Case Study 12.2

 

Case Study 12.2

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Case Study 12.2

The united Auto Workers Union has been struggling to work with General Motors over the years. Research indicates that the labor costs for workers who were members of UAW at a General Motors and Chrysler plant stood at an estimated $73 an hour, as compared to $44 an hour for workers who are non-union members at Honda and Toyota plants in the United States. Increased sales would enable these entities to increase their wage rates for unionized workers and members of the UAW. The UAW has been criticized by many for its role in seeking benefits for its workers, which has been associated with the crisis of the automobile industry in 2008-2009. in addition, UAW members are also associated with receiving benefit packages that had a high cost differential with other entities in Asia which necessitated the need for restructuring of the automotive industry and more so for some entities such as GM and Chrysler (Columbia Southern University).

Enhanced economic conditions because of increase in demand for GM and Chrysler automobiles would enable these entities to improve the wage rates for the unionized UAW member workers. In addition, an enhanced wage rate would also be important for non-unionized workers. The UAW also notes that the cost differential has been associated with the low pricing of automobiles and extensive benefits to the members ass compared to other automotive industry workers in Asian countries such as Japan (Columbia Southern University).

Increased demand for automobiles produced by GM and Chrysler would also offer UAW members with an opportunity to enhance their savings due to increased incomes. Keynesian theory notes that high-income individuals save more than low-income ones due to the premise of high disposable incomes. In addition, high incomes also result in enhanced consumer activity which is important for an ailing economy such as the united states that is seeking to recover from a devastating financial crisis (Columbia Southern University).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Aggregate Expenditures: Case Studies. Case Study 9.1: The Life Cycle Hypothesis

Columbia Southern University. Lecture: Consumption

 

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