This week’s round of congressional testimony has forced our elected officials take sides on the auto industry, a topic that typically doesn’t often factor too heavily into national level grandstanding politicking. Detroit News Scribe Bryce G. Hoffman figures that the divisive issue of aid to automakers is creating a house divided… along the old Mason-Dixon line. The split is based on another legislative battle that hasn’t visited the corridors of power as often in recent years: anti-union “at will” employment laws. These laws are popular in many southern states which have used the lack of labor organization to attract transplant auto factories which have bring hundreds of jobs– and an ambivalence to Detroit’s self-made hell– to their sunny shores. And like much of Detroit’s newspapers’ coverage, Hoffman is taking his lead from UAW boss Ron Gettelfinger who blasted Alabama’s congressional delegation at a recent press conference. “Alabama paid $175,000 per employee to create those jobs there,” he said. “It just seems odd to us that we can help the financial institutions in this country — that we can offer incentives to our competitors to come here and compete against us — but at the same time we’re willing to walk away from an industry that is the backbone of our economy.”
Compuware Chairman Peter Karmanos Jr. chimes in too, with a letter sent to ‘bama Senator Richard Shelby. “I was more than a little taken aback by how out of touch you really are about what Detroit’s Big Three automakers have been doing for some time and continue to do to transform their businesses,” Karmanos wrote. “The intent of this letter, however, is not to take you to task for the inaccuracy of your comments or for the over-simplicity of your views, but rather to point out the hypocrisy of your position as it relates to Alabama’s (the state for which you have served as senator since 1987) recent history of providing subsidies to manufacturing.”
Of course, it’s not as if Detroit turns down state subsidies in order to allow its fine employees to unionize. The D3 have received countless millions from a number of US states and Canadian provinces to attract their factories and jobs. So there’s some hypocrisy for ya. Besides, offering your state’s citizens jobs at $100k per year with a stable company that will be around for years to come is a lot better than $140k per year union jobs with firms that have been opening then closing US plants for decades. But by all means, let’s restart the Civil War over this.
I think you mean hundreds of thousands of jobs
You mean the same Karmanos who took the NHLs’ Hartford Whalers out of Hartford because he couldn’t get the state and city aid he demanded?
Not that I really blame him (or the government).
The locals in Ct. didn’t think a new arena and other perks would ever pan out so they let him walk. Which he did.
The states and citys that are/were handing out $$$s to the transplants believe that they will come out ahead of the game in the end. Non-delusional people don’t believe that is possible for the Dwhatevers.
How much did Ontario pay, or concede, to GM and the CAW to keep some plants open there? If I recall, this was 2007, 2008 agreement.
yankinwaoz: I believe you are looking for this.
yankinwaoz: $250m
Long Live Dixie.
“Hoffman is taking his lead from UAW boss Ron Gettelfinger. . .”
Are you implying that the article was biased toward the UAW? Perhaps I’m missing some nuance, but it read to me like a typical he said-she said news article. Why wouldn’t the scribe get a quote from the UAW? That’s an obvious countervailing perspective.
The north-south split involves more than anti-labor laws. Southern states also tend to have pretty relaxed environmental protection laws as well.
$140k per year union jobs
That $73.21 figure is not how much the workers make but rather how much they cost the company. Included in that figure are the employer’s contributions to FICA and Medicare taxes. I’m no union fan but it’s really disingenuous to make it seem like folks on the assembly line are making $140K a year. When folks ask you how much you make, I’m sure you don’t include your benefit package. UAW assemblers make about $57,000 a year in salary and skilled trades about $67,000.
But if you’re indignant about the 150,000 or so UAW workers with “$140K jobs”, what about all those 1.6 federal employees that have, by your standards “$130K jobs”, “$155K jobs”, $190K jobs” and “$240K jobs”? UAW workers are paid out of voluntary purchases. Federal workers are paid out of taxes coerced from everyone.
There are about 150,000 union employees of the Detroit 3. There are 1,608,742 (2007) federal non-postal civilian employees. They have an avg salary of over $66K/year and a benefit package even more generous than what the UAW gets that includes such things as paying off student loans and 25% “retention fees”. There are almost 300,000 GS-13s and above.
158,000 Federal Employees @ GS-13 $77,488-$100,972
79,000 Federal Employees @ GS-14 $91,566-$119,312
51,000 Federal Employees @ GS-15 $107,709-$140,021
This doesn’t include tens of thousands of fed emps who are paid outside of the GS system.
