Will You Feel Sorry for this GM Retiree?

November 22, 2008 by  
Filed under Money and Behavior

Yes, folks, yet another CNNMoney personal finance sob story, this one about a fearful GM retiree.  Is this retiree disabled?  No.  Then he must be old and feeble.  No.  Actually, he’s a healthy 54 year-old.  That’s all I need to read to drop my sympathy level to barely above the “I don’t care” level.  It’s second career time, my friend, and quit the whining.   I’m older than you and still working in my second full-time career and as a part-time blogger.   The rest of us have to wait until at least 62 to get paid for not working.

This article and many others like it beat us over the head with arguments about the potential for “broken promises” made to retirees if the car companies go bankrupt.  These arguments are premised on the false assumption that benefits promised to GM retirees are social contracts, requiring government intervention.  This just in:  They were not social contracts.  Social Security is a social contract.  The GM labor contracts were negotiated between GM and the UAW.  Neither side invited me or any other taxpayer to the bargaining table.  If I had been there, the contracts would have looked more like what Toyota bargains for with its U.S. employees.  Instead, the UAW and GM management stuck the auto companies with these enormous legacy labor costs, putting them in an non-competitive position in the market.

Call me cruel, heartless, and insensitive if you want.  But if it’s all the same to you, I prefer Tough Money Love.

This week Mr. ToughMoneyLove participated in the Carnival of Personal Finance hosted by MoneyNing.  Head over there and check out the excellent articles.

Try to ignore all of the bad financial news this week.  Think about and give thanks for what you have instead of dwelling on what you may have lost.

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33 Responses to “Will You Feel Sorry for this GM Retiree?”
  1. goldenrail says:

    I won’t call you cruel, heartless or insensitive, but I may suggest that your perspective from your ivory tower is a little skewed. I’m guessing that your second career to which you refer is being a patent attorney. I’m assuming the first was when you were an engineer. The second is directly related to, and even sort of follows from the first. I don’t think it’s fair to compare that to the man from GM.

    He works(ed?) in a manufacturing plant. Most of which are now closing. It’s probably all he’s ever done. I doubt he has a college degree. What kind of job would you suggest he find for this “second career” that’s supposed to be the simple solution?

    As someone who has worked blue-collar jobs, and who has a lot of relatives in these industries, it’s hard for me to think that this man is wrong for feeling betrayed or upset about the loss of retirement benefits. Midwest manufacturing jobs were the kind where you gave your whole life to the plant and the plant promised to take care of you afterwards. For people like my grandpa, they did. Times are changing, and our economy is no longer built on manufacturing like it was in the 50s and 60s. The system does need to change, and maybe the companies can’t do things the way they used to do them. But, that doesn’t mean the workers caught in the middle of this change don’t deserve our sympathy.

  2. Goldenrail: Thanks for your comments. I do have sympathy for retirees who may lose benefits from a bankruptcy. In fact, I would be equally upset if I were one of them. My issue is with elevating sympathy to the point that the government feels compelled to intervene with my tax dollars. If I am going to share in the risk, I want some of the benefit. The folks who are in those positions are called employees and shareholders. With respect to GM, I am neither. I’ll also say this. If GM goes down and the PGIC has to step in as guarantor of the pensions, I think you will see an increase in use of defined contribution plans over defined benefit plans.

  3. I have sympathy for the workers but I also have taxpayer outrage. Even if bankruptcy affects 1 in 10 jobs in this country, what about the other 9 jobs that are being dragged down with the ship?

    It’s not like any of these workers who lived through the 80s couldn’t see the writing on the wall, and those who stayed in the auto industry were basically sticking their heads in the sand.

  4. Brian says:

    A point to remember is that the retiree contract for health benefits was written into the contracts long ago, and workers took less in hourly pay to keep those benefits. It is a sob story but not much different from the packages of benefits that the CEO’s leave with and what many of the Ford family gets.

  5. Brian: Agreed. I have read that the top 37 Toyota executives collectively earn $35 million. Compare that to just the CEO’s of Ford and GM who make $40 million by themselves. Let’s give that money back to the company to fulfill the promises it made to retirees.

