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Will Barack Obama Strike the Last Nail in the Coffin of the American Labor Union?

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The executive branch went forward with the automaker bailout without Congress’s approval. The Republicans in Congress demanded that union wages, benefits, and pensions be reduced in exchange for bailout money, and the United Auto Workers refused to cooperate.

The executive branch gave the same requirements, but instead of being a prerequisite, it’s a vague requirement they have to meet by the end of March. They have to prove to the Obama administration that they have made the necessary changes to return in time to profitability, and if he uses George W. Bush’s criteria, the necessary changes are reducing union wages, benefits, and pensions to match the foreign automakers with U.S. factories. Barack Obama has left it unclear what he plans to do, stating that he agrees with and respects the president’s decision, but also saying that the brunt should not be exclusively on the workers.

What will happen now is unclear. Bush has made it clear that the requirement to retain government funds, and not face instant bankruptcy when it’s time to pay the piper, is to break the UAW, which has already agreed to ending the job bank program for laid-off workers, which will make all of the planned layoffs and plant closings a lot easier for the Big Three, but a lot tougher on a job-starved economy. Will Obama respect this criteria, when the time comes for him to act as judge over the fate of the auto industry?

Why did they even go to Congress in the first place, if the executive branch was capable of giving them the funding independently? When they’re doing something as politically risky as very publicly giving away billions of dollars to rich people, it’s always better to pass the buck. That’s not the only reason; they also want to make it as official as possible. There’s so much grey area in U.S. law that things can be “more” or “less” legal and official, and they wanted it to be first approved by Congress, then signed by the president.

An international example of the same trend would be the mobile retentions in Argentina. When big farming businesses organized a protest against the executive branch’s taxation of windfall profits on soy exportation after the price boom, President Christina Kirchner asked Congress to vote on the measure, where it was killed in the Senate by a tie vote decided by her own Vice President Julio Cobos.

The Republicans want to save the auto industry almost as much as the Democrats, although I’m not convinced of the actual danger, but while the Democrats are perfectly willing to give money to an industry which is continuing to refuse to develop the technology necessary to neutralize the effects of transportation on the environment, a major issue for their voters, the Republicans were not willing to give them money without killing the unions. Republicans don’t like unions, and not just because they give campaign donations to Democrats.

The concept of collective bargaining has been turned around. Now, rather than unions working in one industry or for a single employer organizing to bargain for a good wage, benefits, and income security in the form of layoff benefits, a single employer, an industry, or just the “market” of the largest international employers in general have the bargaining power. Unions use the number of workers and what they can produce, especially if they are skilled laborers, to bargain for a better deal, but big businesses have the same collective bargaining power, the jobs and the wages that affect large groups of people, but with the unity of a single entity or small group.

There are a lot of factors which reduce the bargaining power of unions, including globalization, a failure to protect the right to organize, such as in the case of Wal-Mart, where the employees must sign a contract saying they will not form or join unions, high unemployment leading to an abundance of desperate workers willing to accept low wages, a middle-aged middle class with the economic power to help their young adult children as they enter the job market for less than a living wage, and an active movement in the government to suppress unions and an effort in the public dialogue to make them look bad. They are being blamed for the automakers’ problems, despite the lack of innovation, the competition making more fuel-efficient vehicles, and the fact that their competitors without union workers are having trouble as well.

The move by Bush will at least serve to continue to defame unions, and will demoralize their cause or even possibly destroy one of the few remaining unions in the U.S. with any strength or bargaining power. If the union accepts the measures demanded by the Bush administration, it will have lost its entire purpose. What the Republicans have demanded is nothing less than starting over from zero for the union, taking away any pay and benefits they have earned beyond the market value, which may, in turn, decrease.

If the union doesn’t accept the terms of this agreement, the U.S. government has the option of demanding immediate payment of the bailout loans, thereby most likely instantly putting the companies in bankrupt, and when they are in bankrupt, they do not have to fulfill certain obligations to their workers or pensioners, or may close down completely and/or fire the entire union.

