UAW Wages at Center of Auto Bailout Failure

The automobile bailout has officially failed in the Senate, and will not be looked at again until Barack Obama takes office in 2009. By then, two of the Big 3 may already be bankrupt, with a third ready to collapse. As the next few months now stand to be nightmarish for the automotive industry, and for the economy, the blame game for how this happened is now in full gear. The top candidate for the blame game is wages for the United Auto Workers, at least according to the Republicans.

The Senate bailout vote failed with only 52 Senators voting for the bill. One key reason why the Democrats and Republicans couldn't work out the bailout bill to get more votes is due to the UAW. The powerful automotive union had been asked by GOP Senators to take massive pay cuts as part of the bailout deal.

However, heads of the UAW did not want to alter their wages until their contract expired in 2011. Republican Senator Bob Corker, from Tennessee, led the charge to try and get the UAW to change their mind.

Corker proposed that the UAW could cut their wages and benefits, much like workers for foreign competitors like Honda, Nissan and Toyota. Corker said he offered the UAW the chance to select the date in 2009 when they could cut the wages, but nothing came out of it.

Without the UAW wage cuts as part of the bailout deal, Corker claimed that he could not get the necessary amount of Republican Senators to approve the bailout.

As such, the UAW is the Republicans' scapegoat for the auto bailout failure, while the Democrats have the Republicans as their own scapegoat.

Toyota, Honda and Nissan are used as example of car companies that are not facing financial trouble in the automotive industry, at least not to the extent of the Big 3. But these Japanese industries have less retirees and less benefits for pensions and health care.

Now that the UAW has not backed down from cutting wages and benefits, they put their hopes on the White House to do what the Senate could not. The UAW, after striking back against the Republicans that blamed them for the bailout defeat, called on President Bush to use money from the banking bailout to stabilize the auto industry until Congress returns.

Sources

New York Times- "U.A.W. in Center of Dispute Over Bailout Failure" www.nytimes.com/2008/12/13/business/13uaw.html

Associated Press- "Auto bailout talks collapse over union wages" www.google.com/hostednews/ap/article/ALeqM5gbjFY-o07QeryRxtFR3oC1w_v1PwD950TO680

The Plain Dealer- "UAW puts faith in Bush for a Big 3 rescue" blog.cleveland.com/business/2008/12/uaw_puts_faith_in_president_bu.html