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G.M. Strike: 50k Union Workers Walk Out Over Wages and Idled Plants (nytimes.com)
108 points by jbegley 9 months ago | hide | past | favorite | 132 comments



Unfortunately, what people need to judge this is information about where the negotiations are really at, and what the issues are, and what the differences are - not just PR releases from GM and UAW. Both institutions have proven corrupt over and over during the last fifty years, and it's hard to take either at face value.

There is also a consistent pattern. Companies do great, leading to expansive contracts with workers, then are mismanaged, or not sustainable during down-cycles. Then a down-cycle happens, and the company declares bankruptcy (which more often then not involves a government, a hard core negotiation or a bank bailing them out), and moving to a starvation contract, which they keep in place to far to long, then they get a expansive contract, and the whole thing continues.

Alternatively, Unions don't agree to the starvation contract, which then destroys the company - see Eastern Airlines, Pan Am, and all the carriers that didn't survive deregulation in the 1980s.


Profit sharing and equity grants align employees and shareholders in cyclical industries. I never understood why base pay + shareholder-aligned compensation never shows in these negotiations.

Yes, the lavish packages and guarantees are better in the short run, but they will need to be re-negotiated in the next downturn.


> Profit sharing and equity grants

This works so long as the corporation doesn't try and muck around with how their profit is recorded. See "Hollywood Accounting" for examples of this in practice in union-using industries.


Most union members have fixed monthly expenses and limited cash reserves. A promise of profit sharing at some point in the future doesn't help when the rent is due tomorrow.


There is a long long history of trying this - most notably when UA became completely employee / union owned. However, once the initial ESOP period ended, the unions still ended up in a acrimonious battle with the (labor owned) board of directors. Then 9/11 occurred, the company collapsed (again) and went into bankruptcy.


I agree they align incentives, but there's a large degree of cynicism/skepticism and lack of understanding of how profit sharing is calculated among the workforce. I've worked places where the message that makes it to the represented employees is a far cry from what was presented in the union negotiations. E.g. The end employee thinks they're losing their pension when in reality, they're not, new employees wouldn't be getting a pension.

I talked with a guy who worked 42 years for the same company and was on the bargaining committee when a work stoppage occurred. He said they always thought the company kept two sets of books - the ones they showed the union and the actual books. Nevermind that he worked for a F500 company which was publicly traded at least half the time he worked there, and he worked for the largest facility in the company, driving much of the revenue for the company.

You also hear things about "the company going after tax write-off so they don't have to pay workers as much" when that write-off they're mad about is a standard cost of doing business deduction in the same way payroll is...the company is making a donation to a community organization or buying supplies, but they'd reduce their tax bill by just as much if they paid the money out to employees in the form of profit sharing, bonuses, or higher wages.


He is alleging that his own company is run like Enron? It isn’t impossible.

Non-profits are a way to buy political influence while getting a tax write-off.


Further, I'm keen to learn more about the German practice of having labor represented on corporate boards. They seem to have many fewer of these food fights.

Why?

What helps?

Expanding stakeholder participation, generous profit sharing, limiting CEO compensation, larger social safety net...?


If the labor board members don't act in the best interest of labor or are generally ineffective they can be removed by labor. Also, it's unlikely you'll have a labor dispute when half the boards is made up of labor elected officials.

https://en.wikipedia.org/wiki/Codetermination_in_Germany


Wouldn't it be easier if the company could choose to pay more during the good years (bonuses / raises) and cut more during the lean years (no bonuses / layoffs)? Then the employees could choose to leave the company if they determined the broader market conditions were such that they could get more money at a different employer! This union thing seems really inefficient.


Easier for the companies maybe but not the employees. Companies are almost always in a better position relative to employees when it comes to negotiation: they have more information, deeper pockets, and on an individual negotiation level have little need for a specific employee (especially in manufacturing jobs where the skill level is low). The employee on the other hand often has few options and if they do push for better wages can just be canned losing their healthcare and possibly pension (in the few places those still exist) because in manufacturing (and to be honest many other jobs) individuals are by design replaceable and largely interchangeable. In some areas there's only 1 or 2 employers for that type of job and moving for a better opportunity requires uprooting the lives of the rest of the family (children go to new schools and spouses have to find new jobs as well) with a lot of uncertainty about the new job.

To counteract this and get the employees a fairer share of the value they add to a company unions exist so that the power imbalance gets evened out between workers and management.


Historically, companies - specifically their leadership - has tried to get the most they can out of people for the lowest cost. It has often gotten into ways that would be considered abusive today.

Are people just a thing in a financial transaction where each side tries to get the most out of the other at the least cost? If someone thinks that then it's kind of a sad view on humanity.


Companies must optimize the cost of all inputs. No matter how much unions want to be paid, the market sets the price for cars, and if labor demands an absurd amount of money that prices GM's cars above the market price, the cars won't sell.

This isn't "abuse", it's a free market system.


Are companies all optimizing for cost? Isn't there a temptation to optimize for executive compensation? What it manufacturing was sent to the place in the world with the lowest overall expense. The extra money made could be put into bonuses and raises for execs.

This is an honest temptation. It's not just about the company health. It prioritizes some employees over other employees.

It's more than optimizing expenses.


Every company takes inputs (labor and physical goods) and produces outputs (products and services). GM is not the only producer of cars, this is a very competitive industry. If they sell a car for $25,000 they can't simply raise the price without consequence - there are competitors' cars for sale. So how will they cover the extra expense demanded by labor? It sounds like you believe executives are paid too much, so the extra money to pay labor should come out of executive compensation.

