The Big Three in Detroit — Ford, GM and the Chrysler complex — are demanding major cuts in employee benefits as the industry and union get ready for a new contract. This is a reversal of what has over the years been the customary procedure. Traditionally, the union made demands and in collective bargaining has made steady progress so that at present an auto worker working under a United Auto Workers contract earns the equivalent of about $50,000 a year when fringe benefits are included.
The employers now contend that they can no longer continue in the traditional way because Japanese auto companies that produce cars in the United States pay far less in wages and fringe benefits. To compete, American employers claim that wages and fringe benefits must be cut.
The obvious question is why the UAW doesn’t organize the workers employed by Japanese companies in the U.S. Our guess — and it is only a guess — is that the Japanese employers in the U.S. would probably threaten to shut down their production in the U.S. and transfer it to Japan.
What happens in Detroit, however, will affect American families who have nothing to do with the auto industry. In the course of a year, billions of dollars will be lost to the families of autoworkers. The loss of their purchasing power will be a blow to the entire American economy.