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The contracts that were made between the large American automakers and the UAW in years past continue to weigh the American automakers (often known as the “big three”) down because they require the big three to pay high salaries and high costs in benefits to current workers and, importantly, to retired workers.
In the past, the big three faced much less competition from foreign auto companies. They could afford to sign contracts with the UAW that gave generous benefits to the unions. These contracts continue to weigh the big three down because those companies must continue to pay those benefits even if they can no longer afford them. For example, this link and this link (please note that these are both from conservative organizations that are likely to hold anti-union views) argue that the contracts are so generous that the big three are ending up having to pay the equivalent of $70 per hour for each hour that someone works on the assembly line. This reflects the actual wages being paid, but it also reflects the generous healthcare and other benefits given to the workers. Moreover, it also reflects the money being paid in retirement and other benefits to people who have retired.
Thus, these contracts mean that the big three continue to have to pay much higher prices for their labor than other car companies do.
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