However, the vast majority of executive compensation is in the form of equity, and labor's demand for more cash will punish the stock price. Plus there really isn't that many executives and you can't squeeze them enough to cover the extra spend on labor.


The actual result there is that companies never "choose" to pay more.


Yep, they'll largely only do so when forced by market conditions. Unfortunately there's a lot of other effects that will insulate them from small to medium wage differences: moving is tough, expensive, and affects the whole family not just the worker, in a reasonable commute radius there's often only a handful of potential employers for plant workers, and manufacturing by design has relatively little reliance on individual employees and their skills, tasks are rote and repetitive, and to top it all off getting healthcare outside of an employer in the US is insanely expensive. All of this adds up to a huge barrier to employee power to push for higher wages.


Those are exactly the things that push wages up, because new or growing companies have to set salaries that overcome them in order to attract a workforce. Then workers at existing companies can go to those companies, get a job offer under those terms and bring it to their existing employer and credibly threaten to leave if they don't get a raise. The existing employer would have to match it anyway in order to replace them (because the replacement employee would have those same costs), so it allows the employee to negotiate a raise -- or take the better paying job at the other company, which had to do better than after-cost breakeven to attract them to begin with.


In a vacuum perhaps but that depends on the credibility of them actually leaving and for there to be new jobs coming into a sector. Manufacturing in particular isn't great because any new company is already going to be looking for lower wages just to compete against imported products manufactured overseas.

A small difference in wages won't attract people from far away to move to a new location because of all the thing I originally stated and ultimately while there are some good benefits to manufacturing in the US it's hard to beat Mexico or China because the costs are so much lower there for labor. On top of that because it's a relatively low skill field the potential hiring pool is very large so there's little need to pull in veteran higher wage (and higher healthcare cost) employees from other companies.


But now you're talking about a completely different issue -- competition from foreign labor pushing wages down. But that's also the same reason why the unions can't really get more money from them. They can't pay US workers more when competitors are able to (and do) pay foreign workers less.

You're also now looking at the company's perspective rather than the employee's. The fact that there are other industries is a benefit to the employee -- if you can go to college and get paid twice as much as a software engineer then some people will take that option (benefiting them), which reduces the labor supply in the original industry (benefiting the remaining people).


Conflict is inherently inefficient. That doesn't mean surrender to the opposing party is the best option.


I don't know why you're getting down votes. Not so much bonuses, but a certain amount of unpaid time off is common in the contracts of European car workers.

I still don't think you could/should get rid of the unions though.


It's close to impossible to make a justified, informed decision when both sides are hiding behind pompous phrases and heavily standardized press releases.

But in absence of other information my uneducated sympathy would tilt a bit towards the company and away from the union for one simple reason: many unions are essentially monopolies.

Yes, we all know a good union is a good thing and it can be beneficial for both the corporation and the workers. But what if a union happens to be "bad" it seems like the corporation has very little leverage.

We do have all sorts of laws and regulations preventing formation of large monopolies in corporate world. Do we have anything to prevent a de facto monopolization of workforce by a union?


What's the difference between 'monopolization of workforce' by a union, vs by a corporation? A union should be democratic, but if the workforce is split into many smaller unions it loses negotiating power.


There wouldn't be a difference, but that's not the case here. Workers in the auto sector have several different employers to choose from.

In terms of equalizing bargaining power, unions make sense in a few narrow contexts -- say, single-employer mining towns -- but far less in cities where workers have many options open to them.


In terms of equalizing bargaining power, not having unions maybe makes sense if there 3,000 highly competitive companies in the auto sector instead of only three.


'Choosing' a union or whether to be part of one is not any harder than 'choosing' an employer.


> We do have all sorts of laws and regulations preventing formation of large monopolies in corporate world. Do we have anything to prevent a de facto monopolization of workforce by a union?

It's called "right-to-work" law. Some states have it and some states don't. But it prevents a union from requiring you to join as a condition of working for a company.


And in some cases translates to the ability to fire you same day with no reason given. Perk is you can do the same, quit with no reason or notice. The imbalance seems clear.


> it seems like the corporation has very little leverage

Create a less crooked union...?


Oh wow, yeah, won't anybody think of the poor corporations


Without those evil coprorations your union members are out of a job, so yes, we should probably at least consider that there are two sides to this.


Why do we need to judge it?


You don't. But if you are going to express an opinion, it helps if it is an informed opinion.


Focus on the markets, economics. Ignore the food fight.

GM and others are making fewer cars in the USA.

Why?


Because as long as imports aren't tariffed, you can make cars cheaper in a place where $5/hr is a good wage, and you don't have to pay for your employee's health insurance. Welcome to globalism. You know, that thing that leftists were protesting in the 90s and 00s?

Hint: the solution is not to drop US wages to $5/hr.

I also see much handwringing about the crazy health insurance costs GM has to pay. That's unfortunately the cost of doing business in a country with an utterly broken healthcare model. There is no sane reason for why 'good' healthcare coverage should cost $13,000/capital/year... Yet, here we are.


Apologies, I was hinting that perhaps demand in the USA is declining.

But otherwise I agree with you.

--

As I'm sure you know: GM (and others) have long thwarted single payer. To keep more leverage over labor. To now complain about the expense is pretty rich.


Note that you're basically saying that we should all pay more for cars just so that those workers can keep their jobs.