  6. He should go get a job. Oh, wait, he already did. He runs his own business, but doesn’t make 60K any more. Wah.

    I’m surprised people really thought these union “promises” were that airtight. I am now dying to see the union propaganda. Seems pretty obvious that those benefits disappear with bankruptcy, or, heck, even getting bought out which is not uncommon in the industry.

  7. goldenrail says:

    @ToughMoneyLove: You have some good points, and I do think it’s unfair to make everyone else pay for the auto industry’s problems. Like Matt said, “what about the other 9 jobs that are being dragged down”?

    Personally, I think every family should switch back to only having one working parent/spouse (where there are two). I don’t care which one. This would lessen household expenses in relation to childcare, free-up a large part of the job market and balance out what is available so that every family can have a little piece. Not to mention the stability it could restore to a lot of families. Bringing the grandparents back home would be nice, too. Then they wouldn’t have to worry about needing all those retirement benefits to pay for a nursing home and could be surrounded by the ones they love.

    But maybe I just like this idea because I’m still bitter about the whole feminist movement… Or maybe I’ve spent too much time in Africa.

  8. Clearly this individual is at an early retirement age. I don’ think that he should have to loose any money he has paid to pension over the years, but I agree that there isn’t any reason at the age of 54 you still shouldn’t be working if need be.

  9. I would think the safety of a GM employee’s pension is dependent upon the type of bankruptcy that is filed… if they do indeed file for bankruptcy.

    Mr. TML – could you clarify? Ch. 11 vs. Ch. 7 has different implications correct?

  10. Justin and Matt: If GM goes into bankruptcy – whether Ch 11 (reorganization) or Ch 7 (liquidation) there is no doubt it will try to dump or modify its pension obligations. If it succeeds, then the Pension Benefit Guarantee Corporation will step in (at least until it goes broke.) The PBGC has a limit on the monthly guaranteed pension benefit and does not guarantee health benefits. Bottom line is that even if GM liquidates, current retirees will get some pension benefits from the PBGC.

  11. vilkri says:

    It looks like everybody is knocking on the government’s door to get a hand-out – the huge corporation and the little guy alike. Maybe it is time for me to worry less about how I can make a living and to worry more how I can get some hand-outs myself.

  12. JustAnotherReader says:

    I have to go back to a quote from goldenrail’s comment- “Midwest manufacturing jobs were the kind where you gave your whole life to the plant and the plant promised to take care of you afterwards.”

    Most of my mother’s GM career was spent on the line where she blew out two wrists and both shoulders. I think there is a wide misconception that the GM worker is just another pencil pusher being overpaid to sit on their rear ends in those big expensive factories. Well, if a pencil weighs over fifty pounds or functions as an air tool and you can classify your rear end as sitting because it rests on your two legs…then you could reach that conclusion. Quite a few workers reach early retirement age with work restrictions and sustained injury.

    Are generations of employees naive to think that those contracts meant they had a secure future while working and into retirement? Yes and no. There is the possibility that ANY company can fail at any given time. That’s just the ebb and flow of the natural world. When a company promises you one thing, and constantly back tracks on those promises, it is a different thing. When a company points the financial blame at the worker instead of their CEO’s, it is a different thing. The workers are reprimanded for shutting down the lines for quality control issues, but GM points the finger at them when the consumers shut their wallets to the company for poor parts and expensive manufacturing.

    It saddens me to see GM continually striking down the workers and retirees, yet the top brass continue to reap the rewards of an ailing industry. I find it comical that GM, and the big three in general, are crying foul over US profits but neglect to throw in overseas profit into this discussion. GM can build a multi-million dollar plant in Russia no less, but continues to turn Lansing and Flint Michigan into auto industry graveyards. This failing of the US auto industry is an embarrassment to our trade policies. It is an outrage when the money is tossed at financial institutions who continue to blow their money on swallowing other institutions and handing out bonuses to their CEO’s, but the livelihood of millions of workers are left in limbo.

