Delphi worker strike will destroy the world!
Fri May 12, 2006 at 07:25:46 PM PDT
A hyperbolic title, yes, but not by much. According to the Detroit Free Press, International Truck & Engine Corp., a customer of Delphi, is warning of dire consequences should Delphi's workers go on strike:
"The seriousness of such work stoppages/strikes cannot be overstated," ITEC, which buys $46 million a year in parts from Delphi, said in its filing [with the bankruptcy court]. A strike would have an "enormous negative impact," not just on Delphi's customers, but "consumers and the U.S. and global economies as a whole."
But ITEC isn't arguing that cutting wages at Delphi is a bad idea. Rather, it's trying to get the bankruptcy court to ban Delphi workers from striking.
That a lone bankruptcy judge should be able to ban workers from striking will have to be the subject of another diary. I'd like to address the "enormous economic impact" of letting ITEC, and Delphi, get their way.
First, let's look at what's at stake for Delphi's workers, again according to the Detroit Free Press:
Delphi wants to cut 23,000 jobs, including 10,000 in Michigan, along with closing or selling 25 plants by 2008 and cuts in retiree benefits. Many of its plants in Michigan would be shuttered.
Whoever remains among Delphi's 33,000 hourly workers today would have their wages and benefits cuts sharply, with the total reduction dependent on whether GM agrees to pay Delphi in hopes of avoiding a strike.
Delphi has said it wanted to provide a "soft landing" for high-wage workers through a combination of buyouts, one-time payments and early retirements, some of which would be funded by GM.
Workers that remain would see their average wages cut under Delphi's current proposed changes from $28 an hour today to $22 by September and $16.50 next year, assuming aid from GM. If GM decides not to contribute, Delphi would cut wages to an average of $12.50 an hour by July.
To summarize:
23,000 workers immediately out of a job
An undisclosed number of jobs gone by 2008
Retiree benefits cut
Wages slashed by nearly 2/3 for the workers that remain
These consequences might be good for Delphi customers like ITEC, but what will they do to "consumers and the U.S. and global economies as a whole"?
For starters, our nation's healthcare system will be further strained by the cuts in retiree benefits. I have no numbers, but unionized factories tend to work on the "30 and out" system, meaning many of these retirees are too young to qualify for Medicare. Individual insurance policies are cost prohibitive.
If Delphi also dumps its pensions, the "30 and out" rule creates the same result regarding Social Security eligibility. The retired workers will be too young to qualify and even if the Pension Benefit Guaranty Corp. takes over the pensions, the amount each retiree receives will be slashed because they retired "too young."
Where will the displaced workers go? Despite the current administration's attempts to paint a rosy picture of the U.S. economy, factory jobs are getting harder and harder to find. Yet, that's what many of these workers are trained for. And the work they do find will likely pay less. The service sector, as we all know, pays less than manufacturing, but even the manufacturing sector isn't the track to a middle class lifestyle it once was (thanks in large part to companies doing precisely what Delphi is, breaking unions and cutting wages and benefits in chapter 11 bankruptcy).
And then there are the "lucky" ones who keep their Delphi jobs, with the attendant 2/3 pay cut. At $12.50 an hour, these employees will make about $26,000 a year. That's a lot by, say, WalMart standards, but for a family of four, that's just $6,000 over the poverty line.
It's fair to say that whatever happens at Delphi, there will be "an enormous negative impact," on the workers and retirees, on you and on me. As is the trend, what's happening at Delphi is just another example of privatizing the profit while socializing the risk.
The ordinary Joes and Janes of this country will pay either way. The difference, it seems, is whether the nation (and candidates for offices) takes notice of the costs incurred as America races to the bottom with the rest of the world.
Maybe the pain of a Delphi strike that ITEC so fears is exactly what we need.
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