Democrats & Liberals Archives

The Troll Under the Bridge Loans: Corporate Profit-Taking and Executive Compensation

The Big 3 Automakers may get some sort of assistance to keep afloat. It looks like that assistance will be far less than was requested.

Reemerging along the path to this "bridge loan" has been the multitude of reports on how it is auto workers that make the U.S. industry "uncompetitive." This is more lies and misdirections as I wrote back in May 2007 in Shame on You CBS. In fact, CBS has been hawking the same propaganda.

Just this last week in one of my classes, the "auto workers get paid $70 an hour" came up again. I patiently tried debunking this propaganda - for the umpteenth time. The $70 an hour includes the costs of all benefits for existing workers - and for retired workers and their families or survivors. Those pension plans are already paid for by the workers who have retired. They are not being paid for by current workers - they are paying into their own benefit plans. Keith Olbermann did a nice job of confronting the inflated pay claims.

There is no clearer evidence that corporations control the messages we receive than the bogus claims of "outrageous" wages (and benefits), and the "huge" burden of "legacy" costs.

The propagandistic nature of these claims were revealed in a 2008 report by Schultz and Francis in the Wall Street Journal - "Companies Run Up Big IOUs, Mostly Obscured, to Grant Bosses a Lucrative Benefit. In fact, GM alone had $9 billion more in its workers pension fund than it needed, but a $1.4 billion liability for its executive benefits.

The auto industry is not alone in its claims of "legacy costs" as a way to divert those monies somewhere else. In 2003, Schultz and Theo did another investigation for the Wall Street Journal - "Executive Pensions Often Secured First. This was written at the time that corporations were bailing out of their obligations and throwing the retirement obligation to the U.S. tax payer. In fact, it is not even illegal for corporations to under-fund, or even bail out on, their obligation to workers while dumping big bucks into their executive plans. Shows you who is writing the legislation doesn't it?

The corporate media has done an excellent job of turning workers against workers. The fact that the so-called "public" can be outraged at $70 an hour (which is a lie anyway) tells us how far we have fallen. While many have been angered at the $700 billion Wall Street bailout while the executive suite continues to collect multi-million dollar bonuses, little has been made of what Wall Street employees make. In fact, that figure has hardly been reported. According to a report in the Boston Globe, the average Goldman Sachs employee makes $622,000 a year (including bonuses and benefits). To break that down, that equals $299 an hour - over 3 times more than the inflated autoworker $70 an hour.

Of course, the $622,000 is overinflated as well because it includes what "top traders and investment bankers" made as well. But regardless, there is no drumbeat of worker extortion for these well paid white collar workers.

So how much do those autoworkers make? According to the United Auto Workers (UAW):

In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour of straight-time labor. A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor. Between 2003 and 2006, the wages of a typical UAW assembler have grown at about the same rate as wages in the private sector as a whole - roughly 9 percent. Part of that growth is due to cost-of-living adjustments that have helped prevent inflation from eroding the purchasing power of workers' wages. (Starting wage is $14 and hour)

Of course, that $27.81 looks good when the average wage in the U.S. was $19.56 according to the Bureau of Labor Statistics. Further, there is a difference between the wages of Union and Non-Union workers as well - part of the success of turning workers against workers. In private industry, for example, the average Union worker made $818 ($20.45/hr) a week compared to $651 ($16.28/hr) for non-Union (BLS, 2008). Even these wages look good to those at the Federal minimum wage of $6.65 an hour.

Regardless, even while the CEO's of the Big Three are forced to beg for a bridge loan while the Financial Sector pulls trucks up to the Treasury and the Fed no questions asked, the attack on workers - and the average person - continues. The Big Three want their money, but apparently they don't want to undermine their decades long attack on Unions in the process.

I swear if I hear the Wall Street - Main Street claptrap again I am going to scream. The money isn't getting to those who are bleeding - workers and those who are still housed (however precariously). It definitely is not getting to those who have lost their jobs and their homes. And this is where a the ongoing brainwashing of the people is clearly reflected. Those who are losing their homes have been depicted as losers who should have never gotten loans in the first place. While there were "risky" loans that were made, 60% of those who received sub-prime loans were actually qualified for prime mortgages. Regardless, homeowners and renters are losing their homes. Apartment dwellers are losing their homes. People in the "service sector" are losing jobs and so are public employees. This is not a case of "deserving" and "undeserving." What has happened is the bilking of the people by those at the top. Further, those at the top are making out like bandits, They ARE bandits!

We have seen decades of the corporate spin on everything, and we've been sold that this is "truth." The "public" - even much of the "informed" public - has swallowed the propaganda hook, line, and sinker. It was the propaganda that sold us NAFTA and GATT. It caused the gleeful attack on the poor resulting in so-called "welfare reform." It is a strategy that has been effective in turning us against ourselves in a feeding frenzy of self righteous rage while the "Big Boys" sit in their boardrooms laughing at us and counting their phony profits.

