How Unions Kill American Jobs

Socialism doesn't work:

Massive job cuts at General Motors, America's largest carmaker — coupled with the bankruptcy of Delphi, America's biggest autoparts maker — have provoked predictable handwringing from liberal pundits who worry that America is "losing its manufacturing base." But the wrenching change now buffeting the auto industry defies the usual press formulas. Just listen to Steve Miller a turnaround specialist who is steering Delphi's restructuring process. He exploded the myth of America's "endangered" union manufacturing jobs at his October press conference announcing Delphi's move into Chapter 11: "We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive."

Grass cutting is a manufacturing job?

Miller's frank assessment of unsustainable labor contracts is a refreshing dose of candor in an industry that for too long has talked around union-labor costs in a way that is totally divorced from the realities of the U.S. labor market — much less the global labor market.

While America's national press has gleefully covered the front-office shenanigans of Republican fat cats like Enron's Ken Lay, it has entirely missed the disease eating away at the roots of American manufacturing: Behind the threat of strike, greedy Democratic union bosses have built an unsustainable entitlement-wage culture that is now crashing spectacularly in America's heartland, disrupting lives, and threatening some of America's biggest publicly traded companies.

Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.

But at least the grass cutters are working for their pay. The UAW contract also guarantees that 12,000 autoworkers get full wage for doing nothing. On the heels of Miller's straight-talk, the Detroit News reported that "12,000 American autoworkers, instead of bending sheet metal, spend their days counting the hours in a jobs bank." These aren't jobs. And they certainly aren't being "lost" to China.

"We just go in (to Ford's Michigan Truck Plant) and play crossword puzzles, watch videos that someone brings in or read the newspaper," The News quoted one UAW worker as saying. "Otherwise, I've just sat."

For Delphi, this idled labor cost $400 million in the second quarter of this year alone. Facing similar numbers until the contract's end in 2007, Delphi took refuge in bankruptcy. "The jobs bank must be eliminated," says Miller. "Paying people not to work is just not sustainable."

I used to work for a Fortune 100 company in the manufacturing industry. They were able to avoid this nonsense by playing union leaders off against one another. Ultimately, all these clowns cared about was padding their own nest. They gladly sacrificed the potential for new members in order to keep their own do-nothing jobs longer. They routinely got their clocks cleaned in negotiations for that reason---the management of the company cared about value and took a long-term view; all they cared about was perks for themselves and their cronies in the short-term.

Too bad GM didn't have the guts to play hardball.