Chrysler and GM accepted the bailout funding because they think that, considering the fact that the government is willing to give them bailout funding now, they’re not going to destroy the businesses and their jobs later on to demand repayment. They believe that either the union will give in to the government’s demands, or a more union-friendly Obama administration will let the matter slide.

However, Obama has been reaching across the aisle so much, and the unions and/or the automakers may take so much negative press between now and the end of March, that he may be willing to deal the final blow against the automakers by demanding repayment of the loan, or will make it so clear that he intends to do so that the union gives in to these demands, rather than facing total destruction. Ford, who already provided the basis for their refusal by saying their liquidity crisis wasn’t immediate, denied the funding because there’s just too much uncertainty here. If the government was giving away free money, they wanted in, but with a little bit of risk and some demands, they’re no longer interested. After all, if the currently rather unpredictable political climate permits, they can always ask for money later, and possibly get it without any conditions.

The hammer is falling hardest here on the unions. Chrysler CEO Bob Nardelli said that Chrysler is committed to meeting the Bush administration’s conditions by the end of March, so there will be a lot of pressure on them to convince their union workers to accept the deal or end up jobless (or just fire them).

Union members traditionally vote more toward the Democratic side, but will the Democrats stand up for them? Will the party which is known historically as the party of unions and the party of the workers go down in history as the party whose president, Barack Obama, betrayed one of the biggest and most powerful unions left and contribute to the ultimate demise of labor unions in America? There’s no way of knowing until the end of March; for now, nothing is certain.


Indecent Proposal: A $1 Salary and some Good Old-Fashioned Union Busting

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The big three automakers have been telling a rather convoluted sob story for the past few weeks, spending an unknown amount of money on a campaign to convince the people and policymakers of the U.S. that they desperately need money or they will collapse, bringing down the economy and creating a ripple effect destroying the livelihood of countless people. Now that the UAW and Republicans in Congress have successfully broken the deal, perhaps their money would have been better spent elsewhere.

At the same time, they’ve been trying to convince their shareholders that they will bounce back, with or without the federal bailout, and that they’re going to return to profitability and that they are a sound investment.

Note that GM CEO Rick Wagoner says he’s looking forward to reading all comments to this YouTube video. Comments, however, are disabled.

Ford CEO Alan Mulally said that Ford did not currently have a liquidity crisis, and that even without the bailout they will be able to survive the economic crisis and bounce back. So what are you doing in Washington? Why aren’t you working on your financial strategy? Why are you trying to get emergency federal funding designed for industries with liquidity issues when you don’t have an immediate liquidity problem? Why don’t you try to solve your own financial problems and come ask for bailouts only when it’s absolutely necessary?

These CEOs were in Washington because the handouts are happening now, and they don’t want to miss out on the action. There is no way to justify this behavior, and if your representative in Congress’s response was anything other than “get out of my office”, you should be sending them an angry letter and you should start organizing on a local level right now to replace them with a third party candidate in the next election.

It shouldn’t be that hard, nobody votes in midterms anyway.

When things started looking bad for the big three giveaway, and a few representatives in Congress showed the surprising insubordination of asking why they came in private jets, Mulally came up with the idea of accepting a $1 salary for a year of work. What was the point of this? Are we supposed to think you’re some kind of humble, hard-working man, so dedicated to your company that you’d make such a sacrifice as to work for $1 for one year? How stupid do you really think the American people are? I mean, I know we’ve made some bad decisions in the past and we have been rather complacent and perhaps even complicent at times as the corporations have taken over the government and begun to systematically dismantle any protection of workers’ rights, but this is one you’re not going to get away with. This is completely outrageous.