I am deeply troubled by the haunting similarity in the portrayal of those facing foreclosure with those who were the "undeserving poor" living on the "welfare". The outrage at the modest wages of autoworkers carries the same emotional tenor as the manufactured outrage at "illegal" immigrants. We are pointed at each other like the creatures heartlessly released on each other by cheering jeering dogfight enthusiasts. And like those hapless dogs, we rip and kill each other while massive wagers (called derivatives) are made on the outcome. I am sickened by the whole debacle.

We balk at helping those in foreclosure the same way we balk at giving money to those receiving assistance. We don't trust them to spend it right. Yet we seemingly are comfortable giving billions to those who have already stolen everything we have. This makes no rational sense, but it does reflect that the corporate perspective has been accepted as the definition of the world as it is.

Despite all of this, I support saving the auto industry. I support it because the auto industry is the backbone of our industrial sector and we have lost far too much of our industrial capacity already. Likewise, I believe that we should be putting in place controls on the sale of property to non-residents of the United States. Right now house hunting tours are being sold to Chinese tourists. I believe that special loans need to be made available to farmers so that they don't go belly-up while banks refuse to advance them the money for the coming year's crops.

We need to wake up and speak out to make sure that the people's and the nation's needs are addressed. If we do not, we will wake up to a nation that is not ours. Those who have the money will scoop up the bargain basement "buys" of the United States. Our industry will not be ours. Our agricultural capacity will no longer be ours. Our utilities and infrastructure will no longer be ours. We will belong to global moguls and multinational corporations. There will be no United States left. The current crisis is already seeing the big sharks eating the slightly smaller sharks. We are watching a dramatic growth in the concentration of wealth and power as this disaster unfolds. That concentration will weaken us further; setting us up for continued "collapses" in the future. We have to stop this and reverse course, while retaining our capacity to support ourselves. If we do not, then we are signing away any figment of sovereignty and autonomy we have left.

In speaking out, we need to make clear that we want a bottom-up recovery - not a trickle-down recovery. We want controls on those institutions receiving aid to ensure that they are serving the needs of the people - not their interests. We should demand a voice in the recovery and a place at the table. We want to come out of this recovery stronger as a people and a nation - not sold into a permanent servitude to the powerful.


Additional Resources
The truth about UAW members and the U.S. auto industry. UAW.org

Olbermann Exposes Myth Of Auto Workers' Average $70/Hr. Salary. The Liberal Curmudgeon. 12/02/08.

The media myth: Detroit's $70-an-hour autoworker. Eric Boehlert. Media Matters. 11/25/08.

Wages and labor costs. UAW.

Shame On You CBS. Rowan Wolf. Uncommon Thought Journal. 5/15/2007.

Schultz & Francis, 4/24/03, Wall Street Journal. Executives Get Pension Security While Plans for Workers Falter (also available here and here)

Hidden Burden: As Workers' Pensions Wither, Those for Executives Flourish also available here

Posted by Rowan Wolf at December 9, 2008 11:04 AM
Comments
Comment #271685

The actual wage difference on average between Detroit auto makers and Toyota and Honda makers in Sen. Shelby’s non-union state of Alabama is $3.00 per hour. Detroit average: $27 per hour, Alabama average, $24 per hour. Or is it $24 and $21, I forget. $3.00 per hour difference. Cost of living differences may account for part of that difference as well.

Posted by: David R. Remer at December 9, 2008 11:16 AM
Comment #271690

Link to Shame On You CBS doesn’t work.

Great post!!

Posted by: womanmarine at December 9, 2008 12:02 PM
Comment #271694

CBS link is good now, womanmarine, and….ditto on the post!

Posted by: janedoe at December 9, 2008 12:57 PM
Comment #271697

I’m glad Obama got on the top brass of the Automakers the other day they need a good boot in the rear, shame on them for Investing a great deal of monies into china and India and themselves since the early 1990s and neglecting our workers and consumers and country and shoving crappy cars and trucks down our throats our automakers sell the best and most efficient cars and trucks to Europe and we get the old outdated big crap.I realize japan uses many different technique’s in there Auto world one big one is they make just about everything In house from A-Z where as our Automakers rely on outside vender’s that use many non union and some union help and they make decent pay, you utilize the best method’s that works for your own particular needs and the bottom line is it must be cost Effective and a efficient means of Making and selling A giving Product that provides a service a Good product and a Good company that makes money and pays taxes and reinvests in new technology and well paid workers that invest back into the system with taxes and dues and saving and consuming and living the American dream What a concept.

