More people forced into ER and early social security

[HsiaoChu]

When times are good, employers are nice to employees, because they can. But over the 30 years, employers have done a great PR job in making employees feel that time will always be great and that employers will always be nice, and thus they don't need unions. As such Union membership has declined. People have developed the managment's view of Unions, and have figured that Unions are a waste and who needs them, which is exactly the view that managment has wanted to workers to have.

As times have turned bad, people don't really know what to do, but they aren't turning to Union collective bargaining because they have been brainwashed by management to believe that Unions are bad. The pendulum will swing. But in bad economic times, Unions continue to protect their workers. And now the non-unionized are unhappy. Funny how they were not before.

People should read the story of how unions formed and what they do. In education, there are some places with really strong unions and some places without. The managment brainwashing is so successful that people complain that Educator Unions don't care about children as if that is some kind of indictment. Of course, Educator Unions don't care about children, any more than Auto worker unions want to make better cars, or UPS unions want to make shipping faster.

The bottom line, despite widespread management brainwashing, is that Unions work to protect their workers from abuse by management, easy firing for no real reason, and work to increase or at least hold the line on salaries and benefits including retirement options.

It will turn back again, but people need to wake up to management brainwashing.
IMnotsohumbleopinionofcourse. And of course, you may be part of management or you may have been brainwashed at a very early age.

HS

 

[bubba]

Regarding post above, I'm not interested in unions, but to each his or her own.

 

[rescueme]

...I'm not interested in unions, but to each his or her own.

You would be if you worked in a "closed shop" and the only way you could keep your job (after an initial probation period) was to join the union.

You may not be interested and there may be others that think like you (e.g. no desire to join), but that freedom is taken away from you.

Not anti-union (worked with them, but never in one), but just pro-facts.

 

[travelover]

Regarding post above, I'm not interested in unions, but to each his or her own.

This whole topic is a diversion, but I'll jump in to say that I worked in a nonunion shop out of high school where the employer let people get repeatedly splashed with 600 degree liquid zinc because installing splash guards would have cost literally a few hundred dollars.

I later worked with union employees who would let the company lose thousands of dollars rather than step outside of a very narrowly defined job responsibility for a few minutes.

Not black and white.

 

[nun]

This whole topic is a diversion, but I'll jump in to say that I worked in a nonunion shop out of high school where the employer let people get repeatedly splashed with 600 degree liquid zinc because installing splash guards would have cost literally a few hundred dollars.

I later worked with union employees who would let the company lose thousands of dollars rather than step outside of a very narrowly defined job responsibility for a few minutes.

Not black and white.

I worked in at a blast furnace for a summer. It was fully unionized and everyone was supplied with "hot metal" clothing which was thick felt material. The guys on the cast house floor who's job it was to drill out the plug at the base of the furnace and direct the molten metal into rail cars never wore the protective clothing, just sneekers and shorts as it was so hot. There was also great pride in the scars and burns that all of them had from the metal splashing on their skin.

 

[landonew]

The bottom line, despite widespread management brainwashing, is that Unions work to protect their workers from abuse by management, easy firing for no real reason, and work to increase or at least hold the line on salaries and benefits including retirement options.

It will turn back again, but people need to wake up to management brainwashing.
IMnotsohumbleopinionofcourse. And of course, you may be part of management or you may have been brainwashed at a very early age.

HS

Do they? Or do they prevent necessary contractions during the down times?

The UAW's dismantling of the American auto industry is particularly telling.

Why GM's Plan Won't Work

The carmaker is saddled with a $1,600-per-vehicle handicap in so-called legacy costs, mostly retiree health and pension benefits. Any day now, GM is likely to get slapped with a junk-bond rating. GM has lost a breathtaking 74% of its market value -- some $43 billion -- since spring of 2000,

That $1,600/vehicle doesn't even include other benefits (read cost-increases) obtained through collective bargaining. Without the government bailout, most (likely all) of these UAW employees would be out of a job.

Thus, there is a convincing argument that labor-unions, at least in some instances, do not protect the long-term interests of their members.

 

[travelover]

Right. When a CEO writes himself a $100 million dollar bonus, it is necessary compensation to remain competitive. When a guy spends 30 years with his head in an engine compartment on the assembly line and negotiates a retirement with dignity, he is "ruining the company".

 

[ERD50]

Right. When a CEO writes himself a $100 million dollar bonus, it is necessary compensation to remain competitive. When a guy spends 30 years with his head in an engine compartment on the assembly line and negotiates a retirement with dignity, he is "ruining the company".

