Job and Income Security

What protections do UAW members have against being laid off?

In the face of corporate restructurings at DaimlerChrysler, Ford and General Motors, the UAW negotiated voluntary attrition programs for workers. Under these programs, UAW members could choose to retire with their health care and pensions intact, accept a voluntary buyout with a substantial severance package, or remain on the job. No one was laid off or involuntarily separated.

Those members who remain on the job are also protected against unemployment. The terms of the 2003 UAW auto industry agreements provide that no worker can be laid off for more than 48 weeks for volume-related reasons – a decline in sales or production – during the four-year life of the agreement.

In addition, the Supplemental Unemployment Benefits program provides income maintenance to laid-off workers, as well as employer-paid health insurance for up to 24 months for workers on layoff status. Dental coverage is not included. Workers with less seniority are eligible for health coverage for a correspondingly shorter number of months.

UAW Supplemental Unemployment Benefits

Sample: Michigan resident with two children

Source: United Auto Workers

Notes: In Michigan, state unemployment benefits are $362 for the worker in this example; the employer would pay the balance of $456.46 per week. The SUB payment obligation of UAW employers varies by state, depending on the level of state unemployment benefits.

What is the purpose of UAW job security programs?

The UAW-DaimlerChrysler Base Employment Level (BEL), UAW-Ford Guaranteed Employment Level (GEN) and UAW-GM Job Opportunity Bank Security (JOBS) programs were negotiated in the 1980s to help smooth employment fluctuations in the auto industry. The programs help maintain workers’ income during extended periods of layoff. Workers continue to receive a paycheck while performing nontraditional work or community service and taking advantage of opportunities to increase their skills and education. The programs also benefit the communities where members live and work by maintaining the purchasing power of working families during tough economic times, and encourage employers to invest in their production facilities and workforces within the United States.

The income security provisions in UAW auto contracts have come under strong criticism by employers in recent years. However, it is employers who have failed to properly utilize these negotiated programs, opting to contract out work while leaving large numbers of employees without meaningful job assignments. The UAW believes workers should be treated as valued contributors to their employers rather than disposable factors of production.

Have job reductions at Chrysler, Ford and GM been made up for by new jobs at Toyota, Honda and other non-U.S.-based automotive companies?

No. Despite the fact that non-U.S. based automotive companies have built new facilities in the United States, overall employment in the auto and parts sector is down by more than 200,000 since 2000. Assembly employment has declined by 50,000 jobs since its most recent peak in 1995. Employment in the parts sector peaked in 2000 and has since declined by 185,000 jobs.

Why is there job shrinkage even while new plants are being constructed and automotive sales have been relatively strong?

Imports of vehicles and parts are key to understanding recent employment trends. Total U.S. production – including at new plants – has been trending down, while imports have been trending up.

The share of the U.S. market held by imported vehicles (including captive imports by Chrysler, Ford and General Motors) has grown to 29 percent in 2006, up from 22.5 percent in 2000 and 16.4 percent in 1995. Even as non-U.S.-based auto companies build plants here, a significant number of the vehicles they sell in the United States continue to be produced abroad.

The parts sector has been hurt not just because a growing share of vehicles are produced outside the United States and Canada, but also because domestically assembled vehicles are using more imported parts.

Hasn’t shrinking employment at Chrysler, Ford and General Motors reduced their economic importance?

The domestic automakers remain key to the prosperity of America’s automotive economy:

• Even after employee buyouts, GM will employ more workers than all non-U.S. based automakers combined.⁴
• One Ford plant – the Dearborn Rouge complex – employs more workers than Hyundai’s entire U.S. operations.⁵
• Chrysler, Ford and General Motors sold 57 percent of cars purchased in the United States in 2005, but purchased 77 percent of auto parts made here, supporting 480,000 U.S. jobs in the auto parts sector.⁶

Do UAW-negotiated job security programs have an impact beyond the auto industry?

Yes. By protecting good-paying auto manufacturing jobs, UAW-negotiated job security programs also protect related jobs in auto parts, design, research, engineering, marketing, sales, advertising and other sectors.

These jobs, in turn, provide consumer spending power, tax revenues and economic growth opportunities for hundreds of U.S. communities.

Negotiated programs that protect UAW members against permanent layoffs – and that provide income maintenance during periods of temporary layoff – have a similar impact.

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