Oh, To Be Laid Off By GM

You hear all these stories of GM and Ford laying off workers and images of struggling families come to mind. Well, that may be an illusion, according to this article by George Will. Here's the part that just stunned me:

Under contracts negotiated, beginning in 1984, with the United Auto Workers (UAW), there are about 14,700 laid-off autoworkers in the "Jobs Bank." About 7,500 of them are from GM. They get paid most of their wages and benefits -- between $100,000 and $130,000 a year, for an annual cost to GM of $750 million to $900 million.

jWow, if that's correct, that's incredible - a lot more than I'll probably ever make in my life, even with a PhD! And for doing nothing, zilch, nada!

I loved the last line of this article:

Detroit today is having what Washington will eventually have -- a wrenching rendezvous with promises that seemed compassionate, or at least convenient, when originally made but that cannot be kept without ruinous consequences.

Incidentally, if you are looking for an investment tip, Ford bonds may not be a bad buy, considering the juicy yields and this fact:

Jay Palmer of Barron's says Ford cannot win concessions from workers by credibly threatening bankruptcy because "CEO Bill Ford and other descendants of founder Henry Ford own roughly 40% of the company's voting equity. A bankruptcy would in one stroke eliminate a huge chunk of their fortune and effectively sever the family's ties with the company."