Monday, December 22, 2008
The Washington Post has two recent pieces on the UAW and the recent automakers bailout, with the theme in both centered on the union's declining relevance. I think both are a bit too down on the UAW, as the union has done a pretty good job handling some very tough economic realities over the past few years (as the Warren Brown piece notes, "despite claims to the contrary in White House and Capitol Hill bailout chatter, the UAW repeatedly has taken pay and benefits cuts to help the companies stay in business."). But those harsh realities are significant for the labor movement in their own right.
The first article examines whether the White House bailout plan negates any purpose for the UAW:
The language of the loan agreement sets specific "restructuring targets" that General Motors and Chrysler must use their "best efforts" to meet. Compensation must be made "competitive" to that of nonunion workers, and work rules must be "competitive" with those at nonunion plants. The companies also must reduce compensation to workers who have been laid off -- the jobs bank -- and at least half of the company's payments into retiree health care must be made in stock, not cash. If the companies fall short of those targets, they are required to explain why. The payment in stock makes the health fund more risky. The wage concessions could force average wages down to $24 an hour from $28 an hour, analysts said. . . .
Those and other concessions would essentially erase the significant distinctions between union and nonunion auto workers, and the lack of such union worker advantages would render moot the union's fundamental purpose, some industry analysts and labor experts said.
In the second piece, Warren Brown strikes a similar chord:
The UAW's failure to organize foreign rivals in America has undermined the value of the union's employment agreements with Detroit. As long as workers at nonunion companies receive lower pay than their counterparts at UAW-represented rivals, the union will be under pressure to make concessions at the bargaining table.
The federal bailout loan agreement greatly increases that pressure. The money will help the companies, which long ago began an aggressive restructuring of their operations. But its terms of agreement mean that the UAW will have to live with less, which means that nonunion workers will be asked to live with the same thing.
In some ways, this situation is unique in that the Detroit automakers have had a particularly bad business model long before the economic crisis began. The automakers' problems have to hit the UAW, no matter what the union does. On the other hand, despite factors unique to the auto industry, the UAW's troubles reflect in part the difficulty of our traditional collective bargaining model in a more globally competitive economy. Whether and to what extent unions and labor law can adjust is still an open book (shameless plug: I've written some on this topic with my father, and many others have as well).
Hat Tip: Dennis Nolan