Fair enough, but why stop there? What about all the other productive jobs lost due to cheaper foreign labor? It would be unfair to give special treatment just to auto workers. Either everyone should have a right to forever keep the profession of their choice, or no one should.

Soon enough you find yourself in the situation where everything is more expensive and everyone's standard of living is lower, because all comparative advantage has been lost.

This has been known for well over a hundred years, but people still have trouble accepting it.


>Note that you're basically saying that we should all pay more for cars just so that those workers can keep their jobs.

You're assuming that the higher costs will necessarily all be passed along to the consumer rather than come from profit margins.

I think it's a valid assumption if the market were comprised of a lot of highly competitive firms rather than 3 not-very-competitive-at-all firms.

There's definitely a link, I think, between record high and increasing corporate profit / GDP ratios over the last 15 years and outsourcing.


Why don't you look at the profit margins? But please, don't just look at the good years.

For GM, it's probably about 4-5% average in the last years:

https://www.macrotrends.net/stocks/charts/GM/general-motors/...

> I think it's a valid assumption if the market were comprised of a lot of highly competitive firms rather than 3 not-very-competitive-at-all firms.

Consumer goods are generally highly competitive. There are no monopolies or exorbitant profit margins. The number of companies is irrelevant. Even if it was just a single company, as long as the profit margins are low, consumers are not at risk of being overcharged.

Outliers are companies like Apple, which have a monopoly on their IP, but that's a different story.


No, we should pay more for cars so that executives can keep their multi-million dollar pay, and so that the average surgeon can afford three summer homes, and so that my 401k can keep growing at an average of 7%/year, from now till the day I die, without me having to lift a finger. Duh.

Why is optimizing labour costs the only option that such false dichotomies put on the table? Why are all other expenses sacred, but wages the first on the cutting block?

It's not a 'if we don't cut pay, we will live in a dysopia where nothing is affordable' situation.

It's a 'if we don't reign in the capital owners, the healthcare cartel, and management compensation, we are going to continue to live in a dystopia, where the vast majority of normal people continue to get squeezed to enrich those three groups.' (I'd also throw in loan servicing in there, but sadly, the existence of the bloated retail banking sector is a consequence of those three problems, not the cause.)

Most of a typical family's expenses are housing and healthcare. No amount of blue collar wage cutting is going to make either of those two line items affordable. But it sure as shit will make said blue collar family not be able to afford them. Wringing your hands over the cost of consumer goods, while ignoring those two elephants is bad policy.

We'd all be better off if we lived in a world where cars and widgets and clothes cost twice as much, but healthcare half as much. Well, most of us would, at least. You can find such a model on the other side of the pond.


> We'd all be better off if we lived in a world where cars and widgets and clothes cost twice as much, but healthcare half as much.

No, we wouldn't, because people buy cars and clothes more often than they buy health care.

What costs a lot in the US is health insurance, not health care. And that's because the thing called health "insurance" isn't actually insurance; it's not just covering you against unforeseen large expenses. It's more like an expensive maintenance plan that you're forced to buy whether it's cost effective to you or not--like the full service maintenance plans that car dealers try to sell you, except that you can refuse to buy them from car dealers.

What really needs to happen is to separate out three very different things that are lumped together today into what is misleadingly called "health insurance":

(1) Routine, predictable maintenance expenses, like regular physical exams and vaccinations, and routine care for common illnesses like the flu. These should be provided by a competitive free market, like they were in the US before WW II when employers started offering health benefits to attract workers since wartime regulations prohibited them from offering higher wages. Competition would drive these costs down since the expenses are routine and it's reasonably easy for people to tell good providers from bad ones.

(2) Unforeseen, large, temporary expenses, like accidents. These are what would normally be covered by something properly called "insurance". For auto accidents, people's auto insurance is already required to cover them in most states; but for other kinds of accidents--slips and falls, broken bones while playing sports, etc.--an ordinary insurance model would be suitable, provided by health insurance companies.

(3) Expensive chronic conditions that require ongoing treatment (usually drugs, but not always). These are the hard ones to cover, but a system that was dedicated to covering them and nothing else would be much better than the bastardized system we have now that lumps everything together. These are the kinds of things where it makes sense to pool national resources and provide some kind of universal coverage, since it's usually not feasible to assign specific causes so an ordinary insurance model can't work. But if national resources were pooled to provide universal coverage for just these things, we could see how much they actually cost and we would be more focused on finding ways to reduce the frequency of such conditions.

> You can find such a model on the other side of the pond.

Really? Cars and clothes are twice as expensive as in the US?


> No, we should pay more for cars so that executives can keep their multi-million dollar pay, and so that the average surgeon can afford three summer homes, and so that my 401k can keep growing at an average of 7%/year, from now till the day I die, without me having to lift a finger. Duh.

Don't worry, your 401K has a decent chance of losing half its value before you retire.

As for multi-million dollar compensation, why don't you run the numbers and see how much the executive salary adds up to and then tell me how much money could be saved there. Maybe you'll have an argument then.

> Why is optimizing labour costs the only option that such false dichotomies put on the table? Why are all other expenses sacred, but wages the first on the cutting block?

If you run a multi-national company, in order to stay competitive, you need to look for the cheapest prices everywhere, including labor. Labor just happens to be the major cost factor, so naturally it's the first thing to optimize on. Your own wages are, naturally, the last thing you want to optimize on.

