The Burden of Big Labor

Posted by Tina

One of the newer participants to Post Scripts challenged my assertion that unions have contributed to the decline/failure of the automotive Industry in America. I disagree and since I like to be as thorough as possible in my quest for knowledge and information I did some research. One of the first things I found at the Heritage Foundation was this chart:

5045-Labor Costs.gif

The chart is a few years old but that’s all for the better since (supposedly) union workers in the automotive industry have been getting the short end of the compensation stick for a couple of decades…and the chart clearly shows they’ve been doing okay for themselves.

This is what Heritage had to say in the article, “Auto bailout Ignores Excessive Labor Costs”:

UAW workers earn $75 an hour in wages and benefits–almost triple the earnings of the average private sector worker. Detroit autoworkers have substantially more health, retirement, and paid time off benefits than most Americans. These benefits, and a jobs bank that pays UAW workers nearly full wages to not work, have been a major force driving the Detroit automakers’ current fiscal woes. Consequently, Congress should not force all Americans to pay for high wages and benefits for UAW workers.

Obviously there has been a bailout and the new labor agreement for 2010 included substantial cuts to labor costs. Heritage explains:

GM estimates the new contract will eventually cut 70 percent of their labor cost gap with the Japanese manufacturers.[8] Average compensation will fall to $54 an hour once the contract takes full effect. It will, however, take years for the Big Three to realize these cost savings. The cost reductions affect only a minority of workers and occur gradually as current workers retire.

The vast majority of UAW workers in Detroit today still earn $75 an hour, and the Detroit automakers must still find $60 billion to finance the VEBA. Detroit’s labor costs will not fall as much or as rapidly enough as the Big Three need to restore their competitive position and remain solvent.

Had the UAW made similar concessions in the early 1990s, it might have prevented the Big Three from falling into such dire economic straits. It did not, however, and the new contract is too little, too late to keep the Detroit automakers solvent.

By seeking a bailout, the UAW, along with the Detroit automakers, are asking taxpayers to help keep UAW earnings at $75 an hour when the typical American takes home a third that much. The Big Three also want Congress to use taxpayers’ money to pay billions of dollars into the new health care VEBA, thereby funding health care benefits for UAW retirees that are far more generous than those provided by an already under-funded Medicare system.

UAW workers understandably want to preserve the standard of living to which they have become accustomed, but that standard is not sustainable in a competitive economy. Congress should not tax all Americans in order to maintain UAW workers’ affluent lifestyles.

One of the other negotiated perks is something called a jobs bank as explained by Wikipedia from the Detroit News:

The Detroit News published a story in 2005 on how the Big Three U.S. automakers paid more than 12,000 idled employees their full salary and benefits in “jobs bank” programs. The program was established in the 1984 UAW labor contracts with the Big Three to protect workers’ salaries and discourage layoffs, as part of the automakers’ contracts with the UAW. The union’s intent was to protect jobs via a plan to guarantee pay and benefits for union members whose jobs were extinguished by technological progress or plant restructurings. In most cases, workers are paid via the jobs bank only after exhausting government and company unemployment benefits. Some of those workers were placed in retraining.[29]

As a result of the Jobs Banks, the US automakers are contractually obligated to pay 85-95 percent of union wages and benefits to members of the United Auto Workers union who aren’t working – even if their plants have been closed. In the agreement, GM would to allocate $2.1 billion in Jobs Bank payments over four years, Chrysler $451 million for its program along with another $50 million for salaried union employees, and Ford agreed to set aside $944 million. Peter Morici, a professor at the University of Maryland, College Park’s school of business, testified that the Jobs Bank was one of the biggest problems that the Big Three face, saying “Right now if a plant closes in St. Louis and a new one opens in Kansas City, the workers don’t have to move from St. Louis to Kansas City; they can opt to get a $105,000 payout or go on Jobs Bank where they can collect 95 percent of pay for the rest of their lives.

