At $10 An Hour, Why Not McDonald's?

    So, what good is an "expanding" economy and a growing Gross Domestic Product when workers are going to see their pay cut from $27 an hour to $10 an hour? Or, at least that's what the Delphi Corporation is demanding from UAW workers to avoid bankruptcy. I saw one quote from a worker that makes you want to scream: "I know some people who work as managers at McDonald's that make $10 an hour."

    Today's Wall Street Journal article (subscription required...so I've got an excerpt below) makes another point--if Delphi goes belly up, once again people will get screwed because the company's pension funds will get taken over by the federal government's pension rescue agency, which is already groaning with a huge deficit mainly because of the collapse of airline industry pension funds. I've been sounding the Chicken Little alarm for a long time--we're looking at a Savings and Loan-scale type bail-out for that agency, the Pension Benefit Guaranty Corporation, which every taxpayer will pay for.

    Last point: can we scream any louder that part of the problem facing industry is the lack of a single-payer national health insurance program? Delphi, and the rest of the auto industry, are teetering because of hundreds of billions of dollars in health care costs (and a good dose of mismanagement, too)--health insurance that workers deserve and should not give up. But, it's over, done, finished: private employer health insurance is a complete failure. Forget morality: national health insurance is an issue of economic competitiveness.

Delphi Bankruptcy Filing Expected
U.S. Auto Industry Faces
The Painful Restructuring Seen in Aerospace and Steel
By JEFFREY MCCRACKEN, LEE HAWKINS JR. and KRIS MAHER
Staff Reporters of THE WALL STREET JOURNAL
October 8, 2005

The traditional unionized American auto industry resisted for years the painful restructuring forced on steelmakers and airlines by new forces of competition in a globalized, deregulated economy. Now, it appears Detroit's turn has come.

Delphi Corp., the country's largest auto-parts company, is expected to file under Chapter 11 of the U.S. Bankruptcy Code, possibly as soon as today. Delphi's approximately 33,000 union workers and 12,000 union retirees will experience the large-scale job cuts, slashed medical benefits and uncertain retirements that the traditional U.S. auto industry has largely been able to avoid.

The Delphi board is scheduled to meet Saturday to decide about the filing.

Unless a Delphi filing is averted, the already-stressed Pension Benefit Guaranty Corp., a government agency, could wind up administering Delphi's pension plan, which is underfunded by $4.3 billion.

Coming on the heels of the recent bankruptcy-protection filings at Northwest Airlines and Delta Air Lines, Delphi's plans reinforce how companies with aging work forces in old-line industrial sectors like aerospace, auto, steel and rubber find themselves unable to respond to the shifting realities of the global economy, and cut legacy costs, including pensions and retiree health benefits to stay competitive.

Ripple effects from a Delphi filing could shake former parent General Motors Corp., where management is seeking substantial concessions from the United Auto Workers union to reduce a $1,500-a-vehicle cost disadvantage against Japanese auto makers such as Toyota Motor Corp. Toyota has been steadily gaining in its quest to overtake GM as the world's No. 1 auto maker by late this decade.

The United Auto Workers union, which over several decades crafted a wage-and-benefit package of about $65 an hour -- the undisputed gold standard for U.S. industrial workers -- would find its position weakened in court. The labor and benefits package could be renegotiated if the union and the company fail to reach a deal and most likely the package would be reduced. It is also easier to close plants under the court's protection."