Why a millionaire wants autoworkers to take a pay cut

The former head of the Obama administration's auto task force says he should have pushed the United Auto Workers for steeper sacrifices in the General Motors bailout, including wage cuts. The people earning $9 a hour in a suburban Detroit GM plant would disagree.

Former auto czar and wealthy Wall Street financier Steven Rattner told a luncheon in Detroit on Thursday that while the $50 billion GM bailout was successful, "we should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay." He also said that "friends on Wall Street" were concerned by GM's earnings and communications with the market, pushing the stock down to a level that would lose the goverment $14 billion if it sold its shares today.

Meanwhile, at General Motors' Orion Township, Mich., plant about 45 minutes away from where Rattner spoke, there are three tiers of hourly workers. Roughly 900 workers at the top tier, the most senior UAW workers, make $29 an hour, a rate unchanged since 2008. Another 500 or so UAW workers are paid about $16 an hour — a rate, adjusted for inflation, equal to the famed $5 a day Henry Ford started paying his workers in 1914.

And at the bottom scale are 200-odd workers technically employed by an outside supplier but who work in the plant moving parts to the assembly line, jobs once done by GM workers paid $29 an hour. The contractors' pay: $9 an hour with no health care, a rate which over a year's work would leave them below the poverty level for a family of four.

GM's contract with the UAW that convinced the company to move small-car production to Orion from South Korea allows it to shift such work to the outside supplier. That supplier has resisted UAW bargaining, and the tensions have grown high enough that UAW workers at the plant picketed earlier this month and sought approval from the union for a strike. (They delayed one planned picket so that President Obama could tour the plant with South Korea's president).

GM's North American arm posted operating profits of $5.7 billion in the past nine months, on which it will pay little to no federal income tax thanks to a law passed during the bailout preserving tax credits from the years when it bled money. The estimated savings to GM of its tiered wages at Orion: $112 per vehicle, on Chevy Sonics and Buick Veranos that start at $14,500, and can sell for $29,000. By GM's own stats, $29,000 is also the average annual wage of all GM hourly and salaried workers at Orion.

The UAW wants to move tier two workers up in the coming years, while all three Detroit automakers expect to expand the number of workers being paid the lower wage. Rattner's friends on Wall Street may want GM to cut deeper and answer their whims, but I don't see many of them embracing a life of poverty just to keep their jobs -- despite their far larger bailout.

Photo: Getty, AP

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting