Volume 1 No. 1 Spring 2017

Collateral Damage

How Capital’s War on Labor Killed Detroit

  • Michael Schwartz & Joshua Murray

The drastic decline of the US auto industry over the last half-century, which has ravaged the city of Detroit and other former production centers in the southern Michigan region, is typically explained as the result of union contracts that escalated the cost of labor to levels that required US automakers to move jobs to other countries. In this essay, we disprove the “greedy union” narrative. Relying on an analytic history of the rise and decline of the Detroit production culture, we demonstrate that the decline of the Detroit region resulted from management’s decision to reorganize production to prevent the workers from using their structural leverage to gain a share of control over production processes. This strategy for gaining the upper hand in the class struggle, however, also undermined the flexible production system pioneered in Detroit. This reduced the rate of product innovation and undermined their ability to compete on the basis of production efficiency, leaving outsourcing jobs in order cut labor costs as the only viable option.

In July 2013, Detroit was the news story of the month when it became the largest US city to fall into bankruptcy.1 In January 2016, the city of Flint became the news story of the month when President Obama declared a state of emergency there — two years after its residents began drinking lead-poisoned water.2

These two events highlighted an epic fall from grace for a region that, five decades earlier, had been the poster child for ascendant American capitalism.3 In 1960, Detroit’s 1.5 million residents had the highest per capita income among the country’s big cities; Flint’s 200,000 residents had the highest per capita income among the world’s medium-sized cities. Five decades later, both cities had lost most of their populations and all of their prosperity.4 The median family income in Detroit was $25,769,5 a little less than 50 percent of the national average of $51,939. With nearly 40 percent of all families in both Flint and Detroit living below the poverty line — double the Michigan rate and triple the national rate — the two cities were among the poorest in the United States.

Virtually everyone agrees that the engine of this collapse was the inability of the Big Three auto makers to compete — in price or quality — with foreign auto manufacturers, leading to the decline and departure of the auto industry.

Though there are a range of explanations for why the US auto industry could not compete with foreign automakers, most place the greatest emphasis on the high wages and benefits paid to Detroit area workers. The most common version blames the United Auto Workers (UAW), charging it with bludgeoning the auto industry into concessions that created a huge cost-of-labor disadvantage, which ultimately resulted in the industry migrating to areas with more competitive labor rates. This version is dominant among right-leaning analysts,6 the business press,7 and the mainstream media,8 including Pulitzer Prize–winning journalists such as Paul Ingrassia.9

In this paper we will offer a dramatically different account of this decline, which we will briefly outline in this introduction. We will then debunk in detail the hegemonic “greedy union” narrative. Finally, we will fully assert our own analysis in sufficient detail to document the novel elements in our argument.

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