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The War Against The Young: Detroit Edition

Chrysler is experimenting with a two-tier pay system – high wages for experienced older workers and about half that salary for new, young recruits. Economists are excited because it brings in jobs without overburdening the company’s payroll; Via Meadia, on the other hand, sees the arrangement as just another battlefield in the war against the young. As the NYT reports:

With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries. The new jobs, which are seen as long term, are being watched closely by economists, executives in other industries and Washington policy makers eager to increase employment in manufacturing and other areas.

For many, the opportunity for steady employment is welcome, even at a lower wage and with no certainty when it might increase.

The prospect of a job – any job – is a big draw for unemployed young people. So they take what they can get.

The reality is that American auto workers are not productive enough (and Detroit’s management is not creative enough) to justify their high wages.  (Don’t get me started on the outrageous salaries that management gets for running their companies into the ground.)  That’s sad but it’s a fact of life.  But when it comes to adjustments, the union movement and the older generation at large makes sure that the pain falls on the young rather than spreading it around.

It’s a shame, especially since the young workers will also be paying taxes into Medicare to fund health care for seniors today that the country won’t be able to afford when today’s twenty-somethings want to collect.

One of the big questions in American politics: will America’s young people realize they are being systematically scammed and organize to stop it, or will the older generations continue to pull the wool over those adorable little eyes?

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  • Scott

    I find your “war against the young” posts among your most compelling. Apparently I’ve raised the issue so many times with my children at the dinner table that last night my 16-year old responded with a drollness only a teenager can muster, “I know dad, we’re getting hosed.” I thought you would appreciate knowing that your message is getting through. They look friendly enough (in a bored sort of way) now but I believe they will eventually turn on us and leave we older folks swinging on our own rope.

  • Mrs. Davis

    Our Chinese bankers will blue model before the young figure out what is happening. The subsidies for the elderly will curtailed or eliminated to pay for the subsequent war. From which the millenials will emerge as the new, improved greatest generation. After watching Gen X’s life span fall the millenials will make necessary provision for the elderly, just in time for their own retirements.

  • Kris

    A literal grandfather clause!

  • Ben Horvath

    I’m a dreamer. A healthy union movement would ensure that workers with the greatest need for income (those with families or otherwise taking care of others) would have the greatest opportunity for income. At the same time younger and older workers would have opportunities to work and to have leisure time appropriate for their stages in life.

    Instead, the unions are a labor cartel controlled by and for insiders. Ironically the union has had the same goal as auto executives from the 70’s, 80’s, 90’s and 00’s – to plunder the company for what they can in the assumption that it will always be there.

  • David in OC

    I am as anti-union as they come, but this is one case where unions are not uniquely responsible for younger workers’ getting the shaft. I work for a company where longer tenured workers have more generous vacation time and retirement bennies. Plus the company has obligations to pension funds that protect retirees at the expense of compensation to younger workers who are in separate 401(k) and fund their own retirements. No union in sight. It’s a phenomenon that afflicts the entire society, and defenders of the Welfare State are unwilling to face the generational fault lines it has produced.

  • Toni

    Umm… If “American auto workers are not productive enough…to justify their high wages,” doesn’t the lower wage better reflect productivity?

    Union auto workers will never vote to share the pain. A 1983 Atlantic cover story, “Voting for Unemployment,” explained auto workers’ choice: keep wages high or layoffs low? They chose high wages.

  • Corlyss

    This system is also called the “European labor market profile.” The housing situation keeps workers nailed to the floor where they are. People can’t move to the jobs. Meanwhile, Ameriacan companies fight federal regulations and higher taxes by not hiring or hiring only temp workers. Europeans fight inflation with their two tier system, the companies avoid high union salaries by hiring temp workers mostly 18-35, while unions keep tight control on their workers by excluding the young from their membership as well as the jobs and the salaries. We are becoming more like Europe with each passing hour.

  • dearieme

    “the union movement …makes sure that the pain falls on the young rather than spreading it around”: that’s the point of a trade union – to enrich the members, to the cost of outsiders. Sometimes it doesn’t work out like that – usually because the union is being used to enrich the union officials to the cost of the members.

