Gall about the jobs bank

December 4, 2008
Back to TopCommentsE-mailPrintBookmark and Share
The jobs bank has come to symbolize whatever the general public thinks is wrong with the United Auto Workers and Detroit car companies.

For many years, the UAW contract has stipulated that laid-off workers be paid nearly their entire compensation. Now, because the jobs bank has become such a lightning rod, the UAW says it will suspend the benefit in the hope of persuading Congress to OK a bailout.

Toyota made news this year when it treated its workers much the same. It continued to pay laid-off assembly line workers even through production slowed and they werenâ??t needed. Yet, the decision wasnâ??t met with disdain.

Why are Americans repulsed about the UAW jobs bank but nod approvingly when Toyota keeps its workers on the payroll during slow stretches? Is the difference that Toyota workers keep training during their layoffs?
ADVERTISEMENT
  • My thought is that the idea of full-compensation is admirable until the time that the compensation is funded by taxpayers. I don't believe Toyota is seeking a multi-billion dollar check from the Feds. With the Big 3 seeking tons of money, why should they continue high-level spending? With Gov't funding, it seems to become a form of welfare. When they can afford to pay their own workers, they can continue the full-compensation.
  • Exactly.
  • ditto
  • I agree with the first commenter. In addition, I think a key difference is the free-choice factor. Toyota made that choice of its own free will. Whether or not it is a sound business decision only time will tell. If you believe demand will increase again in the short-run, it makes sense to keep trained labor available. If demand does not increase, Toyota will be penalized for maintaining an elevated cost structure. Washington is less likely to give Japanese firms handouts.

    The Big 3, while certainly not well-managed, implemented full-compensation because the Unions had much more negotiating leverage. A Job Bank program does not make sense if demand for a firm's product is declining and will stay down for the forseeable future. Generally, a firm that has to reduce its workforce is not doing well. The Union Job Bank plan takes a bad situation and makes it worse. The market told the Big 3 to change their operations and value proposition in order to be viable. The Job Bank makes that much harder to do by maintaining elevated costs. No one likes to see someone lose their job, but our system requires firms that do not provide what the public wants be allowed to fail. We benefit more as a society by focusing our resources and productive capacity on goods and services that best satisfy needs. The free market, while imperfect, is the best system to guide those choices. A Job Bank program runs counter to the tenets of the somewhat regulated free market economic system we employ. That bothers a lot of Americans.
  • What I always hated to hear, and it has been this way forever with them was that all these laid off workers wouldn't do anything other than sit around. Many, many you'd hear about spending all their time going hunting and fishing, like it was some big vacation fully paid which it was

    This has been going for a long time and everytime you'd hear about it, it just infuriated you, especially if you were the kind of person who'd always go to work and get things done.

    Yes, it does seems like a double standard, but the US unions have made a mockery of the system which galls most people
  • It's about time this travesty was brought to light. Every worker who took advantage of this situation should feel personally responsible for the downfall of the Big 3. You cannot have extra labor costs and be competitive. Even though this does equate to billions of dollars of savings in year 1, it is, as one person said in the news, the unions private jet. It just shows how irresponsible and unaware of long term ramifications the union was--and how much they really were not thinking of the members' long term well being or they would not have set up this economic impossibility or the political PR problem of having to explain to those of us who work for our money every day how it could in any way make sense to pay someone to stay home or go hunting.

    The unions have outlived their useful life. It's time they disappear, and our economy will be better off without them.

Post a comment to this blog

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

  4. GOOD DAY to you I am Mr Howell Henry, a Reputable, Legitimate & an accredited money Lender. I loan money out to individuals in need of financial assistance. Do you have a bad credit or are you in need of money to pay bills? i want to use this medium to inform you that i render reliable beneficiary assistance as I'll be glad to offer you a loan at 2% interest rate to reliable individuals. Services Rendered include: *Refinance *Home Improvement *Inventor Loans *Auto Loans *Debt Consolidation *Horse Loans *Line of Credit *Second Mortgage *Business Loans *Personal Loans *International Loans. Please write back if interested. Upon Response, you'll be mailed a Loan application form to fill. (No social security and no credit check, 100% Guaranteed!) I Look forward permitting me to be of service to you. You can contact me via e-mail howellhenryloanfirm@gmail.com Yours Sincerely MR Howell Henry(MD)

  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

ADVERTISEMENT