Striker wallets drained
In a normal week, a GM assembly worker averages $27.81 an hour and takes
home nearly $800.
In a good week, several hours of overtime boost that check by a couple
Add in a strike, and weekly pay drops to a mere $200 -- making it a very
bad week for striking workers, the stores they shop in and the Michigan
economy that depends on their spending and labor.
"Many of the UAW members are not financially prepared for this," said
Beth Allen, a certified financial planner in Utica who counts many
autoworkers among her clients.
"I've talked to some union members who already are having trouble in
their month-to-month budgets because they haven't been getting overtime.
They truly haven't been able to save or catch up."
The strike couldn't come at a worse time for workers, who face gas
prices that have climbed to $3 a gallon and real estate prices that keep
falling amid a growing wave of increasing mortgage payments and a rash
of home foreclosures.
The strike also couldn't come at a worse time for Michigan. The state's
unemployment rate -- already among the worst in the nation -- hit a
14-year high last week at 7.4 percent. Meanwhile, the state government
faces a shutdown of its own next week as legislators wrangle over a
$1.75 billion budget gap. If government grinds to a halt, both
furloughed state employees and picketing autoworkers will be living
without their regular paychecks.
"It's a disaster for Michigan if you combine the strike with a
government shutdown," said Patrick Anderson of the Anderson Economic
Group in East Lansing. "It is truly the perfect storm."
Pickets get paid after week of walkout
Once the strike is past its first week, strike pay of $200 will be
available to union members who report for strike duty, union officials
said. Strikers must pick up the checks in person at local union halls.
Health coverage continues while they're on strike, except for dental and
vision. Strike pay is taxable and starts on the eighth day of the walkout.
"We've warned them in advance to prepare financially, but that's not
saying everybody does it," said Gary Prater, vice president of Local 898
That's assuming union members could find cash to save, noted George
Wells, president of Legacy of America Inc., an Auburn Hills financial
"There's not enough savings to fall back on because of overtime
reductions," Wells said. "Guys have gone from making $100,000 to making
$60,000 to now making $200 a week for a while."
Although some states allow it, striking workers in Michigan aren't
eligible for unemployment benefits. If effects of the strike prompt auto
suppliers and other business to cut jobs, those laid-off workers would
be eligible, said Norm Isotalo, a spokesman for the Department of Labor
and Economic Growth.
Advisers: Don't tap into nest eggs for cash
Strapped strikers could find themselves forced to tap family, friends,
home equity or even retirement accounts during a strike, financial
planners say -- but all those options come with drawbacks.
Family and friends are more than likely involved in the troubled auto
industry, too, and won't be much help. Home equity is dwindling with
falling property values, especially for homeowners who cashed out equity
through refinancing. And the strike comes as more workers face rising
payments on adjustable-rate mortgages, with the peak of resets on ARMs
due next month, according to analysts.
A final step for some workers would be to raid retirement accounts. If
possible, workers should try to arrange a loan from a deferred
retirement plan, advisers say. Otherwise, withdrawals will mean paying
regular income taxes on any cash taken out, along with a 10 percent IRS
penalty in most cases.
If possible, strikers should avoid cracking into those nest eggs, Wells
"It's using up tomorrow's prosperity today," he said. "That's their future."