The Washington Independent
The Washington Independent

Forget Emissions, This Is a Fight Over Labor

Elisa Mueller
Last updated: Jul 31, 2020 | Dec 12, 2008

Well, I guess we saw this coming.

Senate Republicans last night killed efforts to grant Detroit’s automakers a $14 billion lifeline to prevent bankruptcies after compromise negotiations broke down over a provision to cut workers’ wages.

Very generally, Republicans wanted the Big Three’s union workers to cut their salary and benefit packages down to the size of those earned by the domestic employees of Japan’s automakers. According to a great analysis of the pay differential in The New York Times this week, the Big Three workers earn, on average, $55 per hour in salary and benefits, while those working for the Japanese companies pull in roughly $45. If the Republicans had their way, that would amount to a cut of about $20,000 per year in annual salary and benefits (health care and pensions) for Big Three workers.

Democrats had already caved to two White House demands: (1) That the $14 billion come from a $25 billion fund set aside to retool Detroit’s factories, and (2) To strip language that would have forced the Big Three to drop lawsuits against states trying to tighten tailpipe emission standards.

Evidently, they drew the line at cutting workers’ wages.

As Laura pointed out this morning, the White House has had the power to step in and help Detroit using a chunk of the $700 billion bailout passed earlier in the year to stabilize Wall Street’s banks. Treasury Sec. Henry M. Paulson Jr. has resisted that strategy arguing that such a move would buck congressional intent (even as Congress is screaming from the rafters for some of the cash to go to the automakers). The money, Paulson contends, was intended to prop up the financial sector, not act as an economic stimulus — something many lawmakers probably dispute.

Watch what the markets do. Senate Majority Leader Harry Reid (D-Nev.), in announcing last night that the negotiations had failed, added, “I dread looking at Wall Street tomorrow.”

The Asian markets plunged when it was clear that the bailout was dead, with Japan’s market falling 5.6 percent. The Dow is currently down about 115 points – not terribly substantial relative to some other falls we’ve seen in recent weeks. If the trend continues, however, Paulson & Co. might be forced to have a quick change of heart.

Elisa Mueller | Elisa Mueller was born in Kansas City, Missouri, to a mother who taught reading and a father who taught film. As a result, she spent an excessive amount of her childhood reading books and watching movies. She went to the University of Kansas for college, where she earned bachelor's degrees in English and journalism. She moved to New York City and worked for Entertainment Weekly magazine for ten years, visiting film sets all over the world.


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