The NAACP strongly supports federal assistance to American auto makers

DATE: December 10, 2008
TO: Concerned Parties
FROM: Hilary O. Shelton, Director, Washington Bureau

ACTION ALERT

FAILURE OF THE BIG THREE AUTO MANUFACTURERS COULD DEVASTATE THE U.S. ECONOMY AND AMERICAN FAMILIES

THE ISSUE:
While estimates may vary, the tremendous impact of a major contraction involving one or more of the Detroit Three automakers in terms of jobs, venders, small businesses, compensation and tax revenues would lead to direct and indirect job losses of 2.5 million to 3 million people in 2009. There can be no debate that this would be devastating to the American economy.

A meltdown in the automotive sector would be especially damaging for African Americans, in both the number and quality of jobs at stake. African Americans hold a greater share of jobs in the auto manufacturing sector than their percentage of the overall population. The average wage African Americans are paid for those solid middle-class auto jobs - about $17 per hour - is much better than their average wage economy-wide. Furthermore, since the end of World War II, manufacturing jobs, particularly unionized jobs in the auto industry, have been an important source of well-paid employment for African Americans and a key route for many African American families to enter the middle class; the fall of the auto industry would be particularly devastating to African Americans and our aspirations to improve ourselves and our families' economic status. It would also have a devastating impact on those who have retired from the automobile manufacturing sector and their families; an estimated one million people who worked hard most of their lives and depend on their pensions and their health benefits to survive.

Because of the importance of the U.S. auto industry to the entire economy, a collapse of the Detroit-based auto companies would aggravate the current economic recession, sending production and consumer spending into a deeper tailspin while unemployment spirals higher. Revenues to the federal, state and local governments would be reduced, forcing them to curtail vital social services at a time when they are most needed.

Under the proposed legislation, the government would extend up to $15 billion in emergency loans to the American auto makers. The proposal also calls for President Bush to name a "car czar" to manage a vast restructuring of the firms and restore them to profitability. Under the legislation, the companies would be required to submit a detailed plan for restructuring by March 31, 2009. Finally, under the plan, bonuses would be prohibited for the 25 most highly paid employees of each company.

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