Bankruptcy Hurts Autoworkers and It'll Hurt Detroit's Workforce

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At Orr’s press conference the day of the bankruptcy filing, he stood behind a podium draped with a banner that read "Reinventing Detroit," as he discussed the necessity of reducing Detroit’s debt. Chapter 9 will almost certainly cut Detroit’s debt, particularly if it manages to reduce obligations to bondholders and workers. Detroit might even raise some cash in the process by selling its magnificent art collection and privatizing services—perhaps enough to pay off the $450 million bond issued for the new Red Wings arena. But Chapter 9 won’t reinvent Detroit. Chapter 9 is a tool for cutting, not for rehabilitation. After all is said and done, the bankruptcy will do nothing to resolve the long-term, structural problems of Detroit (and dozens of other cities) caused by suburbanization, de-industrialization and this country’s history of structural racism.   

All is not lost. Contrary to popular perceptions of bankruptcy as a straightforward, cut-and-dry process, bankruptcy court is a political arena where bullying and coercion often rule the day. While the trajectory of recent Chapter 9 cases bodes ill for Detroit workers, very little case law exists for municipal bankruptcy. The rules of the game are not yet fixed, and what Detroit workers and retirees do inside, and outside, of bankruptcy court really matters. If Detroit workers are willing to fight, they may be able to work a little magic of their own.