April 24, 2005
WHAT'S YOUR ROBOT TO RETIREE RATIO?:
Benefit Burden Puts GM in Slow Lane: The automaker has ample financial reserves for now. But CEO Rick Wagoner must find a way to cut pension obligations and retiree health costs. (John O'Dell, April 24, 2005, LA Times)
Like the Social Security system, GM has ample financial reserves — for now. The company has $19.8 billion in cash reserves, more than enough to fund this year's $5.5 billion in healthcare costs.But Wagoner, who declined to be interviewed, must find a way to reduce the company's so-called legacy costs: $87 billion in pension obligations and $60 billion in retiree healthcare benefits. He has said that healthcare costs have reached a "crisis" stage and that GM needs to talk candidly with the United Auto Workers about finding a solution; the company also has suggested reducing other benefits.
GM says it has 2.5 retired workers for every 1 active employee — a ratio much greater than the forecast for the Social Security program when baby boomers have retired and there will be an estimated 1 beneficiary for every 2.1 active workers.
All told, Wagoner said, these costs add $1,500 to the price of each GM vehicle; that compares with about $300 for Toyota Motor Corp. in this country.
GM needs a considerable amount of outside help, especially from the UAW — which represents 120,000 hourly GM workers in the United States — to make a dent in its liabilities, analysts say. For example, the company would save more than $900 million a year if its hourly employees paid for the same share of healthcare costs as do its 40,000 salaried workers, said John Devine, the company's chief financial officer.
If you want to compete with the Third World in the parts assembley business pay the workers like they're Chinese. Posted by Orrin Judd at April 24, 2005 10:31 AM
WHAT'S YOUR ROBOT TO RETIREE RATIO?
An ironic headline, considering that it probably WILL be robots that save SS for the Boomers - but not until 2025 or so.
The increased productivity that robots will bring will allow future workers to accept levels of taxation that would cause widespread unhappiness now.
Witness the productivity gains that computers have already introduced to American society, and consider that robots are basically blue-collar computers. It's like slavery without the human-rights violations. And without going to Hell.
Yes, the young will happily be taxed to pay for the elderly. The strong often yield to the weak...
Posted by: oj at April 25, 2005 12:14 AMMany years ago, I was amazed that the elderly were willing to screw the younger generations by leaching off of them. But then a comment by one of my friends enlightened me to the actual situation. He said, "My god, it would be horrible if social security collapsed. My parents would have to move in with me and I couldn't stand that - I'd pay any level of taxes to avoid that fate." The problem is that we children aren't quite selfish and cruel enough to turn our parents out on the street, destitute, while at the same time the threat of having our parents move in with us makes us willing to bear any level of taxes.
Thus the "strong" will gladly yield to the "weak".
Posted by: Bret at April 25, 2005 1:35 AMThe young are paying a 15.3% employment tax right now, with the vast majority of the money raised going to the elderly, and I have yet to see more than grumbling about it.
In 1927, the average 22 year old paid nothing whatsoever for the thrill of employment, but in most regards we'd be hard-pressed to say that the '27 employee was better off than the '05 employee.
In 2027 the average 22 year old may well be paying a 25% employment tax, but they too will be better off than their forebearers, '27 and '05, even after taxes.
We have the lowest tax rate as a percentage of GDP of any developed nation, yet we're the only nation where a major party routinely wins races based on cutting taxes.
Posted by: oj at April 25, 2005 7:56 AMFor now.
That ain't gonna fly once the Boomers start retiring.
Posted by: Rip Van Winkle at April 26, 2005 2:54 AM