What do you do when you're offered the GM buy-out?

Last week, GM offered to buy out all 74,000 of its unionized work force, in hopes of both reducing head count and swapping out workers who average $28 an hour in wages with those willing to work for half that. (Lat month, Ford made a similar offer to its 54,000 UAW workers.)

As reported in The New York Times,

With 46,000 of the 74,000 workers already eligible for retirement, G.M. laid out several attractive options — including retirement with full benefits and a cash payout of $45,000 to $62,500 depending on job classification.

Employees with less than 30 years of seniority can leave and receive fixed monthly payments until they reach full “30 and out” status. Younger employees can depart with cash payments of $70,000 or $140,000, depending on years of service, in exchange for giving up health care and other postretirement benefits.

Well, if you're near retirement this certainly looks like a good deal, but you do have to ask yourself how those retirement benefits get funded by a smaller work force making half as much money. Maybe the pension money is all safe and sound in a big old fund somewhere - hopefully one that didn't have a lot of skin in the high-risk mortgage game.

“These buyouts are a watershed event in the industry that defined U.S. manufacturing for most of the 20th century,” Professor [Harley] Shaiken [UCal-Berkeley] said. “The question is, Do you stay with one of the best-paying jobs anywhere, or get out of an unstable industry and a troubled company?”

Workers interviewed for the Times article were (predictably) mixed. One worker with 30 years on the job was quoted as saying, “I’m out of here. It’s all going downhill, and I don’t think it’s getting any better.” Which sounds like a pretty good analysis of the situation.

Another worker interviewed planned to stick it out until he get one kid out of med school and the other out of college. (And kudos for Larry Walker for seeing the industrial worker handwriting on the wall and making sure his kids are prepared for a different working world.)

What a tough decision these workers are facing, knowing full well that, if they leave now they are exceedingly unlikely to find another job that pays so well - especially for the older workers, who are less able to retrench and retrain. These workers can do the arithmetic: $45,000 is quite a lump sum, but if you're making close to $30 an hour plus bennies, it doesn't stretch all that far.

Then there's the worry about refusing the good offer, only to find your plant closed down - and a less sweetened deal on the table. (I know that when I left Genuity in 2002, my big motivation in volunteering for a lay-off - other than the fact that I was sick of having to make quarterly cuts in my group - was my prediction that the next severance package would be less generous than the one that was then on the table (6 months salary at my level). I was wrong - the good packages were sustained (thanks, I understand, to the CEO Paul Gudonis who, whatever else anyone had to say about him, was a genuinely nice guy) until Genuity's bitter, bankrupt end a year or two later.

But, of course, I wasn't particularly worried about finding another job. I knew I didn't want a full time job, and figured that I'd figure something out. (I did.)

But having worked for 25 years in high tech marketing is a lot different than having worked on the GM assembly line for 25 years in terms of applying those skills elsewhere - and demand for those skills.

The Grand Rapids Press also found a mixed bag when it came to worker response to the buyout offers, but for the most part found "the chill of a tough economy and looming family expenses are pushing many to say, 'No thanks.'"

Older workers - those in their 40's and 50's - seemed the most reluctant - especially those who didn't yet have the magic number of 30 years on the job accrued (which would give them full pensions). But as one guy said, "'If I had another game plan, maybe.'"

For younger workers, the buy out - while trading off on any future pension - is certainly enough to get someone started on a new path in life. (They're looking at one time payments of $70-140K, depending on tenure with the company.)

As for the replacement jobs, paying $14-15 an hour?

One of the workers weighing his options said, "'At $15 an hour, they'll be lined up and down 36th Street [location of the plant where workers were interview] to get in there.'"

And why not?

Sure, it's a meager wage compared to $30 an hour - but it's a lot heftier than what you'd be able to make at Wal-Mart. Maybe these new, lower paid industrial jobs become good blue collar jobs, albeit less lucrative ones, and give a new generation of workers something that at least vaguely approaches a decent living - although $30K a year doesn't buy you many frills.

Maybe what's good for GM is just going to be good for GM, but lets hope it turns out to be good for the 74,000 union workers who are facing a tough decision..