that it still has about $1B in assets, the UAW would be very near obsolescence.
Dad was upper-management at one of the car companies. In 1986 or 1987, he took me to an experiment being run in a steel mill. It was very secret. It had to be because that mill was automated. Dad said “there’d be Hell to pay” if the unions knew about the experiment. The tech was rudimentary, but it mixed, melted and poured the same with every batch. I saw the future of everything included people being unnecessary to making cars.
Tech replaced UAW jobs at a slow rate and for several reasons. Not the least of the reasons was the public reaction to the wholesale replacement of workers and the resulting fear that company’s cars wouldn’t sell. So it was slow-rolled and membership halved because workers became dunzels.
Of course, the process continues. It will until the UAW is out of the car business.
Many years ago, I was invited to the UAW’s Black Lake Retreat, where I was befriended by Owen Bieber, who was director of Region 1-D at the time. He later became the UAW president. He gave me his windbreaker as a gift.
To indulge briefly as I’m in Mich close to Detroit ( Ann Arbor) and some history was touched on here. It rankles the folks here who won’t acknowledge the immense contribution the auto industry has made to the area; especially when they find out the industry practically built the University of Michigan as it is today