By on December 4, 2008

As we attempt to understand the UAW’s Job Bank program, and whether or not their reported suspension of that program is a meaningful concession, we’ve been looking for information on it. Unfortunately, as a somewhat outdated but highly informative report from Carlist explains, the details of the Job Bank are kept under wraps by the Union and automakers for “competitive reasons.” In fact, when asked why GM publicized its health benefit and pension obligations but not its Job Bank information, a GM spokesman said “that is public information that can be found in our financial statements, job banks isn’t.” In the absence of public information on the program, the original terms of the Job Bank agreement from 1987 (leaked to Carlist) are all we have to go on.

According to that document, the basic guarantee from the 1987 agreement is that no eligible employee will be laid off over the term of the agreement, except under the following specific circumstances. 1)Reduced customer demand, a maximum of 42 weeks over the life of the agreement (commonly known as loss of marketshare); 2)Acts of God or other conditions beyond the control of management; 3)Conclusion of an assignment known in advance to be temporary; and 4) Plant rearrangement or model changeover.

Eligible employees can not be laid off because of new technology (robots), sourcing decisions, or company-implimented efficiency actions. There are generally three states of layoff: temporary layoffs where workers know their return date, indefinite layoffs where workers get 48 weeks of unemployment benefits and a supplemental from their employer equal to 100 percent of your salary. After 48 weeks workers are reemployed by the Job Bank, at which time they receive 95 percent of their salary. They don’t get seniority, but they do continue to receive health benefits. While in protected status, employees may be assigned to training programs, certain non-traditional jobs, openings at other UAW locations (they only have to accept them if the job is within 100 miles of their home, otherwise they can stay in job banks), and other assignments “consistent with the intent of the program.”

More context comes from former UAW worker and Research for Center for Automotive Research VP, Sean McAlinden. “The UAW was trying to prevent outsourcing,” he explains. “They believe that profit is something you negotiate – something that is shared. the job banks part of the contract is about 100 pages of an over 500 page contract. In 1987 there was $2 Billion guaranteed for the project, by 1990 it was fully funded. It was thought that Lloyd Reuss was fired because of the spending on the job banks. People are protected, but not the jobs. When a person retires their job is eliminated. Job banks don’t protect the UAW. The UAW is down by 57 percent. Back in 1985 General Motors had 464,000 union members, at that time they were as big as the U.S. Army. At the end 2004 General Motors UAW members were down to 111,000 members; a 77 percent decrease in membership.”

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18 Comments on “Unraveling The UAW Job Bank...”

  • avatar

    I heard on tv today that the uaw had already agreed last year to sunset the jobs bank program.

    If so it is a bogus concession.

  • avatar

    First world manufacturing model: Heavy use of robots and other manufacturing technology, low use of expensive labor.

    Developing world manufacturing model: Heavy use of low paid, uneducated, unskilled labor, low use of relatively expensive manufacturing technology.

    UAW manufacturing model: Heavy use of highly paid, uneducated, unskilled labor, and heavy use of robots and other manufacturing technology to ensure quality.

    With the “can not be laid off because of new technology” provision the UAW destroyed the incentive for the big-3 to invest in cutting edge production technology.

    The future of manufacturing in America is very efficient production technology designed by highly educated engineers, this is how America can compete against low wages abroad. Because of their own greed the UAW destroyed that future for the big-3.

    And more recently they have thrown new workers (probably the most productive, and probably the only ones with high school degrees) under the bus, giving new workers half the pay instead a allowing any concessions by current workers to their bankrupt companies.

    Here is how the blame for the failure of the big-3 should be assigned:

    1) By a mile, the UAW, they destroyed the companies.

    2) The infighting, brand diluting, cannibalistic dealers.

    3) The management that failed to deal with 1) and 2) above.

  • avatar

    Here’s some more UAW silliness….My site is undergoing a consolidation and closing of some buildings to reduce overhead. An outside contractor was hired to do most of the work in prep for the move. They will be doing this work no matter what. The UAW balked and said that the contractors can’t work on UAW holidays. This has delayed the move and any cost savings from shutting down utilities by over a month. Way to go UAW on bi-partisan cooperation.

