Thursday, February 19, 2009

Start at 18, Retire at 48, Spend More Yrs. Getting Pension, Free Health Care Than Yrs. Working

In the early 1970s, Detroit agreed to let auto workers retire with full pension and benefits after 30 years on the job, regardless of their age. In practice, that meant a worker could start at age 18, retire at 48, and spend more years collecting a pension and free health care than he or she actually spent working. It wasn't long before even union officials realized they had created a monster.

The 30-and-out retirement program persists -- a sacred part of the inflated cost structure that makes it unprofitable for Detroit to make small cars in America. Another example: Every Detroit factory still has dozens of union committeemen -- the bargaining committee, shop committee, health and safety committee, recreation committee, etc. -- who actually are paid by the car companies. This is a "legacy cost" that the nonunion Japanese, German and Korean car factories in America don't have to carry.

So why were these problems allowed to fester, when smart people recognized them all along? The answer is that the solutions were painful, requiring not just brains but considerable amounts of courage. UAW officials weren't brave enough to risk re-election defeat by agreeing to curtail the 30-and-out plan. Detroit executives weren't about to take on the union and risk a strike that could cost them billions.

The purpose of bankruptcy -- either a plain-vanilla Chapter 11 or a special-flavor version that would require a new federal law -- wouldn't be to punish Detroit's car companies. It would be to give them a chance to survive, just as radical surgery, however painful, often saves the lives of sick patients. And as their latest restructuring plans make clear, General Motors and Chrysler are very sick indeed.

~Paul Ingrassia in today's WSJ

12 Comments:

At 2/19/2009 11:51 AM, Blogger Walt G. said...

I hired in at General Motors 3 days after I turned 18, but I’m still here :)

I don’t think there is anything wrong with the UAW being in charge of health and safety and simultaneously being paid by General Motors. General Motors, all companies, have to be in compliance with governmental regulations one way or another. They have two choices besides UAW members: 1) they must train a salary person every two or three years because the good ones move up and, believe me, you don’t want the bad ones. This training is very expensive and difficult to learn and stay up-to-date, or 2) they have to contract that service out. As a UAW representative in governmental compliance, I have over thirty years of current certifications from asbestos to OSHA fork truck safety permits. I know my job very well.

I am not unique in the UAW representative ranks. We have a wealth of knowledge that will be difficult and expensive to replace when we leave. Don’t just assume UAW members do not provide value-added service above their compensation costs to the employer. Would you like to pay what it would take to replace my experience?

By the way, I don't think a healthy person retiring at 48-years-old is a good idea.

 
At 2/19/2009 11:53 AM, Anonymous Anonymous said...

My goodness you have a lot of problems!!!

As for the solutions???

 
At 2/19/2009 3:08 PM, Blogger spencer said...

Gee that is almost as good a deal as the US Army, Marine Corp, Navy,Air Force and Coast Guard who only have to serve 20 years to get this benefit package.

 
At 2/19/2009 4:35 PM, Anonymous t jefferson said...

Gee that is almost as good a deal as the US Army, Marine Corp, Navy,Air Force and Coast Guard who only have to serve 20 years to get this benefit package.

Add to that teachers and Senators

 
At 2/19/2009 4:44 PM, Anonymous t jefferson said...

As for the solutions???

Lets look at Social Security. People drawing that benefit are older and don't draw as long. Why does S.S. cry they are going broke? I think it is because the Politicians can't keep their fingers out of the till just like Executives eyeing up a big pile of pension money and evenually they think of GOOD resaons to use it. The workers were stupid thinking there were checks and balances to keep them from spending the money. Lesson don't trust anybody with YOUR money

 
At 2/19/2009 4:48 PM, Blogger Walt G. said...

It's difficult to make enough money in 30 years to last another 37 years (from 48 to 85-years-old). Inflation is hard on a fixed income.

Pensions can be accounted for and paid ahead. It's the health care costs that are the real killer for companies! How would you like to have half of your future health care dollars funded with GM stock?

t jefferson,
You have to make sure your skills are transferable to something that people are willing to pay for. Invest in yourself; don't worry about what other people do.

