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Dr. Greg Segment Summary

The New Corporate Bankruptcy and What You Need to Know About It

Dr. Greg Ketchum, 12/03/05

If you’ve been following the news you know that Delphi Corporation, the world’s second largest auto parts manufacturer and formerly a part of GM, filed for Chapter 11 Bankruptcy protection in October. Now this move by Delphi is just the latest and most glaring example of a trend that is rocking American companies: filing for bankruptcy as a way of cutting wages, pension plans and health care benefits.

In its Chapter 11 filing Delphi is seeking to slash hourly wages by up to 60 percent and to drastically reduce both pension and health care benefits for it’s workers. At the same time Delphi is asking the court to approve a $500 million executive compensation package it says it needs to keep its executive team intact.

Now, aside from corporate greed, this trend of driving down wages and benefits is the result of the US being part of a global economy competing with foreign companies where wages and benefits are dramatically lower than they are here.

What Does This Mean to You?
It means that you’ve got a choice to make. You can…

  1. Continue to passively count on your employer for your security and hope this trend doesn’t hit you. 
  2. Take full responsibility for your career now and start managing it like it’s your own business.

OK Dr Greg, I want to take responsibility for my career, now what? Well, here are 3 action steps that will get you on your way to running your career like a business.

  1. Be On The Lookout for Your Next Opportunity: Don’t get complacent in your current job, but don’t job hop either. Build up your network of friends and contacts while you have a job and do what you can to help them. Having a strong network in place is one of the single best moves you can make for your own career security.
  2. Start Your Own Retirement Plan: Set up your own 401k plan now. Start with the free handbook “Protect Your Pension: A Quick reference Guide” available from the US Dept. of Labor.
  3. Set Up Your Own Health Insurance Plan: Check out setting up a “Health Savings Account,” which is a tax-free savings account combined with a high deductible health insurance plan. Your contributions to the plan are tax-deductible, both the interest earned and withdrawals for qualified medical expenses are tax-free. It works in some ways like a medical IRA and only became available at the beginning of 2004.

Finally…

The changes rolling American companies are part of a global trend and will continue to impact wages, benefits and job security. Counting on your employer for security today is foolhardy. The only way to safeguard your future is to take responsibility now and run your career like it’s your business, because that’s what it is.

REFERENCES

®2005 All rights reserved. Gregory A. Ketchum, Ph.D.

  
Career Advice

Dr. Greg is the “KRON 4 (San Francisco) Workplace and Career Expert”

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