Citizen Journal

While labor costs should not bear exclusive blame for the bankruptcy of Delphi in particular and the distress of the domestic automotive sector in general, they have played a large part. The intractability of the UAW regarding those costs may have given auto executives an excuse to regard high labor costs as inherent in their business, instead of a variable cost that could be negotiated down. As Professor John Paul MacDuffie of the Wharton School of Business observes: "The question is why there wasn't pressure to deal with that issue sooner. There wasn't much of an inclination to invest in [improving] those businesses, maybe because labor costs were seen as insurmountable barriers." In short, the former strength of the UAW, and the irresponsible way in which that organization used its strength, has now imperiled an industry.

The auto industry will restructure, and workers will find new employment. Perhaps more importantly, the children of current UAW employees will come of age in a world in which their parents will not be able to regale them with stories of a comfortable life in exchange for their unskilled labor. Those children will know (as most American children have for at least a generation) that they must educate themselves and provide value commensurate with the salaries they hope to command. A recent article in The Nation summarizes the situation best: "Delphi is a marker of a new America in which there is no collective security, in which the union will not make you strong, in which there is no government to give you shelter and in which you know you are alone." Individuality, self-reliance, and an end to the welfare state, surely this is something to warm the hearts of fiscal conservatives everywhere.