Detroit

Will UAW Seek Foreign Help to Unionize American Workers?

by Ivan Osorio on January 18, 2011 · 2 comments

in Bailout Watch, Economy, Employment, International, Labor

America has a vibrant and successful auto industry — just largely outside of Detroit. For years, many foreign automakers’ American divisions have been successful at making cars profitably, while creating thousands of well-paying jobs. One reason for the foreign automakers’ success has been their ability to work without the burdensome work rules faced by the Big Three under their contracts with the United Auto Workers (UAW) union.

Apparently, UAW President Bob King doesn’t like that one bit. In fact, he seems to feel so strongly about it that he recently announced that for companies that resist its organizing efforts, the UAW “will launch a global campaign to brand that company a human-rights violator.” What might such a campaign entail?

One indication can be found in the Obama administration’s report to the bad joke known as the U.N. Human Rights Council — whose members include such human rights champions as China, Cuba, Libya, and Saudi Arabia. In the report, submitted in August 2010, the State Department strongly suggests that the degree to which the law facilitates unionization should be a human rights matter — and that the U.S. falls short in that area.

The UAW — or any other union, for that matter — likely would cite the State Department document in any complaint filed to the International Labor Organization, World Trade Organization, or any other international body — maybe even the ridiculous U.N. Human Rights Council. And King’s recent remarks indicate this is an option the UAW might well pursue.

King also recently acknowledged that the UAW is in trouble. Speaking to an audience of 1,000 union members at a Washington political action conference, he said, “If we don’t organize these transnationals, I don’t think there’s a long term future for the UAW — I really don’t.” With those kind of stakes, it would be surprising for the UAW not to take some drastic action.

The upshot of all this is that we could end up seeing the UAW ask international bodies composed of foreign governments — including some undemocratic ones — for help in unionizing American workers. Stranger things have happened.

For more on labor, see here and here.

LibertyWeek 84: Detroit Seizes the Day

by Richard Morrison on March 18, 2010

in CEI Projects, Features, Podcast, Zeitgeist

Richard Morrison, Jeremy Lott and Dave Weigel come together bring you Episode 84 of the Liberty Week podcast. We cover Washington state’s death wish, new polling on the politics of healthcare, private investment in space exploration, eminent domain abuse in Detroit and the effects of cocaine use on global warming.

Property Rights Under Siege

by Marc Scribner on March 9, 2010

in Economy, Legal, Personal Liberty

Since the Supreme Court’s poorly-reasoned majority opinion in 2005′s Kelo case, Americans have been aware of the grave threats facing their homes, businesses, and property. This awareness–while driving some meaningful reform–has unfortunately not translated into iron-clad property rights protections for most Americans. Municipal planners and rent-seeking private developers still engage in the back room wheeling-and-dealing that undermines our basic rights to own and use property as we see fit.

Today, I wrote about Detroit Mayor Dave Bing’s plan to “downsize” the city in the Detroit News, and warn city officials that redevelopment takings are far more harmful than most planners realize and to avoid using eminent domain–an issue I go into at greater length in my recently released CEI OnPoint. Put simply: government has an incentive to abuse redevelopment processes and is incapable of knowing key economic variables necessary to promote long-term growth. In addition to the actual land grab, cities often bungle the public financing mechanisms to such a great degree that they often end up far worse than they started from a fiscal perspective.

So what potential relief can property owners and taxpayers reasonably expect to get? Following the Kelo decision, a federal court redefining the public use doctrine seems like a long shot. The more promising avenues appear to be state courts and particularly state legislatures (or ballot initiatives, if your state permits them). As I’ve discussed before, implementing the following reforms would be a great first step forward:

  1. Enacting state legislation mandating the creation and maintenance of a public eminent domain database accessible via the Internet. Currently, data on development takings are difficult to obtain due to the fact that eminent domain condemnations are ordered at the local level. Right now, an empirical analysis of takings within a state would require contacting every county clerk and requesting specific filings. A central state database would allow social scientists, journalists, and the public to examine the economic effects of eminent domain use and abuse.
  2. Enacting state legislation defining “public use” as “use by a government body,” which would deny municipalities the opportunity to claim that their takings deals with private developers serve the “public purpose” because they will ostensibly increase tax revenue at some future date.
  3. Enacting state legislation mandating that blight be determined on a parcel-by-parcel basis.
  4. Enacting state legislation mandating that Tax Increment Financing (TIF) be limited to the length of time required to complete public infrastructure improvements within a given TIF district. This would reduce the ability of rent-seeking private developers to collude with local officials to subsidize development projects.

