December 3rd, 2008

UAW - Wow!

It has been reported quite a bit in the media that a concession which UAW are discussing with respect to attempting to secure an auto industry bailout is cutting back the jobs bank.

The jobs bank pays laid off employees in the order of 85% - 95% of their regular pay until they are re-hired. This is part of the reason that US auto companies tend to do deep discounting rather than cutting production if they can't sell - because cutting production doesn't impact labor costs.

However what I didn't realize was that the jobs bank is the second level of this protection. For the first 48 weeks after being laid off, UAW members receive a combination of unemployment benefits from the Government and supplemental unemployment benefits from the company. After that, they start to be paid from the jobs bank.

No wonder the companies aren't competitive with the non-union auto companies. Even if they did everything else right, the labor situation is just crazy.