Friday Bush announced that some of the TARP funds intended for the financial industry will be used as a temporary lifeline to the Big 3 auto makers, after the Senate failed to pass the auto bailout bill last week.
From The New York Times:
The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers. (emphasis mine)
The funding is on the condition that the union workers’ wages be reduced to the level of non-unionized workers at foreign auto plants. Now I’ve written this before, but I’m going to say it again: there were no such stipulations given to the financial industry bailout. I’m not opposed to restrictions and conditions, but the white collar/blue collar double standard in juxtaposing the two bailouts is astounding.
For the financial bailout, no one insisted on increased regulations to ensure such abuse would not happen again, no one said that traders would need to take a commission cut, no one demanded that the financial industry take accountability and explain how this will not happen again. And it’s not like this was the first time the government has stepped into the affairs of the financial sector, just like this hasn’t been the first state funding given to the auto manufacturers.
What’s also key here is who is required to “concede”: unions, creditors, supplier, and auto dealers….hmmm, what’s missing on this list? CEOs, perhaps? Why must the automakers be required become viable on the backs of the blue-collar workers who dare to earn the median income, vacation time, and health care! The average union wage is $29/hour (Factcheck.org debunks the $70/hour lie, and has a great analysis of the difference between wages earned and labor costs “per worker”). The average non-union, foreign auto maker worker makes about $24/hour, and they particpate in profit-sharing program. For example, in 2007,
Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000, boosting the average pay at the Georgetown, KY, plant to the equivalent of $30 an hour. That compares with a $27 hourly average for UAW workers, most of whom did not receive profit-sharing checks last year.
Which means that domestic union workers and domestic plants for foreign carmakers are pretty comparable. But when times are tough, Bush is demanding that worker benefits and pay be cut, when CEOS are making ridiculous compensations despite their leadership failure. It is not the auto workers who aren’t doing their jobs. Why don’t we begin with making U.S. CEOs cut their pay down to what the foreign automakers earn? From USA Today:
Detroit automakers have focused on the gap between their hourly workers and those of the non-union foreign automakers in the USA. Union workers say the executive pay gap should be examined, as well.
Japanese companies are not required to break out salaries and bonuses for top executives. Instead, they lump them together. Last year, Toyota’s top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota’s top executive, Hiroshi Okuda, earned $903,000 in 2006.
At Honda, the top 21 earned $11.1 million, combined, in salary and bonuses, SEC filings show.
“There is this huge gap between the average worker and the CEO, and the gap is greatest in the U.S.,” Kim says. “That kind of thing might work where individual work counts the most, but in the manufacturing sector, it’s all about teamwork.”
This alongside the recent revelation that Bush included a one-line loophole to allow excessive executive pay in the financial bailout package. From The Washington Post:
But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future.
Or listen to Air America’s The Daily Left report:
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Even when Bush & Co. looks like he’s being tough on CEOs as well, he has all his bases covered so he doesn’t really have to be, and the brunt of the burden of blame can rest on the Evil unions.
Again, from FactCheck:
A final note on all this: Labor costs only account for about 10 percent of the cost of producing a vehicle. And it’s not the cost of American cars that people complain about; they’re already often thousands of dollars less than their Japanese counterparts.
American cars don’t not sell because greedy union workers earn $4 more/hour base pay than non-union workers of foreign autos do; their health care and vacation time does not result in an equal quality, more expensive car than the Hondas and Toyotas of the world. There’s clearly a problem with Detroit’s business model, and the Big 3 have no one to blame but their leaders, who are getting paid a shitload for their companies’ unprofitability. You can’t pin this one on the little guy.
(Cross-posted to The Reaction)