Don’t tell me union bosses give a rats a** about the overall health of the industry or ultimately the people those companies employ. And please, don’t try to tell me that auto workers have gotten the bums wrap…sorry, dude, that dog just don’t hunt! I realize there were many factors that contributed to the decline of American auto companies. Some were bad timing and others unavoidable. Unreasonable union demands were not in those categories.

I want people to do well and be happy in their work. I’m all for people making as much money as they can and I believe it’s smart policy for companies to treat their employees well. What I don’t appreciate is unconscious or greedy compensation demand. Companies don’t owe their employees; they have work that needs to be performed and that work has a compensation limit. Unions have to be responsible in negotiations so that the demands they make are not going to jeopardize the health of the company and therefore, the jobs the company supports. Big labor didn’t take that into consideration and became a burden that could no longer be met.

Consumers and taxpayers are paying too much for this error in judgment.

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9 Responses to The Burden of Big Labor

  1. Steve says:

    Anyone who calls the Heritage Foundation’s research lies is probably already voting against the best interests of our country anyway. Sadly, there’s a fool born everyday.

  2. Post Scripts says:

    Quentin, do you realize how absurd it sounds when you say the Heritage Foundation’s job is to lie to us so we will vote wrong? That is crazy, it’s unsupportable by any stretch of logic. But, if you really believe that, then nothing I say is going to make any difference anyway so I’m just wasting my time. I go with what Steve said.

  3. Tina says:

    If only Quentin had a function!

    He engages in a typical Saul Alinski tactic…tp demonize the messenger so as to discredit them. The Heritate Foundation is the messenger in this piece and, as always, the statistics they buse are taken from government agencies like the Labor Board and Daimler Chrysler.

    Quentin’s point about robotics may be accurate (as far as we know he pulled the stat out of his infamous hat) but it doesn’t change the compensation or contract obligations (pension, healthcare and jobs bank) made with the unions that represent, in fact, an unsustainable burden on the industry. Had the greedy union bosses been more reasonable in their demands at least some of those jobs wouldn’t have been lost to robotics.

    There is a moral element to this. Over a period of fifty or sixty years the demands made by union bosses have not been consistent with the level of skills or production of those workers. The scheme is nothing more than a redistribution scheme. Workers don’t get compensated more because they have improved their skills or because they have performed in an exemplary manner but because the union bosses were able to extort more upon threat of shut down. The complicity of the government in this scheme is unconscionable. Workers were never much better off. They just pushed up the cost of the cars and related products for all Americans. Some of those workers may have deserved at least some of the compensation they received…some definitely did not. Merit had nothing to do with it.

  4. Post Scripts says:

    Quentin you should know by now I am all about questioning so-called authorities. If I am burned by a source then I’m really skeptical of said source forever, but I’ve not been burned by the Heritage Foundation.

    So when you say, the Heritage Foundation exists to sell us lies to mislead the public?? I must say, no way!!!

    Q, please look… here’s their mission statement, do you see anything wrong with it? (they live by this)

    “Founded in 1973, The Heritage Foundation is a research and educational institutiona think tankwhose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

    We believe the principles and ideas of the American Founding are worth conserving and renewing. As policy entrepreneurs, we believe the most effective solutions are consistent with those ideas and principles. Our vision is to build an America where freedom, opportunity, prosperity, and civil society flourish.”

    And look at who is involved: “Heritage’s policy centers include: Asian Studies Center, B. Kenneth Simon Center for Principles and Politics, Center for Data Analysis, Center for Health Policy Studies, Center for International Trade and Economics, Center for Legal and Judicial Studies, Center for Media and Public Policy, Center for Policy Innovation, DeVos Center for Religion and Civil Society, Domestic Policy Studies, Douglas and Sarah Allison Center for Foreign Policy Studies, The Kathryn and Shelby Collum Davis Institute for International Studies, The Margaret Thatcher Center for Freedom, and Thomas A. Roe Institute for Economic Policy Studies.” This is the holy grail of important conservative studies that we base everything on!