    There are many angles in which to view this fiasco, but malcontent or insensitivity towards working families who are already in jeopardy in a unstable economic future is not the one I would choose.

  13. JustAnotherReader: Your comments are sincere and important to all of us who do not have relatives working in the industry. I for one am anxious to have our auto manufacturing industry survive, for many of the reasons that you describe. I also agree that management needs to absorb more of the responsibility. But we need to eliminate counterproductive creations such as the “job banks” which are huge cash drains. We also need to keep taxpayers out of it, at least until we see a workable plan presented where everyone – labor and management – participates in sacrificing. Maybe we will see that this week.

  14. JustAnotherReader says:

    I completely agree with you on the jobs banks issue. Even employees thought it was not only a waste of time, but a free hand out.

    In the past workers had even taken voluntary cuts in wages for the sake of the company. Union workers, contrary to popular belief, are indeed willing to face (and negotiate) concessions if it means keeping their jobs. I think this debate has stirred many ill feelings because of the word bailout being used in the same context as the financial industry dealings. It is a loan, not a free handout, that will be paid back in due time. Money had been allocated in the current bailout, 20 or 25 billion if my memory serves, to the auto industry for the development of greener vehicles. However, they have not received those monies.

    At any rate, I digress. I hope there is an amicable resolution in store for everyone involved, from the worker to the taxpayer. Many of us Michiganders are in a state of panic, our local economies cannot afford to take any more serious hits with unemployment rates in some areas going over 12%.

  15. abgoto says:

    Yes, it’s unfortunate what is happening to the American car industry, but for the most part, it is a self inflicted wound that has been festering for decades. Ford, GM and Chrysler auto workers (white and blue collar) are grossly overpaid relative to the prevailing wages of their competitors. The game is over and either the workers will voluntarily reduce wages and benefits (unlikely) or a bankruptcy court will do it for them. For the government to “loan” taxpayer dollars to businesses that are hemorrhaging cash only delays the inevitable.

  16. @JustAnotherReader: I hope things work out as well but the UAW and the car companies need to re-work the contracts to make it happen. The problem seems to be that the UAW is saying one thing to the press but their lobbyists are saying other things in private to their Democrat allies in Congress.

    @abgoto: Agreed. The “plans” we have seen so far from the Big Three are fantasy in terms of returning to profitability by 2010.

  17. Bryan says:

    I’m probably going to get crap from saying this but I say let them fail. I’m at the point where I keep hearing about more of our tax money going to seemingly wasted rescue efforts. GM isn’t doing well because they simply aren’t providing a product that American consumers want to purchase. If they can’t do it right, then don’t do it at all. They had plenty of time to fix this before hand they had to have seen the writing on the wall. I feel bad that my fellow Americans are losing their jobs and benefits but I don’t understand why I have to correct the mistakes of others who made mistakes with outright blatant disregard for the facts at hand – nobody wants a Hummer anymore, they cost too much, they use too much fuel and they are bad on the environment.

  18. topgoalie says:

    Most people rely on our media for facts to make their points, which is not always the best way to go. The Job Bank was set up to help workers displaced by robotics. I should know, I am one of them. But contrary to popular opinion, we do not sit around at home for months or even years and get paid. Once we go into the bank, we are then trained on all the new machines and work that is at our plant. We gave GM over $1 Billion in concessions this last contract and now they want more. Honda and Toyota, while great companies, haven’t made this country what it is today. I had to laugh when one of our elected officials asked why Honda and Toyota are selling cars and trucks. Go to Washington DC and look for an American car. Guess what? You won’t find one! If they are gonna mandate something, why not start there?

  19. topgoalie: Thanks for the explanation. I certainly don’t blame unions for all of problems in the U.S. car market but the fact remains is that even in recent years when Toyota and GM were each selling 9 million cars in the U.S., Toyota was on average making money on each car and GM was losing money. That is a structural failure in the cost of the vehicles, with both labor and management responsible.

  20. Matt SF says:

    There are a few Big Three cars left in Washington.

