Monday, September 28, 2009

Look For The Union Label In Michigan

Michigan is almost 20% unionized. And Michigan is in trouble.

Economically beleaguered Michigan faces a possible government shutdown - shuttering highway rest areas, state parks, construction projects and the state lottery - if lawmakers fail to reach a budget deal in the next few days.

The state with the nation's highest unemployment rate has a nearly $3 billion shortfall. Federal recovery act money will fill more than half the gap, but the spending cuts or tax increases needed to fill the rest have caused bitter infighting at the state Capitol.

Michigan is one of just two states whose budget year starts Oct. 1. The other, Alabama, already has a spending plan in place, according to the National Conference of State Legislatures.
And Alabama is under 10% unionized. I wonder if there is a connection? Do you suppose that extracting unsustainable wages from employers is unsustainable? And it probably is not even the wages so much as inflexible work rules. After all high productivity is what really makes high wages possible.


Neil said...

Essentially the entire difference between the labor cost of GMs and Toyotas can be chalked up to work rules, at least for small cars. Pickups aren't quite so bad--the work rules were mostly written in the 40's and 50's for the manufacturing of body-on-frame vehicles, and aren't such a huge disadvantage there.

This doesn't count, of course, the massive cost of UAW pensions--that's a whole other issue.

LarryD said...

And Toyota can sell its small cars at a profit, GM can't.

Of course, the work rules provide a lot of extra union jobs, even if they're unnecessary, and that's what the union cares about.

As long as they have friend in high places who will keep the companies from actually dieing, that is.