A good rule of thumb is a good benefit package costs roughly equal to wages, so there are over 50,000 federal employees with, by your standards, $200K+ jobs.
Michigan gets 81 cents in federal spending for every dollar sent to Washington. Over the last 25 years, Washington has taken $200 billion out of the Michigan economy and sent it to the sunbelt (paying for infrastructure, bases and defense plants) and DC suburbs. So many high paid fed emps live near DC that Maryland is now the wealthiest per capita state and 9 of the 20 wealthiest counties are in Virginia and Maryland.
It’s not the Detroit 3 that have exported jobs overseas from Michigan, it’s the federal govenment that exported 400,000 Michigan jobs to Alabama and the like. They took our money, sent it to other states, fostering job growth there.
It’s common knowledge that one Alabama Mercedes-Benz employee can whip 10 Michigan GM employees.
Rhett Butler just ran the blockade to deliver us a shipment of window regulators from South Korea. (Sorry, couldn’t resist.)
Ronnie,
“A good rule of thumb is a good benefit package costs roughly equal to wages…”
I work in HR. Any company that maintains benefit costs above 20-40% of wages would be bankrupt.
Oh wait….
Rhett Butler just ran the blockade to deliver us a shipment of window regulators from South Korea. (Sorry, couldn’t resist.)
Why use ships? The roads in Alabama leading to the Mercedes and Hyundai plants were paid for with taxes from Michigan.
Alabama gets $1.38 in federal spending for ever dollar of tax they pay to the feds.
It the function of the government to provide roads for commerce and travel. It is not a function of the government to subsidize companies that have no means and will to sustain themselves.
Soviet Union was last classic example when government was paying to workers to produce goods for market that could not be used by the market. Commies bought their own cars, since there was no choice, but they would pay half year salary for a pair of American jeans, while Soviet made suits were hanging in their stores for decades. We are well aware of results of such economic experiments, should we stage those experiments on our soil for our buck?
Michigan might get 81 cents for every dollar they send to Washington, but that’s part of the overhead of trickle-down government.
There are other reasons why states outside of the Lakes/Rust belt have done better, and one of the biggest is labor laws. Every state that has right-to-work, or at least labor laws that do not compel employees and employers into a union, does better than the ones that do. Michigan doesn’t attract capital investment (even with plenty of homegrown incentives) because the lack of control a business owner has on their labor situation is not tolerable when there are alternative labor markets to source your capital to. France and “Old Europe” have been figuring this out the hard way for some time now with their persistent 10% plus unemployment rates.
I live in Idaho, and making $56000 a year (plus bennies) for basic manufacturing work is exhorbirant. You could easily find thousands of people here who would do the same work for $25 an hour with standard-shaft HMO and 401k for benefits. Too bad Idaho is far from the sea and the infrastructure for supporting something as logistically intensive as mass-producing cars isn’t in this state, or we’d have a Toyota plant by now. Same with Utah, or Wyoming or Montana, or Arizona. Tens of thousands of people in these parts who would JUMP at the chance to build cars for that kind of money. Its one of the reasons I don’t worry about the future of the car biz in the ‘States, and want to see the old order collapse as soon as possible so the new order can arrive as soon as possible. The biggest hits on these states to get that kind of work is infrastructure; all these land-locked places and the ‘States hasn’t laid a new rail line in years.
Technical problems like that can be solved, the social dynamic between labor and management in these old companies is doomed however, and until there is a day of reckoning with that dynamic, everything and every place that embraces it in culture and enshrines it in laws will continue to under-perform and suffer.
Michigan gets 81 cents in federal spending for every dollar sent to Washington. Over the last 25 years, Washington has taken $200 billion out of the Michigan economy and sent it to the sunbelt (paying for infrastructure, bases and defense plants) and DC suburbs.
They took our money, sent it to other states, fostering job growth there.
THIS
Michigan is STILL a donor state even with its economy in shambles. Alabama and some of the other Southern states are finally starting catch up even though it’s been 140 years since the Civil War has ended. Guess they are getting a bit of revenge.
The thing that I noticed is that mainly manufacturing facilities are being sprung up in the South. The brainpower and R&D will continue to be strong in Michigan. SE Michigan in particular will not be taking a back seat to automotive development any time in the near future. As a matter of fact, I see R&D growing in Michigan since it can easily branch out into other sectors such as renewable energy.
