Anyone hear of this? Paid Not To Work

Heard this mentioned on the news today. I can't imagine how much this must add to the price of a new car.


United Auto Workers Paid Not To Work. Something called The Jobs Bank
See Story - http://www.detnews.com/2005/autosinsider/0510/17/A01-351179.htm



The jobs bank was established during 1984 labor contract talks between the UAW and the Big Three.

The result was a plan to guarantee pay and benefits for union members whose jobs fell victim to technological progress or plant restructurings. In most cases, workers end up in the Jobs Bank only after they have exhausted their government unemployment benefits, which are also supplemented by the companies through a related program. In some cases, workers go directly into the program and the benefits can last until they are eligible to retire or return to the factory floor.

By making it so expensive to keep paying idled workers, the UAW thought Detroit automakers would avoid layoffs. By discouraging layoffs, the union thought it could prevent outsourcing.

Analysts estimate that each worker in the jobs bank costs GM about $130,000 a year in wages and benefits, a crippling financial burden for an automaker that lost $8.6 billion in 2005.

That article's from 2005, and it said that the contract expired in 2007. So is this program still going on? If so, that's pretty crazy.

But doesn't the government at times pay farmers to not grow crops to artificially keep the price of food high?

darien87 said:

That article's from 2005, and it said that the contract expired in 2007. So is this program still going on? If so, that's pretty crazy.

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It's still going on; it was renegotiated in 2007.

The Job Bank and SUB (supplemental unemployment benefit) funding cap was elevated to $4.1Billion, and if those funds are exhausted by 2011, the Guaranteed Income Stream (GIS) would be “immediately reinstated.”

I knew about this. It's even better than the CEO's going to Washington in the private jets to beg for money.

rnatalli said:

I knew about this. It's even better than the CEO's going to Washington in the private jets to beg for money.

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We the tax payer, gets screwed again.
The CEO's and the unions are playing us for fools.

darien87 said:

But doesn't the government at times pay farmers to not grow crops to artificially keep the price of food high?

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Yes, you are right. Farmers could easily flood the market with fruits and vegetables to make their worth in pennies. The government pays the farmers not to flood the market.

I just cannot believe the companies would agree with the union contracts. I know unions are powerful, but the companies can't be that stupid.

http://news.yahoo.com/s/ap/20081203/ap_on_bi_ge/autos_uaw_10

Looks like the UAW wants to help

nick1000000 said:

Looks like the UAW wants to help

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How generous of them
But, it is to their advantage, or else, they too are out of operation.

mtrycrafts said:

How generous of them
But, it is to their advantage, or else, they too are out of operation.

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I can see it now, unions sitting in front of congress asking for money to bail them out

This is going to "kill" the US auto industry, do the union guys believe that US is the only country producing cars, those guys need to open their eyes and realize there is a fierce world market of competition....

This of course raises price tags of cars, so people in the end will buy imported cars that provide same or better capabilities at a lower price tag

Great work if you can get it.

Well, I certainly don't begrudge the individual for taking advantage of what's available to him. In fact, I applaud those able to do so and I say good for you.

It's not the autoworker, it's the contract itself, the modern day union, and the leadership of the big three. They have taken the positive and necessary protections needed at the time and have corrupted them into something that a lot would agree is somewhat sinister.

Giving this a lot of thought over the past weeks, I suddenly find myself in awe that everyone's so upset... including myself. I'm a shareholder of all three companies and I have done nothing in the past 10 years to express my displeasure. Granted on my own it means little in the grand scheme, but it's the stockholders who can seriously punish the company for their relationships. No one has, however.

The contracts, the business model - as it is today... simply can no longer work and I don't think anyone actually believes it can. You have the big 3 bleeding up to and surpassing $1billion/month. How long will $25billion last given the same model?

A complete revison of the American auto industry is needed and it's going to hurt... probably a lot, but it will ensure an ongoing concern and still provide us with a powerful economic engine. I think at this point no one really believes they can survive long term doing business the way they are... so in the end.. everyone will lose if nothing is done.

