John Ransom

The recent Obama debt downgrade has left the United Auto Workers in a shaky bargaining position says an economist with the Center for Automotive Research according to the Detroit Free Press.

And it’s a good example of how the Obama administration support may erode at the grassroots while still enjoying confidence of big donors and big organizers like the UAW.   

Auto workers were counting on better auto sales from a robust economy and climbing shares prices to help them win higher wages. They were told that the Obama administration’s plan for the economy would lead to that end by the homestretch of the 2012 presidential election.

But with the outlook for the economy uncertain and recent market declines, the UAW will have a tougher time selling management on taking care of union workers even if the Obama administration is the majority shareholder in the domestic auto industry.

“The steep stock market declines will put pressure on UAW labor negotiators and will force hourly workers to recognize the shaky reality of the nation’s economy, said Sean McAlinden, senior economist for the Center for Automotive Research,” according to the Free Press.

“And that means less hiring, less production and less overtime and some fear about job security,” McAlinden told the Detroit newspaper. “We are not going to hit 13 million in industry sales this year.”

Instead, according to McAlinden, the union big-wigs will have to spend the rest of the summer selling rank and file membership on a smaller deal. It doesn’t matter how upset the rank-and-file gets. Union leadership will ensure that a quiet labor deal gets shoved down their throat.  

Because the Obama administration is such a big partner of labor unions, the auto workers can’t afford to embarrass the president the way the SEIU did in recent negotiations with state governments and hospitals over pay and benefits. The union brass has to protect the “leader” Obama, at all costs, especially if the economy falters further.

TV pictures of purple-clad aging hippies with SEIU logos slathered across their chests still sets off average Americans who don’t get the Cadillac benefits, so to speak, and the job security that union workers, especially government workers, enjoy.   

John Ransom

John Ransom is the Finance Editor for Townhall Finance, host of Ransom Notes Radio and you can catch more of the best money advice and monetary commentary by him daily 10am PT, 1pm ET at or on Comcast Cable