    GM still has a few Chevy Suburbans in the Presidential motorcade… after a few modifications of course.

  21. Tom Terry says:

    I worked on the line at GM for 30yrs. Anyone could have done the same thing and got the same pay and benifits I did. But were not willing to stand in the same spot and shoot the same screw every 2 seconds for 30yrs day after day, year after year. You had the same choice I did. Now I have bad knees, hips , wrist,and hands from the repitition of the job for 30yrs. Its not my fault that the CEOs and managment made bad decisions for the company. I paid into my pension plan out of every one of my checks, for my own retirement. That is my money. Now they want to take it away. To me that is stealing. Thats my money. I would have loved to had a job outside, under better conditions, but I chose this job for the promises of retirement that was made to me. Please dont blame us line workers for the mistakes of the management and CEOs. I just went to work everyday to provide the best I could for my family, while the CEOs stuffed their pockets. Believe me when I say my pockets are not overly stuffed. I made enough to provide for my family and I thought was making a way to surive after retirement. I do have a job now , again , and will keep working, just like anyone else that plans on retiring at the age of 65. Which is sad after working 30yrs with the promises of being comfortable after retirement. I am not sitting on my tush with my feet up enjoying any benifits. I am scared to death of what will happen if GM goes bankrupt and I lose everything I worked for all those yrs. Yes, I will go one and continue to work. But I bet the CEOs will be just fine, and go on to retiree on their big yachts, and houses , and cars. I am not wanting any of your sympathy. I am still working at a different job. Just like you. Just wanted to let you know that us common line workers are not the same as the upper management of these companies. We were made the promises that are all going away. I dont want you taxpayers to help me. I’ll help myself. But on the other hand it is a sad suituation for us.

  22. SUSAN says:

    November gm sold 153Km Ford 123K and Chrysler 87K, must be some one buys GM, get your facts straight,

    Or let 2.5 millon more jobs go, all middle class, who is going to buy anything the minimum wage workers, get a life buster

  23. Tom: Thank you for your comment. I agree with your essential point, that GM management is at fault for allowing the company to arrive at the point where employees, retirees, shareholders, and now taxpayers are all at risk. I do hope that things turn OK for you.

  24. Susan: Whatever the volume of cars sold by GM, Ford, and Chrysler in November, it is not enough to earn them a profit.

  25. John says:

    First of all, the 54 yr old worker put in 30 yrs to retire. Just like one of the autos he/she built that that finally was beat to death in a demolition derby. Their bodies were worn out, beat-up, and broke down. Not like the past two generations that have had everything handed to them, and have no work ethic, valuation of a dollar, or dare I say patriotism.
    The problem came back in the eighties when we had the last recession. You remember back then, double digit inflation, double digit home mortgages, double digit unemployment. People in many businesses stated “I don’t work for the auto industries it dosn’t affect me!” Before having their jobs dissolved the new japanese owners bought their employers out, why? Because our whole US Economy is based mostly of manufacturing. With this in mind the largest being the auto industry.
    In making an auto you need steel, glass, rubber, plastics, fabric, wire, etc.
    If you fail to make autos in the US. Just for the first component you fire steelworkers, coal miners, iron ore miners, scrap metal, coke producers, rail workers, process plant workers, etc.
    These workers buy houses that are built from the building trades, and all of their supply chain. Those houses are financed by the banks, and insured by local agents.
    They are heated, and lit by our utilities, gas water, electric, phone, cable.
    They are filled with furniture, appliances, etc.
    Most of the above workers because of the hazardous conditions that they work(ed) in, carry insurance. That insurance pays our doctors, nurses, hospitals, and drug vendors.


    Without it every $100 dollars put into the economy will only generate $80, or a 20% loss. With a strong US Manufacture economy $100, generates $600. or a 600% gain.