    Look at the staff Quentin. Please look close: Senior Management Staff1-16 of 16 David Addington Vice President, Domestic & Economic Policy
    Stuart Butler, Ph.D. Distinguished Fellow and Director, Center for Policy Innovation
    Becky Norton Dunlop Vice President, External Relations
    Edwin Feulner, Ph.D. President
    John Fogarty Vice President, Development
    Michael Franc Vice President, Government Studies
    Mike Gonzalez Vice President, Communications
    Kim R. Holmes, Ph.D. Vice President, Foreign and Defense Policy Studies, and Director, The Kathryn and Shelby Cullom Davis Institute for International Studies
    Edwin Meese, III Ronald Reagan Distinguished Fellow in Public Policy and Chairman of the Center for Legal and Judicial Studies
    Robert Russell, Jr. Counselor to the President
    Ted Schelenski Vice President, Finance and Operations
    Matthew Spalding, Ph.D. Vice President, American Studies and Director, B. Kenneth Simon Center for Principles and Politics
    Michael Spiller Vice President, Information Technology
    Phillip Truluck Executive Vice President
    John Von Kannon Vice President and Senior Counselor
    Genevieve Wood Vice President, Leadership for America Operations

    These are many of the best of the best that America has to offer!

  5. Tina says:

    Q: “You posit that the unions are an unsustainable burden. ** Can you prove it as fact? May we see the numbers?”

    Can you prove their demands do not represent an unsustainable burden? I have shown the competitions employment burden is considerably less. I have shown a deal that was made to pay people who do not work…those two alone speak volumes.

    You have offered NOTHING to support the idea that these costs are NOT a burden to the companies as they try to compete.

    “Executive and preferred stockholder compensation has increased hundreds to thousands of percent in the same period. I’m willing to bet that these might be the larger unsustainable burden.”

    The post wasn’t about executive or shareholder compensation. Executive pay has been pushed ever higher as employee pay was pushed ever higher as all upper management salaries were pushed higher. This is a seperate issue and an unfortunate/reprehensible reality. particularly at GM those running the company made many mistakes over the decades and did not deserve the compensation they received. However…the compensation they receive is peanuts compared to the overall employee costs.

    The purpose of any company is to MAKE MONEY for owners and investors. It is not to provide jobs or to guarantee a living wage. OF COURSE it is a good thing that investor share has risen!

    “Saul Alinsky tactics????”

    Yes, you closet commie progressive! Demonizing Heritage and ignoring or dismissing the sources of their information is not an argument it is a political tactic.

    It makes you look petty and small.

    Having said all of that…I have not said that union demands were the ONLY cause of American car company failures. I have suggested it was a contributing factor. I have suggested that demands were unreasonable.

    You are free to disagree…but it is up to you to show us that you are right…show us the numbers…make your case…divulge the source of your stats!

  6. Tina says:

    Quentin: “The heritage Foundation opposes The Fairness Doctrine. Ask any member of The Greatest Generation who landed in Europe what happens when there is no balance.”

    What Americans had when the Fairness Doctrine was in place was lop-sided reporting (Democrat) not balance and on radio, mostly cooking and landscaping shows because they were SAFE!

    You are a closet progressive…I knew it!

    “Excuse me, but I will go with the notion that fairness–a FULLY INFORMED PUBLIC–is the highest American ideal.”

    Since the end of the fairness doctrine we have more information and opinion.

    You just can’t stand it that conservatives now have an equal opportunity to voice ideas and opinions…you can’t handle people being fully informed!

    And it really turns your crank that after being fully informed the American people are rejecting a liot of those progressive, socialist ideas that the left shoved down our throats under the Fairness Doctrine!

    “An honest assessment requires I judge them based upon their actions–or lack thereof, not their mission statements.’

    By this very method you, Quentin, have been weighed…you have been measured…and you have been found lacking!

  7. Pie Guevara says:

    Excellent article.

    Again we have Quentin Colgan taking a dump in Post Scripts. The man never brings anything to the table except boorish insults and crap he pulls out of his hat.

    How about banning Colgan just because he is such an unrelenting, specious jerk?

