Live Bait & Ammo #116: Legacy Cost, a Smokescreen for Fraud
The media keeps reporting that GM workers make on average $70 per hour in total compensation, and that Toyota workers only make $45.
The $25 difference is attributed to legacy costs.
Legacy benefits were earned in the past. Tacking compensation earned in the past onto active workers in the present is deceptive bookkeeping.
Since legacy benefits were earned in the past, why are they now charged to workers in the present?
Since GM included the cost of in the price of cars sold in the past, why are they charging customers for that cost again?
Since the compensation was deferred, was any of that money put into a trust fund?
If so, didn’t GM get tax breaks for money deposited in the trust fund?
What happened to the trust fund?
Should the victims of fraud be blamed for destroying the American auto industry?
Management, not labor, is responsible for legacy cost. Management, not labor, is over compensated in comparison to foreign competitors.
“In the fiscal year that ended in March 2007, Toyota’s top 32 executives — a group that included CEO Katsuaki Watanabe — together pulled in $7.8 million in bonuses on top of salaries of $12.1 million. For the comparable period, one single GM exec, , raked in $10.2 million.” [www.toomuchonline.org/tmweekly.html]
In 2008 Wagoner got a $5.3 million dollar raise.
Economist David Gordon in his book “Fat and Mean” said, “In the 1980s, by common measures, the proportion of managerial and administrative employment was more than three times as high in the United States as in Germany and Japan.” Gordon points out that in the US we have a higher percentage of supervisors than Germany, Japan, and Sweden combined.
According to Gordon, 20% of the purchase price of every product made in the USA goes to supervisors and monitors, not including secretaries and assistants and bean counters. In other words, when you buy a $20,000 vehicle, $4,000 goes to pay for the burden of supervisors, managers, and executives whose sweatless efforts add no value to the product. Less than 10% of the purchase price can be attributed to assembly line workers.
Perhaps the biggest question is: Why doesn’t , the President of the UAW, raise these issues?
Why doesn’t he defend the reputation of his members?
Why doesn’t he publicly acknowledge that the legacy cost mantra is a smokescreen for fraud?
Stay Solid, Gregg Shotwell
Posted by Mike E on December 4, 2008
By Mike Ely
“Concessions, I used to cringe at that word. But now, why hide it? That’s what we did.”
Ron Gettelfinger, president of the United Auto Workers (New York Times, Dec. 4)
As the ruling class (and the new administration) debate a “bailout” for the auto industry, it is hard to miss that the autoworkers are becoming a key target.
So much about this stinks. It is outrageous and infuriating.
Within days of erupting crisis, 700 billion were rushed to “protect” (and soothe) huge banks — and a whole superstructure of media mouthpieces announced they were “too big to fail” and that they “needed it.” But meanwhile, those same mouthpieces report that the autoworkers have “bloated” or “supersized” benefits — and that the auto companies have been “irresponsible” in granting concessions (to the workers!) that now “need” to be plucked before any “bail out” can be considered. All the talk of Chapter 11 bankrupcy (for General Motors) revolves around the power this gives the auto capitalists to simply tear up the agreements and benefits (around which hundreds of thousands of working people have structured their lives and plans.) In the brutal language of capitalism, these promises and agreements are called “the dilemma of legacies” (as if the workers’ futures is just a problem hoisted from an outdated past.)
And the argument made is pure capitalism: Why bail out the auto industry if they are not “competitive,” and how can they be competitive without much more thoroughly shredding the “social contract” made with autoworkers (driving them from their current often-stable and middle class status, to a situation “competitive” with the workers of capitalist rivals — in the Deep South or in other countries).
For decades Detroit was allowed to slip away — as a livable city — and now we are seeing the Detroitization of the surrounding region.
What gets laid bare here is capitalism’s drive for the bottom — when it comes to wages and conditions of the workers. And the incredible fluidity of capital — which first granted benefits (and even relative privilege) to autoworkers after world war 2, and then announces that it “can’t” sustain this (as a whole generation prepares to retire).
At night the mind is haunted by the suffering and uncertainty of Iraqi people under occupation and unjust imprisonment. At dawn in Bangla Desh, an army of young women stream into vast textile mills to clothe the world — why they themselves stand barely fed and clothed. As sunset passes over each part of the world, young women are sold and brutalized again and again in a global sex trade. Each day, in China, thousands of coal miners face death in badly ventilated mines with poorly supported roofs. There are other “ground zeros” of global capitalism — and so many of them much more bittern and relentless than what has hit in Michigan .
For decades, a section of workers in the U.S. have been relatively shielded from the worst of these horrors. And then comes crisis, and the cold arithmetic of a restless system. And suddenly it is unclear where the bottom is to this slide.
The following article from the New York Times lays out the concessions just extracted from the autoworkers.
AN AUTO BOOSTER: The Rev. Jesse Jackson, founder and president of Rainbow PUSH Coalition, holds a news conference Friday at MotorCity Casino in Detroit to address the troubles facing the Detroit Three. He is joined by some in the auto industry and others concerned about it in hopes of helping to promote congressional approval of auto loans.
Rep. Sander Levin, D-Mich., speaks Friday at a rally on Capitol Hill in support of loans to Detroit's automakers. Suppliers and dealers from 50 states and D.C. wore red, white and blue jerseys that bore the number of jobs believed to be at stake.