Summary
GM and the CAW succeeded in moving one step closer to preparing for a "prepackaged" Chapter 11 filing. Much more work has to be done. As we have seen already with Chrysler, the process will still take time, probably longer than Washington anticipated. Concessions by the CAW, and likely the UAW, are important to union leadership to save the union. The union concessions will likely drive our economy toward a new, lower standard of living. White collar workers' wages and benefits usually follow the trends in the union agreements.
Analysis
GM has little choice but to complete negotiations with the union so that the company can focus on bondholder negotiations along with other stakeholder concessions to enter and exit Chapter 11 as quickly as possible. As noted in the Bloomberg article, in the end everyone will have said "we gave all that we could." As with the Chrysler negotiations the UAW understands that it has little choice but to give concessions to save as many jobs as possible. The UAW has seen its membership drop significantly in recent years. The UAW leadership is working overtime to salvage jobs and, perhaps, the union itself. The longer term impact will be that the standard of living both for people in both Canada and in the US will undergo a significant adjustment downward. In the past whatever the union gained was also gained by white collar workers and others. We can expect, therefore, that wages, salaries and benefits will move lower as cost of living increases. The result will be reduced discretionary income.