  • Nathaniel

    Thanks for pointing this out. I’m in college and, yeah, it keeps me up at night that I’ll be paying for the previous generation’s diabetes medications and end-of-life care.
    But good luck getting anyone in my generation to believe in the political process–they’re either stupid enough to believe that it can’t be changed (and it’d be the height of bad taste to try), or believe the real fight is still against racism, nuclear power, etc. And then there’s the growing subset who are being taught that well who cares how many people the country has been a haven for, some Indians’ toes were stepped on; and who cares how prosperous commoners have become here, there was slavery hundreds of years ago. If the system we have has been corrupt and a lie from the start, why participate? Boomers don’t have to worry about maxing out the credit card, we won’t protect ourselves.

  • jacket06

    It has always been that way in the Unions. If a younger worker works too fast, or accomplishes more that the “older worker”, he/she is always criticized/chastized by the shop steward. The young worker is demonstarting that workers can exceed the normal production quota/rate negotiated in the contract, and that is a “No-No!” To hell w/the company! The Union Uber Allis!

  • O Leo Leahy

    “high wages for experienced older workers and about half that salary for new, young recruits.”

    This is new? It certainly was that way when I was a new, young recruit many years ago. Why wouldn’t you pay more for experienced workers?

  • Beth Donovan

    Perhaps Chrysler should do what non-union corporations do – once workers are 50+ years old, lay them off and then hire someone just out of school for 1/2 as much. They could save a lot more money that way.

    It happened to me. I worked hard, got good raises, great annual reviews, but being over 50 in a ‘youthful’ company did not suit their corporate culture.

    It has happened to thousands of us. I am not a union supporter, but just try to find a job when you are 58 years old.

  • Milwaukee

    Teachers unions (in Wisconsin, one per school district) try to structure the pay schedule so that veteran teachers make twice what starting teachers make. Younger teachers teach the same load, and in many cases, are willing to take on extra-curricular, out of class activities the veteran teachers have grown weary of.

  • jacDesVert

    How exactly is this a war on the young? Every job I’ve ever worked at the new employee (irrespective of age) makes less money until they become skilled at the job, then they get raises and benefits to aid in the retention. These jobs are still skilled work and require abilities that you don’t have coming out of school, so the company has all the rights to pay you less. And as for the unions, they have apprentice programs in most of them where the new worker puts in their time while learning the trade. Is that a war on the young, or is it the youth putting in their time to get training for a skill?

    The company management may be over paid, but that is completely irrelevant to the premise. Until you can provide some reason why unskilled labor should be paid the same as skilled labor, your argument is foolish.

    As for the auto workers not being productive enough, I wonder what could be the cause. I find it improbable that it has a relationship to the management, and more likely to do with the Unions. When workers have little worry of losing their job irrespective of how well they work or don’t, then you’ve institutionalized the behavior that you see in union shops. Show me a non-union auto plant that is having the same issues. You don’t see it in the Toyota or Honda plants in this country. Let’s put the blame squarely where it belongs and stop ignoring the major factors in the problem.

  • RKV

    It’s tyranny of the majority time, Walter. Which is one of the reasons the founders gave us a republic, not a democracy, not that we’re actually operating on a republican basis now anyway. Those of us who’ve been paying attention have known this generational theft has been going on for a long time. Old people vote money out of the pockets of young people and call it good – aka Socialism Security. We should end it immediately. Yep. That’s what I said, and yes it will be difficult for some recipients. As in very difficult. Call it by its real name, which is THEFT, and you’ll know why it should stop. Taking something that belongs to someone else by force or fraud is morally wrong. And the money taken by the government to fund Socialism Security is taken by force, and used for fraud – it is not an investment, and the people from whom it is taken are getting a terrible deal. To fund a transition period, the feds should sell some of the vast land holdings in the BLM and national forests, perhaps selling mineral rights offshore as well. I don’t recommend a long transition period either. 5 years max.

  • Richard

    Good question. I think it’s a suicide pill for the UAW. The workers on the bottom tier will eventually form a new organization to represent them separately. That is, if GM and Chrysler survive. The UAW only survived at the expense of the dealers and the bond holders. Any further need for reorganization will come at the expense of the UAW. This is not a unique problem, by the way, for the UAW. Look for even bigger problems with teachers unions, police protective leagues, and so on. Lots of young people will be paying for pension benefits they’ll never get. Not pretty.

