What Will Happen to the Ford Workers?

The massive layoffs at Ford Motors mean that 30,000 workers will lose jobs that for decades were the ticket to the good life. You certainly don't have to work for Ford to experience the emotional and financial pain of a layoff -- a million-and-a-half Americans are laid off each year. But how will the Ford workers with their good-paying blue-collar jobs with great benefits, jobs that may be the last of their breed, fare in this market?

Fifty-seven percent of laid-off workers who find new jobs make a lower salary at their positions. One-third of laid-off workers' wages will drop by 20 percent. The average Ford worker makes $50,000 a year without overtime. So even if they find a decent job, on average they can expect to lose at least $10,000 a year in salary.

The good news for Ford workers is that special union provisions from the United Auto Workers give them some protection. This stipulation -- known as a "job bank" -- says that union members idled by situations like this layoff are entitled to collect nearly full pay and benefits even if they have no work to do because their plants are closed. That stipulation remains in effect until the current contract expires in 2007.

However, if the employee takes an early retirement or other buyout, that stipulation no longer applies. So Ford is now offering a variety of inducements to hourly workers to leave early. The company's set aside $250 million to pay for buyouts. And it's even offering to pay $15,000 a year in college aid, along with health benefits, if the worker retires early. But, jobs at Big Three car makers are high paying, and no one wants to lose them.

If autoworkers choose retraining, they may want to consider service jobs in health care, which is the fastest-growing segment, thanks to the aging baby-boomer generation. There have been some success stories in old manufacturing areas like Bethlehem, Pa., and New Bedford, Mass., which went from decaying Rust Belt towns to service and technology hubs. Will the Ford workers make a similar transition? We certainly hope so, and the educational offers they are receiving is a giant boost compared to what laid-off workers usually receive.

So many people, even if they don't work in the auto industry, will experience a layoff in their lifetime. If it happens to you, one thing to consider is taking out a home-equity loan to tide you over. Last summer, the average unemployed person took 18 weeks to find a job. Most severance packages don't last that long, unless your employer is really generous. So, you may want to tap into the equity you have in your home to use as your personal bank until you are back on your feet. The average home in the United States costs $150,000. If you still owe $125,000 on your mortgage, that means you have $25,000 in equity. You can borrow against that to stay afloat. You'll owe interest, but this is one time when assuming debt makes sense. Also, be sure to level with your spouse and your kids about what's going on -- they can be a lot more frugal than you think.

Don't be afraid to talk to your company's human resources department if you believe a layoff is coming. Oftentimes, the company will offer workers early buyouts or retirement packages to keep from having to lay people off. Layoffs can incur costs for companies that do not end up in workers' pockets. Many of them would rather pay people to retire, and offer inducements like tuition help.

Local, state and federal governments may also help people who have been laid off with short-term loans, tuition, retraining and more. This is one of life's most dramatic upheavals, so do not be afraid to find out what assistance you are entitled to.