Protect UAW Retirees: Their Future Is Our Future


[The UAW New Directions Movement (NDM), founded in the 1980s to challenge the auto union’s policy of “jointness” and lack of internal democracy, is experiencing a new burst of support from the union’s rank-and-file membership. The movement’s revitalization comes as workers in the auto industry are facing unprecedented health care concession demands by General Motors (the topic of this statement) as well as the massive destruction of wages, benefits, and working conditons being demanded by the Delphi Corporation followng its recent bankruptcy filing. — Ed.]

Collaboration between the UAW and GM, over 20 years in the making, is well known and now accepted as SOP. Although rarely discussed openly, its footprints are everywhere. A prime example is the current “tentative agreement” which would force retirees to pay a bigger percentage of their health care and active workers to pick up the tab. At the same time, fearful of backlash from members, the union has filed a lawsuit preventing UAW retirees from taking legal action against GM.

The current round of collaboration began in April 2005 after UAW President Ron Gettelfinger told GM: “Don’t Push Me.” He assured anxious and angry workers that he would not open the contract to alter health care benefits and that GM could not unilaterally alter retirement benefits. He promised to work within the confines of the contract. He then attended secret meetings with Delphi, other major suppliers, and the Big Three. After consulting with Wall Street analysts, Gettelfinger did in fact open the contract, thus allowing GM to change health care benefits for existing retirees. What GM could not legally do itself, Gettelfinger did for it.

What is shocking about the lawsuit is that it makes the collaboration so transparent. By getting a couple proxies to file a class action lawsuit against GM (and providing lawyers), the union could both “manage” the scope of the suit and be declared the sole representatives of UAW-GM retirees. This means that retirees will not be able to file a class action suit of their own, nor have an independent say in any proposed remedy. This set-up leaves the door open for further cuts in retiree benefits.

The Detroit Free Press reported: “A statement from GM said the car company ‘supports this action.’ GM and the UAW agreed, as part of the overall tentative settlement announced on Oct. 17, 2005, that the UAW would seek court approval. GM also agreed to work with the UAW to expedite such reviews and approval. Today’s action constitutes the initial step in implementing this element of the agreement'” (“Retirees Worry as UAW Seeks Court OK,” October 2005).

No wonder GM “supports this action.” With the “cooperation” of the UAW, GM is protected from UAW retirees after successfully altering their  health care benefits. This type of cooperation has a name: company unionism. It is the policy of the Administrative Caucus.

UAW retirees should attend court proceedings in full force and demand, first, that their opinions be included in the suit, and, second, that any court approval of post-retirement concessions be contingent on retirees’ right to vote.

Single-Payer National Health Care

What happened to the union’s demand for GM to support a Single-Payer National Health Care System? Why wasn’t action on health care reform a precondition to discussions on health care? Both the company and the union understand the importance of a universal health care system. Both could have lobbied Congress, built support in the working class, and showed that unions aren’t just for current members. All Big Three contracts with the CAW state, “Publicly funded health care . . . has been a significant factor in maintaining and attracting new auto investment to Canada.” Furthermore, they pledge to lobby federal and provincial governments for it.

What accounts for the difference? Many of us would link it to the UAW’s collaboration/jointness model of unionism, something the CAW has resisted for many years.  So where does that leave UAW retirees and active workers?

If the UAW accepts the premise that workers should bear the burden of a wasteful, inefficient health care system, what hope do less fortunate, non-union workers have?  Gettelfinger says, “Single-Payer National Healthcare has long been a goal of the UAW.” But, these are water-over-the-damned words, meant to soothe and pacify the sleeping giant into silence. If rank-and-file passivity were not the goal, the UAW would promote national health care as the best solution for all working people — not with words, but with actions. Instead of forcing the Big Three to demand universal health care as the logical solution to their cost differential with foreign automakers, the International is honing the corporate ax against workers.

Did Rick Wagoner and Gettelfinger attend the same sugar-coated seminar, or did they simply get their stories straight? Wagoner told the Associated Press: “Health care costs in this country are out of control. We would really like to see much more focus and leadership from elected officials especially in Washington” (“GM’s Call for Health Care Reform the Latest Push by Auto Industry,” 22 October 2005). His actions belie his words.

UAW members should not let GM and the other auto companies make them pay for mismanagement and the inexcusable failure to conduct business in a socially responsible way.  For UAW members, active and retired, this latest product of the collaboration/jointness model of unionism puts us on another “slippery slope” of unwarranted givebacks. Does anyone believe it’s the last time, and that they won’t be back for more?  On behalf of themselves and all American workers, UAW members should reject this assault on the hard-fought gains of retirees.