 
At 2/19/2009 5:23 PM, Blogger @sethstorm said...


The 30-and-out retirement program persists -- a sacred part of the inflated cost structure that makes it unprofitable for Detroit to make small cars in America.

That's not necessarily the reason - not all of us are beholden to companies who make glorified golf carts as environmental wonders.

I've driven what some would consider land yachts and they were able to meet the "imports" on the same route in nearly the same driving conditions in fuel efficiency.

 
At 2/19/2009 6:22 PM, Anonymous Anonymous said...

Sounds good. Where can I sign up to make $73/hour sitting on my butt in a worker pool only to retire and be subsidized by taxpayers?

Why do anything else?

 
At 2/19/2009 6:24 PM, Anonymous Anonymous said...

Gee that is almost as good a deal as the US Army, Marine Corp, Navy,Air Force and Coast Guard who only have to serve 20 years to get this benefit package.

Yes, but we make them actually train, move all around the world and occasionally risk their lives in wars. So, they sort of command a higher premium than a dude sitting in a job bank or working on an assembly line.

 
At 2/20/2009 7:29 AM, Blogger save_the_rustbelt said...

Gee, isn't MP an employee of the State of Michigan?

And how is that pension plan? Better than most private sector employees, I would guess.

 
At 2/21/2009 6:14 PM, Blogger NoWhining said...

Yes, but we make them actually train, move all around the world and occasionally risk their lives in wars. So, they sort of command a higher premium than a dude sitting in a job bank or working on an assembly line.

Right on, Anon. And add to that the meager salary that these soldiers, sailors, marines, and airmen actually make. Sure, they have medical and housing benefits while they are active duty and many service people factor that in when they think about their active duty compensation. However, retiring at 20 years, you get 1/2 your base pay. That really isn't a whole lot when you compare it to what retired UAW's earn in their pension. Not considering what many of them are asked to do during their active duty years.

 
At 2/23/2009 8:32 AM, Anonymous Anonymous said...

It would be nice to see some actuall numbers here, such as how many people started at 18 and retired at 48. Otherwise, it's just a philosophical attack that blames any problem on the fact of a policy's existence, rather than what the policy in question has actually done. Case in point, many states still allow kids to drop out of school at age 16but we don't see many actually doing it.

Anyway, on a somewhat unrelated note, there isn't anything at all economical about small, fuel efficient cars. It really makes me wonder what we will do with all that gasoline that can no longer be profitably burned when cars start to get 50 mpg or more. It's real simple to understand...

Wheather it's sweet or sour, a barrel of crude yeilds mostly gasoline. Everything else is a smaller yeild and we need those things just as much if not more than gasoline. Ie, buring more gas makes those other things more available. You don't save money with high mpg CARS. There shouldn't even be any worry over that. Worry about the big things like cars, plane, boats. Worry about lubricating a machine with less oil. Worry about new ways to make plastic. ANd a host of other things that have nothing at all to do with Big Three cars vs blah blah blah.

Find GOOD alternatives to those other essentials and maybe then we can talk fuel efficiency. Well, provided that more rare earth metals, which go into these stupid hybrids (and can honestly care less who makes them... the whole idea is so totally brainless!), are available. Which they won't be, because electronics already uses those quite a bit (and economically, at that, unlike cars). Worse still, all these stupid "alternative energy" ideas uses TONS of rare earth metals that will be competing with electronics and cars!

And does anyone know why that is?

Well, the BIG THREE might have problems with the UAW (I'm skeptical though that it's as bad as many make it out to be) but all car manufacturers have problems with governments and their LAW, see?

So how I see the problem is is how Benjamin Franklin it...

"One bad apple spoils the barrel"

Doesn't matter who makes what because there isn't any genuine competition based on any sound science going on, and so long as it is that way, we're good and fucked not just in the long run, but right around the corner as well. In fact, that is why we'll be screwed in the future, I foresee. I'd worry about more than my personal carbon-footprint or even how much I pay at the pump (which is always going to be a drop in everyone's bucket ANYWAY). I'd worry about freedom first.

 

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