Patterico's Pontifications

12/6/2008

The “Jobs Bank” and Its Effect on Automakers

Filed under: Dog Trainer,Economics,General — Patterico @ 11:36 pm

An October 2005 article in the Detroit News helps explain in graphic terms just how the unions have helped destroy U.S. automakers — namely, by forcing automakers to pay people for literally doing nothing:

Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.’s Michigan Truck Plant in Wayne, signs in, and then starts working — on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits.

“We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper,” he says. “Otherwise, I’ve just sat.”

Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers and Delphi Corp. as part of an extraordinary job security agreement with the United Auto Workers union.

Luckily, as taxpayers brace themselves to get soaked to the tune of tens of billions of dollars, the UAW is considering “scaling back” the program as part of a range of concessions. Why, they might even “suspend” it.

“Scaling back”? “Suspending”? Jeez, at least the overpaid CEOs flying in their private jets are working. They might be screwing everything up, sure . . . but they’re working.

As of November, there were 1000 union workers in the “jobs bank,” getting paid up to 95% of their salary to do nothing. Three years ago, there were 12,000.

Even when the numbers in the “jobs bank” are low, its very existence distorts the marketplace. Because nobody likes paying people not to work, automakers have put many of these people to work producing cars even when they were already meeting the market’s demand. This meant that supply outstripped demand, which forced automakers to take a bath on pricing the cars for consumers.

When unions distort business decisions like that, the company pays — meaning, eventually, everybody pays.

Now we see the UAW running sad ads saying, essentially: since Wall Street got theirs, we should get ours. Well, guess what? You people are a significant part of why we’re in this crisis.

Take the money you’re using for these ads and use it for something productive. If I were king, you wouldn’t be getting one red cent.

Naturally, over at the L.A. Times, David Lazarus is upset . . . that the UAW is making any concessions at all. But that’s par for the course, at a paper where the most well-known auto industry writer, Dan Neil, is seriously proposing that the federal government buy General Motors.

We ate dinner tonight with someone who grew up in the Soviet Union. She says this country is steadily heading towards being the country she grew up in.

Paying people not to work, and nationalizing major industries, sounds like a nice start down the pathway towards communism.

54 Responses to “The “Jobs Bank” and Its Effect on Automakers”

  1. David Lazarus is almost a perfect indicator of economic incorrectness. Somewhat less sensible than Nader.

    The only good thing about the jobs bank is that it isn’t wasting all that much money. GM’s problems do not begin or end there.

    The only thing the UAW has right is that all those Wall Street folks should have their wages halved. Maybe a nice “bailout payroll tax”?

    Kevin Murphy (0b2493)

  2. No mistake: the Jobs Bank is a large part of the problem, but the scope of the trouble caused by the UAW is far wider.

    From 2006: Where Would General Motors Be Without the United Automobile Workers Union?

    This is a question that no one seems to be asking. And so I’ve asked it. And here, in essence, is what I think is the answer. (The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I’ve singled out General Motors because it’s still the largest of the three and its problems are the most pronounced.)

    Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota. Toyota makes a profit of about $2,000 per vehicle, while GM suffers a loss of about $1,200 per vehicle, a difference of $3,200 per unit. And the far greater part of that difference is the result of nothing but GM’s being forced to deal with the UAW. (Over a year ago, The Cincinnati Enquirer reported that “the United Auto Workers contract costs GM $2,500 for each car sold.”)

    Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets. (It believes that $140,000 is less than what they will steal if they remain.)

    Go read the rest…

    Paul (creator of "Staunch Brayer") (3a5751)

  3. Maybe someone can help! The article was published in 2005 and Delphi declared bankruptcy in 2005 the same month. Does Delphi still participate in the Jobs Bank at all as that was one of its obligations listed on the bankruptcy documents? The original target was 2007 but as late as May Delphi was still in bankruptcy and pleading for money from GM.

    Pat Patterspn (f44efe)

  4. And none of those problems the UAW causes would exist if congress didn’t force GM, Ford or Chrysler to accept the UAW’s contract demands when the UAW ends up stonewalling and forcing to actually negotiate in good faith.

