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Free Market Project

3/1/2006 9:33:50 AM

Updated 02/24/06

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Auto Workers’ Benefits: Catching Up with the Times
Broadcasters worry about the future of the American economy, but the NY Times points out that automakers are behind other industries when it comes to the reality of employee benefits.

By Amy Menefee
Free Market Project
Oct. 18, 2005

Send this page to a friend! (click here)     At the announcement of General Motors Corp.’s new contract with union workers, The New York Times pointed out that the automaker’s employees have enjoyed “eye-popping” health benefits surpassing most other companies. But network newscasters saw the announcement of reduced benefits as foreshadowing an economic downturn rather than GM catching up with the times – and they glossed over a long history of union demands driving up overhead costs.

     As the Times’ Danny Hakim reported on October 18, “GM still appeared to be years behind big companies in other industries. And the benefits that GM’s retirees retain will probably remain the envy of many other retired Americans.” Hakim also noted that only a few American companies don’t require retirees to pay premiums as part of their coverage, but the major Detroit auto companies are among them.

     But broadcasters didn’t see the history behind the current story. Instead, they gave fearful reports that overlooked the unions’ impact on the auto industry and encouraged anxiety about the economy. ABC’s Elizabeth Vargas said on the October 17 “World News Tonight” that “We got a glimpse today of what may be in store for millions of people in the country worried about paying for health care, and it wasn’t pretty.” Reporter Dean Reynolds agreed that “what’s bad for General Motors could be bad for the USA.” Reynolds listed several financial problems facing the U.S. auto industry, including competition, gas prices and the decline in SUV sales. However, he left out a history of union demands for higher wages and comprehensive benefits that drastically raised companies’ overhead costs.

     Likewise, NBC’s Brian Williams repeated the adage that “What’s good for our country is good for General Motors and vice versa” on the October 17 “Nightly News.” He said those words, from a former GM president, are remembered “because he was probably right.” Reporter Anne Thompson included interviews with union members who were unhappy about the benefit cuts, and Thompson warned that this was a “new reality that could ripple through other car companies and on to the rest of the manufacturing economy.” Tom Costello set out to prove that point with a subsequent story featuring a small businessman who said health care was his largest cost and the president of Johns Hopkins University, who called GM “the canary in the coal mine.”

     Refuting those statements, ABC News contributor Mellody Hobson, who is president of an investment firm, emphasized the fact that the trend broadcasters feared was in “corporations that have large employee bases that are composed of unionized workers.” She made that observation on the October 17 “World News Tonight,” and had had more time on “Good Morning America” that same morning. On the morning show, anchor Charles Gibson asked her if when “General Motors sneezes, the rest of the country catches a cold.” But Hobson replied that “it actually doesn’t have the effect that it used to.”

     Hobson also said it didn’t mean new troubles for other industries: “when you look at the rest of the country and the rest of the companies that are out there, they’ve already been to this movie. They’ve really made these cuts already. We’re already seeing most Americans share part of the health care burden.” She said that only 4 percent of U.S. companies are like GM in that their workers didn’t have to pay part of their health coverage.


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