Day: December 5, 2008

Would you take a job where you were paid *NOT* to work?

In recent discussions on the future viability of US auto manufacturers, one of the topics to come up was the UAW job bank program.

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.

Now if you are like me, you’ve never heard of this program before very recently. Ultimately, what the program is used for is to keep paying some number of UAW union members a worker’s salary while they don’t work. This is part of a program implemented in the 80s as a concession by auto manufacturers to the union to get support for productivity improvement efforts. In other words, the union realized that improving worker efficiency would mean fewer workers needed, so brought in this program as a way to keep paying some of the people who lost their jobs as a result.

How much does this cost the auto manufacturers? Well, we don’t know for certain, but looking back a few years gives us at least some idea:

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