  • avatar

    As I understand it, it was GM that first proposed the jobs bank in 1984 in a spectacular display of poor judgment.

    From a Wall Street Journal article by Jeffrey McCracken, on 3/1/2006, entitled “General Motors: Paying People Not to Work”: “At about 4 p.m. on Aug. 8, 1984, GM put forward a one-paragraph memo proposing the creation of an ’employee-development bank.’ The idea was to help train or find jobs for senior UAW employees who would ‘otherwise be permanently laid off’ because of better technology or higher productivity.”

    The article is fairly lengthy and devoted entirely to the jobs bank. I would include a link, but I’m afraid that the WSJ would come looking for me.

  • avatar

    bmad, why would the WSJ come looking for you for just linking to their article? They’d probably thank you for giving them more pageviews.

    I tried to find the link myself, as I’m a subscriber, but the search only goes back two years, which is of course not enough to capture something beyond that timeframe.

  • avatar

    Unions have some silly rules and silly work ethics. Ultimately though, it’s corporate management that agrees to these rules and agrees to work under the restraints of these rules. Corporate management (at least in the big three) is handsomely compensated for their expertise and knowledge when making decisions for the good of the company. If a sub-contractor making a critical car component was to charge so much for the component that the car company couldn’t build the car without the component would you fault the sub contractor if management agreed to buy the component anyway and the car company subsequently failed?

    Ultimately, the big three are responsible for the UAW. It was formed in response to the way the big three initially dealt with their employees. Over the ensuing years the big three have fed this monster based on the mistaken belief that it was sustainable long term or the greedy desire to make a buck today and let other deal with the problem tomorrow (I believe it’s the later).

    The UAW is and never was responsible for the long term success of the auto industry. Autoworkers pay the UAW to make them a buck today. Remember the membership is composed of “uneducated, unskilled labor”. Why would any intelligent person expect the uneducated and unskilled to “get it” and why would any intelligent person expect the solution to come from them?

    In America today the future for the unskilled and uneducated is rapidly disappearing. That is fast becoming so across the world. The uneducated and unskilled get this and fear it but not consciously because they don’t think long term. They want to live out their uneducated and unskilled lives doing something they are adapted to do. That is because some are lazy (they could do more and handle it intellectually, emotionally, financially, etc…) and because some are at the limit of what they are capable of and are fighting to stay productive but comfortable within what they can do. As the pool of living wage uneducated and unskilled jobs shrinks the second effected group becomes larger and larger and there is more incentive for the lazy to step up and thus some do and the first group shrinks.

    Finally, the US has the worlds largest economy and by this count ( over 250 billionairs. Japan has the worlds second largest economy (33% of the US by GDP) and by this count ( exactly 30 billionairs (< 12% of the US). Honestly, isn’t the fact that autoworkers are overpaid part of our culture? Doesn’t the problem start at the top and when it ends it will end with voluntary restraint at the top.

    Why is it stupid if a guy making $75,000/year with little alternate job prospects at the same income fight to maintain his standard of living for life regardless of employment (Job Bank) but a guy making $20,000,000/year with many alternate job prospects signs a contract with a multi-million dollar “fired with cause” golden parachute? Gee, I wonder where these unskilled and uneducated people got the idea?

    The UAW needs to change but it’s management’s job to do so and if the problem isn’t solved then it’s management’s fault because the success or failure of the auto industry is the responsibility of management, that is their job.

  • avatar

    No love lost here for the union.

    I commented recently that the boys should’ve carpooled to Congress after getting sent to detention for taking the Gulfstreams. I likened it to a bunch of 7th graders on a field trip… sharing bag lunches and juice boxes, practicing their Congressional term papers on each other…explaining the big words to Ronnie.

    Funny stuff…at least to my silly sense of humor.

    I also suggested they take a detour. Past the gleaming skyscrapers of Pittsburgh’s Golden Triangle and through the still-smoldering remnants of the gritty – and once great – nearby mill towns.

    That part wasn’t so funny.

    The side trip would show Ronnie what happens when a union takes a blood oath to fight to the last man standing.

    To steal a sign from Yogi Berra, today’s events for me are deja vu all over again.

    For 100 years Pittsburgh’s Steel Valley was America’s blast furnace. Every family’s dinner table had a “mill hunk” or two. (A pejorative for Hungarian immigrants; a term of endearment in the neighborhood; fighting words from outsiders).