You can argue that these companies should be bribed into taking more expensive local labor, just keep in mind that this bears a cost that all of us pay.

> Most of a typical family's expenses are housing and healthcare. No amount of blue collar wage cutting is going to make either of those two line items affordable. But it sure as shit will make said blue collar family not be able to afford them. Wringing your hands over the cost of consumer goods, while ignoring those two elephants is bad policy.

Of course, housing and healthcare can't be outsourced in the same way that car manufacturing can be. If I follow your line of reasoning, manufacturing should get the same privilege, so that housing, healthcare and consumer goods will be less affordable. Like I said, this is possible, but you lose the comparative advantage, which is just leaving wealth on the table. Perhaps those auto workers should get a job in those more privileged industries instead?

> We'd all be better off if we lived in a world where cars and widgets and clothes cost twice as much, but healthcare half as much.

Fair enough, let's artificially suppress healthcare compensation in favor of manufacturing compensation. I'm sure it'll do "wonders" for the quality of either.

> You can find such a model on the other side of the pond.

On the other side of the pond, everyone earns less, especially healthcare workers.


How exactly will my 401k lose half it's value before I retire? Are capital owners going to stop making money or something? Is there an anarchist-communist revolution scheduled next Tuesday?

Your mathematics don't make any sense.

If 60% of my household budget goes towards housing and healthcare, and 40% of it goes towards consumer goods, made by people like me.

If I lose 20% of my wages, for a 10% reduction in the cost of consumer goods, this will put me into a net -16% deficit.

Stop optimizing for the cost of consumer goods. They aren't the problem for a typical household. They haven't been a problem for a typical household since we've figured out mass production in the 70s. They never will be a problem for a typical household, unless we have a complete collapse of civilization.

> Fair enough, let's artificially suppress healthcare compensation in favor of manufacturing compensation. I'm sure it'll do "wonders" for the quality of either.

Every other country on Earth manages to provide equivalent or better healthcare, for much lower prices (Even adjusted for PPP). They don't have parasitic insurance and billing industries, they don't waste healthcare money on marketing spend, and they have reigned in physician salaries. None of those things have any impact on the quality of healthcare (Actually, the first two have a pretty major negative impact on the quality of care), but they do have plenty of impact on the cost of care.

> On the other side of the pond, everyone earns less, especially healthcare workers.

It's not what you earn, it's how much you have left over after you pay the bills.


> How exactly will my 401k lose half it's value before I retire? Are capital owners going to stop making money or something?

Believe it or not, markets go both up and down. While it's true that the S&P 500 has shown great paper profits most of the time, for the longest time, other markets haven't been that lucky:

http://www.thebubblebubble.com/wp-content/uploads/2012/05/ni...

We haven't seen the end of a historically unprecedented low-interest phase yet. Even without a breakdown in nominal terms, at current rates of asset price inflation, a million dollars might not afford you a porty-potty in one of the better areas of the country.

> It's not what you earn, it's how much you have left over after you pay the bills.

Generally speaking, purchasing power in the US is higher and the tax burden is lower. Of course it really depends on where you live. If people earn more, prices will be higher as well. There is cheap housing in the US and expensive housing in Europe. You have to compare "similar" cities, e.g. San Francisco with London:

https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

Also, for socialized healthcare, you will generally pay more than 10% of your paycheck, however high that may be.


> Your mathematics don't make any sense.

I haven't done any mathematics.

> If I lose 20% of my wages, for a 10% reduction in the cost of consumer goods, this will put me into a net -14% deficit.

What's the basis for these numbers? First of all, foreign labor isn't 20% cheaper, it's 50-75% cheaper. That's why there's not that much manufacturing left in the US. Secondly, direct and indirect labor cost accounts for far more than fifty percent. Profit margins for consumer goods are usually in the single digits.

Remember, I'm talking about the scenario where everyone has their profession protected. In practice, you are either protected by virtue of not being outsourcable, or by government intervention. You don't see the government artificially keeping a huge domestic garment industry alive, for instance. We leave that labor in East Asia. Still, you can buy domestic garments, but they are massively more expensive.

In practice, assembly work in a car factory is not such a big factor of overall car costs as to raise prices of cars massively. You can argue that only these people should be protected, it just would be unfair.

> Every other country on Earth manages to provide equivalent or better healthcare, for much lower prices.

Every other country? What are you talking about? Most people in the world barely have any access to health care at a level close to that of the US.

Sure, people in Europe on average get a better deal, but again, they also earn less. Of course health care is cheaper if every doctor, every nurse, every clerk earns less. It also helps to not have million dollar malpractice settlements, or not letting pharma companies set their own prices.

It's not all sugar and spice though:

https://www.theguardian.com/commentisfree/2018/apr/06/nhs-fa...

https://www.telegraph.co.uk/news/health/news/6127514/Sentenc...


Isn't the whole point of market capitalism that unfit companies should cease to exist? The airlines you enumerate weren't competitive thus their bankruptcy was both expected and welcome. The airline industry itself survived and (unfortunately for the planet) more people than ever fly.

I find it very hard to believe that any union has ever destroyed any company. But if it has, then it probably was for the best and the company deserved to be destroyed.


The idea is, It was an insulated market, barriers to entry were high, prices were high and wages were high. Deregulation happens, new players come in paying lower wages, and undercutting the established players. They need to cut wages, but it's whether the union lets them. If they don't, the airline goes bust, and the staff have to take lower paying jobs at the upstart airlines anyway. Ofcourse the unions point of view could be that stock holder/corporate compensation is too high, and that should be trimmed instead of/ in addition to cutting staff wages.

