Jim Stanford on Auto Worker Wages

It’s hard to make sense of all the mudslinging going on in the media over Canadian auto worker labour costs.  (See this piece, for example, from the Globe over the weekend) A key aspect of the old Statute of Labourers from 14th century Britain was a government fixed cap on wages. The state capped wages during  times of labour shortages to ensure that workers did not use their bargaining power to demand higher wages, which would cut into the employer’s wealth.  Occasionally in the modern era, Canadian governments have imposed wage restraints on public sector wages as part of an inflation-fighting strategy.  But rarely in the modern age of the contract model of employment–at least in North America–have we seen the state and private sector employers come together so ferociously to demand a privately bargained employment contract be ripped up and rewritten to include dramatically lower compensation for the workers. 
One of the early goals of unions was to ‘take labour costs out of competition’.  That meant bargaining similar labour costs at all competitors in an industry and thereby forcing employers to compete on the basis of other factors (quality, design, lower material costs, etc.).  Provincial and Federal governments in Canada today are turning that idea on its head.  They want to take labour costs out of competition by stripping away the benefits the unionized workers have won in bargaining over the past 60 years and set labour costs at the lowest common denominator: those set unilaterally by non-union auto-makers.
The employers and the government say that the cuts are necessary to save the auto industry, or at least to save Ford, GM, and Chrysler.  But how do we know that is the case?  That is, how to we identify the line between cuts in costs that are truly necessary to save a giant corporation, and cuts that are not necessary, but that the employer (and the state) would just like to see happen?  The number being bantered about  by the employers and the government is a $19 per hour cost cut.  But where does that come from?
The state and the employers argue that number is the difference between the cost of unionized labour and non-unionized labour at auto plants in Canada.  So government policy in the auto industry is that labour costs should be set at whatever rate non-union employers decide is appropriate (since non-union workers don’t ‘bargain’ their compensation rates).  I have had difficulty sorting out the rationale for such a policy.  I thought what matters is not labour ‘cost’, but labour ‘productivity’– which considers both the cost of a unit of labour and the marginal productivity of that unit of labour.  By all accounts, CAW members score will on a productivity measure.  And I wasn’t aware that Chrysler and Ford were going down the pipes because of the existence of a few non-union factories scattered about Canada.  I thought the problem was more that autoworkers in the developing countries earn a very small fraction of what both non-union and unionized Canadian workers earn, and the fact that people aren’t buying cars made by Ford, GM, and Chrysler.  So how is paying a unionized Brampton Chrysler worker the same as a non-union Alliston Toyota worker going to save Chrysler? 
I’m no economist though.  But Jim Stanford is.  He is the CAW’s chief economist, and he has addressed these arguments in an interesting piece in the Globe today.  I recognize that Mr. Stanford is not a neutral commentator, that CAW-bashing is a popular past-time right now, and that many people appear to believe that CAW members are paid “too much”, as if there is a proper rate and an improper compensation rate for jobs, and the lowest rate is always the proper one.  But as university educated students, you need to question everything you read (of course, including what you read on my blog!) and analyze arguments.  So, are you persuaded by Mr. Stanford’s arguments here about why the demands for huge labour cost cuts is not economically, but politically motivated?  Or do you agree with the Provincial and Federal governments’ policy of insisting that unionized labour costs be brought down to those of non-unionized workers?