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Jobs Banks Cashing Out

Employee protection programs ending.

by on Jan.29, 2009

UAW Pres. Ron Gettelfinger cashes out of Jobs Bank

UAW Pres. Ron Gettelfinger cashes out of Jobs Bank

One of the most progressive programs ever launched by the auto industry is about to come to an end.

Ford Motor Co. has reached agreement with the United Auto Workers Union to close its jobs bank, bringing to an end a program that was intended to keep blue-collar employees from being seen as just another line item cost, expendable during the down times of the industry’s normal cycles.

Chrysler has already closed its bank, and the 1,600 General Motors employees the program covered will be placed on layoff, starting February 2.

Job security has been an issue for the UAW since it was first formed, during the depth of the recession. But while the union was able to win a variety of progressive benefits – such as employer-paid health insurance – it was only during the boom years of the mid and late 1980s that the idea of protecting jobs finally gained traction.

The Big Three accepted a trade-off, gaining the contractual flexibility to replace workers with robots and other high-tech devices. In return, workers would be “banked,” maintaining as much as 85 percent of their regular compensation. Participating in the program meant they would be first in line as new jobs opened up, say, if their company added an additional shift or built a new assembly line.

But in recent years, as Detroit’s automakers found less and less opportunity to expand, instead slashing tens of thousands of jobs, the Jobs Bank program became a costly anachronism. The union resisted closing the banks until the domestic makers found themselves before Congress, late last year, pleading for a federal bailout to keep them alive. As one observer put it, lawmakers viewed the Jobs Bank program much as they did the corporate jets the Big Three CEOs originally used to get to Washington – a matter of profligate waste and a symbol of Detroit’s non-competitiveness.

Forced to negotiate concessions with General Motors and Chrysler, which eventually received federal loans, the UAW threw in the towel and agreed to close the Banks. The union accepted it would need make the same give-back to Ford – the only maker to decline federal aid – to keep that company competitive.

Any worker affected by the closures will now have to go on unemployment, but that plus other company benefits will ensure they still get about 72 percent of what they made before – at least temporarily. Considering the decline of the Big Three, and the fact that foreign-owned transplants aren’t hiring former Detroit workers, it’s likely to be difficult to impossible for former Big Three workers to ever come up with the sort of pay and benefits package they made on the line.

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