GM/UAW Jobs Bank or Wall Street?
The infamous “Jobs Bank” was created in the 1980s to protect UAW members from job losses that would otherwise result from automation and robotics. An excellent summary is found here:
The Jobs Bank was created as GM made its plants more flexible and automated to compete with the Japanese. As GM became more efficient, it no longer needed as many workers to run a plant. The union demanded that it keep paying workers displaced by the new technology.
The UAW argued that if workers knew they had job security in spite of the advances in automation, they might embrace the new methods.
Of course, the UAW got its concessions and then some, while still fighting the plant closings. The Jobs Bank became little more than a welfare system for laid-off workers, who are still paid most of their wages and benefits.
Many of the Flint job-bankers, for example, worked in a plant that no longer exists: the huge Buick City factory that closed 10 years ago. Yet GM has paid them up to $85,000 a year. They also still enjoy health care coverage, while continuing to collect years of service toward their pensions.
Keep in mind that GM *agreed* to this. No presidential administration put a gun to their heads and forced this (as with the Rick Wagoner firing), the Jobs Bank was a negotiated benefit.
The IBD editorial says “blame the unions” but remember it takes two to agree to a contract, no matter how awful the deal is for the company. It was cheaper for GM to buy short-term labor peace… no wonder principle #1 of The Toyota Way involves making long-term decisions (it’s a hard principle to copy). Maybe GM should have suffered through a strike instead of agreeing to such bad contracts. Maybe that pattern of short-term bad thinking is the reason GM ended up on the path to ruin?
It’s ironic that the automation was used to compete with the Japanese when the average Toyota plant relied less on automation (investing in people) while GM and Roger Smith dreamed of the “lights out factory.” It’s too bad GM couldn’t choose to compete on Toyota’s terms. While copying the Toyota Production System on the shopfloor, GM’s automation strategy wasn’t enough to beat Toyota. As GM was finally on the brink, the Jobs Bank program was mercifully put to rest (after being mocked endlessly on this blog, see the “Jobs Bank” link at the bottom of this post).
So what dredges up thoughts of the Jobs Bank? I worked in a GM plant where Jobs Bankers played cards in the cafeteria (since management was rarely creative enough to find productive things for the workers to do, such as training or process improvement activities… after all, they were “just workers”).
This article in the WSJ made me think of the Jobs Bank:
Just as automation reduced the number of jobs needed in a factory, Wall Street traders aren’t needed to physically execute as many trades these days. Computers and software do a lot of this now, with about 10% of trades being executed manually.
So, as much as the finance world LOVES layoffs, what did they do with unneeded traders? They apparently have a “Jobs Bank” type program (without a formal agreeement and without union involvement). They’ve cut 1,500 traders (from a starting point of 3,000), but it still seems like they’re overstaffed.
Traders, according to the WSJ piece, do the following during the day:
- Play cards
- Watch movies
- Take long lunches
- Have a beer (“or two”)
- Work out
- Read newspapers
- Talk sports
- Watch YouTube
- Read books
- Do crossword puzzles
So the same things that “lazy auto workers” would be criticized for are the exact same things happening among professionals. Amazing.
I can’t feel sorry for the traders, they should have seen this transition coming and should have saved some money. Auto workers, even at what seems like an eye-popping $80k a year, make less in a decade than some traders make in a year:
Traders have traditionally earned some combination of salary and bonuses. In recent months, some, like Mr. Henderson, say their incomes have evaporated as firms have cut back on pay. Annual incomes vary widely, with a few traders cracking $1 million in good years.
So what is management doing with them? Maybe because their pay is mostly commission, they don’t care if the traders are idle? What does it say for the work ethic of these traders if they sit on their asses instead of finding some productive use of their time? They want an easy million dollars each year?
One trader is at least trying to better himself, just as some auto workers did:
Some are taking advantage of the slowdown to better themselves. Gordon Charlop, a trader with Rosenblatt Securities, used to spend hours after trading closed doing paperwork or meeting with clients. Now he studies. He’s now close to earning a business degree from online-based Capella University that he started in 2004.
It’s a crazy world we’re living in…