Posted on 04/02/2006 5:21:30 PM PDT by Dane
The jobs bank costs GM jobs
A company that loses $10 billion cannot afford 7,500 who don't work
Wednesday March 29, 2006
AS General Motors tries to reduce its payroll by 30,000 jobs, the New York Times has pointed out that GM still pays as many as 7,500 workers to do nothing. This is part of a Jobs Bank experiment gone mad.
In 1984, the United Auto Workers and management created the Jobs Bank as a way of keeping workers on the payroll while the company automated its production.
"The argument went that if the auto companies had a pool of idled workers, they would be less likely to outsource labor overseas," wrote Jeremy Peters of the New York Times.
What was supposed to be a billion-dollar program was supposed to end in 1990. A generation later, it continues. It costs GM about $9.4 million a week to pay the salaries of people in the Jobs Bank, and that does not include their health care and pension benefits.
Now the bank threatens to undermine the buyouts of up to $140,000 each that GM is offering its workers.
Peters visited Oklahoma City, where 2,300 employees remain on the payroll a month after GM shut down their plant. They receive full pay and benefits even though there is nothing for them to do except sit around and chat, play games, or watch TV.
Garland Pruitt, 53, with 27 years of seniority, told Peters: "Why would I walk out the door with $2,000 less per month and have to go find a job when I can sit in the bank, get my 30 years and retire? It's really to my advantage to ride the bank out as long as it goes."
Ridiculous is too mild a word to suit this situation. And it gets worse. The Bloomberg News Service reported that GM will try to modify the Jobs Bank agreement with the UAW next year.
Why wait that long? The company does employ 131,000 hourly workers. Their jobs should not be jeopardized by the unproductive end of the payroll. Jonathan Steinmetz, an analyst with Morgan Stanley, told Peters the Jobs Bank makes GM less competitive.
"This just isn't a cost that can be passed along," Steinmetz said. "Most consumers would rather buy a car with an iPod than a car with a surcharge for a Jobs Bank worker."
But why wait until next year before dealing with this problem? GM executives do no one any good by prolonging this program that fails in so many ways.
It is hard to feel sorry for a company, or the union that depends on it, when the company lost $10.6 billion last year and still pays 7,500 people to sit around and do nothing.
That would be up to the courts to decide.
Auto dealers, vendors, stockholders, pensioners, any remaining employees, bankers - all may have a claim on the carcass. The judge decides who is first in line (gets paid), and who is last in line (gets boned).
A relative of mine worked most of his life for a company in CA that went belly up. The pension fund was empty by the time they closed the doors, so he got boned. There was a class action lawsuit over this issue, along with the fact that employees got none of the proceeds from sale of company assets (a NASCAR race track stands on the former company property, valued at millions). Despite the suit, he still got boned, AFAIK.
Rush discussed this several weeks ago. IIRC, I believe that the other 2 in the "Big 3" automakers are also a part of this.
The gov't guarantees all pensions. There are upper limits, though. The limits are based on age and the company plan. I think the upper limits are generous, but some people - like pilots for now defunct airlines - get far less than they were promised.
Well, they're acting stupid.. not really a shock from the company that killed off Oldsmobile...
What does the term featherbedding mean?
It's unionists with their high up political Democrat connections and media support that suck the lifeblood out of businesses.
We listened to Presidential campaigns when Gore and then Kerry lashed out at businesses to gain voters with this socialist me, me, me strain.
"GM needs to get into the sewer-cleaning business and put some of that "pool" to work. I wonder how many of them would quit?"
None would quit, because you can't make them work out of their job classification, and there is no sewer cleaner classification in the contract.
I used to work at GM, white-collar salaried worker. I was guillotined back in '92 during mass layoffs, I only had 3 years so NOTHING. I went back as a contractor on short term assignments.
I have been doing only short term contracts for the past three years. And there is more and more space between the contracts. I am so discouraged, I hate this freaking industry and I want to get out, but I don't know what else to do.
I'm curious. I've assumed the "58" suffix on your screen name was the year you were born. I'm two years older. How did you manage to retire already? My dad retired at age 47 with his Navy retirement (27 1/2 years, retired as a Commander). He never worked another day.
The "58" refers to my age when I signed up. I was born in '45.
I retired in Dec. '99 at age 54. I started putting the max in my 401k in the early 80s and did that until I retired in '99, I rode the tech boom all through the 90s and following the conventional wisdom I took my money out of riskier tech stocks when I retired and put it in safer investments, just in time to avoid the tech bust. I am not an investment expert, just got lucky with the timing.
There were times in the 90s when a 25% gain was a "bad" year, I saw gains of 40% some years.
In addition, I wasn't old enough when I retired to draw from 401k but my wife and I had other investments and she still works and makes a good salary.
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