DETROIT — In a significant reversal, General Motors has told the UAW that it will continue to pay for health coverage of striking workers.
GM told the union after it went on strike Sept. 16 at company sites nationwide that it was kicking health care costs to the union, a move that UAW leaders said blindsided them, even though they had anticipated picking up those costs at some point through the strike fund.
GM said Thursday it “has chosen to work with our providers to keep all benefits fully in place for striking hourly employees, so they have no disruption to their medical care, including vision, prescription and dental coverage.
“If they have an insurance claim, they should submit it. GM will continue to provide them the coverage they rely on given the circumstances,” the company said. The company set no end date.
“This is truly an attempt to do what’s right for our employees,” spokesman Dan Flores said.
A person familiar with the talks said the company’s change was done to eliminate confusion and in hopes of focusing settling the strike.
The UAW said Wednesday that “all unsettled proposals are now at the main table and have been presented to General Motors and we are awaiting their response. This back and forth will continue until negotiations are complete.”
Attacks on GM
The health care reversal comes as GM has endured withering criticism over its initial decision.
Democratic presidential candidate Bernie Sanders used the issue along with GM Chairman and CEO Mary Barra’s $21.87 million 2018 compensation to shame the company as he rallied workers Wednesday outside the Detroit-Hamtramck Assembly plant.
“They think they’re going to force you into submission. Imagine a company where the CEO gets $22 million and then they cut the health care benefits of their workers,” the senator from Vermont said.
A source with knowledge of the talks charged that GM didn’t mind using the issue as leverage but chose to reinstate health care because its image has been tarnished.
Terry Dittes, who is leading negotiations with GM for the UAW, noted in a letter Thursday to Scott Sandefur, GM’s top negotiator, that GM’s “irresponsible actions” related to health care had been “toying” with the lives of UAW families.
Labor experts had also questioned the tactic.
“They’re pouring gasoline on the fire,” Harry Katz, the Jack Sheinkman professor of collective bargaining at the School of Industrial and Labor Relations at Cornell University, told the Free Press last week. “This induces the workers to get more angry. GM thinks this will scare them or get them to rethink the cost of their benefits. I think it’s going to backfire. It’s quick, rash and insensitive.”
Even as the health care issue for striking workers has been a focus, a different sources with knowledge of the talks said there has been progress during negotiations.
“We’re continuing to talk and that’s good,” the source said.
Meanwhile, analysts agree that the cost of the strike is mounting daily for both GM and striking workers, as well as for the broader community.
Anderson Economic Group, an East Lansing-based consultant, said in a new analysis Thursday that GM probably has lost profits of $113 million so far, and is now losing money at the rate of $25 million a day.
But workers, too, have lost. Foregone wages for striking UAW members and workers at supplier firms laid off because GM cannot accept new parts now total $266 million in direct wages. That translates into $68 million in lost federal income and payroll taxes, the Anderson analysis said.
“We estimate that GM is now facing $25 million per day in lost profit,” said Patrick Anderson, Principal and CEO of Anderson Economic Group, “and we expect that daily loss figure will continue growing as long as the strike continues.”
And it won’t be long before broader economic impacts will be felt.
“The cost of a strike, to both workers and the company, grows steadily in the first week, and then pyramids out into the surrounding economy,” said Brian Peterson, AEG’s director of public policy and economic analysis. “As we move closer to two full weeks of a strike, the effect on the economies of Michigan, Indiana, Ohio and Ontario has become acute, with both union and nonunion workers suffering significant income losses. Even if the strike ends today, those losses will still be felt.”
In another development, UAW President Gary Jones told strikers that the union will continue, for the duration of the strike, designating each Sunday as “Solidarity Sunday.” The union first took that step last week, urging supporters from the public to join picket lines and dispatching chaplains from union locals to offer support.
“As you know, strikes can be physically, emotionally, and spiritually exhausting on our membership and their families,” Jones said in a statement. “We sincerely hope that these services provide everyone with a peaceful opportunity to come together to show support for those on the picket lines.”