There was an article in the paper the other day about the Auto sector and unions, in Canada anyway...
Union labor accounts for 7% of the cost of manufacturing overhead, if all union auto workers in Canada worked for free for one year it would save the Auto Companies 11 days of costs. The Canadian union auto worker is the third lowest paid, just ahead of China and Mexico. Canadian auto industry is (as most others here) one of the only ones NOT receiving Government subsidies. The upper management for there poor performance get millions in wages??

"Paid not to work" Where do I sign up? We seem to be getting fleeced regularly lately....

Rickster71 said:

We the tax payer, gets screwed again.
The CEO's and the unions are playing us for fools.

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Really? Do you think that the companies agreed to this situation because they thought it was a nifty idea? As I've said before, the law allows the unions unparalleled power in negotiations to shut an automaker down during a strike. The company has two choices: endure a strike that could cripple the company, or pay the ransom demanded by the union.

Couple this to the fact that all three automakers are forcibly represented by the same union, the concept of pattern bargaining gives another unfair advantage to the unions. If you are not familiar with this concept, essentially the union targets the automaker that can least afford a strike and forces them to accept demands. Once the demand is settled, the union takes this demand to the other automakers and forces it upon them. If you recall the dire economic situation back in 1984 when this provision was included, not one of the automakers was able to survive a strike.

I'm sure that if you were to ask any of the Big 3's CEOs if they would prefer a bailout instead of what I am going to suggest, they will take my offer. First, break up the UAW and allow Ford, Chrysler and GM to be represented by separate, unconnected and competing unions. End the process of pattern bargaining (i.e. organized extortion). Legislatively roll back the undue benefits of decades of forced concessions by the automakers and force the unions to negotiate without the threat of a strike except in certain, limited cases.

Second, force Japan into a binding bilateral trade accord that allows American products into Japan. If Japan continues it's de facto embargo of American cars in it's market, then the U.S. should apply all the trade regulations and sanctions against Japanese imports that Japan applies to ours. Also, since current law forces the automakers to keep unions, then unionize all the import transplant factories here to level the playing field.

Third, let the market determine relevant fuel economy standards, not Federal or California state legislators. In fact, let the market determine the market. Current legislation is forcing automakers to spend billions on R&D to meet artificial demands for fuel economy based on non-existent technology.

Fourth, lower the corporate tax rate from all sources, federal, state and municipal. Government's greed over the decades has taken billions from the auto companies. That's billions that could have been used to maintain profitability and development of products.

These are steps suggested to offset the governments own culpability in the automakers current situation. The Big 3's management have not had a free hand in the operation of their businesses and I stand by my mantra the it's the governments mess, they should fix it.

jamie2112 said:

"Paid not to work" Where do I sign up?

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UMMMM me thinks no. Not that there is anything wrong with that....

Davemcc said:

Second, force Japan into a binding bilateral trade accord that allows American products into Japan. If Japan continues it's de facto embargo of American cars in it's market, then the U.S. should apply all the trade regulations and sanctions against Japanese imports that Japan applies to ours. Also, since current law forces the automakers to keep unions, then unionize all the import transplant factories here to level the playing field.

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Thanks for the great insight Dave. You can always be counted on for a level headed perspective.

I agree with all you've said; though your second point regarding Japan, may not fly.
The Japanese have always regarded our products as inferior.
It reminds me of a twenty year old clip on 60 Minutes. The Japanese mistook the holes in American made Swiss cheese, as a defect.

Gone are the days that unions are protecting victimized workers. IMHO allow the 'Big Three' to claim bankruptcy and reorganize without the UAW. (Sorry; I really don't mean to offend anyone with that statement.)

Alex2507 said:

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Hey Alex, I thought you'd never post you own picture on the internet.
Which one are you?

Rickster71 said:

I agree with all you've said; though your second point regarding Japan, may not fly.
The Japanese have always regarded our products as inferior.
It reminds me of a twenty year old clip on 60 Minutes. The Japanese mistook the holes in American made Swiss cheese, as a defect.

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We can compete with the Japanese on equal terms anywhere in the world. In fact, we do that successfully every day. The fact of the matter is that our domestic automakers are not competing in a fair or free market in North America or Japan, two huge markets. The only way to find out if we can compete is to establish a free market situation for our domestics to compete in.