Live

Watch CBSN Live

GE's Soaring Profits Won't Stop It From Slashing Employee Benefits

Last week we learned about General Electric's (GE) aversion to paying taxes even as its profits came roaring back. Today comes word about the company's plan to ask unionized employees to accept major cuts in health and retirement benefits, according to liberal blog ThinkProgress:

Among the major concessions GE has signaled that it will ask of union workers is the elimination of a defined [benefit] pension for new employees, a move the company has already implemented for its non-union salaried employees. Likewise, GE is signaling to the union that it will ask for the elimination of current health insurance plans in favor of lower quality health saving accounts, a move the company has already implemented for non-union salaried employees as well.
ThinkProgress also says GE may seek to freeze wages for some workers.

Jeff Crosby, president of the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America Local 201, confirms that GE is expected to press its 15,000 union workers to accept the cuts as part of renegotiating a so-called "master contract" with labor this summer. And his group's members, who make GE engines for military and commercial aircraft, are fighting mad, he told me in an interview:

What they're proposing is drastic, and people don't want it. There's going to be a lot of resistance to this. They want to replace one plan with a new one that would be considerably more expensive.
GE also sought to reduce health care benefits for union workers in 2003, a year the company earned $15.6 billion. That prompted labor groups to strike. Now GE wants to replace workers' health plan with what it calls "Health Choice," which the company says provides comprehensive and affordable medical coverage. The problem is that beneficiaries will pay up to three times more than under their current plans, Crosby said, while acknowledging that GE's health care costs tend to be lower than those of other companies.

GE -- which in 2010 booked worldwide profits of $14.2 billion, including $5.1 billion in the U.S. -- will also likely try to terminate a defined benefit plan for new unionized employees and replace it with a 401(k) plan. Under defined benefit plans, which are increasingly rare in the private sector, companies contribute to a worker's retirement and guarantee a specific monthly benefit. Companies favor 401(k) plans because they shift the burden and risk of saving for retirement to workers.

"Don't screw the new guy"
Crosby, a 31-year veteran of GE, said his group sees no reason to eliminate the defined benefit plan for new unionized employees, which the company hasn't funded since 1987. That could set the stage for eliminating defined benefits altogether, he said. It also would wipe out benefits that organized labor worked for years to secure from the company. Said Crosby:

We have a saying -- don't screw the new guy.
Still, he sounded resigned about the difficulty of preserving health care and other benefits, noting that the "writing is on the wall." Indeed, the company recently threatened to shutter plants unless workers agreed to wage cuts.

What union workers want is for the company -- and all corporations -- to invest more of their resurgent profits in employees. That's good not only for labor, Crosby emphasized, but also for employees not protected by collective bargaining and for the country as a whole. He added:

GE jobs are good jobs, and we appreciate that. The promise of a GE job is that you could send your kids to school. We're proud of the things we make, and we're proud to work for GE. We just want to make a living doing it.
What we need in the U.S. are jobs that you can raise your family on and give you hope that your kids will do better than you. That's not unreasonable.
No, it's not. Certainly the dream seems to be alive and well for GE chief executive Jeffrey Immelt, who received a $4 million cash bonus for 2010 as part of his $21.4 million annual compensation package. And if it is, then all of us -- union and non-union, blue collar and white, Democrat and Republican -- are in trouble.

Image from Wikimedia Commons, CC 2.0
Related:

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.