  • bob sykes

    When the older workers retire, there will be a one-tier wage system in which assembly line wages will be half what they used to be.

    This will spread. Eventually, full professors will be paid $30,000 for a nine-month work year.

    Detroit is everyone’s future.

    • Walter Russell Mead

      @ Bob Sykes: Wait a minute; cut PROFESSORS’ pay?!?! That is going entirely too far. Professors perform a vital service; our pay must increase — and our workloads go down!!

  • Lisa Teller

    Think about the economics of higher education. Tenured professors, working 2 or 3 days a week funded by students, government, PhD candidates, interns, AND unpaid athletes.

  • M. Simon

    Drug Prohibition is another war against the young.

    I have an article up at American Thinker The Democrat’s 2012 Victory Plan. It is about the upcoming Ken Burns PBS movie on Alcohol Prohibition. It will air on 2 Oct.

    The movie is designed to bring up the the subject of Drug Prohibition. You might find my American thinker article of interest because it covers possible Democrat attack points.

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  • Peter Evans

    I honestly don’t see this as a “war against the young.” Rather it is a first (grudging) acknowledgment of what we used to call “reality” when we weren’t so conditioned to view life through the rosy (red) spectacles of class warfare. The “young” are not selected for punishment; they are simply the chronologically “present” bearing the consequences of present conditions, as articulated by a sclerotic industry struggling to remain alive even though burdened by decades of mismanagement and the great weight of union labor. Think of union wages as parallel to the minimum wage.

    “The prospect of a job – any job – is a big draw for unemployed young people. So they take what they can get.” Wouldn’t you? This development is a long overdue sign of health, not oppression.

    Cheer up!

  • TMG

    Sigh. This classist argument (agist, actually) gets my goat. I have paid into the SS system for 30+ years, NEVER EXPECTING A DIME IN RETURN. This “old folks keep voting themselves raises” is a load of [stuff I don’t like].

    Those “old folks” who you are referring to were not around prior to FDR, for the most part. They have been involuntarily paying in for their entire lives. Notice I said “involuntarily”? That means they were coerced into it. What makes the newer generations believe that somehow they should be exempt from that same obligation? How are they any different?

    They believe that if they are going to get nothing out of it, they should not have to pay into it, JUST LIKE THOSE THEY ACCUSE. The big difference is that the Ponzi scheme has been exposed. The lie of the “trust fund” has been shown to be a lie. Those people trusted their government their entire lives and now they are to be pilloried by newcomers to the stage? Really?

  • Tina Trent

    Yes, imagine tenured professors saying: gosh, I can’t possibly justify letting adjuncts do all the hard work while I earn five times as much, with job security, and healthcare benefits (because my health is so much more important than the peon classes below me) and retirement, and advancement, and a pure stranglehold on any and all opportunities.

    Is anyone really surprised anything in society turned out this way, when policy is driven by a class of people who even believe that notions of free speech (academic freedom) are reserved for a special few?

  • scf

    David in OC has a point. It’s not just a union issue. It’s probably the most extreme in unionized workplaces. But lots of non-unionized workplaces have separate rules as well. My workplace changed the pension plan twice in the last 10 years, and those before 2005 have a better one, with more company donations coming in, those hired before 2007 with a plan not quite as good, and those hired since 2007 with the worst of the three.
    It’s simply impossible for young people to change such an arrangement until the young people themselves hold positions of power in the companies in question. Until that time, young people will simply be content to have a job and have no desire to address the inequities.

  • Toni

    @David in OC: First, every employer makes you earn longer vacations by staying with the firm. I started with one or two weeks, eventually got six.

    More important, your employer made the switch from pension to 401K at some time before you joined, and it wasn’t to screw younger workers.

    I went to work for Forbes Magazine in 1979, and to my great good luck, they had both, because Malcolm Forbes understood the 401K’s benefits *for employees* early on. But not all employees did, and the 401K was optional, so they also had a small pension benefit.

