[Mb-civic] The Vanishing Middle - Harold Meyerson - Washington Post

[William Swiggard]

The Vanishing Middle

By Harold Meyerson
Wednesday, October 12, 2005; Page A17

We're leveling down.

With the bankruptcy filing Saturday of Delphi Corp., the largest 
American auto parts manufacturer, the downward ratcheting of living 
standards that has afflicted the steel and airline industries hit the 
auto industry big-time. As Delphi executives tell the tale, they need to 
reduce the hourly pay of their 34,000 unionized employees from the 
current $26 to $30 range to a somewhat more modest $10 to $12.

No one denies that Delphi is losing money -- about $5.5 billion over the 
past year and a half. Its labor costs are roughly 10 times those in 
Mexico and China, where an increasing number of parts that go into cars 
assembled in the United States are made.

The crisis for autoworkers, their families and communities isn't likely 
to be limited to parts suppliers. Delphi, which General Motors spun off 
in 1999, still sells about half its products to GM. Under the terms of 
the spinoff, GM is liable for the wages and pension payments of a number 
of Delphi workers, a fact that has not worked wonders for the value of 
GM shares since Saturday's bankruptcy filing. The specter of sharply 
reduced wages and benefits looms over the entire industry.

And in the United States, auto isn't just any old industry. For much of 
the 20th century, it was, by many measures, our premier industry, the 
pride of the nation. Its Big Three manufacturers employed the most 
workers, produced the most output, made the largest profits, and paid 
their workers enough to transform the economic profile of the entire 
nation. In 1914, one year after he opened his first assembly line, Henry 
Ford doubled the daily pay of his workers, saying he wanted them to make 
enough to buy the cars they produced. The Fordist compact was greatly 
enhanced by the rise in the 1930s of the United Auto Workers, whose 
contracts (along with those of the United Steelworkers) created the 
first employment-based health insurance benefits in the land and soon 
became the model for our mid-century economy. In the post World War II 
decades, America became home to the first decently paid working class in 
the history of the world. This was no mean distinction.

But that was oh, so then. If Delphi gets its way, its employees will 
clearly not be able to buy new GM cars. (At the rate things are going, 
they'll have to save up to buy gas.) In the face of the combined 
onslaught of globalization, de-unionization and deregulation, the bottom 
may not be falling out of the American economy, but the middle certainly 
is. The very notion of a decently paid working-class job has become a 
defining oxymoron of our time.

Those middle-income jobs that still come with benefits attached are 
increasingly clustered in the public sector, where they are becoming 
more vulnerable politically. In the 1960s, '70s and '80s, teachers, 
nurses and cops struggled to win contracts comparable to the auto and 
steelworkers' deals. Today, they are among the last workers in America 
-- along with chief executive officers, we should note -- to still have 
defined-benefit pensions. How long they can go on before their 
standards, too, are ratcheted down is anybody's guess. In California, 
whacking public employees has become the primary purpose of Gov. Arnold 
Schwarzenegger; it is the goal that underpins his initiatives in the 
special election he has called for next month.

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/11/AR2005101101325.html?nav=hcmodule
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