That's a hollow argument. I don't think you'll find anyone here defending outrageous CEO salaries either. Many of us have pointed to it as a problem, and likely due to issues of transparency and an intentionally 'closed' market at that level (BOD and execs keeping it closed).

Sounds like you are trying to justify one wrong with another. Many of those benefits for people with their heads in engine compartments weren't really 'negotiated', they threatened to shut down the company if they didn't get them. I've never heard a CEO try that one.

And while this doesn't make it right - add up the (former) Big 3 CEO and top exec salaries over the past 50 years, assign some portion as 'excess', and then compare that to the 'excess' wage and benefits the UAW workers got over that time. I bet one had a much bigger impact on the bottom line than the other, just due to the numbers.

-ERD50

 

[HFWR]

Agreed. Which is why I called them "outright liars."

Fixed...

I don't begrudge CEOs their pay/ perks, but it does seem that the game is rigged. As for unions, I agree that many, in cahoots with management, negotiated short-term deals without a longer-term, sustainable view.

 

[travelover]

That's a hollow argument. I don't think you'll find anyone here defending outrageous CEO salaries either. Many of us have pointed to it as a problem, and likely due to issues of transparency and an intentionally 'closed' market at that level (BOD and execs keeping it closed).

Sounds like you are trying to justify one wrong with another. Many of those benefits for people with their heads in engine compartments weren't really 'negotiated', they threatened to shut down the company if they didn't get them. I've never heard a CEO try that one.

And while this doesn't make it right - add up the (former) Big 3 CEO and top exec salaries over the past 50 years, assign some portion as 'excess', and then compare that to the 'excess' wage and benefits the UAW workers got over that time. I bet one had a much bigger impact on the bottom line than the other, just due to the numbers.

-ERD50

My point is that people are uniformly greedy. The CEO's job is to negotiate with the union and make sure that he doesn't agree to anything in negotiations that the company can't afford. That was not done - repeatedly. The board of director's job is to make sure that the CEO doesn't steal too much for himself and his buddies. That was also not done and encouraged the union to get "their share". Quoting a 5 year old article and claiming that the UAW was responsible for most of GM's problems is inflammatory at best and disingenuous at worst.

Back to Social Security - are we as Americans not like the UAW who demand more and more even though it is not sustainable? Who asks before they accept their SS check if they have contributed enough or if the distribution is sustainable long term? We want that and free medical care, as well.

 

[landonew]

My point is that people are uniformly greedy. The CEO's job is to negotiate with the union and make sure that he doesn't agree to anything in negotiations that the company can't afford. That was not done - repeatedly. The board of director's job is to make sure that the CEO doesn't steal too much for himself and his buddies. That was also not done and encouraged the union to get "their share". Quoting a 5 year old article and claiming that the UAW was responsible for most of GM's problems is inflammatory at best and disingenuous at worst.

A 5 year article is disingenuous you say? Do you think the information is out-dated? If so, it is only because of the government bailout.

What is "disengenuous" is paying a "guy with his head in an engine compartment" an unsustainable wage and then lobbying congress for a bailout after the company becomes uncompetitive.

Noone is saying that the UAW workers didn't work hard or that they are bad people. I truly believe that, on average, they are as hard-working as the rest of us.

That being said, a lot of us hard-working folks get paid far less than $70/hour.

UAW Workers Actually Cost the Big Three Automakers $70 an Hour | The Heritage Foundation

This article was written in Dec-2008, so hopefully you will find this less inflamatory.

Anyhow, I don't think anyone blames the UAW workers for GM's downfall - I would have done the same thing in their position. I do, however, think that the result accurately illustrates the long-term effects of unionization (at least in some instances).

 

[ERD50]

Quoting a 5 year old article and claiming that the UAW was responsible for most of GM's problems is inflammatory at best and disingenuous at worst.

I think plenty of people would see it as neither inflammatory nor disingenuous, just factual. One could argue about the word 'most', surly there was blame to go around, but this line gives some perspective:

When GM shut down for 54 days during a 1998 labor action, it knocked a full percentage point off the U.S. economic growth rate that quarter.

Those workers, who made parts needed by every GM assembly plant, struck for 54 days over what they said were local issues. That shut down the entire company, costing it $2 billion and nine percentage points of market share, though GM recovered all but a point of that by yearend.

I doubt any GM CEO knocked a full percentage point off the U.S. economic growth rate in any one quarter.

Back to Social Security - are we as Americans not like the UAW who demand more and more even though it is not sustainable? Who asks before they accept their SS check if they have contributed enough or if the distribution is sustainable long term? We want that and free medical care, as well.

