Delphi Bankruptcy and the Effects on Detroit

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The recent bankruptcy filing by auto parts giant Delphi, could have a major negative impact on the company's 50,000 U.S. workers. Commentator Lester Spence says the economic crisis likely to follow in Detroit will blur the distinctions between the suburban white middle class and black workers in the city. Spence is a Professor of Political Science at Johns Hopkins University.

ED GORDON, host:

The recent bankruptcy filing by Delphi, the automotive parts giant, could have a negative impact on the company's 50,000 US workers. Commentator Lester Spence says the economic crisis likely to follow in Detroit will blur the distinctions between the suburban white middle class and black workers in the city. He also says that could be a good thing.


Delphi is trying to strike a new deal with union members to cut their wages from as much as $65 an hour to $10 or $12 an hour. Executives also want to slash benefits. Yet, just days before filing for bankruptcy, Delphi executives increased their own pay by millions of dollars. They backed down only after a surge of criticism swept over this blatant hypocrisy. Though some of the executives subsequently reduced their own compensation, Delphi chief Robert Miller said there was no way he was going to return his $3 million signing bonus. Union president, Ron Gettelfinger, commenting on the situation, said, `People who live in gated communities in this country need to think about where we're headed.'

He's right. No more than two generations ago, it was possible for white and black workers alike to get hourly wage plant jobs in Detroit and make enough money to buy homes and pay for their kids' college educations. That's no longer the situation, especially for African-Americans. While some of us have experienced economic success, black people in general continue to struggle to make ends meet, having to figure out whether the rent or the heating bill will be covered, having to get up at the crack of dawn to catch a bus that may or may not come to get to work all the way across town.

But it's different in the Detroit suburb of Livonia, for example, a town that is 95.5 percent white. The median income of its residents is over $60,000 and the median home value is a hundred and sixty thousand dollars. Like many of the white suburbs that surround Detroit, most of Livonia's residents make their money either directly or indirectly from the automotive industry and places like Delphi. The industry gave them the ability to escape Detroit as soon as they could. These men and women represent what the Bush administration calls the ownership society, the investor class that he's trying to woo with ideas like privatized Social Security.

However, while people in Livonia are better off economically than people in Detroit, their position is becoming more and more precarious. Imagine your typical white suburban Delphi family in Livonia, driving an SUV with gas at $3 a gallon having to deal with increased mortgage payments because they refinanced their homes with an adjustable rate loan and in significant debt because of credit cards. And now with the new bankruptcy laws in full effect, the typical suburban Delphi family will not even be able to use Chapter 7 to get out of debt. And if Delphi succeeds in cutting health benefits, it's possible that these same families will be one ailment away from losing everything.

White suburban families, such as those in Livonia, have long pivots on which American politics turn. In recent elections, they have pivoted toward conservative politicians in Congress and the White House. Some would say they have voted against their own economic interests. It will take a strong, progressive political force to make middle-class white suburbanites see that they have less in common with their wealthy white counterparts represented by the executives in gated communities and more in common with their Latino and black counterparts in Detroit. All are paying the price for corporate profitability and bloated executive pay.

GORDON: Lester Spence is assistant professor of political science at Johns Hopkins University.

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