Double standard for two bailouts?
The president of the United Automobile Workers union, Ron Gettelfinger, cut right to the chase when he announced last week that autoworkers were prepared to sacrifice job security, funding for retiree healthcare and other contract provisions to help salvage their fast-sinking industry.
“Concessions -- I cringe at that word,” he said. “But now, why hide it? That’s what we did.”
Say what you will about the role of the union in exacerbating Detroit’s financial troubles, one thing stands out: Blue-collar workers are taking it in the shorts as part of their employers’ efforts to secure some bailout bucks from Uncle Sam.
I don’t recall white-collar workers on Wall Street stepping up with similar concessions in return for their companies’ receiving billions of dollars in taxpayer cash.
“There is absolutely no excuse for a bailout without significant sacrifices by all stakeholders,” said Robert Reich, who served as Labor secretary under President Clinton and is now a professor of public policy at UC Berkeley.
“We should be making everyone on Wall Street jump through hoops, not just the automakers.”
This isn’t exactly an apples-to-apples situation. Wall Street has been hammered by a credit crunch resulting primarily from all those radioactive mortgages on companies’ books. The auto industry just isn’t selling enough cars.
Solving Wall Street’s woes, in theory, involves pumping a lot of money into the financial system and hoping the credit crunch goes away. Detroit’s problems are more systemic and will require more extensive triage efforts.
That said, a bailout’s a bailout, at least as far as taxpayers are concerned. So why are we holding blue-collar workers to a different standard than their white-collar kin?
Put another way, how many people can even list the terms of the recently announced multibillion-dollar bailout for financial colossus Citigroup Inc. and what the company agreed to do in return for our generosity?
“Most Americans don’t understand -- or don’t want to understand -- the complicated deal we made with Citigroup,” Reich said. “But when you talk about General Motors, it’s much more concrete. People know what a car is.”
For that reason, he said, lawmakers in Washington have been more assertive about wringing concessions from the auto industry, whereas the heads of Wall Street firms essentially got by with slaps on the wrist.
For the record, the government is pumping an additional $20 billion into Citigroup and backing more than $200 billion in troubled assets. In return, taxpayers have received a pledge that the company will cut its dividend to shareholders and will take a hard look at how much it pays its top execs.
Yeah, we drove a pretty hard bargain. Of course, jobs are being cut and bonuses lost throughout the financial world, but that’s more a response to the crisis than an offer from workers to help.
General Motors Corp., Ford Motor Co. and Chrysler asked for $34 billion in loans to stave off possible bankruptcy filings. The companies say they’ll restructure their operations, sell or eliminate low-performing brands and factories, cut the salaries of senior managers and focus on developing more fuel-efficient vehicles.
For its part, the UAW pledged to suspend its controversial “jobs bank” program, which enables laid-off workers to keep receiving most of their paychecks, and to delay billions of dollars in payments from the automakers for a new retiree healthcare fund.
The union also expressed a rare willingness to revisit other terms of its contracts with the Big Three. The UAW represents more than 700,000 workers in a variety of industries in the United States, Canada and Puerto Rico.
Testifying before a Senate panel Thursday, the UAW’s Gettelfinger laid it on the line. “I believe we could lose General Motors by the end of this month” unless Congress approves the bailout, he said.
Why was there no pressure on workers at Citigroup, insurance giant American International Group Inc. and mortgage behemoths Fannie Mae and Freddie Mac to make similarly team-spirited pitches for their respective employers?
Why was no gesture of humility required from the white-collar crowd, even something as relatively minor as a 5% pay cut until their respective companies return to more solid financial footing?
“It’s completely backward,” said Eve Weinbaum, director of the labor studies program at the University of Massachusetts at Amherst. “There’s this perception that the people who make things with their hands somehow count for less than people on Wall Street who sit around thinking up things like derivatives.
“You could argue that an economy doesn’t need derivatives but does need manufacturing.”
The UAW, long criticized (unfairly, I believe) for being too powerful and too greedy, has done the stand-up thing in offering concessions to protect jobs at a perilous time for the auto industry.
White-collar workers on Wall Street, many of whom pull down hundreds of thousands of dollars a year in salary and bonuses, have shown no such spine or self-sacrifice as their employers pass the hat among taxpayers.
Reich is right: A bailout should require concessions from all stakeholders, not just the top brass and certainly not just the public.
By that standard, the auto industry has earned its piece of the pie, while Wall Street firms, silver spoons in hand, are enjoying their dessert on the house.
David Lazarus’ column runs Wednesdays and Sundays. Send your tips or feedback to email@example.com.