Labor’s Day at the Federalist Society

by Vincent Vernuccio on November 16, 2009 · 2 comments

in Deregulate to Stimulate, Economy, Labor, Regulation

Workers may get violent if their wages are cut. The United Auto Workers union (UAW) has a monopoly and was an anchor on the Big Three U.S. automakers. These two ideas were professed by two labor leaders at the recent Federalist Society Convention in Washington, D.C.

There may be violence, says Damon A. Silvers, Associate General Counsel for the AFL-CIO and Deputy Chair of the Congressional Oversight Panel for TARP. Silvers spoke on last Friday’s panel “Labor: Wall Street, Labor Unions, and the Obama Administration: A New Paradigm for Capitol and Labor?” Speaking to the panel, he claimed economic downturns which cause people to have their wages cut, can have devastating results.

Silvers pointed to wage cuts in Brazil and spoke of the violence which ensued. He argued that when people are starving they may get violent, that the have nots will take from the haves. Quickly cautioning that this could not happen in the United States, he smirked and added, “but it may.” Not so subtly, Silvers implied that if you cut union wages there may be violence.

Another gem from the convention came from Thursday’s lead discussion “Redistribution of Wealth.” One presenter, when asked what happened to the auto industry in regards to unions, stated, “Unions missed the most basic fundamental economic role they have to play, which is to take wages out of competition. What happened was when they had a monopoly or took wages out of competition for the Big Three people competed more inefficiently…When the transplants came…the union didn’t do its job, it was an anchor to the competitive field as opposed to a help.”

Which right leaning free-market intellectuals stated this fact? None other than any Andrew Stern, the president of the SEIU! That is correct, Andy Stern blamed the collapse of the Big Three in part to the union monopoly of the UAW and called it an anchor to competition.

More characteristically, Stern also spoke of redistribution of wealth saying, “I do no support, I condemn, the redistribution of wealth — that is to say, the redistribution of wealth upwards.”

Advocating the redistribution of wealth? Cautioning of violence if wages are cut? Is this really the message top officials in the two largest labor unions want to be sending? Both Stern and Silvers knew their audience did not agree with them – Stern was sweating during his presentation – but did make an effort to speak to the constitutionally minded lawyers association.

Unfortunately, while tempered, their message was a clear endorsement of class warfare. Espousing unions as the only way for workers to get ahead in America, they chastised the Reagan era and directly blamed the demise of unions for what they claimed were lower worker wages. They ignored facts of other presenters showing that most workers’ standard of living has actually gone up in the last 30 years.

Stern should be given credit for acknowledging that the UAW monopoly helped almost destroy the American auto industry. He must acknowledge that hard work, innovation, and ingenuity are the real engine of the American economy, not collective bargaining. The monopolistic nature of unions in many industries is a liability to both workers and unions. As Stern pointed out in the context of the failure of the U.S. auto industry, unions’ inflexibility can drag down companies and work as a hindrance, not a help.

UAW Gives Taxpayers the (Gettel)finger

by Ivan Osorio on July 27, 2009 · 1 comment

in Bailout Watch, Economy, Labor

Considering the enormous amounts of cash that the federal government has hurled at the auto industry since the start of the financial crisis, recipients of government largess in Detroit should at least have the common courtesy of telling taxpayers what they’re doing with their money. Unfortunately, United Auto Workers boss Ron Gettelfinger doesn’t seem to think that applies to him or his union. So kudos are in order to Rep. Jeb Hensarling for calling out Gettelfinger and the UAW on this:

The lone member of Congress on an oversight panel reviewing the use of the $700 billion Troubled Asset Relief Program criticized the decision of the United Auto Workers union not to testify at today’s hearing in Detroit on the auto industry bailout.

Rep. Jeb Hensarling, R-Texas, who is member of the Congressional Oversight Panel, said the UAW refused to testify at today’s hearing at Wayne State University.

The panel confirmed that it sought the testimony of the UAW. Alan Reuther, the UAW’s legislative director, didn’t immediately return a call seeking comment.

Hensarling said he was “disappointed” that UAW President Ron Gettelfinger did not accept invitation to testify.

“He was able to rearrange his schedule to come and ask for TARP money,” he noted.

[...]

“The UAW came before Congress and pleaded for billions of taxpayer assistance. Their ownership stakes in Chrysler and GM look suspicious at best and like sweetheart deals at worst. It’s outrageous they would benefit from the taxpayers’ money and then refuse to testify about it,” Hensarling said in a statement before the opening of today’s hearing.

