“What good is a bailout to save jobs at the Big Three U.S. automakers if consumers won’t buy enough of their cars to turn a profit?”

This is the question raised by Cal Thomas in an opinion column at Worldmag.com. We have a problem here. The auto industry wants some government help to save jobs, because its cars are not selling. Thomas bemoans the United Auto Workers Union (UAW) as a serious reason why the industry as a whole needs more than just a bailout:

Half of the $50 billion the auto industry wants is for health care for its current and retired employees. This is the result of increasing UAW demands, strikes, and threats of strikes unless health care and pension benefits were regularly increased. While in the past UAW settled for some benefit decreases while bargaining with the Big Three U.S. automakers, according to The Wall Street Journal in September of 2006, “on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers.” Those increased costs, including the cost of health care, were passed along to consumers, adding $1,600 to the price of every vehicle GM produced. In February 2008, after General Motors offered buyouts to 74,000 employees, the Center for Automotive Research estimated the average wage, including benefits, for current GM workers had dropped to $78.21 an hour. New hires pulled down a paltry $26.65. GM, now facing a head-on collision with reality, has taken an important first step toward fiscal responsibility by announcing the elimination of lifetime health care benefits for about 100,000 of its white-collar retirees at the end of this year.

Contrast this with non-union Toyota, whose total hourly U.S. labor costs, with benefits, are $48 per hour. Those lower labor costs mean Toyota enjoys a cost advantage over U.S. automakers of about $1,000 per vehicle. Is it any wonder that Toyota is outselling American automakers and from plants that have been built on U.S. soil? According to James Sherk of The Heritage Foundation, Japanese car companies provide their employees with good jobs at good wages: “The typical hourly employee at a Toyota, Honda or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime.”

This is Cal Thomas’ bottom line:

More government intervention in private industry will bring us closer to socialism. Better to renegotiate the labor contracts, re-train workers for other jobs, or help them get hired at the Japanese auto plants in America than to subsidize a failed economic model for the sake of political gain.

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