Everybody's Business, Jeffrey Scharf: Unions may have turned a corner

[Omaha Steve]

http://www.santacruzsentinel.com/archive/2007/October/07/biz/stories/02biz.htm

Has trade unionism in the U.S. reached a turning point for the better?

Last week, the United Auto Workers approved a precedent setting contract with General Motors. The UAW will take over health care liabilities for its retirees and permit a new, lower wage scale for certain new workers.

By way of background, the UAW has long insisted on above-market pay and benefits for all workers and retirees. Including benefits, UAW members are paid about $65-$70 per hour compared to $40-$45 per hour at nonunionized auto plants operated by foreign automakers. The UAW negotiated a job bank where laid-off GM members could be paid for not working. In short, the union emphasized the short-term gains for the members of today at the expense of the members of tomorrow.

Short-term thinking has had devastating long-term results. Since 1970, total UAW membership fell from 1.5 million to about 520,000. UAW-GM membership fell from 159,000 to 73,000. All of this happened while the number of cars purchased and produced in the U.S. soared.

Under the new contract, the pay differential between UAW workers and nonunionized workers will be halved. For a one-time payment of $35 billion, the union will assume the estimated $51 billion lifetime health care cost of UAW-GM retirees. For the union, the cash represents the certainty that retirees will not be left with nada if GM ever goes bankrupt.

The union also agreed to a two-tier wage schedule. New hires in certain nonproduction jobs like will receive half the pay of current workers. In addition, these new hires will have a separate, less generous pension plan. In return, GM will convert 4,000 current temps to full-pay UAW status. The company promises to keep certain work in the U.S. rather than look abroad.

FULL story at link.