It’s beyond outrageous; it’s disgraceful — especially in light of the preferential treatment the union has gotten from the government vis-a-vis other bondholders. Even more disgraceful is the fact that the White House and Congress are unlikely to do anything about it. At least now we know what the UAW thinks of the rest of us.

Motoring around the World on Motor City Workers’ Dime

by Ivan Osorio on June 15, 2009

in Economy, Labor, Politics as Usual

Detroit can astound even the most seasoned political cynic, and now it’s done it again. As the Detroit Free Press reports, the trustees of the city’s two public employee pension funds have been enjoying perks that even some CEOs would envy, apparently on the pensioners’ dime.

The trustees who oversee Detroit’s two public pensions, their lawyers and staff spent $380,000 over the past year circling the globe to attend conferences — often traveling in packs, with virtually no limitation on where they went or how often they traveled.

Trustee Ronald Gracia spent the most time on the road — billing the General Retirement System for $105,000 in travel, including three trips to Singapore and $18,600 on travel to Hong Kong, according to records provided by the pension funds.

The two public pensions, with 21 trustees, have guarded their travel records from scrutiny. The Free Press sued to get the records — which are actually only summaries from the past year.

The funds have yet to turn over actual receipts that would show, for instance, where trustees and staffers stayed and how they spent some of the money. Other documents have been destroyed.

Such apparent graft by public officials is hardly new, but today it should ring alarm bells about defined benefit pension funds in general, and union pension funds specifically. Many union pension funds today are severely underfunded, so any workers who could be made to join such funds should be concerned.

The so-called Employee Free Choice Act’s binding arbitration provision would do just that, by enjoining a federally appointed arbitrator to impose a contract on a newly unionized company that could include a provision for workers to join the pension fund of the union that now represents them, and for the employer to pay into it. (Thanks to Marc Scribner for the Free Press link.)

For more on pension funds, see here, here, and here.

Detroit, D.C.

by Ivan Osorio on April 30, 2009

in Bailout Watch, Economy, Labor

Today’s Wall Street Journal further drives home the difficult position in which the United Auto Workers, Chrysler, and General Motors are likely to find themselves as a result of the UAW becoming part owner of GM and majority shareholder of Chrysler. First, the lead editorial notes the political risks inherent in the arrangement:

Some Treasury officials have told the media that 50% government ownership is important to ensure that taxpayers get repaid for the $16.2 billion in Treasury loans. But this is false logic. Taxpayer-shareholders are likely to be far better off with a smaller stake in a truly private company that is better insulated from political meddling. Private owners are more likely than the Treasury or the unions to try to run the company for profit, and so increase its equity value over time. Treasury says it would be a hands-off owner, but that hardly seems plausible and in any case that would merely leave the UAW in control. At the next labor contract bargaining session, the union would sit on both sides of the table.

And former Journal Detroit correspondent Paul Ingrassia points out the conflicting incentives that the UAW will have to control after it assumes such a huge stake in the two troubled automakers (which Holman Jenkins also mentioned this week) — as well as the irony of it all.

Having burdened the Detroit companies for decades with restrictive work rules, enormous health-care obligations and generous retiree benefits, the United Auto Workers union will now end up controlling two of them. Specifically, the UAW will own 55% of Chrysler and 39% of General Motors, where only the government will have a larger ownership interest.

Assuming that negotiations over the next few days or weeks don’t change things, it’s hard to know whether this outcome is perversity or poetic justice. The UAW finally will end up having a direct stake in the survival and prosperity of General Motors and Chrysler — even though the union’s shares in the companies will be held by special trust funds instead of by the UAW itself.

Whether the union’s rank and file will recognize its interest in the companies and act accordingly is another matter. Consider that one of the terms of Chrysler’s pending deal with the union is that workers won’t receive overtime pay until they work more than 40 hours in any given week.

One might well ask: Wasn’t it always that way? Well, no. Often enough, the union negotiated production quotas in local plant contracts that workers could fill in five or six hours a day — after which any work they did qualified for overtime pay. Now you understand one key reason why Detroit has arrived at this unhappy juncture.

That two of the major protagonists in this sorry history — the UAW and the federal government — are gaining more power over GM and Chrysler gives little reason for optimism about the companies’ future. More political manipulation is the last thing troubled companies need, and the  new  ownership structures now being finalized for GM and Chrysler are unlikely to avoid it. By seeking private financing, Ford may be about to dodge a bullet.

