Do you think car workers should take a pay cut to help save the industry?

@owlwings (44211)
Cambridge, England
December 12, 2008 3:13am CST
The question is, really, that, in a recession, there isn't enough work (or money) to employ so many people. Which would you rather? Cut jobs or cut wages so that, at least, most people have a job? Do you think that the unions are being obstructive?
5 people like this
19 responses
@cynthiann (18609)
• Jamaica
12 Dec 08
Hi Owlwings, I really haven't followed this discussion too closely oon cable. I do remember seeing 'fat cats' flying in on their private jets to beg for money. However, this is really a difficult decision for the gbernment to make. Are thousands of people to lose their jobs or should they be propped up at the tax payers expense. I really don't have an answer as I do not know what line the unions are taking. The unions should be cooperative and if the 'fat cats' get their huge salaries reduced then the unions should do what they can to keep the peole in work - regretfully even if it means that the workers have to manage on less money. what is your opinion? Blessings
1 person likes this
@owlwings (44211)
• Cambridge, England
12 Dec 08
In the first place, Cynthiann, the image of 'fat cats' is only partly true. We (as 'hoi polloi' learn to hate them largely because of what we read or hear in the media. That, in itself, is a large and tangled web. As I pointed out in my comment to the first response, there are a few people 'earning' exorbitant amounts and it's very tempting to say "Well, I'm living off $20,000, so why can't 'he'?" (or something similar). Economically, it doesn't work like that for may reasons. The 'fat cats' may actually be paid their 'fat cat' salary because they are experts at asking for money ... could you or I do the same, do you think, with as much authority? Maybe, maybe not, but for sure we would need to climb the ladder first. There are certainly some (relatively) 'fat cats' on hourly rate working in the motor industry, as my second respondent showed.
@cynthiann (18609)
• Jamaica
12 Dec 08
We both know that truth is relative. I do understand what you are saying and you are correct. However, as the saying goes 'justice must not only be done but BE SEEN to be done'. It is all a matter of perception to the workers. If they see that Mangement is going to have a pay cut then they are less resentful if their salary is cut. Do you see where I am going with this? Perception is very important. I did manage to read some responses on this excellent posting and was amazed to see that the workers in the car industry are paid so much money per hour. Honestly owlwings? I don't have any answers but have enjoyed this discussion.Blessings
@derek_a (10891)
12 Dec 08
I think that if my job was at risk, lower wages are better than no wages. I feel that these big companies are now in trouble, the fact that it is probably their own greed, won't put food on my table. So I would say, let's keep the company going, but lets have some transparency and some supervision so that as soon as they are making big bucks again that the workers wages can be increased, and with some bonuses for staying loyal to the company during hard times.
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@derek_a (10891)
12 Dec 08
Yes, I agree with the very valid points you have made there. It feels as the whole world is moving into a new era, and it's amazing how sudden this has been. :-)
• Canada
12 Dec 08
I am from Canada and we are losing our automotive industry left, right and centre. What I can't believe, is why is this even a question. If I was an employee I would think less money to no job would be better. bring it down to a more resonable level like if you were making 20.00 per hour then go to 16.00. if you can't live on that then it might be time to make some life changes. But I have heard that some employees in the plants in the states are making up to 50.00 per hour! I definitely would be cutting that pay in at least half. And as for the unions. Sit back and stay out! You have had your run and now it's time to back off or you will be losing the jobs of your members. You may be able to stop layoffs or firing for striking, but the union doesn't have control when the plant goes belly up. So let the CEO's do their jobs for once and try not to tick them off too much so that there will be a place to be when this is all over.
1 person likes this
• United States
12 Dec 08
My numbers are from 2006 so probably are more now Ford: $70.51 per hour GM: $73.26 per hour Chrysler: $75.86 per hour
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@owlwings (44211)
• Cambridge, England
12 Dec 08
Apparently (according to the link Whiteheather quotes above), your $50 an hour is VERY conservative! The automotive industry world wide is, I'm afraid, in for a long and, in many places, useless struggle to survive. Actually, it has been living on borrowed time for many years - much longer than the current recession - and has probably been paying its workers more than was economically viable in the long term. Whether that has been due to union pressure or competition within an industry which has been riding a false wave, I'm not sure. Part of the problem is that most people don't find CEOs and top executives very believable when it's highly publicised that they are 'paying themselves' what look like huge salaries and bonuses while the 'workers' seem to get nothing. The Unions, of course, try to promote this apparent discrepancy and are too committed to preserving pay levels rather than jobs. In my example above (to response 1) it is very easy to see that a huge (and crippling) pay cut at management level is less viable than a much smaller pay cut across the board. This is not, of course, to say that a simple pay cut of whatever amount will necessarily save everybody's job.
