Who Killed Detroit?
Poor Detroit. It hasn’t had any good news for decades, and now, despite a $77 billion bailout of the auto industry, its population continues to implode. The No. 1 reason: the United Auto Workers union.
Sure, a lot of the blame goes to a generation of bad management. But the main reason for Detroit’s decline is the greed of the industry’s main union, the UAW, which priced the Big Three out of the market.
As recently as 2008, GM, Ford and Chrysler paid their employees on average more than $73 an hour in total compensation. The 12 foreign transplants, operating in nonunion states mostly in the South and Midwest, averaged about $42 an hour.
Behind this is the gold-plated benefits package once guaranteed to UAW workers. We’re not against workers getting what they deserve, but total pay and benefits for a full-time worker for the Big Three until recently averaged about $140,000 a year.
The transplants? Just $80,000. Add in an estimated $2,000-plus per car for retiree health care and pensions for the Big Three, and the cost gap is huge.
There in plain sight in the problem with these union requesting more and more pay. The averages are $73/hour and $140,000/year – which means plenty of workers were making even more than that.
We are now seeing the same problem play out with unions and city, state, and federal governments – and the governments are out of money, and the unions still want more and more.