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| Union members hug after the UAW strike against Chrysler ended Wednesday. Kathleen Galligan/Detroit Free Press/AP |
Auto worker benefits – long rising – begin to wane
Judging from UAW contracts reached this week, from now on auto workers can expect lower pay and fewer benefits than their predecessors.
from the October 12, 2007 edition
Page 2 of 3
Deal may shave $1,000 off a GM car
Not everything shifts in a single contract. But the accord at GM – the one contract where details have emerged – could save the company $1,000 per car, Cole estimates. That goes a long way toward closing the cost gap with Toyota.
The biggest issue is healthcare. The rising liability for retiree healthcare will be capped – as GM agreed to a one-time payment to create a union-administered trust fund for those costs. Chrysler reached a similar agreement for such a trust.
Also, new hires in GM's "noncore" jobs such as subassembly and handling materials will start at pay rates as low as $14 an hour. GM is expected to undertake a new round of worker buyouts, so that as much as one-third of its union workforce may be paid on this lower scale.
Finally, new workers will have cash-balance retirement accounts, not a traditional pension. That doesn't mean future workers will have a poorer retirement, but it does remove a system of company-guaranteed benefits. Company contributions will total 6.4 percent of employee wages, and the accounts will earn interest tied to US Treasury bonds, according to details posted on the UAW website.
A win-win for companies and union
Many analysts see the contract as a win for both the company and the union. By making GM more competitive, the deal should allow more jobs to stay in the US. And union bargainers extracted commitments by GM to invest in making new vehicles at many existing US plants.
Workers and retirees as well do face higher out-of-pocket healthcare costs than they did in 2003, thanks in part to union concessions made two years ago.
But after decades of guaranteed pay raises – and an escalation of benefits – the union this time was struggling just to hold on to what it had.
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