Wednesday, November 19, 2008

How Many Jobs Depend on the Big Three?

“The auto industry supports one of every 10 jobs in the United States,” Gov. Jennifer M. Granholm of Michigan wrote in a plea for a bailout of Detroit’s Big Three. The day before, she told “The Early Show” on CBS that “this industry supports one in 10 jobs in the country,” adding, “If this industry is allowed to fail, there will be a ripple effect throughout the nation.” Many others have used the same statistic.

That’s a scary figure. It’s also somewhat misleading.

The NY Times explains why.

MP: For one thing, the "1 in 10 jobs" figure is an industry-wide statistic that includes jobs at car washes and taxi drivers. Since the Big Three has only a 48% market share, that would mean that only about 1 in every 22 jobs is tied to the Big Three, not "1 in 10." And that's just the start of why "1 in 10 jobs" is somewhat, or even very misleading.


At 11/19/2008 11:10 AM, Anonymous Anonymous said...

Well let's allow them to fail and see how fun it is when 1 in 22 people are suddenly unemployed. I don't know about you, but I love it when people suffer. Especially around th holidays!

(obvious sarcasm)

At 11/19/2008 11:14 AM, Blogger Marko said...

Similar arguments were made to support the horse industry. Buggy whip manufacturers, leather harness, coach and saddle makers, etc. Our economy is so much worse now that we lost those jobs.

(obvious sarcasm)

At 11/19/2008 11:55 AM, Anonymous Anonymous said...

Actually when you look at the article it says 2.5 to 3 million jobs and with over 144 million people employed, it is between 1.7 and 2.3 million which is much closer to 1 in 43 to 1 in 59 jobs, not 1 in 22. And given than the population of the US is about 300 million, it is about 1 in 150 people (since the anonymous 11:10 AM said "people" and not "employed people").

At 11/19/2008 11:58 AM, Anonymous Anonymous said...

If one or more of the big 3 goes away it will surely become possible for the remaining companies to sell more cars and thus expand. So even 1 of 22 is probably too pessimistic. The amount of work available should be a function of the number of cars sold, not which companies build the cars.

At 11/19/2008 12:42 PM, Anonymous Anonymous said...

@ gisle

This seems to be a point that EVERYONE is missing. It's not like cars are going to stop being built. The new Honda plant is a perfect example. If we let the big 3 fail, and assuming they do fail completely, to where they liquidate the entirety of their assets, guess who's going to buy the production equipment? Other car manufacturers!

So, these jobs aren't going to disappear, not medium or long term anyway, simply because the big 3 go under.

At 11/19/2008 1:19 PM, Blogger Bruce Hall said...

Wonder what happens to Flint, Michigan... and the University of Michigan in Flint?

Okay, recovery in a couple of decades.

At 11/19/2008 1:24 PM, Blogger Adam said...

Why doesn't anyone understand that these companies will not disappear? Bankruptcy is simply a protection against creditors. It allows you to re-negotiate current liabilities so you can actually pay them back. GM, Ford, Chrysler will still exist as companies. Will jobs be lost? Sure. Will be anywhere even remotely close to what they are saying? Not a chance in hell.

At 11/19/2008 1:43 PM, Anonymous Anonymous said...

Yeah because God knows I want to buy a car from a compnay that is under bankruptcy prtection. I hate having spare parts and the ability to fix my vehicle.

At 11/19/2008 2:02 PM, Blogger stevedp86 said...

Mitt Romney's take on the "Big Three" bailout

At 11/19/2008 2:07 PM, Anonymous Anonymous said...

I was living in Kenosha Wisconsin when American Motors failed. It was the city's biggest employer.

Kenosha is still there. They rather quickly found the path to a more diversified economy.

If these car companies fail then they join the over 99% of car companies that have already failed: Packard, Studebaker, DeSoto, DeLorean, etc. Losing them didn't crash the economy.

Money equals jobs means that money diverted to the car companies takes jobs from somewhere else.

Britain defended their auto industry this way for many years and many billions of dollars. Their auto industry is gone anyway and so is the money. They have nothing to show for those billions of dollars.

At 11/19/2008 3:12 PM, Anonymous Anonymous said...

It seems to me that some are trying to explain why it's acceptable to give money to businesses that have made many prior mistakes that have lead to their predicament.

I'm all for helping an industry in trouble, but not an industry in decline. They don't make cars people want to buy. So how will money fix that problem?

These companies have lobbied hard against every effort by the government to make American cars more competitive with foreign units in terms of technology and fuel efficiency, and now they're turning to the government for help. Pitiful.

At 11/19/2008 7:51 PM, Anonymous Anonymous said...

I don't think it is because they don't make cars that people do not want. The "big 3" still have half of the market and frankly I have had good cars from them over the years. The real problem is they are not competitive because of a greedy union and greedy management. The management is ultimately responsible for their failure to reduce costs and be profitable and this is because they have a "range of the moment" mentality that is all about their own career as opposed to the health of the company.

I call it large organizationitis. The bottom line is they should have seen the handwriting on the wall and taken the strike for 6 mos. or a year back in the 90's and both the cos. and the employees would have been better in the end.

I say no to a bail out even though I own two domestic cars.


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