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50 Percent Pay Cuts at GE's Plants: Is This the Future of American Jobs?

The company President Obama called a "model for America" is squeezing its workers, cutting pensions, wages and benefits--but workers are organizing to fight back.

Photo Credit: AFP


  This piece was originally published by Labor Notes. Come to the Labor Notes conference May 4-6 in Chicago, the biggest gathering of grassroots labor activists and all-around troublemakers out there! More than 100 workshops and meetings to ‘put the movement back in the labor movement.’  

 If the war against unions has reached a tipping point, Wilma Smith is among those determined to rebalance the scales.

The 58-year-old assembler at the General Electric plant in West Burlington, Iowa, was called back to work in September.

She had been on layoff since 2007 from the non-union factory, which makes electrical switch gears for municipalities and energy-hungry factories, hospitals, and call centers. “You know how you have a fuse box in your house?” she asks. “These are like fuse boxes for a city,” the size of a refrigerator.

But the job came with new terms: a 50 percent pay cut—she’d now make $12 an hour. No health care coverage when she retired. And no chance she’d get the $5,000 bonus GE’s union workers won in last year’s national contract.

“You know what the deal is, so I don’t want to hear any complaining,” the manager at the 150-worker plant told her at orientation.

Six months later Smith is a leader in the Electrical Workers (IUE-CWA) organizing committee that’s expecting a Labor Board election in April.

The campaign was buoyed by a successful January vote at a GE factory that refurbishes locomotive motors in Kansas City, Missouri, the first GE plant to go union in a decade.

Success breeds success, and organizing is now under way in several other locations. “As soon as they heard the workers in Kansas City won, another group called us up immediately,” said Mike Knox, an Electrical Workers (IBEW) organizer involved in the Missouri win.

The organizing is a glimmer of hope against a dark backdrop for manufacturing unions struggling to maintain jobs and decent standards. Their efforts are further stymied by recent actions of the Obama administration, which seems to support the notion that low wages are the answer to globalization and runaway shops.


When she joined GE in 2000, Smith tried to convince co-workers a union would improve conditions in the shop. A former bargaining committee member, local union secretary, and steward in now-shuttered Steelworker and Auto Worker plants, she told them how vulnerable they were without a contract.

She didn’t get many bites, at a wage of $24 an hour. And the plant had a grievance-like “peer review” procedure to resolve disputes.

“They said there was no way they could treat us better,” Smith remembered. “I said, ‘They can always treat you worse.’”

But for decades, GE mostly didn’t. The company spread whatever gains its unions made to non-union workers, to keep organizing at bay.

At the same time, after losing a 1946 strike badly, management adopted a hard-line stance against unions, preaching the gospel of individual responsibility. GE closed plants in the unionized North, shipping jobs South and West, and adopted a “take it or leave it” approach to negotiations, termed “Boulwarism” after its labor relations chief.

The company was a model of de-unionization and corporate triumphalism, even hiring the struggling actor Ronald Reagan to give 135 speeches on factory floors in the ’50s and ’60s, praising “free markets.” (Reagan’s memoir called the GE tours “a postgraduate course in political science” and the turning point in his “self-conversion.”)

The combined strategies paid off handsomely. The company employed 150,000 union workers in 1969. Last year’s joint bargaining covered just 15,500.

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