How do you fire an autoworker?

Answers to your questions about the news.
Sept. 15 2006 6:40 PM

How Do You Fire an Autoworker?

Ford's elaborate scheme for disemployment.

Download the MP3 audio version of this story here, or sign up for The Explainer's free daily podcast on iTunes.

Ford will have closed 16 plants and cut about 30,000 jobs by the end of 2008, the company announced on Friday. This year, General Motors has already eliminated more than 34,000 hourly workers to save money. But no one's getting fired, and no one's getting laid off. Then how do they get rid of their workers?

Pay them to leave. Because of their contracts with the United Auto Workers, auto manufacturers can't kick a unionized employee out the door without a good reason, like theft or drug use. Whenever Ford and GM want to close a plant or shrink the workforce, they must negotiate a system of buyouts. Right now, Ford is inviting its 75,000 blue-collar workers to walk away by choice—in exchange for a big cash payment.

Daniel Engber Daniel Engber

Daniel Engber is a columnist for Slate

Advertisement

Workers get eight buyout options. Some of these involve early retirement, or a "pre-retirement leave" that doesn't preclude regular retirement benefits. Other options trade off the benefits for a lump sum of $100,000 or $140,000, depending on how long the employee has worked for the company. There's even a college option, which pays $15,000 of tuition over four years, plus 50 percent of wages. * (At the end of the four years, you're on your own.)

Why would the manufacturer offer these incentives? If the workers don't take the buyouts, they'll still get paid. Under the union contract, if the company has to close a plant, anyone who worked there is eligible to keep getting wages under one of two programs.

First, they might start collecting unemployment (paid by the state in conjunction with the manufacturer). Ford or GM would have to supplement the unemployment benefits with enough extra money to give each idle worker 95 percent of his take-home pay. (He'd still have to pay taxes on this sum, so he would end up with a substantial pay cut.)

Second, a Ford worker whose plant closed could be eligible to slide into the "GEN pool," which stands for "Guaranteed Employment Numbers." Anyone who's in the GEN pool continues to get paid their full salary and benefits, even if they don't have a job to perform. In theory, they function as a sort of workforce reserve for the company, so they could be quickly reassigned if Ford needed to reopen plants. But lately, the boom-and-bust cycles of American auto manufacturing have veered toward bust-and-bust. Idle workers relegated to the GEN pool may end up on the payroll for as long as the pool exists. (A similar program at GM is called the "jobs bank.")

Workers won't get these benefits forever. Unemployment and supplemental pay have a set life span of up to almost a year. GEN pool wages are guaranteed only for the life of the program, which could expire when the union contract gets renegotiated in 2007. (The guaranteed employment programs have been around for a few decades, but the manufacturers have begun to clamor for their demise.)

In effect, any autoworker who refuses the buyout is taking a gamble. He's hoping that one of two things will happen: Either his plant won't be closed down anytime soon, and he can keep his job indefinitely; or his plant does close down, but he's able to ride out the GEN pool (or unemployment) wages until a new job opens up.

Got a question about today's news? Ask the Explainer.

Explainer thanks Arthur Wheaton of the Cornell University Institute for Industry Studies.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

The Ludicrous Claims You’ll Hear at This Company’s “Egg Freezing Parties”

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Oct. 1 2014 8:34 AM Going Private To undertake a massively ambitious energy project, you don’t need the government anymore.
  Life
The Vault
Oct. 1 2014 10:49 AM James Meredith, Determined to Enroll at Ole Miss, Declares His Purpose in a 1961 Letter
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Oct. 1 2014 10:54 AM “I Need a Pair of Pants That Won’t Bore Me to Death” Troy Patterson talks about looking sharp, flat-top fades, and being Slate’s Gentleman Scholar.
  Arts
Brow Beat
Oct. 1 2014 10:44 AM Everyone’s Favorite Bob’s Burgers Character Gets a Remix You Can Dance to
  Technology
Future Tense
Oct. 1 2014 10:27 AM 3,000 French Scientists Are Marching to Demand More Research Funding
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.