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If Auto Industry Goes Bankrupt, Millions of U.S. Jobs Will Be Lost |
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Here’s one big reason analysts say Congress should approve emergency loan legislation to ensure that Detroit’s Big Three automakers remain in business. If one or more of the automakers goes bankrupt, it could mean a devastating loss of between 3 million and 5 million jobs in the first year alone.
The impact of such a massive job loss would create a domino effect throughout the economy. Some estimates indicate that nearly one in every 10 American jobs depend in some way on the auto industry. A total of 2 million employees, retirees and dependents rely on automakers for health care benefits. The Center for Automotive Research recently reported that if one of the Big Three shut down in 2009, the first year of a bankruptcy would result in a loss of $125 billion in personal income, $17 billion in Social Security receipts and $20 billion in personal income taxes.
Click here to urge Congress to offer a “bridge loan” to our automakers and help get our economy moving again.
In a new report released yesterday, the nonpartisan Economic Policy Institute (EPI) found that bankruptcy at any of the U.S. automakers would result in job loss for up to 3.3 million Americans within the next year—more than 400,000 in Michigan alone.
Says EPI economist Robert Scott, author of the report, When Giants Fall:
It is in the national interest to invest in a bridge loan now, rather than pay the consequences of bankruptcy for one or more domestic automakers. It’s an investment, and the government is likely to get its money back with interest, and maybe even a profit.
If any one of the Big Three goes under, Scott says it would take down more than autoworker jobs. Included in the 3.3 million lost jobs, he says, are those that would have been supported by the consumer spending of autoworkers and others. Tax losses and increased government payments would exceed $150 billion in the first three years following bankruptcy of all three domestic auto companies. Without cars to export, he says, the U.S. trade deficit would rise by $109.3 billion. Click here to read the full report.
On its website, the UAW breaks down what a bankruptcy would mean:
The failure of the domestic automakers will lead to the failure of numerous supplier companies, who will be unable to function without business from one or more of their principal customers. Because of the interlocking automotive supply chain, this means that all automakers—domestic and foreign-based—will be confronted with a lack of parts and supplies. The inevitable result will be a catastrophic drop in overall U.S. industrial production at a time when the U.S. economy is already in the middle of a severe economic downturn.
At a news conference yesterday following an emergency meeting with UAW local and regional leaders, UAW President Ron Gettelfinger said the union is willing to “take the extra step” to aid the industry. Union leaders, he said, have agreed to delay automakers’ payments to a union-administered health care fund and to modify the union’s job banks program that provides laid-off workers with a portion of their wages and benefits.
But he reiterated that UAW members already have agreed to wage and benefit concessions that have lowered labor costs at the Big Three. Terms of the current contract will lower those costs even further.
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If the auto industry goes bankrupt, millions of US jobs will be lost.
We know that. We also know that if the unions don’t start up a massive public relations campaign touting the benefits of union representation, there won’t be a worker in the world who will be safe from slave wages and poor working conditions. It’s time to shut down the right wing noise machine and their anti-union rhetoric and smears. And if you don’t do it soon, it will soon be too late.
I don’t think the UAW has to make any more concessions. what is wrong with good-paying jobs with benefits. In a right to work state like I live in, unions and their influence are needed; and the lack of them has produced poverty, part-time work, hamburger flipping jobs, etc. UAW is the only organization i know that takes care of its retirees–who else does that these days!!! stand firm, uaw!
Time for labor to be out front on this. I cannot recall this much focus on unions since the UAW was on strike. This could be a great chance for some good PR
If the auto industry was nationalized, government controlled, all those jobs would still remain, can still remained unionized and that would more than solve the problem and eliminate any future problems of the same nature.
Let’s give the auto industry some kind of relief until Barack takes office and puts this country back on the right track. 46 more days!
I read that the mgt was not going to limit out sourced materials/work. Bull hockie. Get on with building cars to get rid of oil and exhaust. Will carbon fibers, building materials work in these cars? We are shipping Japanese cars out (to Japan) that have been made in the USA, from the port of Tacoma (WA). Increase this activity. Build a quality car, import from a country exactly, dollar amount, what that country imports from us. Bring our jobs home, all of them.
I am a retired union worker. And before you read the rest of this post I want you to understand one thing. My family has always been pro-union and I greatly appreciate what my union did for me. Were it not for them I know that I would not now be retired. But what were the UAW and the auto industry thinking when they came up with the ‘jobs bank’ idea? I’m not ‘educated’ (being only a high school graduate) but it doesn’t take a college diploma to know that was a BAD idea from the get go. Why should laid off workers continue to draw their paychecks? We have a little thing called unemployment for those times when we’re laid off. Layoffs are supposed to save the company money. How does paying the laid off worker save the company money? I see where the union has agreed to ’suspend’ the jobs bank. IMO they should discontinue it, period! And while they’re at it, no more over the top upper management salaries and perks. Let’s bring these CEOs and other upper management back down to earth!