Stimulus Subsidizes Corruption, Waste, Racism

by Hans Bader on March 10, 2009 · 2 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Politics as Usual, Precaution & Risk, Regulation, Stimulus to Nowhere

The $800 billion stimulus package signed by Obama not only will make the economy shrink over the long-run, it will pay $88.6 million for unnecessary new construction in the Milwaukee School District, whose enrollment is shrinking so fast that it already has 15 vacant schools. And it will funnel over $355 million into the corrupt, racist Detroit schools, no strings attached.

Detroit is the fastest-shrinking big city in America. It once had two million people, but it has lost so many people that now it has only 800,000 residents, even as population in its suburbs holds steady. Its city council is blatantly, unapologetically racist toward white and Asian residents, something Obama’s Justice Department ignores.

Stock markets, which earlier fell after the Administration’s $8 trillion in new deficit spending spooked investors, are rising today on speculation that costly mark-to-market accounting rules will be suspended. But the Treasury Department says that the rules, which have been described as some of the “most destructive policies of the Bush Administration,” will merely be tweaked. If such rules had been in effect in the 1980s, “every major commercial bank would have collapsed.”

The stock markets fell like a stone since the Obama Administration pushed through its bailout and stimulus packages. Investors were spooked, as Stanford University economist Michael Boskin noted in his Wall Street Journal column, “Obama’s Radicalism Is Killing the Dow.”

Are the Golf Carts Made with Union Labor?

by Ivan Osorio on December 29, 2008 · 2 comments

in Bailout Watch, Economy, Politics as Usual

Throughout the Detroit automakers’ bailout saga, the United Auto Workers’ leadership has claimed that the union has made enough major concessions to date, and that demands for it to make more, from company and government officials, are attempts “to make workers shoulder the lion’s share of the costs of any restructuring plan.”

If the UAW leadership is so concerned about the union’s rank-and-file bearing the costs of the Detroit automakers’ restructuring, there’s one item on which it could easily save millions for its members. Reports Foxnews.com:

Even as the industry struggles with massive losses, the UAW brass continue to own and operate a $33 million lakeside retreat in Michigan, complete with a $6.4 million designer golf course. And it’s costing them millions each year.

The UAW, known more for its strikes than its slices, hosts seminars and junkets at the Walter and May Reuther Family Education Center in Onaway, Mich., which is nestled on “1,000 heavily forested acres” on Michigan’s Black Lake, according to its Web site.

But the Black Lake club and retreat, which are among the union’s biggest fixed assets, have lost $23 million in the past five years alone, a heavy albatross around the union’s neck as it tries to manage a multibillion-dollar pension plan crisis.

Necessities, shmecessities….

A loophole wide enough to drive a GMC truck though

by Ivan Osorio on December 19, 2008 · 4 comments

in Bailout Watch, Economy, Politics as Usual

The Bush administration’s outline of its automaker bailout package lists some seemingly sensible changes in labor practices that GM and Chrysler need to make. (Ford, to its credit, is seeking private financing instead.)

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

  • Reduce debts by 2/3 via a debt for equity exchange.
  • Make one-half of VEBA payments in the form of stock.
  • Eliminate the jobs bank.
  • Work rules that are competitive with transplant auto manufacturers by 12/31/09.
  • Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

But…

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.

Conditions with a loophole wide enough to drive a GMC truck through are hardly the stuff of which corporate transformations are made. To be fair, the Bush administration has recognized the biggest labor-related problems affecting these companies, so it is particularly unfortunate that it is being this timid.

The requirement to pay contributions to VEBAs (voluntary employee benefit associations) draws welcome attention to a looming problem. VEBAs are intended to serve as health care trusts that allow companies to pass their health insurance obligations on to another party, in this case a union. It makes sense for a company to want to shed those costs, and GM has already passed $35 million on to the United Auto Workers.

But, as Brian Johnson and Ryan Ellis of Americans for Tax Reform point out:

[T]he United Auto Workers has been given a free hand to define “health care” under the Treasury regulations—not coincidentally written by IRS officials of Presidents Lyndon Johnson and Jimmy Carter—which implement VEBAs.

Payments in the form of stock would at least help make VEBAs less liquid and thus prone to abuse — but even then, the requirement is only for half of payments, and is only a non-binding target for use of taxpayer money.

Finally, handing a large union a large wad of cash requires holding the union to a high standard of accountability, something for which President-elect Obama’s pick for Labor Secretary doesn’t provide confidence.

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