    And yes, Colgan is an Saul Alinsky acolyte. He constantly uses personal attack, misrepresentation, and the dissemination stuff he simply makes up on the spot in order to engage in his idiotic war on the TEA party and anyone else whose opinion and politics gets his anti-business panties in a bunch.

    However one may quantify (with real numbers, not ones that Colgan has a habit of inventing) the influence of robotics in automobile production it still does not justify nor explain the sky high benefits and wages of UAW workers and the real problem that caused with competition in a world market place.

    And it certainly does not justify keeping 12,000 idled employees their full salary and benefits in “jobs bank” programs.

    As usual, Mr. Colgan sees only a tiny slice of what he wishes to see and what his bizzare and distorted political views allow him to see.

    In any case, it makes no difference. While the UAW escaped a GM bankruptcy and bankruptcy court forced renegotiation of all labor contracts, it didn’t last for long. As it stands now UAW workers will only be making twice of the what the average private sector employee makes, and that will likely be for only a short while.

    The UAW has been part and parcel of the destruction of the American automobile industry and that is something Quentin Colgan refuses to look at.

  8. Post Scripts says:

    CONT-

    Now look at who is on the board of directors:

    Chairman
    Thomas A. Saunders III, Heritage Trustee Since 2005

    Prior to founding Saunders Karp & Megrue, a private equity firm, in 1990, Mr. Saunders served as a managing director of Morgan Stanley & Co. from 1974 to 1989. Mr. Saunders serves on a number of boards, but he is particularly interested in higher education and research institutions and has contributed generously to them. He is a member of the Board of Trustees of the Thomas Jefferson Memorial Foundation, where he served as the immediate past chair. He is a past member of the Board of Visitors of the University of Virginia and the Board of Visitors of the Virginia Military Institute. Additionally, Mr. Saunders is the former Chairman of the University of Virginia Darden Graduate School of Business Foundation and was Co-Chair of the recently completed Capital Campaign at the University of Virginia.

    Mr. Saunders received his BS from the Virginia Military Institute in 1958 and an MBA from the University of Virginia Darden School in 1967. Mr. Saunders is married to the former Mary Jordan Horner, the daughter of U. S. Marine Corps Major General Matthew C. Horner, deceased. The Saunders reside in New York City and Locust Valley, New York. They have two children, Mrs. Calvert Saunders Moore of New York and Thomas A. Saunders, IV of California, and three grandchildren.

    Vice Chairman
    Richard M. Scaife, Heritage Trustee Since 1985,
    Publisher and Owner, Tribune-Review Publishing Co., Inc., Greensburg, Pennsylvania

    Scaife’s extensive involvement in the publishing industry – he is the owner and Chairman of the Board of the Tribune-Review as well as a number of radio stations – has brought a refreshing alternative voice to the media markets of Western Pennsylvania, including his hometown of Pittsburgh. His enduring commitment to the free society is evident in his role as a director with the Pittsburgh World Affairs Council and his service on the boards of the Hoover Institution, Pepperdine University and other major educational institutions.

    During the Reagan and Bush administrations, Scaife served as a presidentially appointed member of the U.S. Advisory Commission for Public Diplomacy, which oversees the U.S. Information Agency. One of the Pittsburgh area’s leading philanthropists – he chairs the Sarah Scaife Foundation, The Allegheny Foundation and the Carthage Foundation – Scaife is a frequent speaker and commentator on U.S. strategic interests.

    Secretary
    J. Frederic Rench, Heritage Trustee Since 1973

    Rench is leader of the movement to spur citizen activism in electoral politics, having pioneered new methods of mobilizing conservative political involvement at the local level. His role in engineering a number of political upsets over the years has been noted by media in and around his hometown of Racine, Wisc.

    The former Chairman and CEO of Racine Industries Inc., an international carpet-care firm, Rench is a founding Trustee of Heritage. He also serves on the Boards of St. John’s Military Academy and the Free Congress Foundation and is a past member of the Advisory Committee of the Export-Import Bank of the United States.

