Will Barack Obama Strike the Last Nail in the Coffin of the American Labor Union?December 23, 2008
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.