AILSA CHANG, HOST:
Well, another Friday brings another expansion of the United Auto Workers strike against the Big Three American car companies. About 7,000 more people walked off their jobs at noon Eastern today. UAW President Shawn Fain announced the move.
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SHAWN FAIN: We gave up a lot, and the companies were in trouble, but now they're doing incredibly well. And guess what? We should be doing incredibly well, too.
CHANG: Fain was referring there to concessions his union made during the global financial crisis about 15 years ago. In 2009, the U.S. government bailed out struggling auto companies and forced GM and Chrysler to restructure. The UAW accepted more concessions in that negotiation. The lead adviser for the Obama administration then, known in the press as the car czar, was Steven Rattner. In a New York Times op-ed, he argues that he would like to see autoworkers paid more, but currently the UAW is, quote, "overplaying its hand." Steven Rattner joins us now to explain why. Welcome.
STEVEN RATTNER: Thank you so much for having me.
CHANG: So let's just start right there. What do you mean by overplaying their hand? How can you see this all backfiring on the unions?
RATTNER: Look. It's normal in negotiations for the party that's trying to get something to ask for more than they expect to get or could possibly get. That's all totally normal. The list of things that the UAW has asked for go beyond anything that corresponds to reality today, for better or worse. For example, they've asked for a 32-hour week - in other words, to work four days and get paid for five. They've asked - they started with 40% wage increases. I think they're down to maybe around 30 or 35 at the moment, and that's a fair place to be bargaining. But they've also asked, for example, to have the old-style defined benefit pension plans that very few employers offer to new workers anymore restored and so on and so forth. So...
CHANG: And tell us why those demands are unrealistic.
RATTNER: You have to put the - let's put the whole thing in context. GM and Ford and Chrysler, as your intro pointed out, as Shawn Fain pointed out, are doing quite well at the moment. They have cash. They have the ability to pay them more, but they also have to compete against other companies. And in the South, you have companies like Toyota and Honda that don't have unions at all. In Mexico, you have workers making literally nine or $10 a day - and very productive, according to what auto executives tell me. And so if the Detroit companies have an excessively high burden of wage costs or fringe benefit costs, then they can't compete. They lose car sales. Ultimately, the workers lose jobs, and the jobs move to these other places. That...
CHANG: But I do want to raise a point that the unions are hammering away at. And it's a point that you concede in this op-ed, and that is the vast disparity in compensation between autoworkers and senior executives. You even point out back in 1978, the pay for the CEO of GM was about 60 times the auto industry's average pay, and now it's 400 times. So to be clear, you do think that gap should be narrowed, right?
RATTNER: I think that gap is unconscionable, and it exists not - these companies are not outliers. This is the trend that we see all across American business. It's not something you see when you go and look at European pay structures between CEOs and workers. It's a very uniquely American phenomenon, and it's unconscionable. But you can narrow that gap two ways. You can bring the workers up, or you can bring the CEOs down. And in effect, I'm proposing a combination of both. It's not a question of aggregate dollars. There's no amount of compensation that - dollars that you can take away from these C-suite executives and create a pool of money that will then - can then make a meaningful difference so workers - just given the number of workers there are, relative to the number of CEOs and CFOs and so forth. But I think it's very important symbolically that there be fairness here, and there's not fairness at the moment. I would absolutely concede that.
CHANG: Also, because you managed the 2009 auto industry deals, you have seen these automakers' financial records. Tell our listeners. How substantial of an expense is labor in the overall budgets for these auto companies?
RATTNER: Labor is a relatively small portion of the costs. Some people put it at 5%. I would concede it's a relatively small portion of costs. But you've got to put that in the context of companies that have relatively thin profit margins, and every dollar of costs makes their job tougher for the companies.
CHANG: So I do hear you. At the same time that you are saying autoworkers deserve significantly higher pay, you are also saying that they are currently asking for too much. Can I just step back and ask you, have you considered that autoworkers are hearing that message from you particularly, a person who not only asked them to make significant concessions back in 2009 but also someone who is personally quite wealthy?
RATTNER: Look. I understand that not everybody wants to hear this from me.
CHANG: (Laughter).
RATTNER: I think it's my job as someone who has been involved in this industry to speak my mind. And I've also said - and I'll continue to say - I think the companies started out offering too little. Look. If the companies had come in and said, we want to take away some of your fringe benefits, you'd hear me speaking just as forcefully in saying that I think that that's wrong because the companies are doing well enough to be able to give a pay increase. They're just not well enough to dial the clock back to - I don't know - the 1960s in terms of how these kinds - some of these kinds of fringe benefits used to work but don't work at all anymore for almost anywhere in American industry. This is just the world we're living in today.
CHANG: Steven Rattner, investor and former lead adviser to the Presidential Task Force on the Auto Industry - good talking to you. Thanks very much.
RATTNER: Thank you so much.
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