From the unions perspective, a bankruptcy isnt welcome, nevertheless it could easily bring one about.


Market capitalism doesn't care about individual's workers livelihood though. It makes the assumption that their labor can be allocated more efficiently. That is the reason why companies going out of business can be healthy.

In practice, that isn't necessarily true, at least in the short run. If an airline goes out of business, that doesn't mean all these workers will just be absorbed into other airlines, especially not at the prices they just failed to bargain for. They may need to switch industries and start from close to zero.

Unions are supposed to prevent that from happening, but when they overplay their hand, both sides lose.

Talking about GM, the labor cost for building cars in the US is so high, it barely makes sense. Either foreign labor needs to get more expensive (perhaps through tariffs), or domestic labor needs to get cheaper. Otherwise, these jobs will disappear and the unions will become obsolete. It's not a good bargaining position.


In 2008 GM nearly went under. Part of what saved them was the union working quite a bit of reduced compensation mostly for less senior employees. Now that GM is very healthy and profitable the union workers want thier share. Sees reasonable to me.


This isn't just about wages. From the article: https://www.freep.com/story/money/cars/general-motors/2019/0...

Health care costs are a key issue. Ford and GM said that they spend more than $1 billion per year on health care for active UAW workers. Government data for all union workers show that the average cost of health care benefits is more than $6 per hour, the Center for Automotive Research reported. But the report showed the UAW Detroit Three's health care cost is roughly 150% of the U.S. average. The average UAW worker pays about 3% of his or her health care costs compared with 28% paid by the average U.S. worker, CAR said. Note: Some of the money for CAR's research comes from automakers including GM, Ford and FCA.

UAW members are protective of their health care benefits because their jobs are physically demanding and they need health care to function and stay healthy to do the jobs. Automakers also worry about an economic downturn foreseen by some economists as the car companies face high costs to develop electric vehicles required in China and Europe and to prepare to compete in a future with more shared services and autonomous travel.


One wonders why they aren’t heavily lobbying the government to enact something like Medicare for All.


You mean GM?

The unions don't want Medicare for all, their health insurance is even better than Medicare. They actually fought against ACA until the "Cadillac Plan Tax" was put into place. The govt then pushed out the tax for years.


Yes, I mean GM. Would be a great way to bypass all the fuss and expense of these fancy health plans.


The fuss is part of the product. People overestimate health insurance and health costs generally and assign that high value to the health insurance provided by the employer. If that was suddenly converted to a simple wage without benefits firms would likely end up paying more after it all shakes out.

Think of all the times you have heard "That job only pays $x an hour" and the reply "Yeah but the benefits".


Probably because they're looking for ways to lower costs rather than just move them from insurance to taxes at the same cost, which then becomes much more difficult to renegotiate or improve because a uniform system requires you to have to deal with millions of previously independent stakeholders instead of each party doing what works best for their situation.

They may also need a solution sooner than it would take Congress to do something like that, given the amount of opposition to it from people who prefer the status quo -- or any of a dozen competing alternative solutions to high healthcare costs.


It would lower costs, and it would also put them on an equal playing field with the other domestic manufacturers, rather than having to compete with other companies who have lower costs due to not having such expensive union health care plans.

As for needing a solution sooner... it’s not like this is going to be the end of it. Health care costs were a major point of contention in 2008 as well. I’m pretty sure they were a major problem for GM well before that.


> It would lower costs

That is consistently the claim, but unless it would also lower outcomes, what thing is it doing to cause that which couldn't be done independently of single payer? It's easy to lower "costs" using price controls, but then you have all the usual problems of price controls. Shortages, rationing, quality reductions necessary to meet the price target, etc. Keep in mind that for people with insurance, the US system has better overall outcomes than most socialized systems.

> and it would also put them on an equal playing field with the other domestic manufacturers, rather than having to compete with other companies who have lower costs due to not having such expensive union health care plans.

That doesn't really matter unless they're competing with those companies, but most of the other auto companies have the same issues with the UAW and US workers, and those companies have the same option to build plants outside of the US as their competitors.

> As for needing a solution sooner... it’s not like this is going to be the end of it. Health care costs were a major point of contention in 2008 as well. I’m pretty sure they were a major problem for GM well before that.

That's the point. 2008 wasn't even the beginning of it, this has been an issue since at least the Clinton administration. GM would likely be bankrupt (again) before Congress does anything meaningful here.


Because the benefits they receive today are far superior to medicare. In fact all of the Democrat candidates in favor of medicare for all have made explicit promises to unions that they can keep their expensive health plans if medicare for all is enacted.

It is a promise that will likely be impossible to keep, but you know politics and all.


Basically they are promising the German model with a baseline public option and allowance for private insurance for those who wish to pay extra for it. It would establish something like Medicare as the baseline and push private options to compete with a low/zero cost accessible plan. I think the end result would be like states where auto insurance is not required where I can insure my new BMW as much as I want but at least the uninsured civic that rear ends me has a lifeline to stay solvent.


Sorry, "they" as in GM.


It did go under. It's not the same company that was operating before the crisis.


That seems more of a technicality than a practicality - GM workers in 2007 got a paycheck with the GM mark on them - in 2019, they also get a paycheck with the GM mark on them - the fact that the actual legal entity changes, matters for shit. Also the fact that GM considers itself the same GM that existed also somewhat dilutes this idea.


