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Gettelfinger says lower wage may make buying a car unaffordable

May 28, 2010

Gettelfinger says lower wage may make buying a car unaffordable

The Detroit News

Detroit — United Auto Workers President Ron Gettelfinger said Thursday that it is a "fair question" whether the $14-an-hour starting wage for new workers at Detroit’s Big Three automakers is enough to afford the vehicles they will build.

In 1914, Henry Ford pioneered the idea of paying workers enough so they could buy the product they made, doubling the pay of auto workers to $5 a day. By contrast, the $14-an-hour wage for new workers, roughly half of what veteran workers make, was negotiated in 2007 to help General Motors Co., Ford Motor Co. and Chrysler Group LLC become more competitive with foreign automakers on costs.

Gettelfinger acknowledged to reporters at an Automotive Press Association event at the Detroit Athletic Club that the affordability question is "an open debate" in a democratic union, adding that UAW members could revisit the issue in the 2011 contract talks. The question is one that he won’t fully answer because he is retiring next month.

The answer is that new workers will struggle to afford a new vehicle on their own — but not if they have a working spouse, said Dana Johnson, chief economist for Comerica Inc., which compiles an Auto Affordability Index.

The most recent index found the median American family, with an annual income of $60,000, takes about 23 weeks to earn the average amount a consumer spends on a car — $24,000. After 23 weeks, a $14-an-hour UAW worker making about $28,000 annually could afford roughly a $13,000 car.

In terms of the Henry Ford affordability ideal, $14 an hour "sounds like a bit of a stretch," Johnson said.

But if UAW members have a two-worker household, as many families require, "then they could clearly afford a new car," he said.

The union has said its hard-won victories through the decades have created the wages and benefits that defined the middle-class standard for most American workers.

Still, Gettelfinger defended the unprecedented concessions on wages, retiree benefits and health care coverage that the union negotiated in recent years as General Motors and Chrysler went into bankruptcy and as the Detroit Three shed thousands of jobs.

"We did what we had to do to get to tomorrow," Gettelfinger said.

UAW membership fell 18 percent last year to a post-World War II low of 355,191 amid heavy losses of jobs among the automakers and suppliers. Membership has tumbled by nearly half since 2001, when the union had 701,818 members. Membership peaked in 1979 at 1.53 million members.

But Gettelfinger sees that the domestic automakers are on the road to recovery with plans to hire workers, including many at the $14 rate.

"I think we’ve hit bottom" in terms of the membership decline, he said.

When asked from where new members would come, Gettelfinger cited gains among non-automotive companies, including recent victories in organizing casino workers

Advancing the union’s legislative agenda, particularly protecting workplace safety and simplifying the process for unions to organize workers, is the biggest challenge for his successor, Gettelfinger said.

The union’s leaders have endorsed UAW vice president Bob King to be the next president. King is the lead negotiator on Ford. As head of the union’s national organizing efforts between 2002 and 2006, he was credited with bringing in 66,000 new members.

The UAW will look to "make gains where we can" in the next round of contract talks with Ford, GM and Chrysler set for 2011, Gettelfinger said.

"We will have a bargaining convention in 2011 and our members can decide then," he said.

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