Posted by: Rodney Brown at December 9, 2008 1:16 PM
Comment #271699

According to the 2006 GM numbers posted on their website that people are using (the $73.26 number):

$39.68/hr. for average annual cash compensation: (DL+ COLA +shift differential+premiums+nonproductive hours paid)/ total direct productive hours.

This is higher than the foreign greenfields for a variety of reasons: older workforce (a big reason), more nonproductive hours, higher starting pay (BMW in SC starts at $12/hr. base), and more jobs classified at higher pay grades.

Then there are fringe benefit costs at $33.58/hr. My company has a very competitive fringe benefit package at around 55% per direct productive hour. Contrast that with GM’s 84%. That extra 30% is probably associated with the number of retirees that they have to carry on their books.

I don’t think anyone is saying (well at least I’m not saying) that UAW workers make too much money. In fact, if the current workers could all take a 20% pay cut it wouldn’t help GM much at all given the above formula. But you can’t say that total labor costs are not a significant part of GM’s problem. They are. And in down turns where production needs to be cut, the Big 3’s labor and overhead hotel costs (the cost of carrying unproductive labor, facilities, and equipment) put them at a great disadvantage against their transplanted competitors.

Posted by: George at December 9, 2008 1:20 PM
Comment #271701

Rodney wrote; “our automakers sell the best and most efficient cars and trucks to Europe and we get the old outdated big crap”

Your are correct about American auto sales in Europe and I saw more Ford’s on the streets of Rome in November than just about every other make of car.

However Rodney, do you know why the American cars so popular in Europe aren’t sold here in the U.S.? Caution…Do some reading and research before you answer.

Posted by: Jim M at December 9, 2008 1:29 PM
Comment #271703

Timmy needs to take the blinders off…..and quit making up things that haven’t happened. You got tossed out into the cold along with the SCOTUS’s rejection of the case re:Obama’s birth.
And investigations already have shown that Obama had nothing to do with the dirtbag in Illinois being charged. Living in the same state is NOT a crime.
Nice try tim….keep looking, though, or if you get tired of that, go back to Bush…he’ll keep you busy for the rest of your life and then your descendents. Oh…nice troling.

Posted by: janedoe at December 9, 2008 1:38 PM
Comment #271704

I also have been all over the world since the early 1980s.

Posted by: Rodney Brown at December 9, 2008 1:39 PM
Comment #271706

One big reason is there streets and roads are smaller and there are more.

Posted by: Rodney Brown at December 9, 2008 1:43 PM
Comment #271710

Rodney says in response to my question; “One big reason is there streets and roads are smaller and there are more.” While it’s certainly true that in the historic section of Rome most of the streets are narrow, that’s not the answer. I don’t know what he means by “more”.

Washington Takes Risks With Its Auto Bailout Plans

“Now, it is Congress doing exactly that, but this time as emergency surgery. Other nations will doubtless complain, or begin doing the same for their own companies. “We’re at this moment in history, in which the Chinese are touting that their system is better than ours” with their mix of capitalism and state control, said Mr. Garten, who has long experience in Asia. “And our response, it looks like, is to begin replicating what they’ve been doing.”

link; http://www.nytimes.com/2008/12/09/business/economy/09nationalize.html?th&emc=th

Posted by: Jim M at December 9, 2008 2:02 PM
Comment #271714

Is This Carl Rove ,You Cherry pick Jim, did you read any of my post except for the Europe model and answer me would we not benefit from cleaner and better built efficient cars and trucks and houses and just about everything else? And excuse me where the bulk of there populations are the cities they are older and have much smaller streets and they invested in mass transportation so many factors are involved they pay twice as much for fuel a whole different mind set they never had big cars over there even there houses are twice as small.things I’ve been talking about in many posts for years on watchblog is just basic plain physics efficiency .

Posted by: Rodney Brown at December 9, 2008 2:52 PM
Comment #271727

Rowan:

It doesn’t matter about the $70/hr cost if it is paid to current or former employees, it’s still a cost that other auto companies do not have to pay. As a taxpayer it means that unless that $30/hr extra cost is taken care of the taxpayer dollars are good money going after bad.

Posted by: Craig Holmes at December 9, 2008 5:18 PM
Comment #271731

Excellent article Rowan. You hit the nail on the head. It is becoming increasingly obvious that the bailout was manufactured to reinforce comfort levels for the wealthy. The money flies out the door with few questions for those at the top. While those of us who are providing the money have to beg for any consideration. God forbid those at the top might have to experience any sort of downgrade in their situation. They have played us for fools. And fools we working class are for continuing to rely on the notion of trickle down economics. Those at the top have their cake and get to eat it too. They are guaranteed wealth at our expense while at the same time maintaining their stance with respect to the war on workers rights. It seems there is no justice for those of us who get to pay the bailout bill. Only blame for being so greedy as too want a fair shake in life.

