In a stunning move, General Motors announced this week that, as part of a massive cost-cutting measure, it was going to offer buy-out packages to all of its 74,000 unionized workers in the United States. According to news reports, the lump-sum payments range from a high of a $140, 000, to a low of $70,000, depending upon the employee’s job classification and years of service.
While these don’t seem to be exorbitant sums to trade for, you never know who’ll decide to take the money and move on with their lives. The offer would be especially appealing to workers who fear being laid off in the near future (where there would be no compensation). GM’s buy-out announcement followed by a day or two the company’s earlier disclosure that it had lost more than $38 billion dollars in 2007.
Because the UAW (United Auto Workers) and GM had already cut a landmark deal in which new employees would be paid significantly lower wages than existing employees (less than half as much in many cases), this buy-out is hoped to provide GM with the long-term savings in labor costs it’s been desperately seeking. By persuading a critical mass of the workforce to leave the payroll, and hiring replacements at a fraction of the cost, GM predicts it will be back in the profit column by 2010.
There was a time not so long ago when companies provided these buy-outs for different reasons. They were done in order to prevent having to lay off workers. They were done not so much to save money, as to prevent a family from experiencing economic upheaval, to keep from having to throw employees-even employees affiliated with a labor union-out on the street.
For example, if the contract provided a full pension to all employees who were 60 years old and had a minimum of 30 years on the payroll, a beneficent company would offer a full, unreduced pension to anyone who was, say, 57 years old and had 27 or more years of service. Along with a full pension, a cash bonus was thrown in as an additional inducement to leave.
Again, these buy-outs were attempts to shake the tree and get people to voluntarily leave, so management wouldn’t have to lay off workers during a recession or industry slowdown. Yes, the senior people made a higher wage and carried more vacation liability than newbies, so there was an inherent cost savings, but that wasn’t the primary concern. Moreover, when business picked up again, and new employees were once again hired, these new hires would receive the same pay as existing employees. That was how it was done.
As anachronistic and wildly generous as these arrangements sound in today’s predatory business climate, it wasn’t so very long ago that they were common. You don’t have to go back to the post-war 1950s to find them. They were being implemented well into the 1980s.
Two phenomena more or less changed everything: the rise of Reaganomics and the decline of labor unions. Tied to the latter was the adoption of two-tier wage provisions in contracts (where new hires were permanently locked into a lower wage structure than senior employees), which encouraged companies to get rid of expensive senior folks, and go with the cheaper new hires.
Of course, one of the glaring drawbacks to these buy-outs is that what you save in money by ushering senior people out the door is off set by what you lose in experience, craftsmanship and productivity. It doesn’t take a genius to predict how well a workforce of rookies is going to perform on jobs they haven’t mastered. Even with the drive to “de-skill” (make jobs simpler to perform) the workforce, GM management is going to find out that there’s no substitute for talent.
As for the union, there’s bad news awaiting them as well. Supposing that the UAW winds up with thousands of members who decide to throw in the towel and accept the buy-outs. This will lead to thousands of new employees being hired in at dramatically lower rates. And, despite earning a fraction of what senior people earn, these newly hired, underpaid workers will be required to join the very union that agreed to the two-tier discrepancy in the first place. Union solidarity will go right out the window.
Watching the companies in action, and seeing the writing on the wall, what can we anticipate as the next step for the Big Three automakers? They’ve succeeded in buying out the workforce, getting the union to agree to a two-tier wage format, and, presumably, replacing senior employees with a bunch of brand new people who lack experience and, more significantly, possess little “union consciousness.” What’s next?
Far-fetched as it seems, it’s been suggested that the next step-the final step-will be one where the companies convince the workforce to vote out its own union. That’s the speculation. As a means of declaring their independence, ingratiating themselves with management and, trivial as it may seem, saving themselves their monthly union dues (money being collected by the very union that effectively “sold them out”), these new hires move to decertify the UAW.
But all it takes is a moment’s consideration to realize that such a doomsday scenario is out of the question. In fact, it’s guaranteed not to happen. Why? Because management would never allow it to happen. Now that GM has signed a ground-breaking contract with the UAW that, astonishingly, puts the union in charge of the administration and expense of the hourly health care plan, management can’t afford to lose them.
By freeing management of the crushing liability of employee health care, the UAW has become a “partner.” The union has lost its solidarity and vigor, but has won a future. It’s a marriage now. An unequal, restrictive and even abusive one (and one without the option of divorce), but still a marriage. What a goddamned mess.
DAVID MACARAY, a Los Angeles playwright and writer, was president and chief contract negotiator of the Assn. of Western Pulp and Paper Workers, Local 672, from 1989 to 2000. He can be reached at email@example.com