I know plenty of people who have said all along that they would rather have the money that went into SS and fend for themselves. You can't just frame these things to make your point, and disregard that reality.

But I agree with you, the ones who want, want, want at the expense of others and who risk killing the goose that laid the golden egg are a LOT like the UAW workers.

-ERD50

 

[travelover]

A 5 year article is disingenuous you say? Do you think the information is out-dated? If so, it is only because of the government bailout.

Not true The UAW accepted huge wage and benefit cuts prior to the bailout and even more during the bankruptcy. Future hires get about $14 an hour.

What is "disengenuous" is paying a "guy with his head in an engine compartment" an unsustainable wage and then lobbying congress for a bailout after the company becomes uncompetitive.

You can thank GM management for that.

Noone is saying that the UAW workers didn't work hard or that they are bad people. I truly believe that, on average, they are as hard-working as the rest of us.

That being said, a lot of us hard-working folks get paid far less than $70/hour.

UAW Workers Actually Cost the Big Three Automakers $70 an Hour | The Heritage Foundation

This article was written in Dec-2008, so hopefully you will find this less inflamatory.

The Heritage Foundation is hardly a source for an unbiased view of any union activity

Anyhow, I don't think anyone blames the UAW workers for GM's downfall - I would have done the same thing in their position. I do, however, think that the result accurately illustrates the long-term effects of unionization (at least in some instances).

What it all comes down to is that eventually the union asked for excessive benefits and their management decided to kick the can down the road and take as much for themselves as possible before the whole game ended. Unions are necessary when workers are abused. The early organizers literally put their necks on the line to get what they got. Once that was achieved greed took over. In other industries an equilibrium was reached between union demands and fair treatment. That did not happen at GM. To put the primary blame on the workers or to suggest that fundamentally unions are a bad thing is wrong.

 

[travelover]

I doubt any GM CEO knocked a full percentage point off the U.S. economic growth rate in any one quarter.

The old "he stole more than I did" defense.

I know plenty of people who have said all along that they would rather have the money that went into SS and fend for themselves. You can't just frame these things to make your point, and disregard that reality.

And will they still accept SS money if it exceeds what they paid in?

But I agree with you, the ones who want, want, want at the expense of others and who risk killing the goose that laid the golden egg are a LOT like the UAW workers.

-ERD50

Right because it is human nature.

 

[landonew]

Not true The UAW accepted huge wage and benefit cuts prior to the bailout and even more during the bankruptcy. Future hires get about $14 an hour.

As they should. Moreover, my understanding (which is limited) is that the UAW got precedence over bond holders in the GM bankruptcy, even though they were the junior lienholder.

You can thank GM management for that.

The Heritage Foundation is hardly a source for an unbiased view of any union activity

You challenge the source, but don't refute the facts (i.e. $70/hour). Not very persuasive in my book.

What it all comes down to is that eventually the union asked for excessive benefits and their management decided to kick the can down the road and take as much for themselves as possible before the whole game ended. Unions are necessary when workers are abused. The early organizers literally put their necks on the line to get what they got. Once that was achieved greed took over. In other industries an equilibrium was reached between union demands and fair treatment. That did not happen at GM. To put the primary blame on the workers or to suggest that fundamentally unions are a bad thing is wrong.

I don't think a 54 day strike amounts to "politely" asking for excessive benefits.

The old "he stole more than I did" defense.

And will they still accept SS money if it exceeds what they paid in?

Right because it is human nature.

Wasn't it you who brought up the GM executives compensation?

So not only do you try to justify a wrong with a wrong (i.e. execs stole, therefore excess compensation for UAW is justifiable), you try to do so with a wrong that is far less significant.


At the end of the day, what made GM uncompetitive? Executive compensation or GM assembly line workers getting paid $70/hour?

 

[Gumby]

At the end of the day, what made GM uncompetitive? Executive compensation or GM assembly line workers getting paid $70/hour?

The $70/hr figure is a right-wing canard. Read this Media Matters piece to get some perspective on how the number was derived, and what the workers actually got paid.

The media myth: Detroit's $70-an-hour autoworker | Media Matters for America


In days past, I might discuss the treatment of the varying creditors in the GM bankruptcy (as I have done here before), but I am tired of the topic and I suspect that you are not all that interested in the answer.

 

[NW-Bound]

Thanks to Gumby for pointing this out once more. In case someone does not want to read through the article, here's the pertinent paragraph.

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.​

The cost was not due to the current pay, but benefits and pensions to retired workers! Now, you can draw parallel conclusions to other pension benefits, of private as well as public plans. And SS, and public health care, and whatever have you.

