By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
The Civic Sentinel Bailing Out The Big Three
Placeholder Image
As I'm sure you've already heard, the automotive industry is now lining up to take a swing at the $700 billion bailout piñata. The Big Three domestic automakers, Ford, GM and Chrysler, are looking for government cash to warm them through the holidays. With over three million jobs at stake, from management to manufacturing to sales, most people think it's a good idea to give them a hand. After all, what's $15 billion in the big scheme of things? Well, before we start shelling out cash to private industries - cash that was specifically set aside for other purposes, by the way - perhaps we should figure out why the car giants need our help.

If you're like me, you've heard a great deal about executive bonuses and CEO salaries in the past few months. At last count, Ford, GM, and Chrysler have a combined $300 million dollars set aside for year-end executive bonuses. Part of the rescue bill that would grant government money to the automakers requires that executive salaries and bonuses be reduced and capped, a point to which the executives have begrudgingly agreed. However, the United Auto Workers Union, or UAW for short, represents roughly 300,000 employees of the Big Three; and UAW has flatly refused to allow any reduction in pay or benefits to any of its members, effectively stalling this bill in Congress.

To put things in perspective, let's take a quick look at the numbers. The average take home pay for a UAW worker is about $32 per hour, but the average cost of that employee, including pay, benefits, insurance, and associated taxes, is $73.21. This means the Big Three pay $21,963,000 per hour, $878,520,000 per week, and $45,683,040,000 per year to employ UAW members. Factor in the roughly $5 billion paid out in benefits to retired UAW workers, and the Big Three shell out close to $50 billion dollars in annual employment costs.

Now, call me crazy, but if solvency is the problem, then the first order of business should be to address the largest expenditures. So why are well-paid executives the target of so much indignant finger wagging? At $300 million, these bonuses total out to one-half of one percent of the annual employment costs paid by the Big Three, a mere pittance by any standard. The UAW argues that workers should not be expected to bear the burden of poor management decisions, and therefore should not be expected to suffer a wage or benefit reduction. By that logic, why should American taxpayers be expected to bear that same burden - especially when the average UAW employee takes home close to $60,000 per year, and the average taxpayer takes home $35,000?

The simple truth is that Americans will continue to buy cars, regardless of who makes them. Toyota, Honda, and Nissan employ close to 382,000 Americans, and offer about $10 less in pay and benefits to their employees. Funny, I don't see them lining up and asking for government handouts. Maybe if the UAW reconsidered their position and matched wages with the Japanese automakers, the Big Three would be stable enough to weather this storm. If not, I say we call their bluff and let them go the way of the dodo. If Honda delivers a better product for less money, and employs Americans to do so, then I will drive a Honda. American taxpayers have enough on their shoulders without bending over backwards for the Union bosses.

Jubal McMillan is an Escalon businessman, Video Xtreme, and contributes a monthly column for The Times. He can be reached via email at