Venture: Why auto workers' contract talks matter to the larger economy

September 12, 2011

By Dan Weissmann

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(Ford Motor Company)
Workers at Ford’s historic Dearborn Assembly Plant put tires on cars; the plant made its last Mustang in 2004.

Contracts expire Wednesday between the United Auto Workers and the “Big Three” U.S. automakers—General Motors, Chrysler, and Ford. Ford employs about 2,500 people in its assembly and stamping plants on Chicago’s South Side. The expiring UAW contracts were negotiated in 2007—a year before the United States government rescued GM and Chrysler from bankruptcy. Micki Maynard, senior editor of WBEZ's Changing Gears regional reporting project and the author of The End of Detroit, talked with us about how this year’s negotiations may affect those local Ford workers, the auto industry and the wider economy.

DAN WEISSMANN: So the last time these contracts got negotiated, it was 2007, before the bottom fell out of the economy and before the U.S. government had to bail out GM and Chrysler.  How have these companies changed, both in relation to their workers and their role in the U.S. economy?

MICKI MAYNARD: Well, in the last four years, you've seen a shrinkage of several hundred thousand jobs at the Detroit automakers.  We now have about a hundred and twenty thousand hourly UAW members at the three companies, and in the 1990s it was more like half a million people. In 1978, it peaked at a million people.  So the real importance to the U.S. economy that the auto industry had 25, 30 years ago is no longer there, but a hundred thousand jobs is still a lot of jobs. It's the number of jobs we need to be creating every month to be growing.  So you don't want to get rid of those jobs if you have a way to save them.

WEISSMANN: So now that the automakers are in the black again, what are the unions going to expect?

MAYNARD: A couple of things. One of the things the union is focusing on is what are called two-tiers.  Our reporter Kate Davidson at Changing Gears did a story last year about these workers who are newly hired, and they're making about half of what the older workers on the assembly line are making. We found that in some families you've got a mom working on the assembly line next to a son who's earning about half of what she makes.  So, UAW veteran workers make about 28 dollars an hour. Bob King, the UAW president, has said that one of his goals is to get a higher starting wage for those two-tier workers.  

WEISSMANN: And how are the companies likely to respond?

MAYNARD: I think you may see some modest increase for the two-tier workers, but I don't think you're going to see more than a dollar or two an hour. I don't think the companies want to pay more than that. Because, if we have a double-dip recession--if the market doesn't pick up-- they're profitable now, but  costs do return, and those profits can disappear very quickly.

WEISSMANN: And so beyond the specifics, dollars per hour, people said last time the stakes were pretty high. This time, what's at stake?

MAYNARD: My sense is, this is a contract that has to deal with what's happened in the past, what's going on now, and to be cautiously optimistic about the future.  If those assumptions are wrong, you could see the Detroit companies start to stumble again.

WEISSMANN: So, what's it going to mean to me?
MAYNARD: If you live in a town with an auto plant…
WEISSMANN: Like Chicago.
MAYNARD: Like Chicago, you want to see that auto plant stay open.  Not just because you care about automakers, but you care about the people who work at the McDonald's across the street, and the guys at Calumet Fisheries, who the guys at the plant visit after work.

WEISSMANN: And all those folks pay taxes, and pay for the schools.

MAYNARD: Yeah, and now, the government still owns about 25 percent of general motors, and they would lose money if they sold all their stock right now. I think the Obama administration would like to sell all their stock before the election so they could say, We put them back on their feet.

WEISSMANN: So at stake: Pay for some workers, jobs in cities like Chicago, and the presidential election in 2012?

MAYNARD: Right, those are some pretty big things right there.  And every state in our region has a car plant or car parts manufacturers. So we in this area all have some dependence on the health of this industry   And manufacturing has been one of the few bright lights in this economic situation.  And I can't see an economic recovery without this region participating in that.  So, any economic driver that will help the region's economy is something you have to pay attention to.

WEISSMANN: So, if I ever want to get a job again, I should hope this goes OK.
MAYNARD: That's a pretty good way to put it.
WEISSMANN: Good enough for me.  Micki Maynard's the senior editor of the Changing Gears public-media project, former Detroit bureau chief for the New York Times, and the author of The End of Detroit. Thanks so much for joining us.
MAYNARD: Thanks a lot, Dan.

For this week's windy indicator, we talked to a bike messenger.

MORRELL: I'm Mike Morrell.  I'm a courier-slash-owner of the Four-Star Courier Collective.

Aand he has his own job-specific measure of how the economy's doing, and it owes its existence to the September 11 attacks. After that, couriers started having to jump through new security hoops--like riding the freight elevator--to do their jobs.

MORRELL: It used to be, taking the freight was such a big deal--- because it's one elevator, and you're sharing it with contractors and construction workers, and there'd be a stop on every floor, and there'd just be so many other people working in the building. It seems like freights are less busy now.  There's less construction workers, I guess just fewer people coming in and out of buildings, making deliveries.  It's still a nuisance--I still don't like taking the freight elevator-- I'd rather take a passenger elevator. But it's gotten a little bit speedier.  

DISPATCHER: Uh, Keep standing by.

MORRELL: We're slow. I'm standing by.