Editorial: Breaking the Bank
Back in 1984, the UAW worried that a tsunami of automation would result in robots replacing loyal union members on auto factory floors. To counter the possibility of wholesale layoffs, the UAW struck a bargain with GM, Ford and Chrysler. In exchange for being allowed to bring productivity-improving automation into their factories, the automakers agreed to create "jobs banks."
The concept was simple and, on the surface at least, socially responsible. Laid-off workers could do community service, go back to school or in some cases, sit around the factory, continuing to collect pay and benefits until the automaker found other jobs for them. At the time, American automakers expected that continuing growth would enable them to bring laid-off workers back out of the job banks and onto the factory floor quickly.
Unfortunately, U.S. automakers have been shrinking more than growing since 1984, and finding those other jobs is turning out to be nearly impossible. GM doesn't like to talk about its jobs bank, how many of its workers are in the bank or how much this costs the company, according to The Wall Street Journal. However, the Detroit Free Press reports that there are 5,000 to 6,000 employees in the job bank, at a cost of as much as $800 million a year. If Toyota Motor Corp. replaces GM as the world's No. 1 automaker this year, as expected, the demand for labor at GM is likely to continue falling.
GM isn't alone by any means. Analysts estimate that Chrysler has about 2,500 workers in its jobs bank, and Ford says it has about 1,100, according to The Wall Street Journal. Even UAW leaders are reportedly concerned about the negative image of workers being paid while doing no useful work.
Ford has just stepped up to the challenge presented by the jobs bank with an innovative program that promises to benefit both laid-off workers and the company. Last week, Ford began offering to pay as much as $15,000 a year for tuition to laid-off UAW members at its Edison, NJ, truck plant who go to school full time to earn a degree, certificate or license. Workers also receive half of their usual hourly salary and full medical benefits. To qualify, workers have to agree to leave the company, although they will still receive accumulated pension and preferential rehiring treatment.
Whether this program will be successful remains to be seen. Ford faces a major challenge just in convincing workers to take the offer when they could stay in the jobs bank, receive full pay and benefits, and go to school on their own. We hope the program is successful for all concerned; breaking the jobs bank is crucial to the survival of U.S. automakers, and probably organized labor as well.