The New Treaty of Detroit: Are VEBAs Labor's Way Forward?

doi:10.1017/CBO9780511809798.008

7 - The New Treaty of Detroit: Are VEBAs Labor's Way Forward?

Published online by Cambridge University Press: 05 June 2012

Teresa Ghilarducci

Edited by

Clair Brown ,

Barry J. Eichengreen and

Michael Reich

Show author details

Clair Brown: Affiliation:
University of California, Berkeley
Barry J. Eichengreen: Affiliation:
University of California, Berkeley
Michael Reich: Affiliation:
University of California, Berkeley

Book contents

Get access

Summary

Fringe benefits are of importance to such fundamental labor market problems as the social organization of work and production, as well as to social and moral obligations of citizens … They deserve more attention than they have generally received from the economic research community.

Sherwin Rosen (2000: 29)

The United Autoworkers of America (UAW) struck General Motors (GM) on September 24, 2007, for forty hours, in its first nationwide strike against the company in thirty-seven years. When negotiations broke down, UAW President Ron Gettelfinger quickly assured the media that the impasse was not about retiree health care – that is, not a mandatory subject of bargaining. This, of course, was a strong clue that the strike was largely about the car company's role in providing a promised benefit to people no longer working for it. When the news broke that the autoworkers had agreed to transfer their retiree health-care benefits from an (unfunded) defined benefit (DB) plan to a funded defined contribution (DC) plan, the Wall Street Journal called the settlement on retiree health-care plans the most important concession the union made.

The UAW had agreed that the company would transfer responsibility for retiree health care to a trust fund called a Voluntary Employee Benefits Association (VEBA). Having agreed to the VEBA, the union held out for compensatory job-security language and for sufficient funding for the VEBA. Ford and Chrysler, in typical pattern-bargaining behavior, followed and negotiated similar agreements.

Type: Chapter
Information: Labor in the Era of Globalization , pp. 241 - 263

DOI: https://doi.org/10.1017/CBO9780511809798.008 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Book purchase

Temporarily unavailable

References

Budd, John W. (2005). “The Effect of Unions on Employee Benefits: Recent Results from the Employer Costs for Employee Compensation Data.” Compensation and Working Conditions Online, June 29. Available at www.bls.gov/opub/cwc/cm20050616ar01p1.htm, September 27, 2005.Google Scholar

Cristea, Carrie (1993). “Recognizing Retiree Health Benefits: The Effect of SFAS 106.” Financial Management, June 22.Google Scholar

Davolt, Steve (1996). “Viva la VEBA! Benefit Trust Ready for a Comeback.” Employee Benefits.Google Scholar

Diamond, Stephen F. (2007). “Legal Implications of Proposed GM/UAW VEBA.” October 23. papers.ssrn.com/sol3/papers.cfm?abstract_id=1025001.CrossRef

Freeman, Sholnn (2006). “GM Revises Results, Has 1st-Quarter Profit; Accounting Change Related to Benefits.” Washington Post, May 9: 1.Google Scholar

Freudenheim, Milt (1992).” Paying the Tab for Retirees.” New York Times, January 21: B1.Google Scholar

Gerdel, Thomas W. (2002). “Steelworkers Announce Wage Deal with Republic.” Plain Dealer, April 27: C1.Google Scholar

Ghilarducci, Teresa (1992). Labor's Capital: The Economics and Politics of Private Pensions. Cambridge, MA: MIT Press.Google Scholar

Givant Star, Marlene (1992). “No Rush to Buy GM Stock; Despite Overhaul, Investors See Trouble for Automaker.” Pensions & Investments, November 9.Google Scholar

Howes, Candace (1991).“The Benefits of Youth: The Role of Japanese Fringe Benefit Policies in the Restructuring of the U.S. Motor Vehicle Industry.” International Contributions to Labour Studies 1: 113–132.Google Scholar

Klein, Jennifer (2003). For All These Rights: Business, Labor, and the Shaping of America's Public–Private Welfare State. Princeton, NJ: Princeton University Press.Google Scholar

Levy, Frank, and Temin, Peter (2007). “Inequality and Institutions in 20th Century America.” Working Paper 13106, National Bureau for Economic Research.CrossRef

Lichtenstein, Nelson (1995). Walter Reuther: The Most Dangerous Man in Detroit. Champaign: University of Illinois Press.Google Scholar

Maynard, Micheline (2007). “U.A.W. Pact with Dana Suggests Softer Stance.” New York Times, July 7: C1.Google Scholar

No to VEBA. Yes to National Health Care. www.soldiersofsolidarity.com.

Parks, Bob (2007). “Favorable Risk-Reward around Labor Talks Drives a Trading Buy.” Citigroup Global Markets, 12 September. Citigroup Research, A Division of Citigroup Global Markets.Google Scholar

Quadagno, Jill (2005). One Nation Uninsured: Why the U.S. Has No National Health Insurance. New York: Oxford University Press.Google Scholar

Richardson, Michael, and Salemi, Daniel R. (2007). “Funding Postretirement Health Benefits through a VEBA.”Benefits and Compensation Digest, September. Available at www.ifebp.org.Google Scholar

Rosen, Sherwin (2000). “Does the Composition of Pay Matter?” In Albert, William and Woodbury, Stephen (eds.), Employee Benefits and Labor Markets in Canada and the United States (pp. 3–30). Kalamazoo, MI: W.E. Upjohn for Employment Research.Google Scholar

Sass, Steven (1997). The Promise of Private Pensions: The First Hundred Years. Cambridge, MA: Harvard University Press.Google Scholar

Slichter, Sumner H., Healy, James J., and Livernash, E. Robert (1960). The Impact of Collective Bargaining on Management. Washington, DC: Brookings Institution Press.Google Scholar

Stevens, Beth (1986). Complementing the Welfare State: The Development of Private Pensions, Health Insurance and Other Employee Benefits in the United States. Geneva: International Labor Office.Google Scholar

Strauss, William A., and Engel, Emily (2007). “Transitions: The State of the Automobile Industry – A Summary.” Chicago Fed Letter. Federal Reserve Bank of Chicago, Number 242a: 1.Google Scholar

,UAW (2005). “UAW Statement on Tentative Agreement with GM.” Detroit, MI: UAW Headquarters; October 20.

Wall Street Journal Abstracts (2004). “GM Says Retiree-Health Liability Rose despite Medicare Benefit.” March 12: 12.

Nocera, Joe (2008). “Road Ahead Is Long for GM.” New York Times. November 22: B1