Greed and Globalization: America's Betrayed Auto Workers

Corporations have long been abandoning America for developing nations that allow them to save on labor and production costs.  However, the race to the bottom is now occurring within the US itself through nebulous laws that obfuscate the relationship between employer and employee and make it beneficial to only provide unstable, part-time employment on a mass scale.  In addition, temporary employees are used as bargaining chips to bust unions and strikes, creating a rift between union and non-unionized workers. 

The American auto industry is no longer the economic powerhouse it once was. Despite falling from grace, over one 1 million Americans are still employed in the auto-industry. Stagnant wages, minimal benefits, increased production overseas and competition against temporary workers is hollowing out this industry even though companies like General Motors are raking in record profits. This has led to a 4-week long strike of 49,000 unionized GM workers and has cost GM roughly $1 billion in earnings.  In a world of globalization and open borders, the United Auto Workers are taking a stand against GM, demanding American workers be treated better than workers in China and Mexico.

Temporary Employment and the Race to the Bottom 

The often touted “Trump economy” with the “lowest unemployment in history,” is largely a farce when you take into consideration that the growth in jobs has not been in full-time, stable positions with room for advancement. These Trump jobs are largely part-time temp gigs. Temporary employment has become a popular work-around for the auto-industry, traditionally pressured to provide middle class jobs. Increasingly, American auto-companies are hiring non-unionized, part-time workers to complete the production and supply chain. These temporary workers earn lower wages, receive fewer benefits and usually do not end up being full time employees. Companies and work sites that exploit temp labor have been reported to have many health, safety, workplace and wage violations, as none of the temporary employees are represented by a union in their disputes. On average, temporary employees earn $10 less an hour than unionized workers.

Corporations have long been abandoning America for developing nations that allow them to save on labor and production costs.  However, the race to the bottom is now occurring within the US itself through nebulous laws that obfuscate the relationship between employer and employee and make it beneficial to only provide unstable, part-time employment on a mass scale.  In addition, temporary employees are used as bargaining chips to bust unions and strikes, creating a rift between union and non-unionized workers.

One of the main disputes GM and UAW are resolving is how to handle temporary employees. UAW is negotiating a pathway to full-time employment for these workers, as opposed to keeping them as separate workforces.  In addition, negotiators for UAW are arguing for vacation time and healthcare for temporary employees.  It is clear, GM has exploited the wedge between full and temp employees, however, UAW believes they can negotiate these differences away.

State of the Unions

It is common knowledge that fewer and fewer workers in America are unionized, a trend that has been on a downward trajectory since the 1960s and 70s which saw a peak in the dynamic of worker’s strikes followed by union busting in the auto industry. Fear and economic instability has helped build anti-union sentiment, particularly on the local state level. One such instance was a case of union-sympathetic workers at Volkswagen, who were put under surveillance and required to attend mandatory anti-union meetings. In fact, at one VW plant, the governor of Tennessee personally appeared and pled with the workers to not unionize.  VW workers nevertheless went forward with unionization, hoping Trump’s administrative appointees would side with labor in the dispute. Instead, the company refused to bargain and Trump has not come to the rescue, as many Rust Belt workers were hoping for when they cast their vote for him in 2016.

The anti-union sentiment has taken a serious and dangerous turn in the GM and UAW dispute.  UAW leaders have not only been charged with corruption, fraud and embezzlement charges in their handling of union money but have also experienced retaliatory FBI raids with firearms drawn in suburban homes. UAW President, Dennis Williams, is accused of using union money to build a lakefront home near the union’s vacation retreat for its members. The FBI claims it has been investigating union leaders for 4 years and the timing is merely a coincidence.

In the early morning of August 28, 2019, Dennis Williams was smoking a cigar outside of his home when FBI agents arrived at his home, weapons drawn. Williams was held at gunpoint, ordered to lie down and handcuffed, despite not having a criminal record or any indication of being a violent threat to federal agents. Though the FBI claimed they used this tactic to prevent the destruction of evidence, it is clear it was part of a series of intimidation tactics by the FBI since the last GM and UAW deal reached four years prior. Whether there is a provable link between GM and the FBI, or whether the charges against UAW leaders are true, remains to be seen. However, the animosity and accusations of corruption go both ways.