    The collars were blue, the cars American, and it was home court for the United Steelworkers.

    The unions dated to the 1800s; crushed in the deadly 1892 Homestead strike but back by the 1930’s. Over time organized labor negotiated reasonable pay for what were hard and dangerous jobs.

    By the 1960’s life had gotten pretty good for a “mill hunk”. Then in the 70’s steel went global. Big Steel fought for its survival as imports rose steadily.

    The world changed but union worldviews didn’t … because the laws of supply and demand didn’t apply to them because….. well… just because. … Umm, except for the part where they did. (Sound familiar?)

    And? The union won. Gave no quarter. And the mills slowed. By the mid-80’s most of the blast furnaces grew cold. Padlocks went up and someone made a fortune selling padlocks.

    Everyone lost. The once majestic, now hulking, rusting furnaces that lined the river loomed as constant reminders of better days. Entire towns died.

    Today Pittsburgh is a jewel …downtown. The nearby mill towns – not so bright. To this day the old steel towns remain decimated. At best a smokestack or two left as fading memorials to the past.

    Fastword a generation. Detroit. Deja vu.
    Steel mills then. Assembly plants now.

    The whole boom and bust cycle just occurred a generation earlier in Pennsylvania.

    The union never “got it” then there… and they don’t “get it” here now. They’re awash in Gettlefinger’s Koolaid; the one that says the laws of supply and demand don’t apply in Motown. …Umm, except for the part where they do.

    Sadly, it sure seems like it’s the Steel Valley all over again.

  • avatar

    Hey TaurusGT-

    Nice post, liked your writing…..Sadly true.

    What will the USA look like in 50 years? My kids and grandkids want to know. I won’t be around.

  • avatar

    “the details of the Job Bank are kept under wraps by the Union and automakers for “competitive reasons.”

    Now, you might wonder why Job Bank details are kept confidential. After all, due to pattern bargaining GM, Ford and Chrysler jump alike to the crack of the UAW’s whip. Nor are they worried Toyota might find out about the Job Bank and become a copycat.

    The reason Detroit and the UAW don’t talk about the Job Bank is that they know Joe Q. Public would have even less respect for them if he knew what a boondoggle is baked into the cost of making a Ford, Chevy or Dodge. True, it’s just one boondoggle among many, but enough to make the tears of sympathy dry up fast. It was too good to last.

  • avatar

    Interestingly enough in todays WSJ I see that the Teamsters have agreed to a 10% wage cut to assist Yellow-Roadway. In exchange employees get options on 15% of the company.

    You would think that staring down the abyss of insolvency the UAW would be willing to cut their pay.

  • avatar


    The UAW members are actually an overly educated bunch for what they do. That has always been part of my problem with the arrangement. These folks would be more productive for the country, and likely live more fulfilling lives, if they weren’t trapped in the UAW deal with golden handcuffs. Does anyone here have the data on the average years of education of UAW line workers?


    Do you seriously beleive that the futures of the uneducated and unskilled look worse than they did in the past? I am not talking about comparing recession to heyday, I mean over all quality of life. I think you are nuts. Folks like that were getting killed and maimed on the job less than a few decades ago even in the US. This whole idea of starving masses left out in the cold by robots stealing their jobs is just malarky. They eat better, live longer, and live safer than they ever have in the past.

    The only thing really endangering them is people who insist on telling them how miserable they should feel, and who then proceed to propose we make them more miserable by taking away their ability to learn by failure.

  • avatar

    Why does all this remind me of “Altas Shrugged”?

    Granted, the “big three” along with the UAW have killed the goose that lays the golden eggs; but having the government laying a foundation for a road to recovery will be like imposing “Directive 10-289” as the method to bring about that recovery; in essence, the once great American auto makers are going to find themselves on a short leash held by incompetent politicians.

    Hey Detroit, be careful what you wish for….

  • avatar

    buddyhacker :
    December 8th, 2008 at 11:18 am

    Why does all this remind me of “Altas Shrugged”?
    I’m sure you know the answer, but allow me to document it here:

    In part, Atlas Shrugged tells of the destruction of thriving industry at the hands of union mentality (despite being written in 1957).

