Commentary Magazine


Topic: David Whiston

UAW Enriched, Now What About the Taxpayers?

You might recall that three years ago, GM negotiated wage cuts with the UAW. That was supposed to lower the rate for new hires, to $25.65 per hour, a significant reduction over current rates of approximately $60 per hour. But that was a charade, and GM has yet to cut a single employee’s rate. This report explains:

GM can’t add new workers at the lower wage yet. It still has 5,000 laid-off workers who, under their contract terms, have first crack at any union jobs that the company adds, and most would return to work at the higher pay level. …

“That’s probably one of the reasons the UAW agreed to [the lower wages]. They knew right off the bat there wouldn’t be a lot of leeway for the companies to hire new workers,” said David Whiston, an auto analyst at Morningstar Inc. “There will always be this fundamental difference—that the Detroit companies have union shops” and the U.S. plants of foreign makers don’t.

When might the new, lower wages kick in? Hard to say, GM declares: “As GM’s U.S. sales recover, the company is ramping up production by adding shifts and overtime at several factories. These moves will allow GM to bring back many laid-off workers, but GM spokeswoman Kim Carpenter said the company doesn’t know when hiring will begin for the lower-wage jobs.”

This is what the taxpayers have been subsidizing. And certainly the safety net supplied by the Obama administration for the benefit of its union patrons prevented any real cuts for UAW workers, which in a non-bailout situation or an ordinary bankruptcy would have been among the first steps GM would have been forced to take.

And now we hear that with GM’s improved fortunes, the administration is considering an IPO to unload the 61 percent of GM shares it holds. How about this? In appreciation for having propped up a losing firm and sustaining the exorbitant compensation of UAW workers, any funds obtained from an IPO should go back to the taxpayers in the form of an income tax rebate. In fact, it sounds like just the sort of issue Republicans should present to the voters in November. One party wants government to keep the money; another wants to return it to the taxpayers. One party has used taxpayer funds to enrich Big Labor; the other wants to put money in everyone’s pocket. Sounds like a defining issue, and a stark reminder that the candidate who talked about fiscal responsibility and taming special interests has not practiced what he preached.

You might recall that three years ago, GM negotiated wage cuts with the UAW. That was supposed to lower the rate for new hires, to $25.65 per hour, a significant reduction over current rates of approximately $60 per hour. But that was a charade, and GM has yet to cut a single employee’s rate. This report explains:

GM can’t add new workers at the lower wage yet. It still has 5,000 laid-off workers who, under their contract terms, have first crack at any union jobs that the company adds, and most would return to work at the higher pay level. …

“That’s probably one of the reasons the UAW agreed to [the lower wages]. They knew right off the bat there wouldn’t be a lot of leeway for the companies to hire new workers,” said David Whiston, an auto analyst at Morningstar Inc. “There will always be this fundamental difference—that the Detroit companies have union shops” and the U.S. plants of foreign makers don’t.

When might the new, lower wages kick in? Hard to say, GM declares: “As GM’s U.S. sales recover, the company is ramping up production by adding shifts and overtime at several factories. These moves will allow GM to bring back many laid-off workers, but GM spokeswoman Kim Carpenter said the company doesn’t know when hiring will begin for the lower-wage jobs.”

This is what the taxpayers have been subsidizing. And certainly the safety net supplied by the Obama administration for the benefit of its union patrons prevented any real cuts for UAW workers, which in a non-bailout situation or an ordinary bankruptcy would have been among the first steps GM would have been forced to take.

And now we hear that with GM’s improved fortunes, the administration is considering an IPO to unload the 61 percent of GM shares it holds. How about this? In appreciation for having propped up a losing firm and sustaining the exorbitant compensation of UAW workers, any funds obtained from an IPO should go back to the taxpayers in the form of an income tax rebate. In fact, it sounds like just the sort of issue Republicans should present to the voters in November. One party wants government to keep the money; another wants to return it to the taxpayers. One party has used taxpayer funds to enrich Big Labor; the other wants to put money in everyone’s pocket. Sounds like a defining issue, and a stark reminder that the candidate who talked about fiscal responsibility and taming special interests has not practiced what he preached.

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