Ask yourself this: With all the “foreign” manufacturers building in the South, why did Toyota, Nissan, Kia/Hyundai and countless suppliers choose to have engineering and design facilities in Michigan? Why did Toyota choose to locate its NA Technical Center in Ann Arbor (York Twp) rather than California or South Carolina? It was because of the technical know-how that is here. Even though Michigan has been stained by the UAW, the automotive and technical brainpower is a force to be reckoned with.
A buddy of mine works for BMW and told me that the main reason they moved to South Carolina was because of the financial incentives offered. Michigan, at the time, simply didn’t offer any $$ to BMW. Although BMW is now partnered with Clemson U, many managers regret the decision to relocate there from a technical standpoint.
Ronnie, thank you for knocking down the $140/hr straw man.
“UAW workers are paid out of voluntary purchases. Federal workers are paid out of taxes coerced from everyone.”
Um, yeah. That’s called a modern industrial democracy. Would you prefer we privatized everything, e.g., the military, emergency management, highways, public health, etc.?
“They took our money, sent it to other states, fostering job growth there.”
Under our system of government, the feds can divert funds collected in one place and spend them elsewhere for the good of the nation. If you are questioning that basic principle then you presumably endorse the dismemberment of the US, because this dynamic is pretty much a given in our current form of government.
Now, you could also argue that the south has dominated national politics over the last eight years — and has brought home more bacon as a result. With the defeat of some powerful southern politicians in the last election we may see somewhat different priorities emerge.
It’s common knowledge that one Alabama Mercedes-Benz employee can whip 10 Michigan GM employees.
That may be “common knowledge” but stats show that their Alabama facility is one reason why M-B quality is below that of the domestics.
With the defeat of some powerful southern politicians in the last election we may see somewhat different priorities emerge.
Whenever you see Barry O. up on stage, have you ever noticed that there are Northern/Midwest politicians such as Jenny Granholm on stage near him?
“A good rule of thumb is a good benefit package costs roughly equal to wages, so there are over 50,000 federal employees with, by your standards, $200K+ jobs.”
That is not at all true. Benefit costs tend to be fixed. For example : one guy makes 40k and another makes 100k. Their healt benefits (the most expensive) are 12k (at most). The only benefit that may be more for someone making more is potentiall 401k matching, and of course FICA, etc. But those are negligible in most cases, much less than health insurance. Also, the lower-paid guy is more apt to take advantage of things like tuition reimbursement too.
@Ronnie Schreiber,
Quality is looked upon as function of process and design. The quality of M-B made in Alabama can be traced to plethora of reasons. Since production lines are almost 100% automated, workers may not be the reason for plunge in quality. Cost payed to employee does contribute to the cost of the vehicle.
Ask yourself this: With all the “foreign” manufacturers building in the South, why did Toyota, Nissan, Kia/Hyundai and countless suppliers choose to have engineering and design facilities in Michigan? Why did Toyota choose to locate its NA Technical Center in Ann Arbor (York Twp) rather than California or South Carolina? It was because of the technical know-how that is here. Even though Michigan has been stained by the UAW, the automotive and technical brainpower is a force to be reckoned with.
Kind of flies in the face of conventional wisdom that says that folks in Michigan are “uneducated and unskilled”, “stupid”, “on crack”, etc.
Although BMW is now partnered with Clemson U, many managers regret the decision to relocate there from a technical standpoint.
Not just technical. The transplants have experienced some difficulties with training, quality and finding enough skilled tradesmen. Say what you will about the folks in the rustbelt, they know about industrial work.
If you are questioning that basic principle then you presumably endorse the dismemberment of the US, because this dynamic is pretty much a given in our current form of government.
What I’m questioning is the fairness of Michigan taxpayers paying for water projects so folks can water their lawns in Phoenix. What I’m questioning is that there is a tremendous imbalance in federal spending that benefits particular states over others. I’m questioning why military bases and defense plants in Michigan have been closed while funding has gone to facilities in the sunbelt.
Now, you could also argue that the south has dominated national politics over the last eight years — and has brought home more bacon as a result.
It’s not just the past 8 years. Michigan has had a net drain of federal tax dollars for at least the past 25 years. $200 billion. Maryland is the wealthiest state. For the past 25 years, they’ve always received more back from the feds than their taxes, about $1.25 on average.
Sure, based on immediate needs, government funds will shift around, but there are clear trends in play here. A huge amount of wealth has been transferred from the industrial midwest to the sunbelt and DC suburbs.
Say what you will about the folks in the rustbelt, they know about industrial work.
Get the UAW out of the equation or at least make Michigan a right-to-work state and things will dramatically change. Of course, this is wishful thinking since Michigan is run by retarded politicians and unions.