There is no such thing as "free". Somebody always has to pay, and when they do not want to pay anymore, we've got a problem. In this case, I guess it's the fault of GM car buyers who would not want to pay a premium for GM cars, so that GM profits can support its retirement cost.

 

[timwalsh300]

If there is such a fund that is kept then the treasury bonds sound good to me. My understanding is that there really is no fund at all. I heard President G.W. Bush (not to get political) make a statement on TV that after the retirees were paid each year, any left over money was used for other programs and such.

1. It is true that there is a SS fund that is invested in US Treasury bonds.
2. It is also true that the extra SS contributions were spent on government programs.

These things are not mutually exclusive. The Treasury sells bonds to borrow money to pay for government programs. The SS fund invests in those bonds and collects interest, paid by the Treasury from tax receipts or additional borrowing. It can be confusing because we often think of "the government" as just a single entity.

Tim

 

[landonew]

The $70/hr figure is a right-wing canard. Read this Media Matters piece to get some perspective on how the number was derived, and what the workers actually got paid.

The media myth: Detroit's $70-an-hour autoworker | Media Matters for America


In days past, I might discuss the treatment of the varying creditors in the GM bankruptcy (as I have done here before), but I am tired of the topic and I suspect that you are not all that interested in the answer.

Alright, let's assume for the sake of argument that your article is more accurate than mine. Would you at least concede that their compensation is not in-line with non-unionized competitors?

Here is a quote from the article you cited.

By the way, here's the right way to cover the issue: In a November 18 column, the St. Louis Post-Dispatch's David Nicklaus wrote that the Big Three "need to bring their labor costs, which average $72 an hour, closer to the Honda or Toyota level of about $45." Note how Nicklaus never implied that labors costs equaled take-home wages. Why? Because they don't. (And kudos to Washington Post business columnist Steven Pearlstein, who refuses to use the $70-an-hour figure because it's so misleading.)

The crux of my argument does not stand or fall on whether UAW workers actually receive $70/hour, but rather that the UAW worker's compensation caused GM to become uncompetitive with non-unionized competitors.

Please explain to me the flaws in my reasoning. Also, please link your past discussions on the gm bankruptcy proceedings. I am actually very interested, but my internet search was not fruitful.

 

[Gumby]

What is the proper value of an automotive worker's time and abilities? $29/hr or $14/hr or something else? You presume an awful lot to say new hires get $14/hr "as they should". Would you care to have me set your salary, since I know precisely what your time and abilities are worth? I think you probably would not like that at all. In fact, you would likely tell me that your proper salary is whatever you can negotiate with your employer and that I should butt the hell out. And you would be correct.

GM failed for the simple reason that they were unable to sell a sufficient number of cars at a sufficient price to cover their expenses. Period, end of story. Why that should be the case is a more complicated matter.

High labor costs were certainly a part, but only one part, of their problems. In fact, given that there are more retirees than active workers, the legacy labor costs (pensions and huge retiree health care costs) were a bigger problem than the current labor costs. In addition to that, they had old and inefficient physical plants. They also had poor automobile designs that did not find favor with the buying public -- they focused on large trucks and SUV's, not smaller, fuel efficient vehicles, and the run up in gasoline prices during 2008 hit them hard. They had too many brands and too many low volume dealers. They had substantial debt service payments. In sum, they had a substantial number of problems that crushed both top line revenues and bottom line earnings.

By contrast, the foreign manufacturers like Honda and Toyota don't share these problems, for the simple reason that they have not been around as long. Their factories, both in Japan and the US, are newer and more efficient. They do not have a huge overhang of retiree pension and health obligations for a variety of reasons. The simplest is that they have not been around long enough to have a significant number of retirees. Additionally, they started operating in the US after the time people came to realize that the "free healthcare for life" promise, a promise that had easily been offered by the Big 3 during the go-go years after WWII, was unsustainable, and they did not make the same mistake. And for their Japanese workers, they don't need to worry about health care costs at all. The fact that their work force is not unionized does not substantially affect the above observations. Additionally, their sales practices are better. Honda has only two brands and Toyota may be up to three, and each of their dealerships is much higher volume. And, perhaps most importantly, they focused on designing smaller, fuel efficient cars that people actually wanted to buy.

In sum, the issue is far more complex than just labor costs, but perhaps reflexively bashing unions makes you feel better.

 

[ERD50]

The $70/hr figure is a right-wing canard. Read this Media Matters piece to get some perspective on how the number was derived, and what the workers actually got paid.

