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

The number of GE workers overall has also plummeted in the U.S. The company has closed 30 U.S. plants in the last four years, leaving about 130,000 employed in about 100 locations, says Chris Townsend, political director of the United Electrical Workers (UE). Securities and Exchange Commission filings count 34,000 jobs lost at the company between 2000 and 2010.

GE is constantly shifting work, taking over new divisions, outsourcing. “We can’t keep track of it,” Townsend admits.

GE SWITCHES COURSE

With unions at GE boxed in and shrinking, management began to dictate terms. Last summer’s contract ended defined-benefit pensions for new hires, escalated health care costs, and eased contracting out.

“Once, we assured the wage and benefit pattern was broadly shared among the non-union universe,” Townsend said. “Now, of course, they’re more than happy to pass along our losses.”

GE certainly isn’t the only corporation to crush unions, ship jobs overseas, and skirt taxes. But it’s very good at it: The watchdog group Citizens for Tax Justice reported in February that GE paid just 2.3 percent in federal taxes on $81.2 billion in U.S. profits in the last decade. In four years, the company had a negative tax rate—actually claiming a refund.

GE stands out for its special relationship with the Obama administration. CEO Jeff Immelt heads the Council on Jobs and Competitiveness, where he is credited with helping convince Obama to propose chopping the corporate tax rate to 28 percent.

Last year Obama strolled through a GE plant represented by the IUE-CWA, praising the company as a “model for America,” because it had returned some work to U.S. factories. Obama appears committed to GE’s wage-slashing approach to revive manufacturing, calling it “insourcing.”

In January’s State of the Union speech, Obama highlighted a consultants’ study that said low wages, weak unions, and high productivity will soon make Southern U.S. states competitive with China. He argued that companies that bring manufacturing jobs back onshore—even if barely above minimum wage—deserve new tax incentives.

Jeff Lacher, an organizer with IUE-CWA, says GE is testing workers to see what it can get away with—and came after the Burlington workforce big-time. Management threatened to close the plant in December 2010 unless it got $8 million in savings, terrifying a workforce where almost everyone is over 40 and many couples work alongside each other.

“If you put people on the butcher block, they’ll agree to anything,” Smith said.

The city, county, and state kicked in $2.4 million, and workers saw wages cut by up to half. GE even had the non-union plant take a vote on the wage cut, “so they could claim it was negotiation, not extortion,” Lacher said. Burlington worker Harold Smith (no relation to Wilma) says management refuses to release details on the vote.

The most senior workers, who had put their entire working lives into the plant, are now the anchors of the union drive. Wilma Smith says some of her shift-mates qualify for food stamps and Iowa’s health plan for low-income people.

The Burlington workers aren’t fearful of retaliation for organizing, she said—factories down the road pay just as little, and they’re hiring.

MIDNIGHT OIL

At the Kansas City engine plant, workers had tried for a union three times before they won their second vote with the IBEW in January.

Along with a string of broken promises following previous votes, a fatal incident in 2010 was a major motivator. A worker was caught between two swinging locomotive engine motors. His legs crushed, he died in the hospital.