Big Labor - Big Management - The Fat Cats Sleep Together

GM has a lot of problems beyond labor, but labor is their biggest problem and consequently, GM is shrinking (i.e., losing jobs) while Toyota et al., are growing (i.e., adding jobs, in the U.S., almost all non-union) – who would you rather work for?

Big Labor and GM management, particularly labor leaders and GM management in the 80’s and 90’s, made a devil’s bargain a few decades ago that is now coming back to screw GM’s workers. To wit, Big Labor agreed to ‘moderate’ pay hikes in return for large, and unreasonable, hikes in pension and retiree medical benefits. Big Labor leaders benefited by showing workers that they were negotiating huge increases in total compensation (most of it deferred to retirement) and GM management benefited by making FUTURE promises they knew they wouldn’t be around to pay for…and they saved current labor dollars because cash raises in hourly pay were modest.

So, the fat cats in Labor and Management made promises their bodies couldn’t keep. Who’s left holding the bag? GM workers who, though wildly over-compensated for their relatively low skill levels, nevertheless believed they were going to retire with certain benefits that will now almost surely not be there. Why? Because companies that don’t make money (profits) can’t pay workers, period!

The crux of the problem with the U.S. Labor Union model is that it ‘pits’ labor against management in an adversarial manner, which ultimately hurts the ability of a company to pay more workers more money. It is the reason that Labor Unions share of the PRIVATE work force has been in decline for three decades…it does not work. Conversely, Labor Unions have been growing in government, since government typically has a monopoly in whatever it does and funds whatever it does with money that is involuntarily confiscated (taxes, under threat of loss of freedom) from the private sector (the productive part of the economy that provides all of the money (means) for all the various social programs that liberals, err, I mean progressives, love).

As an aside, a good deal of the ‘rich’ pensions negotiated by Big Labor and agreed too by irresponsible managers, will ultimately be paid by tax payers (e.g., corporations and private sector workers) since the Pension Benefit Guaranty Corporation is under funded by tens of billions of dollars (projected to grow to hundreds of billions). It is ironic, to me at least, that Big Labor pensions are being subsidized by my tax dollars through the PBGC.

The real lesson is not to rely on someone else, like the government or a large corporation, to take care of you. Save your own money, in your own account, so that nobody (except the government through taxes) can take it away from you.

Cheers!