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NewsFlash: September 25, 2007

Middle class living standards at stake

American autoworkers helped build the American middle class through hard work, higher productivity and innovation over the past 70 years. But now that shared prosperity is at risk, says Economic Policy Institute president Lawrence Mishel, not only for those who work at General Motors but for the broad American middle class, as well.  In a statement issued today he describes what’s at stake in the face-off between the company and the UAW.

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The full text of Mishel’s statement follows.

I have followed the contract negotiations between the UAW and GM with great concern for the autoworkers and the future of the three companies that built the American auto industry. Of course, no one really “wins” a strike — and nobody but the negotiators knows the details of the give-and-take at the bargaining table. But I believe that the success of the UAW’s fundamental stand — investing in secure jobs with rising wages, stable health care, and dignified retirements — is vitally important not only for the union’s members but also for every working American and the entire economy.

For most of the last century, the economy benefited when the three companies that built the American auto industry and their unionized workers all prospered together. Together, they helped build the American middle class over 70 years of tough bargaining and hard work in the factories, foundries and assembly plants.  Together, they raised productivity, set new standards for wages and benefits, created the shared prosperity that was the engine of economic growth and the envy of the world.

But now that shared prosperity is at risk, not only because of GM’s demands at the bargaining table but also because of the decisions it has made in recent years. As the global economy has emerged, GM has closed plants all across America, even while investing in new facilities in Mexico, Europe, China and Russia.  The U.S. has lost more than 3 million manufacturing jobs in just the last 6 years, and thousands of GM workers have been among the victims. 

When those jobs are lost, wages are driven down throughout the economy as the displaced and outsourced workers compete for jobs in other industries. This trend has contributed to the crisis in living standards for America’s working families. With the exception of the late 1990s, the wages of the average American worker have been stagnant for decades, and the share of the economic pie going to the typical family has been falling steadily, while the wealth and income of the top 1% have skyrocketed.  What’s at stake in the negotiations between the UAW and GM is the ability of workers in a key industry to preserve a middle class standard of living for themselves and others in their communities.  If GM and other great corporations take the wealth their employees have produced and invest it overseas their shareholders might see short-term gains, but our economy and our people will lose in the long run.

Such a shortsighted course of action would forget the lessons of the extraordinary growth of the American auto industry and the American middle class. At their best, the American auto companies understood that their profits depended on the prosperity of working Americans — including their own employees — who built the cars that they made. The wisest auto executives also understood that workers would be concerned with their companies’ futures when they knew they had secure futures with their companies. It used to be said that “What is good for General Motors is good for America.” If the auto workers win an agreement that maintains their economic security and their health security, and invests in good jobs at home, it will be good for working people, good for General Motors, and good for America.

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