UAW members should proceed without concern for corporate America (GM), but should proceed with deep concern and utmost diligence for the well-being of America’s working class. We urge UAW members to vote against these concessions first and foremost to protect retirees, who not only sacrificed for our well-being, but who do not have the right to vote on contracts. If we open the door to concessions on retiree health care, then we set a precedent for more concessions in the future. The UAW lawsuit against GM doesn’t prevent cuts in health care for retirees — it endorses the UAW’s collaboration with corporations in executing changes the company wants.  Active members jeopardize their own security by endorsing such a policy.

Unanswered Questions

There are some fundamental questions that the International should answer about how this plan affects members.

It is important to see the whole agreement and have time to digest it. The Highlights, as past experience has shown, are not sufficient.
A major change that has already been announced is that the defined benefit will be converted to a “defined contribution VEBA [Voluntary Employee Beneficiary Association].” What is the difference between defined benefit and defined contribution and how will it affect members? Who will control the VEBA? In the past GM has taken money out of the VEBA for capital investments. What happened to the original VEBA? GM is committed to pay one billion into the VEBA in 2005, 2006, and 2011. What happens in the gap between 2007 and 2011? A new Agreement with new concessions? More COLA diversions? Is this a set up for  2007? If benefit claims exceed contributions, what happens? Will costs be passed onto retirees? The maximum annual increase for out-of-pocket expenses would be 3% per year for retirees. Does that mean 18% by the expiration in 2011? Will there be limits to the plan? For example, will the plan discriminate against the mentally or chronically ill or people with rare diseases by limiting or denying coverage? Will there be a cap on total payouts?  Who will administer this plan? Is this another jointness plan to provide job security for International appointees at the expense of workers?

Why Is COLA So Important?

The major reason autoworkers in the Big Three make above-average wages is cost-of-living adjustment. There were many years when we did not receive raises despite productivity gains. But thanks to retirees who struck GM in 1970 for ten weeks, our wages rose with inflation. When inflation went through the roof during the Reagan years, our wages rose with the rate of inflation. While non-union workers lost spending power due to inflation, our standard of living was maintained. COLA is one of the most important factors in our contract. COLA ensures that we will be able to pay our bills when gas and heating prices rise.

As former New Directions leader and UAW Local 599 President Dave Yettaw said, “The corporations are playing chess, but the UAW is playing checkers.” The companies not only have a long-term plan to shift the burden of health care costs onto workers; they want to eliminate COLA in the bargain. COLA diversion to pay for health care and other benefits is an alarming trend.

COLA diversion is a code phrase for money diverted from wages to offset the cost of health care. Below is a short history of COLA diversion.

COLA Diversions for Health Care
cents per hour

In simple English, COLA diversion amounts to a health care premium. Not adjusting for inflation, or accounting for overtime, or calculating Travel COLA concessions, the accumulated COLA diversion amounts to a minimum of $1,500 per year. On top of that, in the 2003 Agreement, 2 cents per quarter from COLA (8 cents a year) was diverted to pay for pensions.  These diversions add up over time and represent a permanent loss. We not only accepted a reduction in pension improvement, we paid for it. On top of that, in the 2003 Agreement, the rate of health care inflation was deducted from the COLA formula.

With all these deductions, we are rapidly approaching a zero cost of living adjustment. Now GM wants another dollar an hour. Where will it end?

Does Anybody but GM Make Out Here?

“This is opening the door to a whole new era of collaboration between labor and management,” said David Cole, auto analyst. Is Cole aware of a new layer of jointness/collaboration — another class of self-serving UAW bureaucrats — lining up jobs, managing a VEBA, and administering a health care plan for UAW members? There is every reason to think this might be the case.  Remember how joint funds grew from a nickel to nineteen cents per hour, plus up to five dollars for overtime? How is it that during all this talk of concessions we never heard of any concessions in joint funds? How is it GM can afford joint fund donations of nineteen cents per hour but not health care?

Things weren’t always this way in the UAW. Before collaboration, members and officers aligned themselves for the well-being of a nation and were willing to fight for the greater good of all working people. Today’s retirees were those workers who fought for justice. They deserve our support.  They won pension, health care, and cost of living for us. If we abandon retirees now, we cast our fate with the jackals.

UAW New DirectionsMore information on the NDM and the GM/Delphi concession demands can be found on the following Web sites: <>, <>, and <>.