    But I’ll tell you what… Given the chance, I would jump at a chance to get a cushy job like sitting around and doing nothing.

    Hell, at $31 an hour plus bennies, I might be willing to cause a person harm.

    Scott Jacobs (90ff96)

  5. In 1979, as Congress debated the Chrysler bailout, I was treated to a story on the network news. In a sob story about the pain that would be caused by the failure of Congress to give large sums of money to Chrysler, the reporter practically broke into tears as he described the suffering about to be imposed on a poor auto worker. He might have to sell his five bedroom house and perhaps one of his five cars ( for a family of four ). He might have to give up his vacation house on the lake, his truck ( in addition to the cars ), his boat and all the necessities of life.

    The reporter and the UAW workers don’t understand that they are not guaranteed this lifestyle. They don’t care that taxpayers, making far less than they are, are being asked to contribute to preserving the “jobs” they do.

    I hope GM, Ford and Chrysler survive. But if killing them is what it takes to destroy the UAW, so be it.

    Ken Hahn (73cf62)

  6. Naturally, over at the L.A. Times, David Lazarus is upset . . . that the UAW is making any concessions at all.

    In response to the idiot’s whiney question “Why were Wall Street workers not asked for concessions?”, I have but two points:

    a) The Wall Street employees aren’t in a union that held Wall Street by the short hairs.

    b) They were fired, without the insanely rich compensation packages the auto-union folks will likely get.

    He wants the union boys to get the same treatment as the Wall Street crowd? So do I.

    I just don’t think he understands what that treatment actually was.

    Oh to be a Far-Left Liberal, where every day starts history anew…

    Scott Jacobs (90ff96)

  7. But I’ll tell you what… Given the chance, I would jump at a chance to get a cushy job like sitting around and doing nothing.

    Scott, read the article I linked. What George Reisman predicted two-and-a-half years ago is coming true in spades.

    That gravy train is approaching a river-crossing trestle at full speed ahead…and the bridge is out.

    Paul (creator of "Staunch Brayer") (3a5751)

  8. Well, yeah. I know that it’s ending. I’m just saying it would be nice, is all. :)

    Scott Jacobs (90ff96)

  9. “Job bank” – What an euphemism.
    What is happening is closer to “robbing the bank.”

    Perfect Sense (9d1b08)

  10. The free market pays many, many people “not to work.” It’s called equity. You sit back and collect the earnings your equity builds.

    That’s what these workers are doing — enjoying the earnings from their labor equity. These earnings were freely negotiated with the auto manufacturers in the past.

    These workers are a handy scapegoat, but the truth is they’re showing up, willing to work — and the idiots who agreed to pay them can’t think of a damn thing for them to do.

    The auto companies bought these workers’ labor. At the time they thought they wanted it. Now they don’t know what to do with it. Well, too bad. They sure knew what to do with all the profits they made in the good times — squander them. Now they want to back out on the deal they made with the unions in the good times.

    Phil (3b1633)

  11. Phil just dumped an Everest sized pile of dung here.

    freely negotiated

    Leftist speak example of the day.

    JD (059bab)

  12. …and the idiots who agreed to pay them can’t think of a damn thing for them to do.

    Agreed to pay them? Just for the heck of it?

    My Czech immigrant friend is also appalled at the direction we are going.

    Patricia (ee5c9d)

  13. I tend to agree with Phil.Sorry.And I agree with the Czech friend.To quote a cpl of very well known examples from literature.
    “Your father and my father and nearly everyone’s father here made money from empire building.I’m making mine from empire destruction.”
    And,”There has arisen in the minds of some people that because they had a profit making a profit making business for some time,the government is obligated to ensure it continues.
    From GWTW and ‘Timeline’
    I don’t now enough about stocks to know if I can make money from empire destruction.but I will

    Corwin (906e3f)

  14. I guess I should feel sorry for these UAW workers, but somehow I just can’t manage to do that. And I have my doubts about the 1,000 number of “job bank” workers who are still on the payroll dole.

