Posted on March 17th, 2009 by Tim Eavenson | No Comments »
Filed under: ., Employee Benefits, Labor Law, Politics, The Financial Crisis | 
[Ed. Note: I have been looking for a way to channel my vitriol over the news that AIG wants to pay the guys who could arguably be blamed for the entire global economic meltdown $225 million in structured bonuses, and I'm hoping to do it through this post. That said, don't fault me if I start yelling. ]
I love David Greising. The Chicago Tribune and NPR business contributor seems to understand everything business, especially the stuff I don’t. This morning, he took on AIG’s bailout apologist CEO, Edward Liddy, for going soft on derivatives execs after canning 6000 Allstate employees a few years ago, employment contracts be damned.
Why, Greising asks, after pushing Allstate into a handful of class action lawsuits (two by the EEOC, even – that takes work) because he ignored the axed employees’ contracts, has the man brought in by the Bush Administration to clean up AIG dropped the broom?
Given his own history, Liddy’s explanation that his “hands are tied” because of the derivative department’s executive agreements is sad. Can you imagine the media tsunami that would follow a class-action lawsuit on behalf of AIG derivatives executives for their bonuses? It’s not even their salaries, it’s their #%*$@* bonuses! … [cough] sorry.
Honestly, it’s like Wall Street and K Street are having a “who can sound more hollow” contest.
Greising also points out that other ailing corporations, including Motorola and Continental Airlines, have worked out deals with their executives for pay cuts, bonus paybacks and the like.
And then there’s the big wrench in Liddy’s explanation – the United Auto Workers. They, too, had a contract. A few, actually. But nobody – not the government, the union or the automakers asking for tax money ever questioned whether it could be renegotiated.
And that’s as it should be.
So what’s different about AIG? How is it that, in the face of a furious public, following one of the biggest collective renegotiations in history, and with a proven executioner at the helm, this company can’t get out of paying millions in bonuses?
Is there a double standard among contracts for workers and contracts for executives? Probably. But Greising’s article proves that that can’t answer the whole question. Honestly, I think the real problem here is a denial of workplace realities.
When the auto industry was getting bailed out, one of the biggest arguments against giving them the money was that it would create a false sense of stability. The employees and executives of the Big 3 needed to understand the dire straits they were in, and government infusions would keep that from happening.
The same is clearly true at AIG. Employees and executives alike simply don’t understand how close to the edge they are. They want to pay bonuses to “retain talent”? Talent?
The department created confusing securitized investments that didn’t work. Now it’s months away from being wound down, and they’re still paying to retain talent? This is a group of people who need to feel their livelihoods are in jeopardy. That’s why the UAW renegotiated their deals. That’s why Motorola execs adjusted theirs, too.
Employment contracts are only as good as the companies that agree to them. Perhaps if AIG were suddenly small enough to fail (potentially, at least), its employees would find it in their hearts to discuss their compensation structures.
Posted on February 17th, 2009 by Tim Eavenson | No Comments »
Filed under: ., Labor Law, Politics, The Financial Crisis |
I know, that’s a vitriolic headline for a website that claims to be Switzerland in the labor wars.
It’s also a bit of a tease. This article (or this writer. Or this website) will make no opinion about whether the UAW is responsible for the mess the auto industry is in. We will leave that to the biased blogs to our right and left.
But as we all eagerly anticipate the release of GM and Chrysler’s restructuring plans, the UAW’s staunch refusal to concede on issues like healthcare payments is already being cited as a reason the Plans won’t meet with much satisfaction on the Hill.
And that’s probably true. Congress will likely hate the fact that, for the mess the economy is in, the UAW is standing pat on its collective bargaining agreements and playing hardball with concessions. Indeed, as we reported last fall, part of the deal the Bush White House struck with automakers when it promised the $17 Billion was that they get concessions from the Union on the big-ticket items like health coverage, wages and work rule restrictions.
But wait. That’s the problem. This wasn’t the UAW’s deal. Sure they were “at the table” when negotiations were taking place, but the UAW wasn’t asking for the money. No, remember: what happened here was that Congressional Republicans had tried to get them to concede to these very same cuts weeks before the deal went through, and when they failed, Bush just put the onus on the carmakers to force the union’s hand.
And that’s my problem with putting this one on the UAW. Whether they got Detroit in this mess or not, they didn’t draft the “bailout” last fall, and they didn’t approve it, but it had everything to do with them.
