Michael Barone has a good article up at U.S. News & World Report, Who is at fault for the decline of the Big Three?
Picking up on Mickey Kaus’s article at Slate, Michael indicts “Wagner Act unionism.”
The problem… is not just the high level of benefits that the United Auto Workers has secured for its members but the work rules—some 5,000 pages of them—it has imposed on the automakers. As Kaus points out, unionism as established by the Wagner Act is inherently adversarial. The union once certified as bargaining agent has a duty not only to negotiate wages and fringe benefits but also to negotiate work rules and to represent workers in constant disputes about work procedures.
Under the Wagner Act, management manages. What the union does is complain, and negotiate for a rule limiting management’s right to do what the union doesn’t like. A worker protests that his job should be classified as “drilling special and heavy” instead of “drilling general.” The parties butt heads, a decision is reached, and a new rule is deposited like another layer of sediment. At some GM plants, distinct job categories evolved for each spot on the assembly line (e.g., “headlining installer”). In Japanese auto plants, where they spend their time building cars instead of creating job categories, there is only one nonsupervisory job classification: “production.”
The nature of the relationship between union and management corrodes the quality of the manufactured product. That adversarial relationship polarizes the two sides. Management tries to extract what efficiency it can from labor and labor tries to extract as much wage as it can for as little work as possible. This culminated in the establishment of programs like GM’s job bank, where workers are paid not to work.Barone places the start of the decline in the 1970’s.
So the big UAW demand that year was “30 and out”—assembly line workers could retire after 30 years on the job. This in turn led the union to demand generous retiree benefits. A worker who retired at 51 wouldn’t be eligible for Medicare for 14 years, and therefore the UAW negotiated incredibly generous medical benefits—elective dental work with no copayment is one that sticks in my mind.
The UAW also created a constituency within itself of retirees who have voting rights in union elections just as actual workers do, and there are now something like three times as many GM retirees as GM employees as voting members of the UAW. Retiree benefits account for the lion’s share of the difference between GM’s labor costs and the labor costs of foreign automakers in the United States.
The danger this poses has been obvious for a while, but the adversarial nature of the union/management relationship made it difficult to do anything about it. In Septemeber of ’07, the UAW finally agreed to absorb the cost of health benefits of retirees–if GM would pony up $30 billion in start-up cash. GM can’t afford that payment, and the bailout from Congress will go–in large measure–to offset that payment.
Kaus sums it all up,
That’s why Democrats are deluding themselves if they think they can save Detroit by mandating that GM and Ford build high-MPG small cars in the U.S.–thanks to inefficient work rules, they’ll be overpriced high-MPG small cars, and badly built high-MPG small cars. That’s why Republicans are deluding themselves if they think a wage cut that saves Ford and GM $800 per car is going to make all the difference–it won’t, if the trim still falls off and the carpets bunch up.
Sen. Corker’s proposed bailout compromise apparently did try to tackle the issue of work rules. But the UAW balked at the Corker requirements (which would also have cut pay to parity with Toyota and Honda’s U.S. factories) and the deal collapsed. That shouldn’t be a surprise. A “web of rules” is what adversarial Wagner Act unions were designed to produce.
The sad fact is that neither GM nor Chrysler (and possibly Ford) can remain competitive in either the global or the domestic market unless they radically increase both the quality of their cars and the efficiency of their factories. The current UAW labor agreements make that almost impossible.