    At the end of last year, Chrysler totally shut down it’s Fenton, Missouri plant along with the second shift from it’s north St. Louis plant. The total number of workers came to a cool 2,400. This last March (08) GM shut down it’s Wentzville, Missouri plant permanently, laying off 2,000 workers. GM had to close Wentzville due to the strike of UAW workers at American Axel. Without axels, GM could not build vehicles. The American Axel strike idled over 19,000 automotive workers and when GM saw that there was no end in sight, it closed it’s Wentzville plant for good. So workers at American Axel put thousands of other UAW members out of work, but I hear no remorse for that from the UAW. Why should they express remorse, those workers were still being paid.

    The 2007 UAW contract with GM provided that a buyout would be offered for terminated workers, but those workers would have the choice to turn the offer down, opting instead to take the 95% job bank wage offer. If the laid off worker reported to the union hall everyday, they got 95% of their salary. If they opted to stay at home, they then drew 85% of their salary. GM said it would relocate the workers but the UAW said that would create a personal hardship. And since there was no other GM plant within 50 miles of Wentzville, there was little to no chance that these workers would ever be offered jobs so that the two offer rule was useless.

    Chrysler had two plants in the St. Louis area. The Fenton plant was closed completely, and since the north plant laid off it’s entire second shift, there was also no chance that the laid off workers would ever be offered jobs.

    So three plants, in Missouri alone, laid off almost 3,000 workers but we are to believe that the job bank has been reduced to 1,000 workers? My guess is that the auto industry, while asking for a taxpayer funded bailout, doens’t want the real numbers out there, nor does the UAW.

    Perhaps someone should ask the UAW if they are willing to get rid of it’s tony golf resort in Michigan that has managed to lose $13 million in just the last five years.

    Honda recently built a new plant for the cost of $550 million that now employees 2,000 workers. In the same time frame (one year) GM alone paid out $497 million in job bank salaries and benefits.

    The problem with the unions is that they demand higher wages and better benefits when the market is good but are unwilling to suffer, or give something up, when the market is bad.

    Why are the foreign automakers, who are suffering due to the economy, not in the same dire shape as the Big 3? The answer is simple, really.

    They are located in right to work states that have given them tax abatements for a certain length of time (the tax revenue is made up from higher property values and support businesses locating next to the plant, as in San Antonio); they have mostly located in states that have no state or city income taxes; they have located in states that have a lower cost of living. While the Michigan workers have to make more to pay their state and city income taxes, pay out two hours pay each month in union dues, pay higher taxes on their homes and those homes cost more to begin with, the Toyota worker in San Antonio can afford to take less because his cost of living is a lot less.

    Jennifer Granholm, governor of Michigan (our next Secretary of Energy?), has been snuggling up to Obama and D.C., with her hat in her hand, hoping he will save UAW jobs as well as bail out her over taxed, over regulated state that is deeply in the red. I wonder if it ever dawned on her that if the workers in Michigan had a smaller tax burden that they could take less in salary and help save the American auto industry? Nah, that’s way too simple.

    When the actions of Bill Clinton threw 250,000 textile workers out in the cold when they lost their jobs in South Carolina alone, no one in Washington blinked an eye. Those workers were basically told to suck it up and retrain if they wanted another job. The hit was so bad that the United Garment Workers had to merge with another union as it was broke. No dues coming in from laid off workers. When ATT lost thousands of jobs back in the 80′s, no one in D.C. cried. When thousands of steel workers lost their jobs, it was not a big deal to Democrats.

    Now, it is a big deal. I guess part of the reason being that Obama marched with UAW workers demanding better pay/better benefits. And lest we forget, the UAW is a huge Democratic campaign fund cash cow.

    Let the Big 3 file Chapter 11. Giving them tax payer money is not going to force the American people to buy vehicles they obviously don’t want to begin with. Maybe then the Democrats in D.C. will realize that the restrictions they (no one else) has put on the American auto industry has helped bring it’s demise along. If people wanted to put their families in Reynold’s Wrap cars that are unsafe just because they get 28/mpg, they would do it. My guess is Americans are willing to trade gas milage for safety. At least, I am.