    The story of Starnesville (a lifeless auto-manufacturing town of degenerates) is a remarkably accurate account of what is happening in Detroit at the hands of the UAW.

    The town and plant were in great shape until a new corporate policy was instituted for the common good: “From each according to ability, to each according to need.”

    As the story goes, ideas, motivation, and productivity all disappeared. As a result, the plant closed. The people were reduced to fighting for bread and clothes.

    The Starnesville passage answers the burning question: “Who is John Galt?”

    John Galt is the man who stopped the motor of the world.

  • avatar

    Here’s the link to the Wall Street Journal article on the job bank.

    Google is your friend.

  • avatar

    I was employed from 1996 – 2001 at the Chrysler Technology Center and World Headquarters in Auburn Hills, MI as a salary contract employee. My position was one that required a great deal of flexibility and in some cases waiting. I was frequently spending 10 – 11 hour days and would have one to two hours a day of “bench time” waiting for a task to finish or between meetings. I was allowed by my manager to take breaks as they came so that they were only paying for 8-hour days. I often would walk around the halls of the huge complex. One of the wonderful places I discovered was a library of sorts. I later learned this was the “UAW Job Bank”.

    The job bank was a single room of about 1000 square feet. There was a librarian desk at the front, which often went un-staffed. There were banks of PC’s, VCR’s & DVD players with headphones, various newspapers and magazines, and one of the greatest collections of videos you’ve ever dreamed of. There was a small section of intoduction type videos such as “How to be a Millwright” and other skilled trades videos such as plumbing, welding, and so forth. That made up about 15%- 20% of the collection. The rest were things like the “Civil War” series, “Guns of the Wild West”, Unexplurigated Benny Hill” and other entertainment features.

    At that time I was studying for an examination for increasing my professional certification in the discipline I worked within. This was a perfect spot to study. At any time there were perhaps 3 – 8 people in the room, reading, watching videos, or whatever. I could easily study for an hour in peace. I went into this haven at various times for several weeks while studying for that exam. I’d see people coming in, spending a brief period of time, then leave.

    I finally approached the “librarian”, a guy about mid-40’s. I asked him about the room. He explained that there were about 90 UAW employees assigned to the “bank” for re-training. I was puzzled, as the place could seat perhaps 30 at the most, and there was never more than 4 or 5 present. He kind of chuckled.

    I had an occasion to chat with one of the bank employees. He had been UAW trained as a keyliner… That was a job before Apple Macintosh and desktop Publishing was invested. He would do paste-ups of artwork and run typesetting machines for posters and reprographic services. He had lost his job when they bought in PC’s and laser printers, and replaced the old copy devices with high speed printers and photocopiers. The interesting thing was he lost his job 17 years before, and had been assigned to the Job Bank for re-training since then!

    I had to of course ask him if he had used any of the resources of the job bank to retrain in another viable job position. He said he had started to a couple times, but basically said “why?” Chrysler was paying him to sit there. In his mentality the UAW saw that he was trained. He did his apprenticeship and became a journeyman. Then his job went away. The UAW said he would receive the training he would need for a whole career. So he came to “work” each day, would read the paper, leave the bank, walk around, talk to friends, and so on. 17 years. Amazing. I got the impression he had been employed soon after high school, and had been a keyliner for several years before being displaced. That meant however that only about 1/4 of his working career he had actually worked. The rest was the equivelent to UAW welfare.

    I had to ask where the other 90 or so people were. I was given the impression that some came in, “punched in” and would leave. Some had other jobs outside the facility, others had hobby businesses inside the complex. Management essentially turned a blind eye.

    This is not unique to Chrysler. I had previously worked in a GM facility. In one area a few dozen workers were displaced from a manufacturing line when it was automated. Rather than firing the workers, most of whom were in their mid 50’s, GM made them “quality inspectors”. There job was to sit adjacent to the line as the parts went by, some tapping the part lightly with a wire to assure that the casting material was indeed off of the part leaving the automated shaker. (It was of course) The purpose was to essentially leave the employees in a job until an “easy out” was offered for early retirement which was expected to come in a year. That I thought was honorable.

    More than a decade in the job bank is however rediculous.

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