Why Bailout a Company With Bloated Compensation?

Mark Perry makes a great point.

Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM, Ford and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?

Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda and Volkswagen take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution.

Hat tip Tom McMahon.

I don’t support sending any taxpayer money to the Big 3 without major structural changes in their organizations.  Heck, changing their compensation packages might make a bailout unnecessary. 

1. I’m sure the executive suite is somewhere in there in terms of being well paid. Just wanted to be helpful since you were busy and forgot that.

   Actually the better approach for our economy would be to pull those other workers more in the direction of UAW pay than the other way around.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1013 hrs




2. Paying people more for no additional output will not be better for any economy.

   Additional cost with no additional production unfortunately will just drive inflation.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1029 hrs




3. No, Keith, if they reduce their expenditures, especially pay to the curent and former employees, they can reduce the cost of their cars, more people will buy them and they will return to profitability.The big 3 have totally restructure their entire organization.  They pay out too much to retirees and current workers and management.
   If the government is going to give them money then then they have to change and reduce their expenitures and make better choices concerning R&D;.  Otherwise the government will be just throwing money down the drain.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1031 hrs




4. Three words: universal health care.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1037 hrs




5. GM’s big problem is that they have 50% of their payroll not working - ie., these are retired people getting pensions. That’s why their pay is so out of whack.

   GM needs to declare bankruptcy and renegotiate it’s obligations. Just like you would do if you got in over your head.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1133 hrs




6. Requiring Honda and Toyota to be under the same obligations as the “Big 3” would serve no purpose other than to drive more jobs out of the US.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1226 hrs




7. When I saw the headline in my reader I just assumed we’d be talking about the bailouts for AIG and Lehman Brothers but I don’t see their blaoted compensation on your little graph.

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1313 hrs




8. And I don’t think we should be bailing them out either.  Did you have any other points or can we just agree to agree on that one?

   Posted by Owen on November 10, 2008 at 1413 hrs




9. The WSJ had a great commentary on this:

   http://online.wsj.com/article/SB122628230122212449.html

   No bailout without a major house cleaning of executive “management.” Amen to that brother.

   I don’t like or support anyone breaking promises and obligations to workers but this got out of hand by both sides. If our tax dollars are supposed to save it, we should have a big say in how it gets done.

   Sharpen the Machette.

   BTW Owen, your site seems to have more down time than a Milwaukee County Supervisor. What’s the deal?

   Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 1821 hrs




10. I often look at graphs like this and ask myself why I went to college and became a highly-skilled worker.  All I needed to do was become a complete pansy, hit myself in the head with a hammer until my IQ was below 90, and I could have watched machines do work for $35 an hour.  I say good riddance - let Toyota and Honda build all the cars.  Perhaps if GM folds we could even see a buyout of some of the facilities.  I don’t think these liberals can even fathom what the impact of a free market workforce and some lean manufacturing practices could do for the “big three.”  They’re too busy making sure the “working man” can afford a 4800 square foot house, three cars, a boat, and a timeshare condo.

    Posted by Mike Gallo on November 10, 2008 at 1933 hrs




11. No bailout without a major house cleaning of executive “management.” Amen to that brother.

    I don’t like or support anyone breaking promises and obligations to workers but this got out of hand by both sides. If our tax dollars are supposed to save it, we should have a big say in how it gets done.

    I don’t think these liberals can even fathom what the impact of a free market workforce and some lean manufacturing practices could do for the “big three.”

    Which liberals are those Gallo? The ones in the White House and at Treasury and the Fed?

    There seems to be a lot of whining and indignation about the pensions and compensation for the working class yet almost total silence on this kind of crap.

    http://www.cnbc.com/id/27635077

    Do you guys all work on Wall Street or are you just plain dumb?

    Posted by (JavaScript must be enabled to view this email address) on November 10, 2008 at 2315 hrs




12. pir: you are mixing my words with Gallo’s.

    I strongly believe the union AND auto CEOs played the benefits and pension game and figured we would cover the losses on either side. BS, they should both loose.

    AIG? Start a thread on that and watch me harp on that. We need to let things break and die in order to let the well managed companies flourish and the workers in those companies flourish with them. We can’t put everything on taxpayer funded life support.

    No, no, no Auto bailout. No, no, no AIG bailout. Is that clear enough for you pir? Or do you work on Wall Street?

    Posted by (JavaScript must be enabled to view this email address) on November 11, 2008 at 0934 hrs




13. Grumps, and pjr, here’s a bit of an explanation about why a financial bailout is much more important/necessary than a Big 3 bailout.
    http://is.gd/7d2r

    Not that I am happy about either.

    Posted by Matt on November 12, 2008 at 1728 hrs