@alokn99 (5717)
• India
12 Dec 08
I'm not sure if this can apply to all workers in the car industry. Yes it's true that some of the top bosses can surely do with a pay cut and reduce on the expenditure a great deal. Pay cuts always seem to be short remedial measures and the solution lies in the overall economy improving which makes people buy cars and keeps the money in circulation.
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@owlwings (44211)
• Cambridge, England
12 Dec 08
Most people's economic perception is swayed a good deal by the 'envy factor'. If you have (to take a simple example) one executive who is earning $100,000 and 1000 workers who are on $30,000, if you cut the executive's salary by 50% you save $50,000 but if you cut the worker's pay by 10% you save $3 million. The point is that an executive's skills are transferable and he can move to an industry which will pay the going rate. That's a very simplistic example, of course, but, in the end people are paid what they are worth to the company, not primarily for their time or to give them a living. There simply isn't an economic equation that says that any particular person has a right to be paid a 'living wage' by anyone. Governments may try to protect their people by passing laws to set a 'minimum wage' and by creating benefits for those who are unemployed but, in economics, there is really no 'inalienable right' or 'natural law' that says that everyone 'deserves' a living.
@owlwings (44211)
• Cambridge, England
12 Dec 08
I agree very much that it is the circulation of money (rather than the existence of it) that is what the economy is about. This is why we have built-in obsolescence in almost everything we spend our money on. It is actually perfectly possible to have light bulbs, washing machines and cars which could run (with maintenance) for 50 years but the economy, as we have come to know it, simply would not survive!
@p1kef1sh (45696)
12 Dec 08
I think that a healthy dose of realism is hitting the car industry. Unfortunately it will be the line workers who will be hardest hit. They have limited transferable skills and will end up vying for the few jobs available. Of course there has to be a wholesale review of what the future is going to be for car manufacturing; included in that has to be the scope for new enterprises and the skills necessary to implement them. To not do so will see a hugely disaffected group of people. Should they take a pay cut, yes. Are the unions being obstructive? Probably, because they are just a challenged as anyone else when sacred cows start being made into hamburgers!
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@sharra1 (6341)
• Australia
14 Dec 08
I quite agree with you. If they had not been trying to prevent non petrol engines being built and had listened to environmentalists about what cars they should be building they might not be going broke now. It is always the ordinary workers that suffer and cutting their wages will not save the industry. As a worker said on the TV last night if they all worked for free the company would still be broke by January.
@underdogtoo (9588)
• Philippines
12 Dec 08
I there are no profits to be made then companies will close shop. This has been the experience of people. If people price themselves out of the job market then they would risk losing their jobs. Cheers!!
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@owlwings (44211)
• Cambridge, England
12 Dec 08
The problem seems to be that it's the people's Unions that are seeking to price them out of jobs. Unions were originally set up to act collectively against exploitation by employers. Historically that was very necessary (and still is of course, in spite of much legislation that protects workers) but I feel that, in this case, they have lost the plot.
@Destiny007 (5819)
• United States
12 Dec 08
Yes, they are being obstructive. The COE's all agreed to a lot of things in order to try to save their companies, including a salary of a dollar a year. The Union's balked when it came their turn to help, which proves that they care nothing for the company, and are only looking to satisfy their own greed.
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@savak03 (6691)
• United States
12 Dec 08
I have never had much sympathy for people who make such a large hourly rate for their work. I've seen news programs where they have been on strike because they wanted more money and they were saying that they couldn't survive on 20.00 per hour or what ever the going rate was then. It would make me angry because I couldn't get a job (at that time) making over 6.00 per hour and I was a college graduate. So to answer your question I believe they could absorb a pay cut so others could keep their jobs and support their families.
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@KrauseHome (36629)
• United States
14 Dec 08
Well, it would all depend on the Big picture, etc. There are some areas that if you cut back much more it would make the plants have to close, and many people loose jobs. The Big thing should be the Main people who are in charge of these companies. They should be the ones who have to suffer some and be able to offer enough to keep more people working. Here is our area I have heard of places cutting back their hrs. so that all of the Employees could keep their jobs, and maybe that could be a bigger solution for more of them as well.