>That seems more of a technicality than a practicality [...] the fact that the actual legal entity changes, matters for shit.

If I can go a meta layer above this subthread and explain the 2 different conversations happening:

- the gp (maxerickson) comment was responding to "2008 GM nearly went under", and it's correct (not technicality) that the old_company (with its own assets-liabilities) did go under. Not "nearly", but completely went under. A new_company was created as different legal entity with a clean slate to pick and choose assets-liabilities.[1]

- the other replies (Aloha, wil421) are more philosphical "Ship of Theseus"[2] type of arguments

All 3 (maxerickson, Aloha, wil421) can simultaneously be right because they are all emphasizing different aspects of what "General Motors" means. It can be either "GM the assets&liabilities" or "GM the brand, the public perception".

[1] https://www.nytimes.com/2009/07/11/business/11primer.html

[2] https://en.wikipedia.org/wiki/Ship_of_Theseus


Yes, I was indeed making a 'Ship of Theseus' argument - specifically, GM's obligations to its current and some obligations to former employees was not extinguished by the bankruptcy.

I was also arguing that the bankruptcy was immaterial to GM's moral obligation to 'share the wealth' when times are good.


The government dissolved the old company and gave the union a significant chunk of ownership in the new company.

It's sort of a technicality, but it's an important one.


It’s the same company if the same executives, managers, salaried and union employees are still there.

Did they rehire everyone and start their plants from scratch when the legal entity changed?


You can read about it:

https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor...

The new company had ~23,000 less people (I think many of those jobs were sold to other companies).


Just because a company reduced its workforce it doesn't mean it is a different one.


I'd say it's the same company if the same stock holders exist.


Equity in the old GM got wiped out. It's more than a practicality for you if you held shares in the old company -- or your retirement fund held shares.


Shareholders come and go. This makes little difference for the company.


This is like calling a heart transplant an everyday affair. It's deeply incorrect.

Corporate reorganizations under bankrupcy law do happen, but they are rare, newsworthy, and very disruptive to workers (at a minimum, their pension and health benefits are renegotiated). Shareholders being wiped out is not normal, and retirement funds -- or really, the stock market at all -- would not work if it was.


The workers never take a share of the losses.

In 2005 when the company lost $10 billion or in 2007 when they lost $38 billion the union workers didn't get bills in the mail instead of checks. On a personal level, the workers are still making profit regardless of whether or not the company is as well.

In 2008 GM was a $100 billion in debt. The union workers didn't pay that, they didn't take responsibility for that, the taxpayers did.


By this logic, management doesn't share in the losses, either. But they are for damned sure collecting bonuses when times are good. Sounds to me like the union wants a piece of that same "times are good" action.


Management can't ever owe money, but their stock dropped 90+% in a couple years during their downfall.


I assume management gets both annual bonus and equity as a part of their compensation, so I would argue that yes, management is sharing in the loss, in particular with the equity.


IOW, management made less profit. They did not share in the loss. From parent:

when they lost $38 billion the union workers didn't get bills in the mail instead of checks.

If management got bills in the mail, they shared in the loss. AFAIK, they did not.


Yeah. Management work for the owners just like everybody else. They're workers who happen to not be represented by the union.

Management only takes losses so far as they have equity stakes in the company, which is to say the extent to which they are owners. When GM lost $38 billion in a year the people who own the company took that hit.

That's why employees usually don't value ownership in a company, because it cuts both ways. A salary only deposits into your account.


When their equity grants went from being worth X to 20% of X, they shared in the loss.


What's your point? The workers don't run the company - it's not a co-op. Since they don't run the company and don't get a share of the profits, why would they ever be expected to pay losses?


The point is specifically that because they don’t share in the losses[1] they shouldn’t share in the profits. This was a direct response to the parent comment: “Now that GM is very healthy and profitable the union workers want thier share.”

[1] I’m not making a statement about whether this is true or not. Just capturing the context.


> The point is specifically that because they don’t share in the losses[1]

Assuming it's true they had their wages reduced in the crisis, it's absolutely disingenious to claim that a return to higher wages post-crisis would be undeserved profiteering. They did share in the losses.


Did you stop reading when you got to something you wanted to argue against or did you just pick the wrong comment to reply to? I very clearly called out that I am not making a statement about whether the workers shared in the losses.


By sharing in losses I mean losing money in absolute terms, that's what happens to owners. Owners don't just make less money in bad times, they lose money. Workers may lose money relative to what they think they would make otherwise, but they still make money.

Accepting the risk of losses is why owners have a legitimate claim to the profits. Workers take a guaranteed paycheck which shelters them from losses in bad years and forfeits their claim to profits in good.


> Workers take a guaranteed paycheck which shelters them from losses in bad years

It's just great when workers accept pay-cuts in bad times, just for people like you claiming that this is just normal, no loss, and certainly no reason to restore their paycheck when good times are returning.


When I co-owned a company, we gave employees a share of the profits when we had a good year. Besides seeming like a decent thing to do, the employees were more aligned an incentivize to increase profits to increase potential profit-sharing checks. Also, it's easier to adjust bonuses downward as needed. On the other hand, employees would prefer not have their base-pay cut in down year.

We had good employee retention.


Don't autoworkers get stock? I remember vaguely in The Simpsons that the nuclear powerplant employees got stock, and Homer stupidly sold his stock.


