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Detroit: Recovery for the Auto Bosses, Not for the Workers or the City

By Alan Benjamin

In his January 24, 2012, State of the Union address, President Barack Obama invoked the auto bailout and the “recovery of the auto makers and Detroit” as one of main achievements of his administration and proof of the correctness of his economic policies. “On the day I took office,” Obama stated, “our auto industry was on the verge of collapse… In exchange for help, we demanded responsibility. We got workers and auto makers to settle their differences.”

By “responsibility” Obama was referring to the White House’s huge concessionary demands on the United Auto Workers union and its members — demands that were required by the U.S. Treasury to provide an estimated $80 billion in TARP bailout funds to General Motors and Chrysler. These included a wage freeze, a 50 percent pay cut for a new second-tier category of workers, the destruction of more than 20,000 jobs, major cuts in pension and health benefits for retired workers, and a ban on strike action. (It should be noted that there were no such strings attached when the U.S. Treasury literally gave Wall Street up to $4 trillion in the name of bailing out the U.S. economy.)

When then-UAW President Ron Gettelfinger announced on May 29, 2009, the new contract ratified by a majority of the auto workers, he said the cuts, which were needed “to make GM competitive and give it a chance to survive the worldwide collapse of industry sales” — would save GM $1.3 billion a year over the life of the five years of the new contract.

Larry Christensen, a UAW Local 140 retiree, called this a “slave labor contract” imposed at gunpoint by the corporations and the government.

While autoworkers paid the price, the auto bosses reaped the profits. “Today, General Motors is back on top as the world’s number one auto maker,” Obama boasted in this State of the Union speech. “The American auto industry is back.”

This, however, is not the case of the autoworkers three years after the bailout plan was approved. The entry-level wage of an autoworker is $14 per hour. This is what most workers are now making. It is not a living wage, especially considering that the workers’ benefits have been slashed, their healthcare and pension plans have been decimated, and their union has been transformed into a shadow of its former self.

But what’s happening in Detroit is not only the destruction of the auto work force, the standard-bearer of the labor movement and what became known as the U.S. “middle class” for more than seven decades; it’s also the destruction of a city.

The bitter truth is that Detroit is bankrupt, with poverty and unemployment over 50 percent, widespread foreclosures and utility shutoffs, and a city government committed to scrapping entire neighborhoods and returning large sections of the former manufacturing capital to fallow lands.

In fact, the situation is so bad that the state government, with the support of the Democratic Party mayor and City Council, has installed an unaccountable Special Emergency Board that is authorized to suspend local government, rip up union contracts and rule by decree. The board’s first target has been to impose sweeping concessions on other unions — particularly the public-sector unions.

Obama continued his speech with the following words: “What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh.”

Detroit has become a synonym for urban collapse and social misery. This is what Obama offers to workers in “Cleveland and Pittsburgh and Raleigh.”

And to add insult to injury, Obama concluded the portion of his speech on the Detroit “recovery” by lying outright to the American people when he said that the automakers had already “repaid their loans.”

Hogwash, stated — a non-partisan institute that monitors all the claims made by both Democratic and Republican candidates in the election. With a body of evidence to back its assertion, Factcheck noted that U.S. taxpayers are still on the hook for half of the $80 billion in federal aid. Is this money we will ever see? Not likely if the government considers that it has already been paid back.

Current UAW President Bob King told The Nation writer Laura Flanders (Feb. 2, 2012) that he is hopeful that union strength will return to Detroit now that the industry is back on its feet — to which Flanders replied, “Heaven knows how!”

It is a dangerous illusion to think that union strength will return to Detroit because Detroit is “now back.” True, the auto bosses are once again reaping mega-profits, but they have no intention of restoring past wages or benefits. Quite the opposite. With the help of federal, state and local governments, they are driving down the working conditions and living standards of all working people in Detroit. And no amount of divine intervention is going to turn things around.

In the spring of 2009, the San Francisco Labor Council (AFL-CIO) adopted a resolution on the crisis in the auto industry that continues to offer the only solution to this deteriorating situation. It stated, in part:

“The financial crisis of the auto corporations was not caused by the auto workers any more than the financial crisis of Wall Street was caused by the working class. … We strongly reject the administration’s drive to make the unions a partner in the effort to resolve the corporation’s financial crisis. The unions were not created by the workers to join the employers in their corporate assault on workers’ jobs.

“There should be no layoffs. If the government can find trillions of tax dollars to bail out a handful of bankers, it can surely find the funds to prevent layoffs and put all laid-off workers back on the job. The U.S. labor movement must draw a line in the sand to say: ‘Not One Single Layoff in the Auto Industry!’

“The Obama administration must nationalize the Big 3 and place the management of the companies under the control of an elected labor-community board of directors, halt all further layoffs, retool the auto industry, retrain its workforce, and ensure that all laid-off workers can return to work immediately with union contracts at union scale.”

Indeed, if union strength is going to return to Detroit, it will require an independent labor movement willing to fight for the interests of its members — against the auto bosses — and willing to embrace a fighting platform such as that adopted by the San Francisco Labor Council.

5 Responses to “Detroit: Recovery for the Auto Bosses, Not for the Workers or the City”

  1. On October 2, 2012 at 5:45 pm David Walters responded with... #

    Yes it is likely that most of the new hires are Black but it’s hard to find specific stats on this. I doubt even the UAW keeps them. But at this point there is a huge crisis for capitalism and every one is struggling for jobs.

    • On October 3, 2012 at 10:52 am cheryl wade responded with... #

      Thanks for your response to my question. Yes, you are absolutely right that this crisis impacts all of us – regardless of race. But the economic downturn has had a disproportionately harsh impact on people of color- particularly African Americans and Latinos. Unemployment rates are disproportionately higher for African Americans. African American and Latino communities were targeted for predatory mortgage loans in a way that white communities were not. I think we need to understand the history of discrimination in our capitalist system. We need to understand the economic impact of slavery on the nation and for generations of African Americans. We should also try to understand the causes of present present-day racial disparities in our economy also.

  2. On October 1, 2012 at 11:44 am cheryl wade responded with... #

    Excellent essay. What are the demographics of the second-tier workers? I imagine that since Detroit has a large working class black population that most of the second-tier workers are African American. Is that right?

  3. On June 19, 2012 at 2:25 pm David Walters responded with... #

    Great that you liked it Hal. Are you based in Detroit?

  4. On June 16, 2012 at 8:02 pm Hal responded with... #

    Great story on Detroit. I understand the turnover among newly hired workers at Chrysler’s Belvidere Assembly Plant is 30 per cent — even with the national unemployment rate stagnating at about 9 per cent.

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