    There is a lot to this problem: bureaucrats in D.C. who don’t have a clue making regulations that the auto industry can’t possibly meet; over paid CEOs in private planes (maybe they should insist Nancy Pelosi also fly coach, since they are taxpayers as well as CEOs) and an oppressive union that is unwilling to conceed that it is 50% of the problem.

    Sink or swim, they can do it without my tax dollars.

    retire05 (92f1fb)

  15. I’ve heard estimates that if we don’t give some assistance to the auto industry, we’re looking at losing 3 million jobs. Are folks against the bailout taking this into account, or not caring? In an era when treasury is giving out 350 billion, and it turns out the fed is giving out trillions in secret, I don’t see why the time to get up in arms is when jobs are directly at stake.

    imdw (00ec94)

  16. imdw,

    These are jobs that can be done more efficiently and for less money by non-union companies or companies with lower union costs. I understand the desire to subsidize jobs so families won’t suffer but what this really does is subsidize inefficiency, and that makes no sense. A bailout will make the problem worse, delay the inevitable day of reckoning, or both. On the other hand, a bankruptcy reorganization would enable these automakers to trim excess costs and save jobs for many of their workers.

    DRJ (b4db3a)

  17. Comment by Phil — 12/7/2008 @ 8:27 am

    Phil, you’ve written in the past on this blog that you have clients. I hope and pray you don’t have anything to do with calculating taxes, financial planning or legal financial representation, because whenever you post anything to do with economics, your horrific ignorance scares me.

    JD, to say that “Phil just dumped an Everest sized pile of dung here” is an understatement of epic proportions.

    Paul (creator of "Staunch Brayer") (1f5390)

  18. “These are jobs that can be done more efficiently and for less money by non-union companies or companies with lower union costs.”

    My understanding of the figure was that this wasn’t just auto company jobs, but upstream people too. I don’t see why unions would make Detroit unable to compete with companies saddled with the regulatory regimes of japan or europe.

    imdw (688568)

  19. imdw, read my link in #2.

    Paul (creator of "Staunch Brayer") (1f5390)

  20. The auto companies bought these workers’ labor. At the time they thought they wanted it. Now they don’t know what to do with it. Well, too bad. They sure knew what to do with all the profits they made in the good times — squander them. Now they want to back out on the deal they made with the unions in the good times.

    What could possibly make more sense than hiring workers when you want them, and wanting to let them go (or pay them less) when you no longer need them?

    As for squandering the profits, you know about profit sharing bonuses, don’t you?

    My stomach is in knots about the auto industry. I have too many loved ones involved to say “let them eat cake”. But if the unions continue to behave the way they do, I don’t know how Michigan will ever be able to attract more manufacturers to set up shop there. It just doesn’t do to have an entire entity that makes money off a company, is legally tied to the company, and yet creates a work force that is not invested in the success of the company- but rather hostile to it.
    Labor laws need a revamping in this country.

    MayBee (d82a30)

  21. “freely negotiated” = agree to our terms or we will burn down your building.

    Perfect Sense (9d1b08)

  22. imdw,

    How can Japan regulate a non-union Toyota plant in the US?

    As for upstream vendors, they will need to find other markets for their products. Presumably Toyota and other automakers will buy their products at the right price or they will be replaced by companies that make better products, and those companies will need employees. Granted, some employees may have to relocate or take less pay but that’s how it works if your employer can’t make a competitive product.

    DRJ (b4db3a)

  23. It isn’t just jobs banks, either.
    One relative of mine was a skilled tradesman at an automotive plant. God bless him, he was a good man and I don’t begrudge him his earnings. But he talked about how many books he read on the job, and the guys that turned their lockers into stereo systems, and the guys that turned their lockers into big grills for cookouts, all while they sat around waiting for someone to call them down to take care of a problem. He could earn time and a half for reading John LaCarre and eating grilled ribs.
    A cousin was in a union-protected purchasing job, and she got paid for not working because they eliminated her position at all plants, yet her contract said her salary was protected until they found her a comparable job.
    Another unionized family member works out at the company gym during work hours.

    Again, I don’t begrudge people these perks if the company can afford them.

