Ford's guaranteed wage made labor history
The supplemental benefits, known as SUB, were to guarantee an annual wage to laid-off workers that would come close to their regular wages.
SUB was hailed as an unprecedented benefit for working people and their families. General Motors agreed to the program one week later.
The legendary Walter Reuther was president of the union at the time.
Reuther and his lieutenants had been brainstorming on a guaranteed wage plan for hourly workers for at least three years before it was presented during the 1955 contract talks, which began early in the year and extended through June.
First, the union demanded that Ford, its strike target and thus the first of the auto companies to negotiate that year, pay 100 percent of the take-home pay to laid-off workers. Then it reduced its demand to 80 percent. But John Bugas, Ford's industrial relations vice president, scoffed at both demands.
Part of Ford's initial offer was to give interest-free cash advances during layoffs that would be paid back from future earnings. The company also offered hourly workers the opportunity to buy Ford stock at half price.
But the union said no.
Community and government leaders held meetings on SUB. The idea was intriguing and controversial. What impact would it have on employers that might not have the money to fund such an expensive package?
Bargaining lasted several months. The UAW threatened to strike. The agreement finally was reached on
June 6 after 26 hours of continuous bargaining. SUB became the centerpiece of a new three-year contract between Ford and its 140,000 hourly workers.
The SUB plan provided for payment of up to 65 percent of take-home pay for up to 26 weeks to laid-off workers, depending on seniority and other factors. The figure included state benefits, with the company paying a maximum of $25 a week. Since state benefits varied across the country, and the company's contribution was limited to $25 a week, some workers would get less than the maximum 65 percent of take-home pay.
Company contributions were to be paid from two trust funds totaling
$55 million that would be built up through payments of 5 cents an hour for each hour of paid employment during the next three years.
To minimize the danger of exhausting the trust fund, payments to workers would be reduced 20 percent if the fund dropped below13 percent of the maximum funding level. Payments to workers would cease if the fund dropped below 4 percent.
Workers became eligible for the supplemental benefits by acquiring credit units for weeks actually worked. They could acquire up to 26 credit units or the maximum 26-week pay period.
SUB is still a mainstay in contracts at Ford, GM and the Chrysler group.
During the latest contract at Ford, which began in 1999, SUB was funded at $918 million, and the $200 million SUB contingency fund was carried forward. The number of eligible weeks was increased from 36 to 42, with workers getting up to 95 percent of their take-home pay.