@owlwings (44211)
• Cambridge, England
14 Dec 08
Cutting back hours is just another way of saying that the pay of the hourly paid workers is cut. It usually doesn't affect salaried workers as much, if at all - or, at least, it affects them in a different way (often by redundancy while the reduced staff are employed at the same salary): that is just one of the basic inequalities of the current structure of most corporations. Here in the UK, at least one company has sent its workers home on one third pay. "We have no work, but we shall need you back when business gets better.", basically. Yes, it's natural to hit out at the 'fat cats' who appear to be earning gross amounts (from the common worker's point of view). We are human and envy and greed are just as present in our minds as they are in the minds of most (including the 'fat cats'). They tend to distort our view of basic economy in the name of 'fairness', which we have come to believe in as a 'right' which is hardly ever achieved! I have shown elsewhere in this discussion that it is actually more economic to cut the workers' pay packets by, say, 10% than it is to reduce the executives' salaries by 50%. Assuming that both things happened, if you were an executive, would you consider that 'fair', I wonder? No doubt you would say that you 'suffered' more. On the other hand, the workers would point out that the executives' salaries were still much higher than theirs and that, if they can survive on their reduced pay, then surely the 'fat cats' are still laughing! In fact, I hear that the bosses (or some of them, at least) did agree to forgo their salaries entirely for a time in order to make it seem 'fairer' and to help the industry. It seems, though, that the unions still were not prepared to negotiate pay cuts. Since you cannot be a Union member unless you are employed in the industry, it looks as though the unions want to drastically downsize the number of people they represent!
@bellis716 (4802)
• United States
14 Dec 08
I wasn't old enough to remember the great depression back in the 1930s, but my parents told me that men were glad to take any job at any wage. It seems reasonable to me that to keep more people employed, wages should be lowered or number of work hours reduced. I'd be in favor of first doing away with the union. That would give the rank and file more money in their pay envelope. Next, number of hours worked should be cut by 1/3. Yes, that would mean that the workers would have to eat a few more beans. They might even have to heat just one floor of those big houses, but more would be working. Fewer cars would be produced, so a larger percentage would be sold.
@owlwings (44211)
• Cambridge, England
14 Dec 08
Thank you for putting it more succinctly than I have done! At least, by all accounts, this recession is probably not going to be nearly as dire as the Depression of the 1930s, though for some people it may feel like that. The World economy (along with the economy of individual countries) is currently on a very rocky road and the media, on the whole, are doing nothing to make it look any better than the worst! That, of course, is so that, when there is any slight improvement, they can get up on their hen-houses and crow about how much better it is already! Many sectors are going to have to make big adjustments in the way they work. Some are just not flexible enough to do so and many vegetables will fall off the ox cart. What will be very sad is, if, having weathered this storm, we continue with running things just the way they were before. The basic mechanisms and principles behind the economy of the developed world need to change radically not just so we can say "Look, we survived the last rough spot, we can do it again" but so that the whole world, including the emerging nations, will be better off.
@ronaldinu (12438)
• Malta
14 Dec 08
what if they have mortgages to pay? Are their loans to be cut by the banks? What if they have family to take care of? Are the supermarkents going to take of some money off the bill?
@owlwings (44211)
• Cambridge, England
14 Dec 08
Ronaldinu, in the first place, we are not talking about people on the breadline here. Look at the figures quoted by Whiteheather39 in Response #2. These are hourly paid workers who are on an average rate of more than $70 an hour! I agree that (nearly) everybody designs their life-style around their pay packet. The sensible man first sees to the basic necessities of life - a roof, food, clothing - and pays what he can afford (or can sensibly afford in the future) to maintain the lifestyle he has become accustomed to. Your response is a very common and natural reaction but it shows a basic ignorance of economics. No, I am not saying that you are ignorant - you are not! I am saying that the opinion you express ignores some very basic principles. We are discussing here a major industry which has been paying its employees very much more than the general rate because it could afford to. Now we have a recession and this great industry finds itself much too high up and, consequently, has to take a bigger fall than most. As I have shown elsewhere, it makes sound economic sense in order to save the industry and to keep at least the majority of people's jobs that all employees should accept a pay cut. The UAW, apparently, refused point blank to negotiate any such deal and the Government could not, therefore, continue with their proposals for injecting $17.5m capital. In this country, one motor company has recently given all its workers a 'garden leave' on one third pay. I am sure that there will be more to follow and, no doubt, some of the solutions will be harsher than that. The hard fact is that, if an industry collapses and cannot afford to pay workers because there is no work, it can very easily implode and disappear completely. That is much tougher on all the employees who have bought into the social norm (which the country's economy has blatantly encouraged) of living on the 'safe' credit of mortgages, loans and pension schemes. Of course they have families to take care of! Inevitably, the price of food and other things will rise, not fall! Those who have jobs, albeit at a lower rate, will be the lucky ones. If a whole industry disappears simply because unions refuse to accept viable and realistic economic solutions, the ultimate expense for the country as a whole will be far, far more than the amount that the Government put on the table!
@ladybug565 (2217)
• United States
13 Dec 08
how about cutting the wages for the ceo's and presidents instead of the workers? I think that is a better plan.
