ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, September 29, 2011

Surprising Good News out of GM

Detroit_Renaissance-Center  Today's New York Times reports that the United Automobile Workers (UAW) union has reached a four-year contract agreement with General Motors (GM).  This is shockingly good news in a time of general economic contraction when much is being blamed on the power of unions and their long-term contracts.

GM (whose corporate headquarters is pictured) is willing to put $215 million into increased labor costs in the next three years, but that will represent only a 1 percent increase in its labor costs over that period, according to the Times.  The Times also reports that the contract calls for the creation of 6,400 new jobs, the transfer of some work from Mexico to the United States and an increase in entry-level pay.

The deal also includes incentives for workers to accept early retirement.  GM expects ten percent of its skilled-trade employees to take the $75,000 being offered and estimates that it will save itself $30 million if they do. 

One onion in the ointment is that the company plans to offset much of the costs associated with new bonuses and wage hikes by eliminating a program that provided free legal services for employees.  An additional wrinkle, at some plans, the Times reports, fewer than 40% of those eligible bothered to vote. 

Apparently the UAW is also close to a deal with Ford.


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Wow. That is surprising. I could have sworn that unions had nothing to do with the contraction of the economy. I had heard something about a housing bubble and irresponsible financial transactions that consequently led to many unions being forced to give concessions on everything from wages to pensions. Who would have thought that some of the last members of the dwindling middle class were actually slowing down an economy that continues to consolidate income and wealth in a small percentage of American households?

Posted by: Wingo | Sep 30, 2011 3:20:11 AM

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