Good point. But let's take it a step further. The workers might not "share" __directly__ in the financial losses, but certainly if the company is struggling they lack opportunity for career growth, and such. To say nothing of the fact that struggling conpanies seem to be fond of cutting corners on safety and other things that comprise the the quality of work life for the workers.

As with ao many things: it's complicated.


Unionized workers had to take pay cuts during the downturn of the company, so they shared the losses.


If their compensation was reduced then that does count as taking a share of the losses.


>In 2005 when the company lost $10 billion or in 2007 when they lost $38 billion the union workers didn't get bills in the mail instead of checks.

And you're saying that shareholders did get bills in the mail?


Taxpayers got this bill! Shareholders of GM got billions in profit, and then mismanaged the company (through their appointed officers). In the end the US taxpayers had to pay for their stupidity.


Seconded. I’d like to know who got these bills when GM was losing money.



> when they lost $38 billion the union workers didn't get bills in the mail instead of checks.

They reduced their paychecks and benefits, so they actually shared part of the losses. Which entitle them now for a share of the profits.


The ones that got laid off or went nt on short time or didn't have a COLA rise did


The executives never take any loss, in fact they make huge bonuses, even when the company is on verge of bankruptcy.


Doesn't matter. Executives (in this case) are workers, not owners. Some of their pay may be in equity in an attempt to align their interests with the owners but their agreement with the owners is the same as a janitor's: they take guaranteed pay in exchange for not being tied to the risks and rewards of the profit/loss cycle.


> The union workers didn't pay that, they didn't take responsibility for that, the taxpayers did.

These union workers are also taxpayers.


Getting laid off isn't taking a loss?


> GM is very healthy and profitable

This seems to be the Crux of the issue. A quick look at the financial statements shows positive net income (though not consistently). The statement of cashflows, which is where companies go bankrupt or not, seems much less positive a story.

My accounting training is limited. Any HN'ers with accounting/finance background care to comment?


I'm no accountant, but I think the bulk of the issues is that profits never last in the auto industry. GM trades at a price to earnings of 1/4 of what the market as a whole gets, because investors expect earnings to be negative as soon as a recession hits. GM has cash on hand of 3X its current profits to weather this storm.


Isn't it true that if if they didn't have a reduced work load and compensation then the company would be closed and nobody would have a job today?


That's not what the parent is saying. They're saying that now that GM is back to being profitable, the union wants those things raised again.

That seems totally reasonable to me too (and I'm not one of those blindly pro-union people, especially massive unions like UAW)


No. You can't really blame GM's financial troubles on worker compensation alone. You can blame the quality and desirability of the products they create however.


Perhaps, but I'm not sure that the fact that the reduction was the proper response to the situation at that time changes the fact that the situation no longer applies.


This is not a great time for the UAW to be staging any kind of strike. Why? Because a bunch of UAW top officials from the president on down are facing federal charges for embezzling from their workers.

https://www.reuters.com/article/us-autos-corruption-labor-fa...

The UAW shouldn't be striking when under under indictment as they are weak. It's also at a time when auto sales are weakening.


This is a great time to strike if you want to distract people from the fact that your top officials and president are under investigation :-)


Most of their demands seem reasonable but I don't understand their request that plants be reopened.

If there aren't customers to buy the products why would the UAW demand that GM keep making cars at those plants?


I think their solution would be to reduce the number of cars made in foreign plants and move that work to the US.


It's pretty simple: the UAW wants to keep their members employed. This isn't necessarily unreasonable. However it is one of the factors which drove the old GM into bankruptcy. Toward the end they were building cars that no one wanted and selling them at a loss because due to restrictive union contacts that was actually cheaper than laying off workers.


Because they don't care if the cars get sold, just if their union members get paid.


I believe it's more about shifting plants to other locations/countries. Existing factories can be re-fitted to produce a different model.


> The U.A.W. is pushing G.M. to improve wages, reopen idled plants, add jobs at others and close or narrow the difference between pay rates for new hires and veteran workers.

Can someone help me understand this? I mean, I guess I have to think about this as "factory workers are doing algorithmic tasks" so there's less benefit to being a veteran worker than there would be as a "knowledge worker?"

I don't want that to sound demeaning - it just seems odd to me that you'd be in a union to improve things for workers, but you wouldn't want the most senior people to be making solid money in comparison to new employees. Wouldn't you then lose some of the motivation for those experienced workers to stick around?


A decade or so ago, GM was looking to control costs, in particular the benefits, things like the crazy generous health insurance.

The UAW eventually agreed to create two classes of workers - the more senior union people would have their pay and benefits kept intact (mostly), and then it would be the new hires that would see lower wages and reduced benefits.

What they are arguing for now is to bring the new workers up to the level of the senior workers.


During the last negotiations, the UAW agreed to a two-tiered structure where new workers were considered a lower-class than veterans and received much lower pay and benefits.

> But in 2007, as the Detroit automakers were starting to bleed cash, UAW leaders agreed to create two classes of workers – in effect, protecting current members at the expense of future ones. Those hired after 2007 would be paid as much as 45 percent less and have less generous benefits as well as limited transfer rights.

https://www.reuters.com/article/us-autos-usa-families/for-ua...


The tiers are large. New hires make $17 per hour, the next tier starts at $28.

That's a big gap for people doing the same work.

https://www.freep.com/story/money/cars/general-motors/2019/0...


It's that the veteran workers got their pay hikes during earlier collective bargaining agreements. Recently, things like the crash in 2008 have caused newer workers to have different wage growth. They want to bring those wages closer to where they would have been if it had not been for the financial issues caused by the banking crisis and the renegotiated contracts.