Individual and Collective Bargaining Systems

Imagine for a moment you want to purchase a car. As an individual, a dealership has little reason to lower the vehicle’s price to what you’re requesting. However, that same dealership may be inclined to sell the vehicle for the price you’re requesting if you find 4 other people who are willing to demand that same price. In this situation, the customers have more weight as they are bargaining with the dealership collectively as opposed to individually.  This is the general idea behind collective bargaining agreements.

Despite rapid globalization and automation, the Bureau of Labor Statistics estimates 1 million Americans are currently employed in the auto industry.  One of the biggest snags in unionizing these workers, or creating more fair employment conditions, is that there is no law that requires collective bargaining agreements.  Instead, in a nation of hyper-individualism, US labor law treats each individual company and worker as its own unique set of facts and circumstances, isolated in a vacuum from all other aspects of society. Not only is this view anti-social, it is ahistorical and false. It is this hyper-individualistic view in law and culture that is permitting the race to the bottom internally within the US.

Collective bargaining laws would require entire economic sectors to create a bargaining agreement with the entire labor pool in that economic sector. These collective bargaining agreements would apply between all companies and all workers of a given economic sector. For example, people who drive for Uber also often drive for other app-based companies such as Lyft.  In this regard, Uber and Lyft are sharing from the same labor pool, just as the drivers work for both companies. This allows for a more collective, pro-social and historically honest view of employer-employee relations in modern America.

Instead, American law promotes individual worker and work-site agreements that could vary between each employee at that job site. This individualistic system creates a resistance body to unionization both in the individual and the economic sector. Even if employees of one company are able to collectivize, bargaining against a single employer in that economic sector makes little sense in today’s economy. Thus, even powerful unions typically only have power at one or two job-sites, maybe even one company, but seldom do they cover every worker of an entire economic sector. 

By contrast, employees of an economic sector have more power and voice when they negotiate with every company in that sector. Under most sectorial bargaining systems, individuals and companies may still negotiate terms above the limits set in the bargaining agreement, but every worker will be assured the same basic wages and benefits.

Effect on the Election

UAW has already begun leveraging the 2020 election in its favor in its negotiations with GM.  Even though unionized rust belt workers voting for Trump over the Democrats played a large role in his 2016 victory, Trump has remained silent during the nation’s biggest strikes. Opportunistic Democrats have capitalized on this and begun vocally backing UAW, which is currently more popular than GM in public polling on the dispute. Though UAW has historically backed Democrat candidates, Michigan was a swing-state that Trump won due to union workers trusting his economically-nationalist policies that have yet to be meaningfully implemented.  With GM threatening to layoff the strikers, these 49,000 workers can play a pivotal role in swinging Michigan back to the Democrats.

Negotiation Collapse and the Near Future

As of now, reports indicate that talks between GM and UAW have largely stagnated, if not outright collapsed, as the two are unable to come to a quick settlement in the contract dispute. In addition, GM has made little indication it will not move more plants to Mexico, where it now builds pickup trucks, small cars and two SUVs. The work stoppage has thus far halted factory output in more than 30 plants and has even resulted in a temporary layoff of thousands of non-unionized workers. 

Stuck between aggressive capitalists and often very liberal unions, American laborers still have an opportunity to fight for their rights under laws that would require collective bargaining agreements among each economic sector. In fact, unions could potentially even be eliminated if the government does the bargaining on behalf of the workers. Collective bargaining agreements make more sense in a world in which technology and the job market is rapidly changing. Though it is true the law tends to lag behind economic and technological advances, laws requiring precautionary sectorial agreements will prove to be more prudent than reactionary laws that tackle individual issues, liberal unions and the companies racing to the bottom. 

Perseus is an attorney and the author of the upcoming book, Iranian Sun, which can be found at www.IranianSun.com