Two cheers for the United Auto Workers, who this week woke up to the realities of competition in agreeing to a deal that will help General Motors save $15 billion or so in health-care costs. We hope it's the beginning of wisdom about the global economy for the American labor movement.

No doubt the immediate wake-up call was last week's bankruptcy filing by auto-parts maker Delphi, the largest in the history of the American automotive industry. The UAW could see Delphi in GM's future if it didn't do something. It also realized that GM's management, urged on by major shareholder Kirk Kerkorian, was finally gearing up to play hardball.

Still, this is a watershed concession by the American industrial workforce in the middle of a contract that doesn't expire until 2007, and it will certainly save jobs. Ford is currently in talks with the UAW about lowering its own health-care burdens and both it and DaimlerChrysler have already made it known that they expect equal treatment.

The details of the accord probably won't be announced until tomorrow at the earliest -- and they must be approved by the union's membership and a federal court before they can take effect. But we already know the realities of GM's health-care costs, which keep going up even as the number of people covered keeps going down. Some 1.1 million Americans currently have health insurance courtesy of GM, which expects to spend $5.6 billion on their care this year. Ten years ago it cost the company only $3 billion to cover 1.2 million workers, retirees and dependents.

Meanwhile, GM's 106,000 hourly employees continue to receive benefits that most American workers haven't seen in years, if ever, with little or no co-pays or even deductibles. This year the company's hourly workers will pay just 7% of their total health-care bill, compared with 27% for salaried workers; the corporate America average is 32%. GM CEO Rick Wagoner said Monday that salaried workers' cost share will rise to 31% in 2006.

GM management shares the blame for agreeing to these gold-plated benefits back in the days of its market dominance. The company began to offer health insurance to employees in 1950 and expanded the system to retirees in 1961, adding bells and whistles as the years went on. The tax code made it easier by subsidizing employer-paid health care, and the benefits helped buy labor peace.

But these costs are unsustainable now that GM has only one worker for three retirees, and when Honda and Toyota aren't burdened by the same unionized benefit levels in Tennessee and Ohio, much less in Nagoya. Change should have begun long ago, but for years the UAW was more willing to shed jobs than bend on benefits. Let's hope this week's concession is a sign of more management-labor cooperation to come.

The federal government could also contribute, by recognizing how its policies have driven up health-care costs. Nationwide, the average per-employee cost of health care is $7,323 this year, according to Hewitt Associates, and is expected to rise to $8,046 in 2006. In some quarters, this is a call to turn all health care over to the government, as if Americans want to wait months for an MRI as they do in Canada.

The better idea is to introduce more competition into the health-care marketplace. A few years ago the supermarket chain Whole Foods switched to a consumer-driven health-care plan in which its 32,000 employees were allowed to pick from a menu of care options. After three years, the company's health-care costs rose by only 3.3% a year, compared with national averages in the double digits, and job turnover plummeted, according to researchers Regina Herzlinger and Tom Nerney. Congress could help by enhancing the appeal of health-savings accounts and by passing Congressman John Shadegg's (R., Ariz.) bill to allow Americans to purchase health insurance from vendors in any one of the 50 states.

As for the auto workers, we are going to hear often than its concessions signal the death of the American middle class. The truth is that these changes are the only way to preserve it. The most secure future for workers isn't the industrial-age labor model with one company providing pensions and health-care benefits for life. Just ask thousands of former steelworkers.

Job security depends on constantly upgrading skills, and financial security requires individuals to have more freedom to negotiate their own health-care and retirement funds, and the ability to transport them from job to job across a lifetime of work. The key is ownership, not paternalism. The UAW isn't there yet, but at least the union appears to have awakened from its long, willful oblivion before one of the Big Three filed for Chapter 11.