Unions: Good Ol' Days or Part of Ford's Demise?
When an American auto manufacturer gets in trouble, journalists are quick to declare the American way of life is dying.
Despite the growth and health of Honda and Toyota plants employing American workers, not to mention a strong economy with 4.7-percent unemployment, network reporters often turn to nostalgia and overlook unionsâ negative impact on the industry.
âUsed to be a union job for one of the Big Three was a guarantee of a good financial future,â said NBCâs Brian Williams on the September 14 âNightly News.â
Journalists blamed SUVs, gas prices and foreign competition for âputting the brakes onâ the American dream, but the union label was missing in most network news coverage of Fordâs (NYSE: F) recent cutbacks.
âFord has to do something. Itâs headed for a multibillion-dollar loss this year, largely because the products it offers are not in sync with the times,â said ABCâs Dean Reynolds on the September 15 âGood Morning America.â
ABC, NBC and CBS aired 14 stories between September 14 â the day of Fordâs announcement â and September 19. Only a few times did journalists explicitly point to exorbitant union contracts as a reason for the companyâs downward slide. The majority of stories focused instead on Fordâs market share and SUV production.
âHow did Ford find itself in such a financial mess?â anchor Katie Couric asked business reporter Anthony Mason on the September 14 âCBS Evening News.â Mason answered: âIts sales have been slipping very badly, worse than expected. Their truck sales in July were down 45 percent. So this company needs radical surgery to survive.â
But Fordâs woes, like those of General Motors (NYSE: GM), arenât just the result of slipping truck sales. In an August 29 WebMemo, Heritage Foundation analysts Tim Kane and James Sherk wrote, âThe slow demise of General Motors (GM) is visibly intertwined with the inefficient labor contracts that the United Auto Workers (UAW) secured in decades past.â As the Business & Media Institute noted, GM estimated that its cost per worker, including benefits, was more than $70 per hour.
CBSâs Mason was one of few in those 14 network stories who explained that âFordâs union contracts are a big part of the problem.â âA Ford worker earns on average nearly $65 an hour,â Mason said on the September 15 âCBS Evening News.â âIn contrast, Toyota pays its American workers just $45 an hour.â When those wages plus benefits are calculated for a year, thatâs $135,200 for Ford compared with $93,600 for Toyota â a difference of more than $41,000 per year.
Death Knell for the American Dream?
Despite evidence that unionsâ heyday has passed â just 12.5 percent of American workers are in unions nowadays â journalists continued to heap nostalgia on the old days of industry.
On the September 14 âNightly News,â NBCâs Brian Williams posed this question to CNBCâs Phil LeBeau, who covers the auto industry. âPhil, used to be a union job for one of the Big Three was a guarantee of a good financial future. These companies are part of America. How should people feel about this news?â
CBS even brought CNNâs Lou Dobbs, who frequently accuses businesses of waging a âwar on the middle class,â on the September 15 âEarly Showâ to lament the collapse of working America. âThis simply adds to the pressure on working men and women across the country,â Dobbs said. Co-host Hannah Storm later added, âWow. One of the oldest American companies, part of the American dream, and letâs hope they survive and get back on their feet.â
But as Kane and Sherk pointed out, âthe union philosophy sees the economy through a 1950s lens.â The economic analysts explained that âit assumes monopoly power for employers, lifetime employment for workers, and non-unique (lower-skilled) labor. Consequently, unions tend to prosper only in the rare cases where all three conditions exist â and increasingly rare situation in the modern economy.â
ABCâs John Donvan called attention to that stark truth on the September 19 âNightline.â He asked the wife of an Ohio Ford employee, âIs maybe the catch on this that the money is phenomenal and the benefits are phenomenal and that means that Toyota can make cars so much cheaper?â The woman replied: âWell, the benefits are phenomenal. I donât think â I hope thatâs not â I never looked at it like that.â