    When I was eligible in 1980, I joined the 401K and started salting a little away. I didn’t take money out or borrow against it. I didn’t try to get fancy: I put it all in an S&P 500 index fund and left it there. (At Forbes I learned the investment wisdom that you can’t beat the stock market averages, and you can’t “time” the market — be sure of buying when prices are low and selling when prices are high.)

    When disability forced me to quit in 2000, my 401K had about $250,000. Does that sound like I got screwed?

  • teapartydoc

    If the Republicans don’t initiate an anti-entitlement youth movement, the Libertarians will beat them to it and the Republicans will be late-comers to the game and look like they are aping the YAL.

  • An Angry Xer

    We know we are getting the shaft. The response is still inchoate, but if I were a Boomer I wouldn’t plan on getting all those goodies forever. Father Time will start winnowing your numbers, and you’re voting power will fall.

    I am not going to bust my [fanny], and sacrifice my children’s future, so that you can play golf for 20 or 30 years.

  • Kris

    jacDesVert (#14): “Until you can provide some reason why unskilled labor should be paid the same as skilled labor, your argument is foolish.”

    According to the linked article, the new workers are doing the same work just as well as the old ones, and there is no track for increased benefits. Who’s foolish now?

    Shorter TMG (#23): I never expected any return on my Social Security “contributions”, and I deeply resent people who take me at my word.

  • PacRim Jim

    Sinification of the American worker. Thanks, D.C.

  • 30 Something And Angry

    Angry Xer is right. I don’t think the Boomers realize the rage that is just below the surface.

  • Johnny

    @An Angry Xer
    Your comment makes me wonder why I should bust my hump to pay school taxes for your kids.

    We all pay in some way for something else that another person wants. You pay into SS for me, I pay school taxes for you.

    Sure, we’ve all been [poorly treated] by politicians playing on fear and greed to get elected.

  • richard40

    If I was a younger member of the UAW, I might want to know why I am getting hozed so the older UAW members can get huge pay and pensions. I thought unions were supposed to protect all their members, but it looks like they are only protecting the senior ones.

    Of course it was mostly young people that voted for Obama in 2008. For the life of me I can’t figure out why the only group that really protects the interests of young people, the Tea Party, has mostly older members. If young people really had any sense, they would be joining the Tea Party in droves. The only thing I can think of is they actually beleived the leftist BS that our educational system has taught them. If they are stupid enough to vote for Obama and the dems again in 2012, they deserve to get hozed.

    To An Angry Xer. At least it looks like you are waking up, but where is the rest of your age cohort. I am 57, but am willing to support the Tea Party, and the Ryan Plan, to make significant cuts to medicare and SS to save it for the future. But you are the guys that our fiscal unsustainability will harm the most, why aren’t you joining me in droves?

  • ArtD0dger

    In every era, the young bear the brunt of every utopia-by-rent-seeking scheme, and in every era, they are the first to support the same. It’s like they never learn.

  • R. Alazar

    We of the older generation as such–as opposed, for example, to teachers as such–are not pulling wool over anything.

    It is true and frightful that the non-leftist young will unjustly suffer and the leftist old will unjustly benefit.

    I hope it is a little consolation that the leftist young–and the rightist old, who will unfairly benefit *over their own objections*–will get some of what they deserve.

  • JBsolar

    Unfortunately, I haven’t red a larger truth in a long time! That system is unfair , and as such, can only inflict damage.

  • Georgiaboy61

    The you-know-what is going to hit the fan when the younger generation realizes that they were played by both Obama and their elders. The hard truth is that the western social welfare state is collapsing under its own weight; it cannot fund its own liabilities or commitments, and thanks to abortion on demand and birth control, there are not enough young workers entering the economy to support the generous benefits governments and businesses have promised.

    When the modern welfare state was created in Bismarck’s Germany, life expectancies were short, and the ratio of workers to retirees very favorable; the opposite obtains now. The typical old-age pension kicked in maybe five years before one’s life was expected to end. Nowadays, we have retirees living 30 or more years after retirement, in some cases. Few social welfare regimes can withstand such fiscal pressures and survive, let alone thrive. Add in the enormous negligence on the part of government, and you have a recipe for financial and actuarial disaster.

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