    Supposedly the brilliant economist stated that the US is turning into a “SERVICE INDUSTRY”! Bottom line, if you don’t own the manufacturing, you don’t own service! The manufacture can at any point tell you, your out, we the manufacture will do all service now, and you can’t do a thing about it.
    These are the same brilliant economist that didn’t see this crisis coming. However, people similar to myself have forecasted with-in a 5% variance, exactly what happened, but 8 1/2 years ago.
    We are headed to a DEPRESSION OF HISTORICAL MAGNITUDE, that will make the on of 1929 seem like a cake walk.
    Has corporate execs raped our US Cororations, YES!
    Have they mismanaged our US Corporations, YES!
    Have these corp execs screwed over the work class, Yes!
    Have these corp execs cooked the books to give themselves huge bonuses, YES!
    Has our Government been involved with shipping US Jobs out of the country, YES- YOUR TAX Dollars help fire you, and send your job out of the country!

    To get a glimse of what is headed our way. Rent, or get from the library the Movie “Rodger and ME” by Michael Moore. Look at it from an economic history angle to get a glimpse of what we are loosing.

    Congess did a ticker tape parade of money on Wall Street to the tune of $700,000,000,000+, yes count the zeroes, without a plan in a couple days. Then these banks still charge the american public 25~30+% on your credit cards. Lower your credit line so that your outstanding balance shows high utilization, lowering your credit score, to raise your rates again. And yes about half or $350,000,000,000 is going to other countries, that also made bad decisions.

    Let’s see $350,000,000,000 leaving the US economy, but they put the screws to the big three for a $15,000,000,000 loan. Why because the TARP bankers won’t lend money to people to buy US Cars unless they have perfect credit. You know 750+ credit scores.

    There is a simple solution: BUY US MADE PRODUCTS!

    The answer well Toyota pays only xx.xx/hr to their employees, and they used to make a profit.

    Three points!
    1. Japans Ministry of Industry pays for manufacturing research.

    2. Japan subsidizes there products.

    3. Japan, pays for their healthcare.

    In the US Corporations pay all of the above!


    Even if it costs a buck more, invest in your own future, invest in your own country, invest in your own life!

    Before its too late!

  26. pam munro says:

    On another note -the Motion Picture Home of Hollywood is closing its hospital and nursing home “due to a shortfall” in their Medicare and Medicaid payments. This is coming from the directors who are multibillionaires themselves (Think Jeff Katzenberg, and Steven Spielberg)! My fantasy as a performer is to be able to retire there among the crazy actors – but the motto “We take care of our own” no longer seems to apply. No attempts to appeal to fans in movie theatres, no internet campaigns to save that vital part of the last refuge of so many stars! (Joel McCrea and Norma Shearer to name a few.) I think that there WAS a compact between management and workers in the 50’s-80’s which is now being breached by the newer generation of top executives – who have chosen a path of personal greed instead. My father was a responsible executive who lived a comfortable but not extravagentlife – and in the last part of his career he saw the younger generation of slick MBA’s come in and run the business he had built up into the ground with short-term paper profits that looked good on their spread sheets (but ultimately were disastrous) and lined their own pockets, and the company (and its workers) be damned. Such are the results of narcissism in business –

  27. 09allin says:

    It is interesting to note that at this defining moment in our history we are 100% caught up in finger ponting and blaming one another. Any intelligent population would realize that this is a global problem/opportunity, and that the nation, community, population that decides to work together will most likely prevail. The United States is the nation that has provided all of us with opportunities that do not exist anywhere else in the world. Rather than capitalize on these opportunities we waste our resources. Those resources are our intellectual caital, our time, and our collective will. Rather than getting involved in positive efforts to move our economy forward, let’s instead, devote our resources toward taking shoots at one another over events that are history! This country is in a crises that we have not experienced during our life times. Are you voting? Are you participating in local community efforts focused at improvement? Are you actively engaging in any efforts other than mindless blogging?
    What we failed to understand during the ’70s and ’80s is the concept of consensus. We learned that other countries used this for decision making and we decided that it meant that small groups of people should learn how to make decisions. Our global competition has used this concept at a higher level of abstraction that we seem unable to comphrehend. We can either continue to support other nations while we amuse ourselves by taking shots at people who spent their lives working in our industries; Or we can recognize that it is time to gather the collective will of the American people and bend that to solutions. “I have met the enemy, and it is us”. End note. I most certainly do not have the answer(s), but I do think that I am perceiving parts of the problem.

