A longstanding deal with the United Auto Workers means that U.S. auto makers pays billions for employees who don’t work. The “Jobs Bank” program sees to it that over 15,000 unneeded workers continue to earn wages and benefits that often exceed $100,000 annually per employee. The total cost of this program will be $1.4 billion to $2.0 billion this year.
This was such an interesting story in the Wall Street Journal that I’m posting the entire article here.
Detroit’s Symbol of Dysfunction: Paying Employees Not to Work
By Jeffrey McCracken
WSJ, March 1, 2006
FLINT, Mich. – In his 34 years working for General Motors Corp., one of Jerry Mellon’s toughest assignments came this January. He spent a week in what workers call the “rubber room.”
The room is a windowless old storage shed for engine parts. It is filled with long tables, Mr. Mellon says, and has space for about 400 employees. They must arrive at 6 a.m. each day and stay until 2:30 p.m., with 45 minutes off for lunch. A supervisor roams the aisles, signing people out when they want to use the bathroom.
Their job: to do nothing.
This is the “Jobs Bank,” a two-decade-old program under which nearly 15,000 auto workers continue to get paid after their companies stop needing them. To earn wages and benefits that often top $100,000 a year, the workers must perform some company-approved activity. Many do volunteer jobs or go back to school. The rest must clock time in the rubber room or something like it.