U.S. Labor Is in Retreat as Global Forces Squeeze Pay and Benefits
By David Streitfeld Times Staff Writer Tue Oct 18, 7:55 AM ET
Workers at auto parts maker Delphi Corp. will be asked this week to take a two-thirds pay cut. It's one of the most drastic wage concessions ever sought from unionized employees.
Workers at General Motors Corp., meanwhile, tentatively agreed on Monday to absorb billions of dollars in healthcare costs. Ford Motor Co. and DaimlerChrysler employees are certain to face similar demands.
The forces affecting Delphi and GM workers are extreme versions of what's occurring across the American labor market, where such economic risks as unemployment and health costs once broadly shared by business and government are being shifted directly onto the backs of American working families.
Four years into an economic recovery, workers across America should be riding high. Instead, they're facing new demands to surrender hard-won benefits and agree to wage concessions. Companies say these cutbacks are essential to stay competitive in an increasingly globalized economy.
In recent weeks, there have been numerous examples — and they aren't limited to manufacturers.
Grocery workers at the 71-store Farmer Jack chain in Michigan agreed to take a 10% wage cut to make their operation more palatable to a new owner. Hundreds of workers at a hose plant in Auburn, Ind., approved a $2 cut in their $18-an-hour pay to keep the plant open. Police officers in Wyandotte, Mich., agreed to a three-year wage freeze and to pay more for healthcare.
Jerry Jasinowski, president of the Manufacturing Institute at the National Assn. of Manufacturers, said such givebacks would simply become a fact of life.
"From airline pilots to auto assembly workers, employees need to help reduce their costs," he said. "We can't afford to live with the very generous benefits we provided 10, 15 years ago."
Workers' reduced leverage has many origins, including a slack labor market and the offshoring of jobs to low-cost countries such as China and India.
Some companies, challenged by low-cost rivals, say they can't afford more than minimal raises. And even at firms doing well, high premiums for healthcare insurance take away from the pool of funds that could be used to provide raises.
Only 60% of businesses offer health insurance to their workers, down from 66% in 2003 and 69% in 2000, according to a new survey by the Kaiser Family Foundation and the Health Research and Educational Trust.
Companies also are asking workers to produce more for the same pay.
The result is that the cost of living has been outpacing wage increases for most workers all year. Driven by high energy costs, inflation rose twice as fast as wages in September, the government reported last week. The liberal Economic Policy Institute called it "the largest decline in real earnings in decades."
Wages that stand still or decline help to damp inflation. But that's small consolation for anyone contemplating a lighter wallet.
As old-line industries such as auto parts and airlines struggle to adapt to harsh circumstances, their workers are particularly vulnerable.
When the mechanics at Northwest Airlines Corp. went on strike nearly two months ago in an effort to forestall a 26% pay cut, the company promptly filled their jobs. The workers have an offer from the company that features the same pay cut and worse job security than the deal they rejected before the strike.
Prospects for the rank-and-file at Delphi, which filed for bankruptcy protection Oct. 8, are just as grim. Labor historians say they can't remember a moment during an economic recovery when so many at one company were asked to give back so much all at once.
The proposed givebacks are "extraordinary sacrifices," especially in light of Delphi's "disgusting" decision to sweeten retention packages for executives.