    Meg Allen , Heritage Trustee Since 2009

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    Meg co-founded the partnership, DRAMLA Consulting U.K. in 1984 where she was responsible for financial management and providing intermediary services for companies looking to establish joint ventures in China. In 1995 she co-founded DRAMLA S.A. in Geneva where she is currently Director responsible for portfolio management.

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    Douglas F. Allison, Heritage Trustee Since 1998

    Mr. Allison was Chairman and Chief Executive Officer of Allison-Fisher, Inc., an automotive marketing research and consultancy firm with offices in Southfield, Michigan and Gardena, California. Before founding Allison-Fisher, Inc. in 1980, Mr. Allison was a partner in an investment company that purchased and operated banks in the United States and Europe.

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    President, Hillsdale College, Michigan
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    Jerry Hume, Heritage Trustee Since 1993
    Chairman of the Board, Basic American Inc., San Francisco, California

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    CEO, Peter Island Resort.

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    Van Andel-Gaby served as Vice President of Amway Hotel Corporation before leaving the company during its restructure in 2000. She then served as CEO of Peter Island Resorts, an island resort owned by her family. She retired from this position in 2006.

    Van Andel-Gaby is trustee of the Richard and Barbara Gaby Foundation. In addition to funding several charitable organizations, the Gaby Foundation founded the Center for Policy Studies at the Georgia Family Council. Van Andel Gaby also serves on the board of trustees of the Heritage Foundation in Washington, DC.

    A dedicated homeschooler since 1998, Van Andel-Gaby is currently homeschooling her 6 children. She is a member of the Georgia Home Education Association, Home School Legal Defense Association and several other home school organizations in Georgia. She is also a member of Perimeter Church of Atlanta, Georgia.

    Born in Grand Rapids, Mich., Van Andel-Gaby graduated cum laude with a bachelors degree from Hope College in Holland, Mich., and earned her MBA from Indiana University in Bloomington.

    Van Andel-Gaby is the sister of Amway Chairman Steve Van Andel. Her other siblings include brother Dave Van Andel, a member of the companys board, and sister Nan Van Andel. Van Andel-Gaby is the wife of Richard Gaby. They have six children.

    Marion Wells, Heritage Trustee since 2003
    Ft. Lauderdale, Florida

    Marion is a long-time member of the Board of Trustees of Capital Research Center, which is headed by Heritage’s former Vice-President, Terry Scanlon. Marion has also served as an advisor to several civic organizations, including: Exuma Cays Land and Sea Park, the Cleveland Clinic of Florida, and the Board of The Orleans.

    Since 1992, she has been a Co-Chairman of The Heritage Legacy Society, a group of Heritage supporters who make gifts through their estates so Heritage will be a permanent voice in Washington for conservative principles. Marion is also a trustee of the Intercollegiate Studies Institute. Marion’s late husband, Preston “Dick” Wells, was a long time Heritage trustee before passing away in 2003. She continues his legacy as a stalwart advocate of conservative principles in America.

    HONORARY CHAIRMAN & TRUSTEE EMERITUS

    Honorary Chairman and Trustee Emeritus
    David R. Brown, M.D., Heritage Trustee Since 1978
    Emeritus, Orthopedic Associates, Oklahoma City, Oklahoma

    Dr. David R. Brown maintained a private practice as an orthopedic surgeon in Oklahoma City and was a Clinical Professor at the University of Oklahoma Health Sciences Center. Brown is Retired Chairman of Orthopedic Associates, Incorporated. And serves on governing boards for the Heritage Foundation, the Samuel Roberts Noble Foundation, the Oklahoma Council of Public Affairs and several nonprofit organizations. Dr. Brown was a member of the OMRF Board from 1976 to 2001. He served as Chairman of the Board from 1997 to 2001.

    HONORARY TRUSTEES
    Kathryn Davis , Heritage Trustee since 1994
    Partner, Shelby Cullom Davis & Co., LP, New York, New York

    Much of The Heritage Foundation’s success in foreign and defense studies can be traced directly to the guidance and support of Dr. Kathryn Davis and her husband, the late Ambassador Shelby Cullom Davis.

