If I'm so fond of workers taking haircuts, why not at AIG and the banks, huh? huh?
Ummm . . . .
For starters, I am not trying to punish the UAW. I am thinking about how the company can be made profitable. The company cannot, in my estimation, be made profitable with higher labor costs than the competitors.
Labor costs are not the issue at banks, or AIG; balance sheet impairment is. Labor costs are a much smaller portion of their financial burden than at an automaker. Cutting their compensation will not return the balance sheets to full strength.
However, in fact, workers in the banking industry are taking a massive hit. CEOs were forced to take huge paycuts, and if their bank is in trouble, they've already lost the greatest portion of their personal net wealth. The banks are firing huge numbers of people, and the ones who are left can count on their paychecks looking pretty anaemic this year. I know that many of you would like to see every single one of them have their paycheck reduced to that of a Nissan line worker, but it doesn't work that way. The good people at those banks have better alternatives than being a Nissan line worker, and have usually invested substantial amounts of time and money in building human capital, rather than hitting the line after high school. If you cap their pay there, they will leave to pursue those other opportunities, leaving you a firm staffed with the rejects who can't work elsewhere. Given that we are trying to save the banking industry, not destroy it, that's not a good idea. A UAW worker, on the other hand, has alternatives that are generally much worse than the wages on a Nissan line.