    MayBee (d82a30)

  24. The UAW is the biggest reason why I refuse to purchase a big 3 manufactured auto. I’ll stick with Toyota, keep my car for 10 years or more with little major maintenance, etc. It would be fighting words with a union person but the extra 2K that goes on the price of an American car due to union demands is little more than welfare courtesy of the car buyers.
    As for the guys who get paid to do nothing.. I worked for six months for a defense contractor. We were paid to do a specific task and by contract couldn’t do anything more. Sitting around for six hours a day idly is a mind numbing and frustrating thing to do (for me anyway).

    voiceofreason2 (0aff5b)

  25. More of Phil’s squandering profits:

    Summary: More than 103,000 Ford Motor Company hourly employees across America have received profit-sharing cheques averaging $6,700. “Workers around the nation are receiving $US733 million today – the second-highest payout in the 18-year history of our profit-sharing program,” said Edison plant manager Robert Webber, who helped hand out cheques totaling more than $US10 million to local workers.

    Date: 7 March 2001

    MayBee (d82a30)

  26. Comment by imdw — 12/7/2008 @ 9:24 am

    We cannot afford to continue subsidizing inefficiency, union demands and all the other perks the Big 3 expect us to prop up for them. And why should we when we can see Toyota, etc., do it more efficiently, with profits and without dependence on subsidization? That there is a such a resistance by the Big 3 to change their embedded ways and serious resistance by the UAW to put everything on the table for renegotiation does not indicate to me that they themselves understand that their behavior may cost 3 million jobs as well as not understanding that the public no longer wants to be saddled with this continual bleed.

    Dana (79a78b)

  27. As a former union member of Local 12 operating engineers, I can attest to the fact that unions are worthless. They pretend to be on the side of the worker, but I suspect they are only after the very large sums of cash.

    Now sure the unions help somewhat with training workers and getting them to vote for democrats and making companies pay outrageous benefits the member sees very, very little of.

    I started my career at a non-union company and when I moved to a union company I discovered I was much better trained then the union members that hide behind the lame union job protection rules. I had far less experience then my colleagues yet I had to train them on how to use the latest equipment.

    The company I was at back in the early 90′s had to pay $5.00 + an hour for my medical which ends up being like $800-900 bucks a month and I had to work a certain number of hours to be eligible of it. When work was up and down the union made $500 bucks a month free and clear because I was not eligible to receive the benefits. That money should have purchased the very best insurance money could buy at the time, yet it was just average insurance that could be purchased privately for a quarter of what the company had to pay. All the benefits worked that very same way, I was making about $23-24 hour, yet the company was really paying me something $37 an hour if benefits were included, what a ripoff. I would be retired by now if the company had paid that money straight to me.

    So this $31 an hour plus benefits just to sit on your ass is really costing the company more like $55+ an hour.
    Unions are nothing but thieves under the pretense of protecting workers.

    ML (14488c)

  28. Again, I don’t begrudge people these perks if the company can afford them.

    That’s the problem: the company can’t. No company can in the long run, which is why the big 3 are in such trouble.

    Paul (creator of "Staunch Brayer") (1f5390)

  29. Now sure the unions help somewhat with training workers and getting them to vote for democrats and making companies pay outrageous benefits the member sees very, very little of.

    That’s the thing that bothers me about this politically. Enron was allowed to fail, yet it was stapled to GWB because he played golf once with Ken Lay.
    The unions financially support Democrats to a huge extent. That this isn’t mentioned every time the issue comes up just drives me crazy.

    If this bailout happens, Republicans should push for laws keeping unions from donating to politicians or political causes. It will be taxpayer money going right into Dem pocketbooks.

    (ha! That made me wonder if any of the jobs banks people were tasked with entering Visa Gift card numbers belonging to qwert into Barack’s campaign website for 8 hours a day)

    MayBee (d82a30)

  30. That’s the problem: the company can’t.

    I know.
    The pushback from the unions against people who don’t agree with the bailout, however, seems to be “what’s wrong with wanting to put your kids through college? What’s wrong with wanting a middle class lifestyle”.
    I’m just trying to say to them, there is nothing wrong about it, it’s just that the company can’t afford the way it’s being done. It isn’t a value judgment.