>...so there's less benefit to being a veteran worker than there would be as a "knowledge worker?"

There can still be benefits for the company to having an experienced workforce - and it comes down to the company and union culture. I've worked in union shops as in industrial engineer. Your experienced press operator can help troubleshoot problems better and faster than a newbie, and they can tell you all the ways a plan you have is wrong before you implement it. Whether they do or not varies. Some individuals have an attitude of "I do what I'm told and go home at the end of the day", some are more than willing to help and collaborate, some hate their job but are holding out for a pension, some literally work harder at not working than if they just did their job.

I had many internships before starting full time. Some places you'd never guess were union - mostly in a good way. Factory #1 I could go out on the line and talk with anyone, and largely everyone was helpful in trying to make the work more efficient, improve the bad parts of their jobs, etc. It felt wrong, but my first day on the job I went to the R&D manufacturing area with my coworkers, they made small talk with the union machinist, then started machining some parts. I was taken aback, and they then explained the union only really cares about normal production.

Also factory #1, as I was making standard work, one worker was 10' and up a ladder from his toolbox when he realized he had the wrong size socket. He'd messed up a few other times for the same kind of thing and was tired of going up and down. He asked me to hand him the right size socket. I "took work from union labor" when I did that, though that factory had the attitude of "if you're making my life easier, it's okay".

Factory #2: I've also worked places where the union workforce pushes for wage increases for every tiny thing that changes. You took added a monitor to the computer they run a machine with, you moved a few buttons on the interface, you change the process to greatly reduce the safety risks and also reduced labor required by a marginal amount. All of those have been brought up as reasons they deserve a raise.

Factory #3: experienced downtime due to a mouse running into a 2' pit on the production line. The workers exited and refused to return to work until they saw the dead mouse come out. Not directly relevant to the conversation, but a fun story to tell.


They’re referring to two tier wage scales [1].

Workers hired after a certain date have worse pay and benefits, and it takes longer to earn benefits.

[1] https://en.m.wikipedia.org/wiki/Two-tier_system?wprov=sfti1


There are good factory workers, and bad factory workers. On one side you have those that do the absolute minimum (just like any job), while on the other you have people that know how to work more machines and are more helpful in diagnosing production issues etc.

The flaw here is that the only thing that matters is how long you've been hired. Not how good you are. Similar to teachers. Higher pay, shift preference, vacation scheduling, overtime availability, it all goes to the senior employees.


My union shop has two pay schedules. It's a grid of classification x seniority. If you're level 1, you make $8/hr. If you're level 6, you make $24/hr. There are yearly pay increases until you hit the end of the grid, then it's just COL increases.

There's a cutoff date where everyone before is on one schedule, and everyone after is on a different, lower-paying one. It's a concession the union made when the employer was less profitable that it had been. It's always been a dealbreaker that the two-tier system goes away, even though they could afford it.

Of course, management is doing their damnedest to make sure they don't hire anyone who could possibly join the union.


How do you prevent someone from joining a union?


non-full-time employees. Or being in a state with a Right To Work law.

Which is actually worse, because non-union employees are required to be ~represented by the union without paying for that representation~ treated as though they are represented by the union when in fact they are not. So the employee reaps the reward of the union without contributing.

dammit I want to strikeout something and I can't find the correct markup for HN. I know I've done it before.


I was kind of looking forward to the new C8 Corvette because it's only one of two interesting cars GM has produced recently (the other being the Bolt). But of course those people are on strike too.

https://www.bgdailynews.com/news/local-uaw-strike-puts-corve...


I've heard, but have not confirmed, that GM now makes and sells more cars in China than the USA.

"The Truth About GM’s Huge Layoffs and Why You Should Be Mad About It"

Scott Kilmer 2018/12/06

https://www.youtube.com/watch?v=FEyppHyeSWQ

Even if this is only partially true, I don't think labor (striking UAW workers) are going to win this round.


GMs profit comes almost completely from large SUVs and Pickup trucks, which gives the union a lot of power.

Essentially, they are selling pickup trucks and Escalades to Americans with fantastic margins to prop-up their car business (which is unprofitable in the US and only occasionally profitable elsewhere) and to fuel global expansion.

Basically if the UAW stops making pickup trucks and Escalades, GMs cashflow will turn ugly fast. Doesn't matter where the growth is.


Success for labor will truly come when they can do what management did: globalize.

If labor is cheaper elsewhere, can they get them to strike together? Are they trying to connect with them?


I think you’re subtracting quite a bit of historical context from your equation. The United States military and intelligence services through their weight behind making this globalization happen, policing trade routes and deposing economically unfriendly regimes. I don’t see them doing the same for labor any time in the near future...


>If labor is cheaper elsewhere, can they get them to strike together? Are they trying to connect with them?

The Taft-Hartley Act actually made that illegal. Strikes can only be engaged in between the shop being struck against, and it's respective Union. Network effects are apparently too destructive to be used by anyone except for the people raising money.

In short, no industry blacklisting of Union members/organizers by employers is allowed, and no secondary striking by other shops' laborers are allowed to be organized.

This legislation was enacted due to some rather poorly timed strikes during WWII if I recall correctly. Or at least that's what I've read.


The wobblies tried that with the idea of One Big Union. They were suppressed heavily.[0]

[0] https://depts.washington.edu/iww/persecution.shtml




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