When Even the Good News Is Bad

There are two ways to look at the new four-year contract between the United Auto Workers and General Motors that was unveiled yesterday. The first is to note that by the standards of today's economy, the auto workers got about as good a deal as anyone could imagine. The second is to note that the standards of today's economy don't allow for the kind of vibrant, sizable middle class for which America was once famed -- and which the UAW's contracts in particular did so much to build.

The new agreement -- which the 48,500 UAW members employed by GM will vote on over the next ten days -- commits GM to reopening its plant in Spring Hill, Tennessee, and increasing production at five more U.S. plants, thereby creating 5,100 new jobs. New hires, however, won't be making what more senior workers get. The two-tier system of worker pay, which the UAW was compelled to accept when the Detroit Three were hanging by a thread, is actually strengthened in the new contract. Under the current contract, new hires have been paid $14 an hour, compared to the $28 hourly pay that more senior workers have made. In the contract unveiled yesterday, new hires' hourly pay is raised over the four-year term of the agreement to a little more than $19 an hour -- better than $14 an hour, to be sure, but not enough to support the semi-middle-class lifestyle to which American auto workers were once accustomed.

What's more, GM is offering bonuses, on top of their retirement benefits, to veteran workers who opt to leave. Today, just 1,900 of GM's nearly 50,000 UAW workers are new hires in that lower tier, but it's clear that the company will significantly expand the number of lower-paid workers in its next contract.

None of the UAW members at GM, whether new hires or old, will receive traditional pay increases. Instead, they'll receive a $5,000 bonus if and when the contract is ratified, and profit-sharing bonuses, if profits there be, in the subsequent years of the contract. By foregoing the wage increases, the UAW enables GM to stay competitive with the non-union auto plants that companies like Toyota and Volkswagen operate in Southern states. It also acquiesces, however, in the lowering of living standards for America's blue-collar workers, though it certainly keeps those standards higher than would be the case in the UAW's absence (or in GM's absence: Saving GM and Chrysler remains the apex of the Obama administration's achievements).

In a country where 50,000 factories have been shuttered in the past decade, and where unemployment exceeds 9 percent, the UAW's contract is a signal achievement. But a country where 50,000 factories have closed in the last decade and where unemployment exceeds 9 percent is not a country where workers, no matter how good their union, can win genuinely good contracts.

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