Posted by: RickIL at December 9, 2008 6:25 PM
Comment #271735

Ben Stein, while a raging creationist lunatic has some sound advice about a bridge loan:

http://finance.yahoo.com/expert/article/yourlife/127875;_ylt=AvuUDeE66I_c_g8POZkj1.O7YWsA

Posted by: gergle at December 9, 2008 7:27 PM
Comment #271768

Thanks to gergle for the great link to Ben Stein’s article. I agree with much of what Ben says. I do wonder why gergle felt it necessary to condemn Mr. Stein’s religious beliefs? What exactly do his religious beliefs have to do with what he wrote?

Isn’t it interesting in a time when the nation needs healing and cooperation that some still find it necessary to smash another’s sincere beliefs.

I would much prefer allowing any of the big three to file for bankruptcy protection and be reformed into profitable, leaner, and more competitive companies with the federal government stepping in with financial help in the reorganization where necessary if private financing became unavailable.

Companies continue to operate during bankruptcy and employees continue to work and suppliers continue to supply. I would trust a federal bankruptcy judge much more than any self-interested politician to handle the reorganization. And…whose to say that private funding might not be available under the protection of bankruptcy. Government could also provide warranty guarantees on new car sales eliminating that public fear.

There have been many solutions put forward…let’s find the best one consistent with our capitalist system. Instead of simply bailing out companies, let’s use our existing bankruptcy laws which might just prevent more companies asking for hand-outs.

Posted by: Jim M at December 10, 2008 12:16 PM
Comment #271772

Ole Ben has been Talking about this for over two months, BTW he owes me Ben Stein Money.;)

Posted by: Rodney Brown at December 10, 2008 12:34 PM
Comment #271777

In all fairness to the big Three they did come out with clean Diesel Trucks First the imports don’t have a diesel truck, And my Chevy Duramax Lbz is Built by Union workers in the USA stamped on the door it’s why I bought it.

Posted by: Rodney Brown at December 10, 2008 12:57 PM
Comment #271781

Thanks for your comments Rodney. I loved my Cadillac and traded it for a Lincoln Town car two years ago. It’s a luxury automobile with great engineering and I get 24 mpg highway and 19.5 city. Not bad for a full-sized luxury car.

The fit and finish on my Lincoln is comparable to the best foreign car in the world and is a real pleasure to drive.

I have never owned a foreign made vehicle, although I have driven many, and remain committed to buying American-made whenever I can.

Posted by: Jim M at December 10, 2008 1:23 PM
Comment #271785

Right Jim , Gm and Ford Got them Right The new GM Caddy’s and Lincoln Town Cars are Beautiful, I think quite a few people think of the great big Cadillac’s and Lincolns of the 1960s and 1970s But there not ,there a great handling and riding Touring Car and the Right size and get good mileage and every bit as good as there European Counterparts, I was a little harsh on the auto makers They must survive somehow that’s about all we have left.

Posted by: Rodney Brown at December 10, 2008 2:13 PM
Comment #271792

“”Report from a consumer”” Awesome 2009 Lincoln Town Car

Written by: RWinSyracuse on 09/16/2008

Detailed Ratings
Overall Rating

Performance: 10 Fun-to-Drive: 10 Build Quality: 10
Comfort: 10 Interior Design: 10 Reliability: 10
Fuel Economy: 10 Exterior Design: 10

Vehicle

2009 Lincoln Town Car Signature Limited 4dr Sedan (4.6L 8cyl 4A)

Review

My new Dark Cherry 2009 Lincoln Town Car is an awesome car. The ride, handling, comfort, luxury appointments and roominess are all as great as I expected. And the quality and fit and finish of this car are equal to and better than Cadillac, Lexus, BMW, Mercedes, Infiniti and Acura. I also had nitrogen put in the tires and am getting 20 mpg in the city and 28 mpg on the highway with this elegant and stately cruiser. I am very happy with my 2009 Town Car and highly recommend it to everyone. It is definitely not an “old man’s car” as I have often heard others say.

Favorite Features

HID headlights, trunk organizer, roominess for driver and passengers throughout, the infamous “Town Car Ride”, handling and responsiveness on the road, awesome style and looks.

Suggested Improvements

I would like to have a moonroof, navigation system and Lincoln Sync available.

31 out 34 people found this review helpful

Posted by: Rodney Brown at December 10, 2008 3:38 PM
Comment #271795

Thanks for the review Rodney. I am surprised by the fuel economy improvement in such a short time. I’ll be looking to buy another Lincoln TC in 2010.

Posted by: Jim M at December 10, 2008 4:33 PM
Comment #271812

Son of a gun It’s Gergle again.

Posted by: Rodney Brown at December 10, 2008 9:17 PM
Comment #272948

Trickle-down economics is really great, except for U.A.W. members having a little extra to stimulate the economy.

Posted by: Stephen Hines at December 29, 2008 9:22 PM
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