Under contracts negotiated, beginning in 1984, with the United Auto Workers (UAW), there are about 14,700 laid-off autoworkers in the "Jobs Bank." About 7,500 of them are from GM. They get paid most of their wages and benefits -- between $100,000 and $130,000 a year, for an annual cost to GM of $750 million to $900 million.
The former workers -- expected to be 17,000 by next year -- are required to do nothing that adds value to the auto companies. Some attend classes given by GM. The Wall Street Journal reports that one worker took a class in which he learned how to play Trivial Pursuit.
Detroit's Jobs Bank, which was GM's idea, is a product of an oligopoly's -- the Big Three domestic automakers still were such in 1984 -- misplaced sense of permanent abundance: They assumed that layoffs, if any, would be brief because expansion of demand for their products would generally be automatic. This mentality was self-defeating. It caused management to focus not on producing desirable products but on running private-sector welfare states, allocating much of the supposedly ensured cash flow to fund employees' benefits. And labor's myopic focus was on extracting benefits from the corporation-as-welfare-state, not on the long-term vitality of the corporate employer.
The crisis engulfing the UAW and the companies entered a new stage with last year's bankruptcy of Delphi, the nation's largest manufacturer of automobile parts. That was the pebble that presaged an avalanche.
The avalanche may mean two large things; it certainly means one. Perhaps it means the bankruptcy of GM. Certainly it means, for the UAW and for organized labor generally, the worst crisis since the National Labor Relations Act of 1935 enabled private-sector unionization. In 1969 the UAW's active membership peaked at 1.53 million. Today it is 640,000 and, depending on the success of the buyout incentives and continuing failure to stabilize the domestic automakers' market share, might dip below 600,000.
Here's another article (thanks to Al) highlighting the UAW's antics at a Ford plant in Virginia.
One provision that may be in Ford’s sights is the Guaranteed Employment Number program, or the Jobs Bank. It is a two-decade-old program that pays workers their full wages and benefits when they are laid off, even if they do not transfer to other plants. Workers have the right to refuse work at plants more than 50 miles from their home base.
The Jobs Bank has paid workers to idle away hours reading or to attend classes on subjects such as dealing blackjack. There is no limit on how long a worker can stay in the program, which includes an estimated 1,100 Ford employees and could cost U.S. auto companies up to $2 billion this year.
“The fact that they can stay in a room and play checkers for the rest of their life is an unbearable burden,” said Peter Morici, a professor of international business at the University of Maryland. “The fact that the UAW has not conveyed to the workers that this is unsustainable … is irresponsible.”
It's one thing for a company and union to lavish exorbitant benefits to its members, and quite another when the public is forced to bail out a company that bankrupts itself (and the union that compels it) for trying to provide a welfare state (particularly made worse since the UAW consistently lobbies to force all Americans to live in a socialist welfare state via its support of "liberal" politicians/policies). A bailout of GM or Ford would be very costly for taxpayers, but hopefully more bankruptcies of UAW affiliated companies will reduce the already dwindling influence the UAW has over public policy.
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