    MayBee (d82a30)

  31. So this $31 an hour plus benefits just to sit on your ass is really costing the company more like $55+ an hour.

    Actually, it’s in excess of $72 per hour for the Big 3.

    Paul (creator of "Staunch Brayer") (1f5390)

  32. The UAW is the biggest reason why I refuse to purchase a big 3 manufactured autoWell if you buy a car based on the ideological backdrop, I guess you’re upvoting nationalized healthcare and protectionism.

    jpm100 (b48b29)

  33. #29. May Bee

    I couldn’t stand the idea that my union dues not only went to support democrats but the union would send out a pamphlet saying vote for this or that democrat.

    I was very vocal about disliking democrats to the union administration and I let them know in no uncertain terms what ignoramuses I thought the union was.

    ML (14488c)

  34. But he talked about how many books he read on the job, and the guys that turned their lockers into stereo systems, and the guys that turned their lockers into big grills for cookouts, all while they sat around waiting for someone to call them down to take care of a problem. He could earn time and a half for reading John LaCarre and eating grilled ribs.

    Wow. Just wow. This is almost surreal. Unfortunately the sense of entitlement is now multi-generational and the expectation of said perks blinds the UAW to the realities outside of their myopic view. If the company can afford the perks, fine, but if they are relying on an entity outside of the company or the public to continue this fiasco, forget it. The reality is that the vast majority of employers expect workers to be actually working and earning their dime while in turn earning profits for their employer. The massive dysfunction of the Big 3 could not be illustrated more clearly.

    Unions are nothing but thieves under the pretense of protecting workers.

    Yep.

    Dana (79a78b)

  35. If you look at the latest UAW/GM contract, you will see that a worker classified as an “electrician” makes slightly over $39/hr cash payment (not counting benefits). That comes to a cool $81,120/yr for a 40 hour week. Let’s say the electrician has a wife that also works for GM for the standard line worker salary of $35/hr. Add to their income another $72,800/yr for the total of $153,920. That does not include the contract signing bonus they both got for around $6,000 ea last year. Somehow, I don’t think $165K a year is a “middle class” income bracket for any couple.

    So this play that the UAW is doing with their commercial that the workers are just simple middle class workers, is more b/s than you can find at a Texas fed lot.

    The problem is that between the two of them they are paying out $148/month in union dues and if they live in Lansing, they are paying combinded state and city income taxes of over 6%. Let’s see; 6% of say $150K a year (after deduction) comes to about $9K a year and adding their $1800/yr union dues we have almost $11K right off the top. Almost $3/hr goes just in local taxes and union dues. Now add the cost of living to that; higher property taxes, higher sales taxes and you have a prescription for failure.

    retire05 (92f1fb)

  36. #31 Paul

    Wow, they cant survive doing that stupid crap and why on Gods green earth are auto workers making that much.

    I am not putting down auto workers but working an assembly line does not require a high IQ so why pay them like they have a high IQ.

    ML (14488c)

  37. Unfortunately the sense of entitlement is now multi-generational and the expectation of said perks blinds the UAW to the realities outside of their myopic view.

    The multi-generational thing is another problem.
    It’s really difficult to get into the skilled trades unions (and then the UAW) unless you know somebody. All of my relatives that are in the auto industry (and unions) are there because they know someone.
    And they say rich kids use their connections to get jobs.

    MayBee (d82a30)

  38. Car-ists.

    JD (059bab)

  39. Naturally, over at the L.A. Times, David Lazarus is upset

    Ha! He has a right to be because his own industry (the media, and the print media in particular) is tanking big time. Similar to the ridiculous practicies of the US auto industry, his employer, the LA Times, also has been notorious for allowing far too much of its staff to be glorified pencil pushers.

    And so now that he and his workplace are going the way of the dinosaur too — as much as what’s happening to GM, Ford and Chrysler — it’s understandable that people like Lazarus, in order to avoid the day of reckoning (and the inevitable) will want to put up a fight for as long as possible.

    Of course, when that leads to a dead end, and in light of their favorite pols and policies running things from here on out (ie, we-love-unionism Barack Obama and the lawsuit-crazed Democrat Party), Lazarus and others can then find a job in government, with even better pension plans and retirement benefits to boot.