Mulally got an $18.5 million bonus when he became CEO of Ford in 2006, after streamlining Boeing employees into the unemployment lines. In 2007, he earned a $2 million salary and another $4 million in bonuses. This doesn’t even include stock options. I don’t know exactly what the $1 deal would have been, whether or not he would be receiving bonuses or additional stock, but the actual salary is the least of the money these CEOs are making. And if they do get the federal funding, as soon as that first year passes, there are going to be big, fat bonus checks with “thanks for getting those $25 billion of public money” written on them in invisible ink. And the stock market doesn’t like uncertainty, but it seems to love a publicity stunt. Ford stocks surged when he made the statement, and therefore, Mulally made money just by saying that he would work for $1.

This is an insult. It’s an insult to the intelligence of the American people. I don’t even have that much faith in the intelligence of the American people, as a whole, but this is just too much. It’s an insult to anyone who had to invest their savings or their parents’ money in their cost of living while working an unpaid internship getting coffee for the people with real jobs. It’s an insult to all of the people working in the automotive industry who know they won’t be seeing a raise anytime soon. It’s an insult to all of the foreign workers making parts for wages that don’t cover the cost of living. And it’s especially an insult to all of the people who are going to be laid off, and won’t even be earning that one dollar a year.

Taking a temporary pay cut when we all know you’ve got millions in the bank is not a show of solidarity. It’s an insult. If you really wanted to show your solidarity, to show your faith in the company, and to show that you really need these federal funds and are doing all you can to make it work, and if you’ve really got liquidity issues, why don’t you liquidate your own assets, lend the money to the company, and work for a year on the same wage as your janitor? Or is the lifestyle of a real working-class American not good enough for you?

Now the blame is being spread to the Auto Workers Union. Congress Republicans required a pay cut for union workers in order to vote for the bailout, furthering the idea that the best way to make a business viable and competetive is to pay the workers as little as possible, literally offering government funding in exchange for lowering wages. The UAW is refusing to cooperate, as they should, especially considering the fact that the Big Three aren’t even talking about going out of business without the handout, but they’re taking a lot of flak now in the public debate for refusing to cooperate.

It’s been a bad decade or two for unions, and for the working class in general all over the world. The new focus on staying competitive, trimming down workers’ wages and benefits in order to increase profits, has been both a cause and an effect of global outsourcing, and it’s one of the main reasons globalization is such a “bad thing”. Sectors in every nation all over the world are putting pressure on the local politicians to keep wages stagnant and cut benefits, spreading the word to all the big corporations always looking for cheaper labor while putting on their biggest, brightest “We’re Creating Jobs” smile.

Ford was a company founded on the idea that with the right kind of organization and innovation, the use of the assembly line, you could offer a product of consistent quality at a reasonable price. They knew that if you offer a quality product at a reasonable price, and pay your workers enough money to pay that price, then every worker will also be a customer. And they were a success.

Today, businesses grow, but they do so in a different way. The safest way, they’ve found, of increasing profits is not to invest in innovation or new technology, but to lobby for deregulation, close factories, outsource, break up or ban unions, and basically do everything they can to save money on things like environmental protection and workers’ wages and benefits.

Politicians have been doing their part. Making it easier for corporations to take away the right to organize, and bashing unions as being nothing better than secret Communist organizations and Mafia fronts has been common practice for decades. Ford has been accused of fingering union organizers in their factories in Argentina for the 1976-1983 military dictatorship organized by Henry Kissinger which systematically tortured and murdered leftists, and gave away their children to ranked military families.

This bailout thing is getting uglier and uglier. The bailing out of corporations was meant to prevent unemployment, supposedly, but layoffs are going forward as planned, and union-busting wage and benefit cuts are actually being named as a requirement to receive bailout funding, when not cutting wages or laying off workers should be the what the government demands in exchange for bailing out businesses.

Meet the new boss, same as the old boss. Don’t think that just because the Republicans have suffered during this election that everything’s going to be better. One side wants to bail out every corporation who still has the strength to hold out their hand, while the other side wants to do the same, just as long as they break up their unions. We need to make our voices heard now more than ever and demand real change.

(This article also appears at, where I am writing as a contributing author.)

Written by Alex (Capitalocracy)

December 22, 2008 at 11:48 pm