(A postscript to our analysis of the GM strike.)
A few additional bits of information about the recent settlements at GM and Chrysler have come to light this week. They add to the sense that the agreements are mile markers in the race to the bottom.
GM announced on Monday that it would save up to two-thirds on labor costs for new hires under its new agreement with the UAW. About 16,000 non-assembly line jobs will be reclassified as second tier jobs and paid under a separate wage scale. In addition, second tier workers will not be eligible for GM’s pension or for retirement health care. The current hourly rate of $78.21 for wages and benefits for second tier jobs will be adjusted downward to $25.66 per hour. Apparently, workers currently in second tier jobs will keep their current pay rate but will be encouraged to retire or take a buy-out.
Assembly line workers will continue to be paid at the existing rate, but only those now employed will receive the GM’s current benefit package; new hires will not be eligible for the pension of the retirement health care.
GM and the UAW are currently negotiating a buy-out deal for all hourly GM workers. Up to 75% of GM’s workers are eligible for retirement in the next 4 years leaving plenty of space for lower wage new hires. Along with savings resulting from the Veba trust agreed to under the contact, GM says it could lower its ‘structural costs” by more than 25% of total revenues.
Wall Street loves this. GM stock has been trading at 3 year highs, although it dipped a bit this week.
With the pattern set at GM, the union turned its attention to Chrysler where, following a six hour strike, a similar agreement was reached. But there has been dissention within the union. While the union leadership approved the pact, it was not a unanimous vote. At issue for some was the lack of job guarantees and a failure to move temporary workers to permanent status as was done in the GM deal. Some members of the bargaining committee are urging Chrysler’s 45,000 US workers to vote no on the agreement. But no matter what the outcome of the vote, in the end auto workers will be earning significantly less in the future than they do today.
These settlements represent versions of what’s been going on for most workers for years. The reality is that auto workers are playing “catch down” to the rest of the working class. This economic decline is reflected in a new Pew Research Center Poll that shows that 48% of Americans now believe the country is divided between “the haves and the have-nots.” This compares to 26% who believed this in 1988. Asked which group they were in, 45% said they were in the “haves”, 34% in the “have-nots” and 21% in “neither or don’t know”. Compare this to 1988 when 59% or respondents said they were in the “haves” and only 17% in the “have-nots”.
The perception reflects the reality. The richest 1% of families have doubled their share of national income from 8% in 1980 to 16% in 2004, not counting capital gains. Meanwhile, in 2006, median household income was still 2.1% below 1999 levels.
There has been hope in the labor movement that agressive organizing will make janitors and other low wage service workers the auto workers of the 21st century, earning middle class wages with good benefits in decent jobs. So far there is scant evidence that this is happening. On the contrary, evidence is mounting that auto workers--even highly unionized auto workers--will become the janitors of the 21st century as their wages and benefits are cut.
Today no group of workers, no matter how well organized, is immune from the pressures of globalization. Going it alone simply won’t work, nor will a trade unionism that limits its struggle to the bargaining table. Only a revitalized labor movement that links the organized and the unorganized in a broad social and political movement for workplace and economic justice can protect and extend the gains that labor has made over the last century.
M.O.
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