    Mark (411533)

  40. Job banks…
    We forget how this attrocity started.
    Back before the foreign invasion, and when annual model changes (a euphanism for rearranging the chrome trim) ruled the market, the factories would have to shut down for 60-90 days to change the line for the next years’ models.
    “Job Bank” was the solution for the majority of line-workers not working for that period, and guarantees for the factory that their trained line-workers would return in September, thereby minimizing retraining costs.
    Starting as a supplement to unemployment-insurance, it morphed into this pretend, make-work system where you got 95% of your line pay for just reporting in.
    (I’m surprised that the NEA & AFT haven’t imposed the same crap on the schools.)
    But, beyond job-banks, remember that GM alone is supporting over 1/2-million retired workers,
    and surviving spouses for retirement pay and health benefits.
    Those people don’t contribute one dime to GM’s bottom line (or top line either).

    It’s Chapter-XI time!

    Another Drew (b4fb11)

  41. From Lazarus:Why was no gesture of humility required from the white-collar crowd, even something as relatively minor as a 5% pay cut until their respective companies return to more solid financial footing?

    As I understand it, white collar workers already have less generous retirement health care benefits at the automakers. I know at one time they made less at entry and mid-level positions and had fewer benefits than did the UAW workers. White collar workers were the ones making sacrifices when the UAW wouldn’t.

    The other issue is that the white collar workers have more transferable job skills. Surely if the entire economy is shut down they will have trouble finding new jobs. But in a normal economy, they would be able to work a similar type job in another industry or another state for similar pay. If Michigan can’t get a bailout, the unions and less mobile workers will be more hurt. Especially if new industry won’t move in, for fear of unionization.

    MayBee (d82a30)

  42. imdw,
    A more pertinent question would be, how many jobs would we lose if the bailout does happen? For an answer, look at the grocery clerks in CA: the union went on a long terrible strike (hurting the income of the clerks), then settled for great pay and benefits for the remaining union members. But now each clerk handles 4 automated checkout lines instead of 1 manual line. The company will cut costs however it can; the union deal gave them short term gain, long term loss, exactly like the Big 3.

    Patricia (ee5c9d)

  43. [...] Patterico describes the UAW’s job banks and its effects upon the market and viability of Detroit.   Essentially, automakers are required to set up “job banks” for union employees  who have no work to do.  The employees (it is not quite accurate to describe them as “workers”) show up each morning, are told – surprise of all surprises – that there isn’t anything for them to do.  They are then paid over $30/hour, plus benefits, to sit around and do nothing. [...]

    An Ayn Rand Sunday Smorgasbord at Haemet (9b0c50)

  44. It’s important for everyone to remember that union contracts are negotiated agreements. They are promises.

    Whatever benefits are being given, no mater how absurd you think they are (i.e. these crazy-sounding “job banks”), they were promised by the auto companies, in order to keep these workers in the auto industry.

    These workers could have left the industry, could have retrained and found more stable, economically viable jobs years ago. But the auto company promised them all of these cushy benefits to keep them working here.

    So all of you who want to support the auto industry’s right to break its promises to the workers. Where were you when the industry was making these stupid-ass promises in order to keep its workers producing in its dying industry? Nowhere.

    You’re find when big corporations MAKE promises — as long as they can break them at will. You’re all about getting the industry to break its promises NOW when the workers will be left up shit creek.

    Because that’s where you side — with the wealthy, against the people they lie to and then screw over.

    Phil (3b1633)

  45. Phil,

    Corporations can’t break promises at will. Parties to a contract can be in breach of contract but the breaching party can be sued when that happens, and there are some lawyers who will help aggrieved parties sue on a contingency basis. In addition, unions have lawyers on staff/retainer that represent members who claim they have been wrongfully terminated, suspended or demoted.

    There can also be legal modifications of contracts in certain circumstances, such as in a bankruptcy.

    DRJ (b4db3a)

  46. Comment by Phil — 12/7/2008 @ 8:02 pm

    Actually, the American consumer has been very vocal about what they consider the waste and ineffeciencies in “Detroit” by the increasing share of the North American auto market taken by foreign nameplates year after year.

