Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Autoworker Pay Cut Hurts Growth, Former Obama Aide Rattner Says

Dec. 5 (Bloomberg) -- Wage cuts aimed at increasing the competitiveness of U.S. auto companies may harm the economy by reducing workers’ disposable income, said Steven Rattner, the former leader of President Barack Obama’s auto task force.

Rattner, now chairman of the Willett Advisors LLC investment firm in New York, led the $63.4 billion bailout in 2009 of General Motors Corp. and Chrysler LLC, which he said would have shut down and fired their workers without government support.

“What I saw when I started to spend time in the auto industry is this incredible downward pressure on wages that comes from other countries being able to do things increasingly as well as we do at much, much lower wages,” Rattner said today at the Bloomberg Hedge Funds Summit in New York. “So today, General Motors workers are getting hired at half of what these old line workers were getting.”

U.S. economic growth will probably be limited in part because of wage reductions, he said.

Americans unexpectedly pared spending in October as superstorm Sandy depressed wages. The 0.2 percent decrease in purchases followed a 0.8 percent gain, Commerce Department figures showed in Washington last week.

Adjusted for inflation, the decline was 0.3 percent, the biggest in more than three years. Incomes were little changed as the biggest Atlantic storm to ever hit the U.S. shaved $18.2 billion in wages at an annual rate.

To contact the reporter on this story: Kasia Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.