It is difficult from reading the media coverage to know what to make of the GM-UAW pact. According to summaries in the Washington Post and elsewhere, the average worker will receive bonuses totaling just over $13,000 over the four year contract, but no pay increases. If this means that there will be no cost of living adjustments, then a worker earning $56,000 a year ($28 an hour, with no overtime) will be losing a bit over $1,000 over the next four years after adjusting for the impact of inflation, assuming a 2.5 percent rate of inflation. Of course, the loss will be larger if inflation runs higher (likely in my book) and the worker puts in overtime (nearly all do). The VEBA commitment of $30 billion now and $5 billion over future years comes to about $100,000 per retiree (this counts the retirement benefits for current workers). Since current benefit commitments also apply to spouses, GM probably has obligations for about 50 percent more people than actually worked for the company, so the package would be around $70,000 per person. It's hard to say whether that will be enough to cover benefits. Health care costs for people in their 50s already average around $10,000 a year. They are even higher as people get older, but of course Medicare picks up much of the cost for people over age 65. My guess is that, without a national health care reform measure that contains costs, the GM VEBA will end up running short. It would have been useful if some of the coverage had explored these issues more closely.
--Dean Baker