GM/UAW Jobs Bank or Wall Street?

The infamous “Jobs Bank” was created in the 1980s to protect UAW
members from job losses that would otherwise result from automation
and robotics. An excellent summary
is found here:

The Jobs Bank was created as GM made its plants more flexible
and automated to compete with the Japanese. As GM became more
efficient, it no longer needed as many workers to run a plant. The
union demanded that it keep paying workers displaced by the new
technology.

The UAW argued that if workers knew they had job security in
spite of the advances in automation, they might embrace the new
methods.

Of course, the UAW got its concessions and then some, while
still fighting the plant closings. The Jobs Bank became little more
than a welfare system for laid-off workers, who are still paid most
of their wages and benefits.

Many of the Flint job-bankers, for example, worked in a plant
that no longer exists: the huge Buick City factory that closed 10
years ago. Yet GM has paid them up to $85,000 a year. They also
still enjoy health care coverage, while continuing to collect years
of service toward their pensions.

Keep in mind that GM *agreed* to this. No presidential
administration put a gun to their heads and forced this (as with the Rick
Wagoner firing), the Jobs Bank was a negotiated benefit.

The IBD editorial says “blame the unions” but remember it takes two
to agree to a contract, no matter how awful the deal is for the
company. It was cheaper for GM to buy short-term labor peace… no
wonder principle #1 of The Toyota Way involves making long-term
decisions (it’s a hard principle to copy). Maybe GM should have
suffered through a strike instead of agreeing to such bad
contracts. Maybe that pattern of short-term bad thinking is the
reason GM ended up on the path to ruin?

It’s ironic that the automation was used to compete with the
Japanese when the average Toyota plant relied less on automation
(investing in people) while GM and Roger Smith dreamed of the
“lights out factory.” It’s too bad GM couldn’t choose to compete on
Toyota’s terms. While copying the Toyota Production System on the
shopfloor, GM’s automation strategy wasn’t enough to beat Toyota.
As GM was finally on the brink, the Jobs Bank program
was mercifully put to rest (after being mocked endlessly on
this blog, see the “Jobs Bank” link at the bottom of this
post).

So what dredges up thoughts of the Jobs Bank? I worked in a GM
plant where Jobs Bankers played cards in the cafeteria (since
management was rarely creative enough to find productive things for
the workers to do, such as training or process improvement
activities… after all, they were “just workers”).

This article in the WSJ made me think of the Jobs Bank:

The Big
Bored: NYSE Traders Look for Diversions as Life Slows on Floor -
WSJ.com

Just as automation reduced the number of jobs needed in a factory,
Wall Street traders aren’t needed to physically execute as many
trades these days. Computers and software do a lot of this now,
with about 10% of trades being executed manually.

So, as much as the finance world LOVES layoffs, what did they do
with unneeded traders? They apparently have a “Jobs Bank” type
program (without a formal agreeement and without union
involvement). They’ve cut 1,500 traders (from a starting point of
3,000), but it still seems like they’re overstaffed.

Traders, according to the WSJ piece, do the following during the
day:

• Play cards
• Watch movies
• Take long lunches
• Have a beer (”or two”)
• Work out
• Read newspapers
• Talk sports
• Watch YouTube
• Read books
• Do crossword puzzles

So the same things that “lazy auto workers” would be criticized for
are the exact same things happening among professionals.
Amazing.

I can’t feel sorry for the traders, they should have seen this
transition coming and should have saved some money. Auto workers,
even at what seems like an eye-popping $80k a year, make less in a
decade than some traders make in a year:

Traders have traditionally earned some combination of
salary and bonuses. In recent months, some, like Mr. Henderson, say
their incomes have evaporated as firms have cut back on pay. Annual
incomes vary widely, with a few traders cracking $1 million in good
years.

So what is management doing with them? Maybe because their pay is
mostly commission, they don’t care if the traders are idle? What
does it say for the work ethic of these traders if they sit on
their asses instead of finding some productive use of their time?
They want an easy million dollars each year?

One trader is at least trying to better himself, just as some auto
workers did:

Some are taking advantage of the slowdown to better
themselves. Gordon Charlop, a trader with Rosenblatt Securities,
used to spend hours after trading closed doing paperwork or meeting
with clients. Now he studies. He’s now close to earning a business
degree from online-based Capella University that he started in
2004.

It’s a crazy world we’re living in…