[quote=asianautica]So, you’re rich if you make $150k/yr as a contractor w/out benefit, but you’re not rich if you make $60k in W2 but $90k in benefits? I’m not blaming UAW for this, I just think it’s foolish to do what Teamster did. The big 3 are down. I don’t think it’s very smart of kick them when they’re already down.[/quote]
You’re missing the point. The current UAW workers don’t actually receive 90k in benefits. GM pays them the 60k salary, plus some fraction of that 90k for actual benefits. The bulk of the money is needed to pay for *retired* employee pensions and healthcare, which were massively underfunded by GM over the years.
Imagine that you currently work for UAW, you receive a gross “paycheck” of 150k per annum, you net 60k in cash, 15k goes to fund YOUR benefits. The remaining 75k is the GM FICA/Medicare tax for retirees. Why so much? GM decided to underfund these accounts in fat times, expecting to have them covered in the future (promise now, worry about it later…), in addition to poor planning, their lack or relative quality and foresight into product lines has caused revenue shortfalls (as well as GMAC’s massive losses on credit). So instead of blaming the company for its failures, accounting tricks are used to scapegoat the current workers.
With all that said, the reality is that GM will eventually go bankrupt w/o restructing these legacy costs, and the UAW and retirees will get hosed in the process one way or the other, unless the gov’t bails them out… Essetially GM has gone to the public well for 25b to retool (ie, we didn’t plan our product line well, give us money). Now they need 50b for legacy costs (we didn’t plan our HR well,give us money).
I think this example correlates to the upcoming Social Security shortfall. The USG will have huge “legacy costs” that were promised, but through underfunding, demographic shifts, and piss poor management the same scenario will unfold. As a taxpayer you may get the same treatment as the UAW, as the govt shifts the underfunded ss/medicare shortfalls onto non-retired citizens while claiming them as benefits you receive. Will you kick the gov’t when its down, or will you voluntarily raise your taxes to meet the shortfall, or reduce retiree benefits? Unfortunately, we probably won’t have a choice…