@owlwings (44211)
• Cambridge, England
14 Dec 08
A simple sum should show that, logical and 'fair' as that might seem, it isn't actually a valid economic answer. Let us assume that everyone personally values the salary they are currently earning and the lifestyle it supports. An executive on $100k a year 'needs' that amount to support his lifestyle and, for many reasons, feels justified in being paid that much. A day labourer who maybe makes $10k a year feels exactly the same, of course. Someone on a large salary is not any greedier than one who is on the breadline and both would feel the same about, say, a sudden 10% cut. There is a personal economic difference, of course, because food, clothing and housing are not based on a proportion of a person's salary, but this is not what a person's pay is based on. What someone 'earns' is determined by the demand for certain skills, the availability of those skills in the job market and by the amount a particular industry can afford to pay. From the industry's point of view, let us say there is one CEO for every 1000 workers. Suppose that the (well-paid) workers take home an average of $50k a year and the CEO gets, say, ten times that because that is what it costs to hire a good CEO in that business. You can easily see that if the CEO takes a 50% cut in pay, the company saves $250k but if the workers agree to only a 10% pay cut, the company will save $5000k ... a huge difference! In fact, I read elsewhere that, in order to help save the industry, some of the top people offered to take (effectively) a 100% pay cut but the UAW still refused to negotiate any pay cut for the workers!
@riyasam (16567)
• India
12 Dec 08
in this time of economic crises,i think all should have especially the higher ranking men.it seems their pay packet is getting higher and higher while the comman man is suffering.
@owlwings (44211)
• Cambridge, England
12 Dec 08
What has happened, riyasam, is that the Unions (who represent the 'common man') have rejected a proposition that everyone should accept a reduction in pay. Let us not forget that many of these 'common men' are earning more in a couple of hours than many people would be glad to earn in a day. Read the article posted in Response #2.
@AJ1952Chats (2335)
• Anderson, Indiana
6 Jan 09
There are people far worse off than auto workers would be even with reduced wages, and they would be glad to do their jobs. That's why outsourcing began happening--USA workers (especially, those listening to union bs) were expecting too much for what they produced. Yes, each job is priceless no matter what your work is, if it's a positive job that is being performed with dedication, but employers can only afford to pay so much. I wonder if those at the very top of the union really are using an agenda that has the welfare of the laborers in mind or if they're cutting sweetheart deals with people (e.g. communists, dictators, etc.) that would love to see America collapse. Something to think about...
@suzzy3 (8347)
15 Dec 08
Well this is a difficult one.It all depends on how much you would lose I suppose it has to be more than the dole,and it is much better for all concerned if the main bread winner is employed ,stuck at home when used to being busy all day,then you have to watch everyone else going out to work my husband would go round the bend if he was unemployed,he would do voluntary work to keep busy,If it meant my neibour could feed his kids then yes I would work for a paycut or no payrise,because lets face it the dole is not much is it,if you own your home you have had it,if your rent you can get rebate on rent and council tax,Every body will have to go with what suits them and hope everyone is ok,I am glad it is not me who has to make this choice,probably stay at work.
@MsTickle (25214)
• Australia
15 Dec 08
That'd be like asking folk to turn their thermostats down 1 degree or to only bathe once a day in hot weather or not to fill their pool or to dress more warmly and turn the heat down or to organise their shopping better so they don't waste gas running to the shops unnecessarily. People are too greedy and too selfish to help each other out. I can't comment on your unions but my experience with Aussie unions is that they keep the boss happy before they keep the worker happy.
@sharra1 (6341)
• Australia
14 Dec 08
I would want to know all the wages of all employees before I decided on this topic. What does the CEO earn? The CEO of our telephone company just got paid 15 million dollars while denying workers any pay increase to cope with inflation. So if you cut the CEO's salary in half you save 7 and half million. That works for me. If the workers are earning 30,000 and you cut their wages then you may also be kicking them out of their house if they cannot afford to pay their mortgage any more. 30000 is not a big wage. I get a bit sick of people saying its all the workers fault when in actual fact it is the refusal of the company to change designs to meet market demands. They shelved new types of engines refusing to redesign while their competitors tried to change and now they whine. It is management's fault that they are in trouble not the workers.
• India
13 Dec 08
I think they should be given their according to the hard work done by them what if the company is in loss or on profit just give a small clarification if the company is in profits did the management give the profits to the workers they have enjoyed why do they want to share the loss with the workers it's the duty of the companies to make profits and to have a perfect workers
@dawnald (84324)
• Shingle Springs, California
12 Dec 08
The unions used to be there to help the workers and now I think they are mostly there to keep the unions up and running. Anyway my understanding is that most unions will protect long term workers over short term workers. To me it makes more sense to ask everybody to take a pay cut or shorter hours so that fewer people lose their jobs. But it seldom works that way.