Also, the lower-paid guy is more apt to take advantage of things like tuition reimbursement too.
What, well paid people don’t get MBAs and other advanced degrees?
Who do you think is more likely to ask for and receive a 25% retention bonus, a GS-5 or a GS-13?
How many folks in the private sector can go to their boss and threaten to work someplace else if they don’t get a 25% raise? Oh, I’m sure they can go and threaten, but in the vast majority of cases the boss will say, “See ya!”
Should taxpayers be paying the day care tuition of federal employees or for on-site day care? Can a woman working on the line at GM or Ford take a break to breast feed or pump?
Face it, the word for fed emps’ bennies is called “lavish”.
Ronnie,
Where are you getting your federal tax spending data? Not doubting it – just curious to read more on the subject.
Thanks
Ronnie Schreiber: Alabama gets $1.38 in federal spending for ever dollar of tax they pay to the feds.
That figure includes Social Security payments and Medicare spending.
Given that many people prefer to retiree to the warmer south, it stands to reason that southern states will receive more federal money.
Unless the North wants to keep retirees in the region via ankle bracelets, or abolish Social Security and Medicare, this will continue.
Last time I checked, the Democrats were ones the raising the image of grandma starving in the streets every time someone mentions touching either program.
Ronnie Schreiber: Maryland is the wealthiest state. For the past 25 years, they’ve always received more back from the feds than their taxes, about $1.25 on average.
Have you ever been to Maryland? Do you realize how many federal employees and retirees live in the Baltimore-D.C.-Annapolis region? How many “Beltway Bandit” contractor firms there are in the region?
Of course Maryland will receive more than it sends to the federal government.
But, given that neither party at this point really wants to shrink the federal government, or the employment associated with running it, I say, “You are getting what you want. Stop whining.”
Obama sure wasn’t elected on a small government platform, and the last time I checked, he won Michigan handily…
Ronnie Schreiber: Say what you will about the folks in the rustbelt, they know about industrial work.
Unfortunately, all too many of the products that they engineer, design and produce fail to reflect that…
Carnotcycle, shame on you for using Rumsfeld’s expression “Old Europe”: it was stupid when he said it, and when you use it it’s not so good either.
http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate
Unemployment rate in %:
3.2 Netherlands
6.1 Sweden
6.1 Italy
6.5 U.S.
6.7 EU
7.5 France
I’ve worked in and around factory’s (aerospace, not auto’s) for almost 20 years. Several were open shop (union membership optional) and the others were not.
Without starting a flame war discussion regarding pros/cons of unions I have to say that open shop environment made for better unions – for workers and companies alike.
That fact alone is going to drive the Big 2.8 to the US South as soon as they shed the old UAW rules.
Many European countries do not use the same definition of “unemployed” as the U.S. does. If the definition were consistent across the countries, it would be higher for the European countries.
Also note that most European countries – Italy, in particular – have a population that is older than that of the U.S., so they will have more people officially out of the work force because of retirement.
I will propose this again, maybe it will sink in by 2108.
The federal government needs to have a veto on tax breaks and incentives to stop state and local governments from competing for factory locations. Its an obscene system, and is nothing more than thievery.
geeber: do you have any data to back up your first assertion? It sure sounds strange to me.
As I see it, the problem in many European countries is that it is so easy to get generous unemployment benefits. In other words, there is a powerful incentive to be unemployed and a disincentive to work. If Europe had the same system in place as the U.S. has, unemployment would be considerably lower.
(Not to forget the approx. 1.5% of the U.S. working population currently incarcerated and therefore off the labor market…)
Ronnie,
Where are you getting your federal tax spending data? Not doubting it – just curious to read more on the subject.
Thanks
The Tax Foundation
http://www.taxfoundation.org/research/show/22685.html
Have you ever been to Maryland? Do you realize how many federal employees and retirees live in the Baltimore-D.C.-Annapolis region? How many “Beltway Bandit” contractor firms there are in the region?
Yes, the federal government has transferred much of the wealth of the industrial midwest to the VA and MD suburbs.
That’s why 9 of the 20 wealthiest counties are in just those two states and why Maryland has the highest per capita income in the US.
At least the UAW is honest about its members getting paid not to work, unlike federal employees.
Why are people indignant over autoworkers making $67,000/year but are ho hum about the 1.6 million federal employees who average more than $66K a year? There are more than 50,000 federal employees who make more than $100,000 a year.
Do you honestly believe that government employees are more conscientious workers than autoworkers?