The media myth: Detroit's $70-an-hour autoworker | Media Matters for America

The crux of my argument does not stand or fall on whether UAW workers actually receive $70/hour, but rather that the UAW worker's compensation caused GM to become uncompetitive with non-unionized competitors.

Please explain to me the flaws in my reasoning.

I agree with landonew - I read both articles and I fail to see how the mediamatters.org article counters anything at all in the Heritage.org article.

1) The Heritage piece clearly states the UAW workers cost the Big Three $70/Hr. They don't say they are paid $70/Hr, and it seems that 80% of the mediamatters article is pouncing on people who said they are paid that amount.

2) Heritage.org breaks out that these numbers are from SEC filings, and they are required to account for the cost of future benefits of current employees in the current year. So that means that the people who are retired now and receiving benefits were accounted for when they were working, not in this hourly figure for 2006. If this is incorrect, mediamatters does not explain the accounting, they basically say "is too!". If I missed the explanation, please help me out.

... I am tired of the topic and I suspect that you are not all that interested in the answer.

Well, you did step into the fray, and that's a pretty condescending response. It implies we made up our minds and have no interest in the facts, thank you very much. I read both articles, I saw more facts in the Heritage article than the mediamatters. I'm very interested in the facts.

I do recall a post of mine at the time - pointing out that in public, Ron Gettelfinger kept trying to downplay the difference in compensation between UAW and the rest of the workers in the USA. But when you went to the UAW 'member benefits' page, it was a very long list of how much better UAW workers had it, due to all the hard work the UAW did to protect their interests. It was pretty funny, in that non-funny kinda way.

Cake - eat it - 2.

-ERD50

 

[Gumby]

Landonew said, and I quote,

At the end of the day, what made GM uncompetitive? Executive compensation or GM assembly line workers getting paid $70/hour?

Clearly they didn't "get paid" $70/hr. The Media Matters piece explains how that number was calculated. As NW Bound mentioned, it includes retiree costs -- pensions and healthcare.

 

[dex]

By contrast, the foreign manufacturers like Honda and Toyota don't share these problems, for the simple reason that they have not been around as long. Their factories, both in Japan and the US, are newer and more efficient. They do not have a huge overhang of retiree pension and health obligations for a variety of reasons.

I think there is a systemic difference between the USA and Japan. Probably very difficult to compare the two countries. I remember reading an article that companies in Japan pay into the systems for their employees and then they are the government's responsibility after retirement.

Health care system in Japan - Wikipedia, the free encyclopedia

Social welfare in Japan - Wikipedia, the free encyclopedia

Something is rotten in Denmark when they start to cut back
Why Denmark Is Shrinking Its Social Safety Net - Economix Blog - NYTimes.com

 

[Gumby]

2) Heritage.org breaks out that these numbers are from SEC filings, and they are required to account for the cost of future benefits of current employees in the current year. So that means that the people who are retired now and receiving benefits were accounted for when they were working, not in this hourly figure for 2006. If this is incorrect, mediamatters does not explain the accounting, they basically say "is too!". If I missed the explanation, please help me out.

I do not believe the Heritage explanation for one simple reason -- as I understand the accounting rules (and I am a lawyer, not an accountant) the present value of expected pension obligations to future retirees goes on the balance sheet, not the income statement

So, for any year, with respect to labor, my current obligation is the present value of benefits promised to existing employees. I make appropriate actuarial assumptions (regarding how many will retire and when, what COLAS will be, how long they will live, etc) to calculate this number. I also must perform this calculation for current retirees (it is a little simpler since they are already retired). I then add the two numbers. That is my current balance sheet obligation for benefits. When Heritage says they are required to account for the present value of benefits to future employees in the current year, I believe they are referring to accounting on the balance sheet like this. But that says nothing about current per hour labor costs.


It is, rather, the income statement that performs this function. It should have the actual costs paid to current employees in wages plus health care payments made, plus payments made on pensions. For any year, the per hour labor costs (current plus legacy) could be viewed as the sum of these three numbers divided by the number of hours worked that year, which is how I believe the $70/hr was calculated. However, I believe that is misleading, because the payments to retirees actually represent deferred payment for work done long ago. Unless you also account for the hours that generated that deferred pay, you don't have an accurate gauge.

 

[ERD50]

Landonew said, and I quote,



Clearly they didn't "get paid" $70/hr. The Media Matters piece explains how that number was calculated. As NW Bound mentioned, it includes retiree costs -- pensions and healthcare.

OK, I see. I thought your 'right wing canard' comment was directed to the Heritage Foundation (considered by many to be 'right wing'), and they didn't say 'paid' in their article.

-ERD50