MADELEINE BRAND, host:
Reaction now to yesterday's extraordinary move by the world's largest auto maker, GM. It's no secret GM is hemorrhaging money and so the company is making this offer to all its unionized workers: leave and give up your retirement benefits, and we'll pay you between 35 thousand and 140 thousand dollars, depending how long you've been with the company. That could cost GM billions of dollars. Is it worth it? Here to talk about the offer and the pros and cons of downsizing is Louis Uchitelle. His new book is called The Disposable American: Layoffs and Their Consequences.
And welcome to the program.
Mr. LOUIS UCHITELLE (Author): Thank you.
BRAND: GM's unionized workers are paid on average, including benefits, around $70 an hour. So is getting rid of some of these workers the right thing to do for GM?
Mr. UCHITELLE: I think the better thing to do would be for GM to make a car that is popular and that sells well. I would say that the costs are high but we have gone too far with this cost cutting and the layoffs, beyond what is required by a company.
BRAND: The costs are high. $70.00.
Mr. UCHITELLE: Well, the costs are high but it's all a question of efficiencies. If they can sell enough cars and keep the assembly lines running well, they can justify those costs. Particularly as they increase productivity and gradually shrink the labor force through normal retirement and attrition. It's not a question of not being able to afford the costs. It's really a question of how successful they are in the global economy. GM is not that successful; quite unsuccessful at the moment. And it's dealing with it by first taking a whack at labor, if you will.
BRAND: And what they would say is that the labor costs and the extraordinary high healthcare costs and retirement benefits for workers who have already retired is what's dragging it down and making it unable to compete on the global stage.
Mr. UCHITELLE: Well, let's think about other costs to society and not just the dragging down of GM. One is, we accept what GM says because we operate on the myth that these workers can turn around, be retrained and reeducated, and go to work at jobs, good jobs, that our economy does generate. That's a myth.
The supply of skilled, educated workers, including college educated workers, is much greater than the demand for them at decent wages. And that's across society, whatever the labor costs are, people, two-thirds of the people who lose jobs either drop out of the labor force or end up in jobs that pay less than the ones they held. And only a third manage to match their old wage or go higher.
The other issue is mental health. In a society that in effect says to the victims, it's your responsibility to re-equip yourself for the American labor force, we are telling you now that you are not properly equipped, in effect that you do not have value as a worker, that's the message in a layoff. And it is damaging to self-esteem.
We have to recognize that damage as a society, and weigh that against GM's needs.
BRAND: Well, given the current climate of layoffs and the sort of Darwinian nature that you describe, I'm wondering if this is actually the best that unionized workers can hope for, in that they're at least offered something and they're just not, and they're not just laid off with no money at all.
Mr. UCHITELLE: Well, yes, I suppose that's true. But as they themselves, as several of them were quoted as saying in the newspapers this morning, the amounts will last a year or two. For those who are close to retirement, that's all right. They'll go into regular retirement anyway. For the younger people in their 40's, a year or two of wages is not very much money; particularly if they are then cut loose and are without health benefits.
That's, so what they're losing is considerable. And they'll have a very hard time regaining that in other work. Some will, but most won't.
BRAND: Louis Uchitelle is an economics correspondent for the New York Times. His new book is called The Disposable American: Layoffs and Their Consequences.
And Louis Uchitelle, thanks very much for joining us.
Mr. UCHITELLE: Thank you.