Steve Rattner, anointed by President Obama as an auto industry expert in 2009 so now he is one, points out the challenge for the GM workers who have been on strike now for eight days in an op-ed in the New York Times:
I’m all for workers earning more, but it’s important to understand that, at least in the car industry, this is not a case of rapacious investors profiting at the expense of workers. Since its initial public offering in November 2010, G.M. stock has risen by only 13 percent, compared with 154 percent for the overall market.
We need to be realistic about these challenges. The United States government can support the auto industry with initiatives like the new trade deal with Mexico, which would require that 40 to 45 percent of the vehicle is made by workers earning at least $16 per hour. But Mr. Trump’s flowery rhetoric notwithstanding, we’ll be lucky just to keep the jobs we have now.
When you consider the graph at the top of this page things look pretty grim for the autoworkers but it doesn’t tell the whole story. Total compensation is the real question not wages and on that score the autoworkers make out somewhat better. Since 2002 health care prices have risen about 75% so their health care plans make up a very significant part of that compensation. That’s why their health care plan is one of the main sticking points in the negotiations.
Since I tend to be a ways and means sort of guy and frequently take a “if you can’t raise the bridge lower the river” approach, perhaps we should look at the autoworkers’ expenses. What are they spending more on than they did 17 years ago? Health care and taxes are a lot more expensive than they were. Food, apparel, and home rental have about kept pace with the general rate of inflation.
Perhaps the best way to give the autoworkers a raise would, coincidentally, give all of us a raise: cut health care prices and taxes that fall on most of us, i.e. other than the personal income tax.
Just promise them better pensions in lieu of pay increases. Works every time.