    I remember as a teen-ager when Chevrolet had 25% of the market all by themselves, and politicians in DC were rumbling about needing to break-up GM, which had a total market share (NA only) of 52%. Detroit, through its’ desire to buy “labor peace”, pissed it all away with overly generous labor agreements, and an arrogant attitude as to what its’ customers wanted in an automobile – and this was before DC got involved with safety, emissions, and mileage requirements.

    Now, they want the taxpayer to bail them out from their own foolishness.
    Well, it just isn’t going to fly!

    Another Drew (b4fb11)

  47. Whatever benefits are being given, no mater how absurd you think they are (i.e. these crazy-sounding “job banks”), they were promised by the auto companies, in order to keep these workers in the auto industry.

    Please remember, Phil, that the auto companies by law have to negotiate with the UAW. They can only have UAW hourly workers. If the UAW strikes, the automakers can’t hire non-union people to keep them in business. If the UAW refuses their terms, they can’t operate.
    So it isn’t really that the auto companies so very badly wanted to keep these particular workers in the auto industry. They legally had to keep these workers in the auto industry.

    MayBee (d82a30)

  48. You’re all about getting the industry to break its promises NOW when the workers will be left up shit creek.

    You realize there are non-union people that will be left up shit creek too, right Phil?
    People that never really had promises other than as long as things were mutually beneficial, they’d have a working relationship. Why should a unionized person be so different? Are they more valuable?

    MayBee (d82a30)

  49. Whatever benefits are being given, no mater how absurd you think they are (i.e. these crazy-sounding “job banks”), they were promised by the auto companies, in order to keep these workers in the auto industry.

    Actually Phil, a LOT of UAW contracts hinge upon the fact that if negotiations break down, Congress gets involved. The insane demands that the UAW doesn’t back off of end up causing a breakdown, and Congress (to the extreme benifits of the Dems) says “No, you will accept these, Big Three. You make so much money, you can afford it.”

    I am intimately familiar with AUW and Catapillar negotiations (or as much as one ouside the company can be). You will hear, at negotiation time, union employees bitching about “CAT made so much money! That’s our money!”

    No. It isn’t. Your money came in your paychecks. If CAT has a bad year (which it looks to be, since CAT just let go all it’s contract employees), will those “it’s our money” people give money BACK? Take a pay cut?

    No. CAT will be stuck paying the same inflated wages and benefits they were forced to pay during the good years.

    And that is where Unions fail. The force companies into situations where a few bad years will destroy them. That doesn’t benefit the Union, in the long run, because it costs jobs. If unions actually cared about the workers, they wouldn’t be anywhere near as greedy as they are.

    As has been said, this is a Union bailout, because without the Unions, this wouldn’t even be an issue.

    Let them fail. Crush the UAW like Reagan broke the Copper union and the Air Traffic Controller unions.

    Scott Jacobs (90ff96)

  50. You’re all about getting the industry to break its promises NOW when the workers will be left up shit creek.

    I shold point out that only NOW is it shit creek. They have been living the HIGH life for WAY too long, They make INSNAE amounts of money plus have stellar benefits.

    It’s high time they learn how the rest of us live.

    Scott Jacobs (90ff96)

  51. Comment by jpm100 — 12/7/2008 @ 10:52 am

    I buy a car first and foremost quality and reliability. I take great pleasure in knowing that the unions tend to suffer as a result.
    And I would imagine that if the bailout occurs you will see more people who will refuse to buy a big 3 car.

    voiceofreason2 (925c44)

  52. And I would imagine that if the bailout occurs you will see more people who will refuse to buy a big 3 car.

    Which would, ironically, require further bailouts to keep them afloat…

    Scott Jacobs (a1c284)

  53. 49, Scott, Cat, like the Big 3 and other major Manufacturers, has too much bureaucracy. If you do EDI with Cat, you’d know.

    PCD (7fe637)

  54. I think the Big 3 ought to be forced into bankruptcy. It would allow them to break the union contracts and get something sane, if you can find any sanity in the UAW leadership.

    (I live in a UAW (John Deere) town)

    PCD (7fe637)


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