  28. 09allin: You make an excellent point but I think it needs to balanced with a concern that the more we use collective resources (government/taxpayer) to solve individual economic problems, we are gradually impairing the ability or willingness of those individuals to be responsible for themselves.

  29. 09allin says:

    I agree, and have spent my life being responsible for myself and family. I have steadfastly tried to invest wisely, save faithfully, pay all bills, maintain a stering credit rating, and sucessfully changed careers at 54 years of age. That was after working 34 years for one of our major manufacturers. I am independant and will remain that way. I believe that Americans are being duped at every level of government and have been for a great many years. When we look across the land we see people everywhere who are being made victims through no fault of their own. Picking one person out and pointing fingers at them does nothing to start solving the issues. I would really like to see conversations being started that are focused at solutions. Our unemployment rate is soaring to all time highs, our educational system is in dissarray, people are frightened, the gap between the haves and have nots is growing rapidly. Finding a good paying job is very difficult for any generation. It really is time for a focus on what is good for our country, our people, and our way of life. This is a great nation, and the people deserve better.

  30. Matt SF says:

    “When we look across the land we see people everywhere who are being made victims through no fault of their own.”

    Morons who signed NINJA loans and falsified their income to buy homes they couldn’t afford are at fault. GM management teams who continually rolled out cars that no one wanted to buy are at fault. I can find fault in most places I look.

    You can make statements of our theoretical greatness and the way things are “supposed to be” all day long. But at the end of the day it’s all words — nothing has changed. I think we’ve gotten a healthy dose of reality served to us and no one likes how it tastes. The fact is a limited group of people made ultra ridiculous decisions, and now the collective must pay the price for their greed (lenders) and stupidity (consumers).

    Like most “mindless bloggers”, we didn’t accept the invite to the spendthrift orgy but please allow us the option to voice our opinions while we clean up someone else’s mess, nurse their hangover and help pay their bills.

  31. 09allin says:

    Matt SF

    Don’t mistake what I am saying. I have absolutely no tolerance for saving people who knowingly went “upside down” in their personal finances, with sub-prime mortgages, autos they could not afford, had to have every new gadget offered, etc. I also have no tolerance for those who profited from the financial scandal being visited upon our economy by profiting from the schemes and scams that fueled the present condition. Giving billions in bailouts to people and banking institutions is ridiculous, most of the financial personnel involved should be classified as criminals, not given huge bonuses and perqs at the taxpayer’s expense.
    All of that said, and ascribed to, I still know that there are thousands and thousands of Americans who have been “thrown under the bus” through no fault of their own. You point out that we get to clean up the mess and nurse their hangovers. I would submit that your comment makes you one of the victims along with the rest of the people who continue to do the right thing.
    I also believe that the vast majority of the American people simply do a good job every day, work hard, and try very hard to do the right thing. My notion is that these are the people who are not heard from and are not being represented in this mess.

  32. 09allin says:

    Evidently interest in this topic has vanished as more and more people are realizing that the economic meltdown affects them personally? It was clear two years ago that this was not going to limited to a small group of people who made stupid decisions. It was also shaping up that a majority of people thought that they, their families, and their friends were above it all, but that is increasingly becoming claer to not be the case. Let’s invent a game wherein we select a group of fellow citizens to assign the blame to. That would be much easier than actually figuring out what a group of concerned citizens could do, on an individual basis, to start correcting this mess. It seems to me that we need to start acting in our own best interest. What are we/you doing on a local basis to start helping the national/global picture? I would be truly interested in hearing from people who actually have, and are implementing, actions.

  33. Melissa says:

    Did Gm deserve the bailout? You Ask me I would say NO.. why? When Honda and Toyota were out inventing new cars, GM was busy boasting about its pride and Showing off its hungry hungry Daughter the Hummer

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