American Dream Slipping Away

There was a time, not very long ago, when getting a job on the production line at a big automaker meant an instant ticket to the American dream, even for someone with little formal education. Not anymore.

"The minute you signed the paper, you were instantly vaulted into the middle class," said Mike Smith, director of Wayne State University's Walter P. Reuther Library in Detroit, named for the founder of the United Auto Workers, the union that represents auto workers.

A shrinking paycheck. As the auto industry undergoes a sea change, the government has demanded that Chrysler and General Motors (GM, Fortune 500) bring their labor costs in line with foreign competitors operating non-union factories in the U.S.

Today, an entry-level autoworker in a "non-core" position will make $14 an hour, compared to the $28-an-hour "base rate" others make, according to a summary of Chrysler's contract agreement.

Workers' benefits have also taken a hit.

"Workers coming in will have good benefits and a good wages but not necessarily what they were 20 or 30 years ago," said Smith.

Anemic health care. New UAW employees will pay a much larger portion of their health care expenses and once they retire, carmakers won't pay for it, according to information from the Center for Automotive Research.

Fewer medical procedures and drugs will be covered and, under new agreements, Chrysler and GM retireees won't have dental and vision care covered.

Eroding unemployment benefits. As GM and Chrysler restructure, the UAW has agreed to give up salary protections that had cushioned laid off autoworkers... [Read More]