Why Detroit Matters to Obama

by Jonathan Cohn | May 26, 2011

More good news from Detroit: General Motors is adding shifts at its Hamtramck factory. It will mean hiring 2500 workers, so that GM can meet the growing demand for Volts, Malibus, and Impalas. And it’s part of broader plan that, GM says, will expand operations at five Michigan plants.

Stories like this tell you why President Obama is so eager to talk about U.S. automakers -- and what he has done for them. (Next week: A visit to an Ohio Chrysler plant.) Press coverage of the industry's bankruptcy and recovery has focused on how the companies are performing (sales, profits, etc.) and whether they will fully pay back the government's loans (probably not). But what really matters is whether they are adding jobs. 

If it looks like the Obama Administration's intervention put people back to work, it really won’t matter whether those voters think of it as a “rescue” or a “bailout.” 

The headlines don’t tell the whole story, of course. Read through any of the stories on industry hiring and you’ll discover, quickly, that the new jobs aren’t nearly as good as the old ones. That’s by design. As part of the bankruptcy arrangement that kept Chrysler and GM in business, the United Auto Workers agreed to a two-tiered wage system. New factory workers start at $14 an hour, or basically half of what veteran workers make.

Don’t forget, too, that the hiring spree comes after a very, very long string of layoffs. It’s going to take Detroit a long time to dig out of its economic hole. And in that sense, the auto industry really is emblematic of the country as a whole.

Still, everything is relative. If the Obama Administration hadn't stepped up, far more people would have lost jobs and the entire region (maybe the entire country) could have experienced depression-like conditions. But it never got that bad and, today, unemployment in the auto states is falling sharply

The UAW is already agitating to raise wages on that lower tier -- as it should. But its leadership has also indicated that it understand economics, and that the the companies must remain competitive with foreign-owned factories here and abroad. As UAW vice president Joe Ashton told reporters on Wednesday, “It’s no good making $28, $38 or $48 an hour if you don’t have a job.”

Update: Steve Benen checks in on GM's operation in Lordstown, Ohio, and finds similar developments there.

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