When I was in grade school, our history textbooks had a picture of UAW folks picketing Toyota dealerships with signs reading “we beat ’em in ’45, we can beat ’em in ’90! stop the trade deficit!”
Perhaps now they should change their signs to read 1865 and 2010.
I can’t help but feel like one of the reasons the confederate states receive so much federal coin is because the Republicans with their southern power-base.
Also, every state to my knowledge is “at-will” employment although the Civil Rights Act tempers it somewhat. What you are thinking of is “right-to-work” states.
I can’t help but feel like one of the reasons the confederate states receive so much federal coin is because the Republicans with their southern power-base.
That has nothing to do with it. These are long term trends that date back to the Carter administration at least. The growth of the federal workforce has continued through both Democratic and Republican administrations.
Actually things have gotten a little better in terms of federal spending in the midwest since 2000. Michigan currently gets 92 cents per dollar of taxes, compared to the avg of 81 for 1981-2005.
In any case, it’s the Democrats that are the party of the Confederacy, slavery and Jim Crow. Lincoln was a Republican. The KKK was founded, in part, to terrorize and run off blacks elected as Republicans during reconstruction. It was the Democrats who filibustered the ’64 Civil Rights Bill and the Republicans who passed it. The ’65 Voting Rights Bill was first proposed by the Eisenhower administration.
Ronnie: In terms of North/South and white/black relations, the Democrats and Republicans swapped parties decades ago.
Ronnie Schreiber: “At least the UAW is honest about its members getting paid not to work, unlike federal employees. . . . Do you honestly believe that government employees are more conscientious workers than autoworkers?”
In general, I am skeptical about broad-brush comments targeted at any large group of people. Sweeping remarks at best can result in caricatures.
Your advocacy for Michigan auto workers is a worthy goal. What I don’t get is why you’ve apparently taken to attacking another group of workers using sweeping generalizations that you would presumably find offensive if directed at auto workers.
I’d respectfully suggest that a more nuanced argument could win more hearts and minds.
In general, I am skeptical about broad-brush comments targeted at any large group of people. Sweeping remarks at best can result in caricatures.
With all due respect, the same can be said for some of your own partisan political remarks.
Your advocacy for Michigan auto workers is a worthy goal. What I don’t get is why you’ve apparently taken to attacking another group of workers using sweeping generalizations that you would presumably find offensive if directed at auto workers.
I don’t find sweeping generalizations about UAW members offensive, at least the ones that say they are very well paid for semi-skilled work and have ridiculous work rules that hamper productivity. I’m no defender of featherbedding or other union ills.
However, the reason why I’ve decided that the 1.6 million federal employees are relevant is because most people have no clue just how high their salaries are and how much the costs associated with them harm many states. Those federal employees are one reason why nearly a trillion dollars has been transferred out of the midwest. Federal employees are extraordinarily well paid, with benefits that are simply not available in the private sector. Unlike the autoworkers, federal employees have their hands in our pocket. You can choose not to buy a domestic car because you don’t like the work ethic or quality of UAW members. You can’t choose not to pay some GS-14 a “retention bonus”, or tell the IRS you’re going to pass on funding that off ramp to the Mercedes plant in Alabama.
Federal employees have the power of the state behind them to compel you to pay their salaries at the threat of losing your liberty. Frankly, I’m a little wary of posting these things under my own name because if I piss off the wrong federal employee I’m likely to get audited or something. And if you don’t think that public employees resent being told that they work for the public, try telling a local cop that he works for you.
As for sweeping generalizations, like I said before, my aunt is a retired administrative law judge for the Social Security system. She’s seen how the federal bureaucracy works from within. She’s worked with federal employees and she’s adjudicated cases involving them. It’s her opinion that they don’t do much productive work. I wish it was online so I could find it, but there was a letter to the editor of the Wall Street Journal from an employee of the Commerce department. He said he made about $80K/year and literally had nothing to do all day. He’d read his newspaper and said that his situation was not unique, that his department had hundreds of folks like him “working” in his building. The higher ups don’t care because if they got rid of him, they’d have smaller budgets to control, fewer employees they “supervise” and subsequently lower salaries themselves.
You didn’t answer my question so I’ll rephrase it. Who do you think are more conscientious workers, UAW autoworkers or federal employees?
I have been doing warranty claims at an Mercedes-Benz dealer for 18+ years, and I can assure you that most of the quality issues with the vehicles produced in Alabama are design, engineering, and component quality–not the workmanship of putting these vehicles together. The quality issues source to Germany.