So while the politicians and media will no doubt fall on one side or the other of the debate, let’s not forget that they were the ones who praised the original bailout, without ever bringing up this promise-discrepancy in the first place.
Before you light your torch with the rest of the mob tomorrow when the wails against the UAW start, here are a few points to consider:
The fight is not over “health-care costs”.
Well, it is, but not really. During the parties’ last collective bargaining negotiations, the union agreed to take on all of the healthcare responsibilities for its workers. That would have been a huge money-saver for GM in the long run. The deal was that GM would put $34 billion or so in a trust, called a VEBA, which would provide startup money for the union to use to administer the employees health plans. After that initial cash infusion, GM would essentially be off-the-hook for healthcare coverage for its unionized workforce.
Now, as part of the “restructuring plan”, GM wants the union to agree to reduce its payment obligation, delay the VEBA’s funding or more. While the rioters make it sound like the union is pushing back against reductions in healthcare coverage, the reality is that the UAW made a huge concession taking on healthcare administration, and wants GM to cover what they promised in the interim.
The Union has been making the exact type of concessions Congress is demanding for years.
Also at the most recent contract talks, the UAW reduced its base pay for recent hires and altered its job classifications to make certain jobs more flexible and pay less. It’s not ignorant to the economic plight in Detroit. I think it’s just doing what unions do – fighting for every drop or crumb it can get for the workers. Good or bad, criticizing the UAW for that is like blaming a cow for eating grass or Terrell Owens for mouthing off.
After giving up a lot of ground over the past few years, is the union playing hardball? Yes. That, in fact, is why unions exist. It gave up a lot during the last round of collective bargaining, and is probably wondering what the point was, if it was just going to have to give up so much more now, whether it likes it or not.
Should Congress be demanding some accountability in Detroit? Again, sure. But if it wants concessions from the UAW, it should’ve gotten them itself, instead of creating this prisoner’s dilemma and then patting itself on the back for saving the auto industry.
Look, saying you’ll loan person #1 money that they need to survive, provided they can convince person #2 to do something that you yourself could not convince them to do is not exactly a recipe for success. The obvious result of forcing the car companies to make promises they couldn’t control was exactly what happened – a meltdown at the negotiating table.
One has to wonder whether that was the idea all along. Instead of criticizing Bush in his unappealing, waning days as President, push the public anger back into the Obama administration, and blame the union. That sounds like a much better proposition for those thwarted Congressional Republicans.
Posted on December 22nd, 2008 by Tim Eavenson | No Comments »
Filed under: ., Labor Law, Politics, The Financial Crisis |
A few weeks ago, the CEOs of Chrysler, GM and Ford were hopping back and forth to Washington to try and negotiate a deal with Congress that would keep their companies out of bankruptcy. The biggest roadblock for the automakers were southern, congressional republicans, who thought any money should be contingent on major concessions from the United Auto Workers Union. First and foremost on the list of concessions was bringing UAW salaries and work rules in line with the non-union autoworkers in foriegn car companies’ US plants – most of which, coincidentally, are in the south.
It was this negotiation – more between Republicans and UAW President Ron Gettlefinger than any of the Big 3 – that finally dissolved the talks. That was why everyone was so excited when the Bush Administration – the BUSH Administration – announced that the President had authorized $17.4 Billion to be given to the automakers to stay afloat. What many failed to notice – as they cheered the bailout’s passage, was that the restructuring schedule attached to the bailout funding looked oddly familiar:
President Bush’s plan includes targets for United Auto Workers’ wages to be brought in line with what foreign companies pay their non-unionized workers in their U.S. plants and to have similar, more flexible work rules. Foreign makers can move workers from plant to plant and give them different duties or more responsibilities. Many union plants have thick manuals regulating what a worker can be asked to do. (From USA Today)
The deal also demands that the unions take corporate stock for ½ of the funding for its VEBA (a retirement fund established to put health and pension benefits in the hands of the union, rather than the employer – click here for earlier coverage). But the money, of course, isn’t going to the union. It’s going to the automakers. So how can the President demand these concessions?
Essentially, what the President did was place the burdens of the southern Republican demands on the shoulders of the Big 3, instead of Congress. If the automakers can’t convince the UAW to essentially overhaul its collective bargaining agreements, which means at least 3 votes by workers themselves for major concessions, then they lose out on the promised federal aid.
For his part, Gettlefinger is looking to the President-elect to alter the requirements when he takes office next month. As the paper points out, this puts the spotlight on one of Obama’s biggest challenges: balancing the interests of a faltering economy and the organized workers that helped elect him.