    An adventurer, scholar and visionary, Dr. Davis has exercised her interest in foreign affairs for more than three-quarters of a century. She celebrated her 1929 graduation from Wellesley College by searching the Caucasus Mountains, on horseback, to find an obscure Muslim tribe. She holds a master’s degree in international relations from Columbia University and a doctorate from the University of Geneva. She was a researcher for the Council on Foreign Relations throughout the 1930s.

    In 1991, she and her husband received the first Clare Boothe Luce Award, Heritage’s highest honor. Six years later, Dr. Davis established the Kathryn and Shelby Cullom Davis Institute for International Studies at Heritage. The Davis Institute today addresses virtually every aspect of foreign policy with analyses produced from four study centers: the Allison Center for Foreign Policy Studies, the Asian Studies Center, the Center for International Trade and Economics and the Margaret Thatcher Center for Freedom.

    The Hon. Frank Shakespeare, Heritage Trustee Since 1979 former U.S. Ambassador to the Vatican, La Jolla, California

    Ambassador Shakespeare’s belief in the power of ideas is exemplified by his role as Chairman of the Board for International Broadcasting during the Reagan administration. Under his leadership, Radio Free Europe and Radio Liberty carried the message of freedom behind the Iron Curtain and helped bring the Cold War to a successful conclusion. Heritage’s Board Chairman from 1981 to 1985, Shakespeare went on to serve as Ambassador to both Portugal and the Holy See (Vatican City). He also has served as President of RKO General Inc., Director of the U.S. Information Agency, and President of CBS Television Services. He currently serves as a Trustee of the Lynde and Harry Bradley Foundation of Milwaukee, Wisc.

    PATRONS OF THE HERITAGE FOUNDATION

    The Right Honourable The Baroness Thatcher, LG, PC, OM, FRS Former British Prime Minister

    In September 2006, Baroness Thatcher added a unique title to her list of honors: Patron of The Heritage Foundation. It is a designation that recognizes her “singular contributions as a leader of the free world and to the improvement of the life of her nation and people.”

    As Prime Minister of Great Britain from 1979 to 1990, Margaret Thatcher joined her “noble friend,” U.S. President Ronald Reagan, in directly challenging the oppressive communism of the Soviet Empire. The Russian people honored her efforts by nicknaming her the “Iron Lady.”

    Lady Thatcher also restored Great Britain to its position as a world power through economic reforms emphasizing deregulation and privatization. The success of her economic policies led other nations–including those in newly free Central and Eastern Europe–to adopt similar market-based reforms.

    In 2005, Lady Thatcher selected The Heritage Foundation to house the new Margaret Thatcher Center for Freedom. The Thatcher Center specializes in the study of transatlantic relations, with a special emphasis on advancing initiatives to strengthen the “special relationship” between the United States and Great Britain.

    Lady Thatcher has spoken at The Heritage Foundation on a number of occasions. In an open letter to Heritage members, she noted that she looks to Heritage “to carry forward my legacy in the United States” because it is “an organization committed to defending and restoring sound conservative principles.”

    Quentin in no way can you make the claim all these patriots, defenders of freedom, world class leaders, are here to tell a bunch of lies and destroy their reputations. C’mon Quentin, you have to get a grip, you should be able to believe when it’s logical and right to believe, it’s such a tiny baby step of logic. Otherwise, you are going to be dismissed as a kook – and you don’t people to see you that way do? I don’t want to hurt your feelings, but somebody has to tell you this stuff. Now take a deep breath, go over what I said and why I said it. It’s for your own good. I know you mean well, I know you are patriotic and love your country, but Quentin you have to open your eyes to something beyond this silly fringe conspiracy stuff.

  9. Libby says:

    “UAW workers earn $75 an hour in wages and benefits….”

    Yes, well if this were in any way endemic to the American labor force in general, I’d say we have a problem … but it isn’t … and we don’t.

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