UAW Jobs Bank Breaks the Bank: Organized Slackers

Photo Credit: Ajit Solanki/Associated Press

In 2005 Henry Payne, a Detroit freelance writer, writing for National Review Online, reported on the cushy situation for a UAW member. Things haven't changed much for the Big 3, [General Motors, Ford and Chrysler] since 2005, but for the UAW worker, a cushy situation has gotten even cushier. Back in 2005, there were massive job cuts at GM, and America, back in 2005, still "worried" about job loss and unemployment. Along came Steve Miller in 2005, a "turnaround" specialist, who told Americans just how cushy UAW workers actually had it, and he warned America that these policies would not work.

We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive.

Miller meant, literally, "cutting the grass." Henry Payne wrote:

Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.

But at least the grass cutters are working for their pay. The UAW contract also guarantees that 12,000 autoworkers get full wage for doing nothing. On the heels of Miller's straight-talk, the Detroit News reported that "12,000 American autoworkers, instead of bending sheet metal, spend their days counting the hours in a jobs bank." These aren't jobs. And they certainly aren't being "lost" to China.

"We just go in (to Ford's Michigan Truck Plant) and play crossword puzzles, watch videos that someone brings in or read the newspaper," The News quoted one UAW worker as saying. "Otherwise, I've just sat."

For Delphi [autoparts maker], this idled labor cost $400 million in the second quarter of this year alone. Facing similar numbers until the contract's end in 2007, Delphi took refuge in bankruptcy.

"The jobs bank must be eliminated," says Miller. "Paying people not to work is just not sustainable."

I am struck by the union member comments I've read on forums and message boards around the web. Anyone suggesting that unions need to clean-up problems like the jobs bank are met with heated accusations of greed and downright meanness. Union workers often see nothing odd about their own greed. A 7th grader understands that something must be left lying on the bottom line after all debts are paid and future debts are factored in. When future debts (like health care and pensions) far exceed realistic estimates for future income, there's a problem. The union workers' loyalty is to the Union and not to the company or the stockholders. Hello...there is no Union without the company and stockholders. The Union's argument: there is no company without the worker. It's a good argument but those workers need not be Union. That's the reality. Payne points out that the competition for these UAW jobs were not foreign laborers, but Americans. A UAW independent supplier, who does not receive Union benefits, in the industry in 2003, made an average wage of $15.76 an hour, compared to the hourly wage, minus the benefits, paid to UAW workers of $15.77 an hour. Add the benefits to the hourly pay in 2003, and the UAW worker received $65.00 an hour. That's $50.00 per hour paid in benefits alone to a UAW worker - $50.00 per hour more than the average. Back then, in 2005, Payne reports what we may hear repeated in the near future, and he called on our political leadership to show some leadership:

The coming months will be painful for many American autoworkers. Accustomed to a certain lifestyle, they will see their wages cut in half, jeopardizing second homes, college tuitions, and car payments. One blue-collar Delphi worker interviewed by the Detroit News makes $103,000 a year operating a forklift and fears the consequences if his pay is drastically reduced. But many Americans will ask how a forklift operator felt entitled to a six-figure income in the first place (according to Bureau of Labor Statistics, the average forklift operator wage in the U.S. is $26,000).

It is an opportune time for political leadership to step to the plate and speak with candor, but the signs are not encouraging.

Does this sound familiar?

UAW leaders are threatening strikes, and their Democratic allies are parroting tired slogans of government bailouts and trade protectionism. Michigan's Democratic governor Jennifer Granholm recently traveled to Washington, D.C. to stump for auto-import tariffs, while Senator Hillary Rodham Clinton demanded President Bush convene a "manufacturing summit" to examine a taxpayer bailout for the Big Five's "enormous legacy costs, including paying the health care and pensions of retirees."

The Washington Post reports that GM's ratio of retirees to workers is 2.5 to 1. Many of the retirees went out on the 30 years-in-and-out with full benefits plan, regardless of age. Some are not eligible for Social Security and Medicare until years after retirement. Move on to 2008 and nothing has changed, including the existence of the Jobs Bank, with the exception of the hourly wage plus benefits which is up to about $73.00 an hour. A headline in Canada Free Press: Unions Killing Detroit, shows the insanity of Union leadership.

If you’ve followed developments in the auto industry at any time during the past couple couple decades, you’ve probably heard of GM’s “Jobs Bank.” This nausea-inducing scam was the concoction of the UAW in the 1980s. Rather than allow GM to layoff workers when conditions warranted, the UAW had GM assign workers to the Jobs Bank , where they were paid almost full wages and benefits NOT to work. The Jobs Bank was pitched nominally as a retraining program, where workers would acquire the skills and train themselves in the technologies and techniques of the future, or where “workers” could perform community services.

Alas, the Jobs Bank became little more than a casino and lounge, where workers would report for a full day of leisure, reading newspapers, playing cards, and generally not adding value to GM’s vehicles. (Sounds a bit like my job description, actually.) Now you know why a handle falls off or you hear a tinny sound when you slam your Chevy’s door.

Understandably, GM and the UAW generally don’t like to talk about the jobs bank. It sort of undermines the credibility of the argument that a bailout would save hard working Americans’ jobs. But it still exists and estimates are that thousands of workers report there for duty every day.

The Canada Free Press article links to excellent data about hourly wages at Toyota, Honda and Nissan. Not only do these three know how to make great cars, they have a business model that makes sense, as well as profits. Please read Warner Todd Huston's article and follow the links.