[U]nion concessions were "painful" only by the peculiar standards of Big Three labor relations: At a time when some American workers are facing stiff pay cuts, UAW workers gave up their customary paid holiday on Easter Monday and their right to overtime pay after less than 40 hours per week. They still get health benefits that are far better than those received by many American families upon whose tax money GM jobs now depend. Ditto for UAW hourly wages, though according to the task force, GM's labor costs are now within "shooting distance" of those at nonunion plants run by Honda, Toyota and other foreign firms. Cumbersome UAW work rules have only been tweaked.
Even the one "big risk" the union is said to have taken--turning "much of its $20 billion retiree health fund claim into stock"--apparently has to be qualified by two factors: 1) The deal apparently contains an underpublicized allocation of preferred stock to the UAW health care fund (VEBA) in addition to its 17% or so ownership share in the new firm. Preferred stock pays dividends, and the dividend on this stock will still pay $585 million into the VEBA per year , according to WaPo . In other words, the union doesn't really have to rely entirely on the value of its 17% ownership share. It will still get large cash payments. 2) If GM goes broke again, and the VEBA winds up a dozen or so billion short, don't you think the federal government is going to step in and guarantee health benefits? That might partly explain why the UAW was willing to take more risks with those retiree benefits than with the pay of current workers. ...
Whether or not the union has given up a lot less than it would have to give up in a normal bankruptcy in which union contracts can be voided--and it has --the question is whether it has given up enough to make GM a "viable" auto company. I would have thought the administration would, off the record, have already fallen back on the 'if-it-fails-at-least-we-delayed-it' defense. But apparently not --they are sticking to Obama's optimistic public line that the current deal is enough to get GM "back on its feet," even to become "once more a symbol of America's success."
"The fear at the UAW was that ownership in GM could eventually be worth very little," said a person involved in the talks.
Backfill: Clarifying Michael Levine piece on the un-taken middle alternative to a) liquidation and c) Obama's expensive nationalization. ... If the process had to start last November, though, it seems unfair to blame only Obama. ... 1:19 A.M.
Creepy Latte: Politico 's Mike Allen, summarizing the day's news in his "Playbook" for those in a hurry, sees fit to print two long paragraphs of a self-serving letter from Starbucks' president, Howard Schultz , on health issues. Sample:
Over the past year, we expanded our food menu to include a variety of healthier options, including a yogurt parfait, fruit cups, protein plate, Vivanno Smoothies, and Perfect Oatmeal. ... [snip] ... Our commitment over the next 18 months is to increase the scope of our healthy food and beverage choices ....
Riveting stuff. Would Allen have delighted his readers with Schultz's prose if Starbucks wasn't frequently a sponsor of "Playbook" ? ... It's a fine ethical line we all have to walk in these hard economic times! But not that fine. ... 3:06 A.M.