Appearing on WTTW's Chicago Tonight yesterday, GOP Mark Kirk repeated his suggestion -- advanced by the conservative and mainstream media at the national level -- that the average General Motors worker makes $70-plus per hour. Watch it:
In citing these figures, Kirk's underlying premise seems to be that GM's demise can be attributed to the greediness of its workers and the union that represents them. Indeed, on local radio last week, he said this could end up being a "bailout of the United Auto Workers, not General Motors." But the idea that individual workers at GM are paid substantially more than those at Toyota is bogus. The $70 figure includes not only an individual worker's wage and benefits, but also the legacy costs being paid out to retired workers. Dean Baker recently estimated that the actual, individual labor cost at GM is more like $41:
The New York Times told readers that GM's autoworkers are paid $70 an hour (including health care and pension). This is not true. The base pay is about $28 an hour. If health care cost per worker average $12,000 per year, that adds in another $6 an hour. If the pension payment takes up 25 percent of base pay (an extremely high pension), that gets you another $7 an hour, bringing the total to $41 an hour. That's decent pay, but still a long way from $70 an hour.
How does the NYT get from $41 to $70? Well the trick is to add in GM's legacy costs, the pension and health care costs for retired workers. These legacy costs are a serious expense for GM, but this is not money being paid to current workers. The person on the line in 2008 is not benefiting from these legacy costs.
If Kirk believes that the pension and health care secured for retired autoworkers by the UAW is unjust or greedy, he should just say so. My sense is that many working Americans disagree. But his suggestion that the workers themselves are taking home more than their fair share is ridiculous, particularly when we haven't heard a peep about the six-(or seven)-figure salaries being taken home by bankers at AIG or Citibank.







Comments
Lisa (not verified) on Wed, 11/26/2008 - 00:30
Oh please. Stop the spinning. The UAW workers are vastly overpaid and their benefits are unreal. It doesn't really matter how much of the $70 may be attributable to retirees. When you add up the current workers wages and benefits, the ones on the job farm being paid for doing NOTHING and the retirees pension and benefits it is an astronomical amount which none of the big 3 can afford and is substantially higher than all labor related costs of the foreign car makers. Who else pays workers for life when they are laid off? Who else gives lifetime medical benefits to laid off and retired workers? GM loses money on the cars it sells due to these labor costs. There simply isn't enough profit in autos to absorb these labor costs. If the big 3 had the same labor costs as the foreign auto makers do, like the vast majority of Americans have, they would be profitable. The big 3 will never be profitable with the gold plated union contracts. That is a fact. Not one of them can show a profit for years. The big 3 bank on workers and retirees dying off to relieve their obligations. GM lost 73 billion since 2003. These losses are not due to the credit crisis. The big 3 have been bankrupt for years existing on fumes. Predictions of bankruptcy for GM have been around since 2003. Every financial and economic expert point to the overpaid workers for the demise of the Big 3. No amount of spinning will change these facts. The american people have no interest in having their tax dollars going to the UAW. The UAW's greed will go down in history as destroying the big 3.
Anonymous (not verified) on Sun, 12/07/2008 - 19:16
I agree....I like unions but this is ridiculous....these car people make more...have a decent retirement....more kudos, more benefits....all the while making stink bomb fossil fuel guzzlers playing patsy with the oil cretins. Gimme a break...they honestly make more than most (check it out) college professors!!!! I said most!
Spread some of this money around...the rich really do get richer. Duh!
Josh Kalven on Wed, 11/26/2008 - 08:54
It's true that foreign car companies -- whether in Japan or Germany -- aren't responsible for their workers' 'and retirees' health care costs. In fact, they're not even responsible for their current workers' medical coverage. Why? Because they have national health care.
If we had a national health care system in the U.S., the Big Three's labor costs would drop dramatically. It would restore some of their competitive advantage on the global stage. And the UAW wouldn't have to work to ensure their workers aren't left out in the cold.
The health care burden is just one of the many factors weighing down the auto companies and other big manufacturers. But if you're going to compare global labor costs in these industries, you have to take it into consideration.
Anonymous (not verified) on Wed, 11/26/2008 - 14:43
I don't even know where to start with these right wing wind bags. To the Lisa's point that the Big Three will never make money as long as the workers have a "gold plated" benefits package, all you need to do is look back 3 or 4 years and see the the Big Three were making money hand over fist with just such a "gold plated" workers compensation package. The problem arose when the Big Three did not adapt to the changing economic environment and start building smaller more fuel efficient cars.
Secondly, if Congressman Kirk believes that workers should give up their health insurance whenever their employer hits hard economic times then I think that the Congressman should take his own advice. The federal government, which Kirk is a part of, is running a trillion dollar deficit so Mark give up your "gold plated" health insurance until the government gets back on its feet. You only pay $800 a year in property taxes anyway so you could afford to buy your own insurance.
As Josh Kalven has already pointed out, to compare American auto workers' compensation to their European or Japanese counterparts it is like comparing apples to oranges . Those other countries have national health insurance and much better national pension benefits which make up all the difference in the benefit packages. Pass national healthcare and provide more than poverty level national pensions and the Big Three will be on equal economic footing with their international rivals overnight.
I love how the right wing always blames the little guy for macro economic conditions. Remember when the Sean Hannitys of the world were arguing that the banking crisis was caused by banks giving loans to poor people who couldn't afford them? Now the problem with the economy is that workers make too much money even though real income hasn't grown for the average American family in 30 years.
I guess the country would be much better off if we all just worked at Wal Mart, rented apartments and went to county hospital for our healthcare needs. This is why the Right has gotten their a** handed to them in two straight national elections. Their solutions no longer hold water for the American people.
Anonymous (not verified) on Wed, 11/26/2008 - 15:09
It's not just the premium pay/benefits the auto workers, hourly and salaried, get, it's the "doggie in the window" feeling the non-inbreds endure when their families don't have the legacy and thus are consigned to contract work in the auto industry. Then the salt in the wound is learning one at a time that the inbreds are malicious sleazebags, one way or another.
Rick Trimmer (not verified) on Thu, 11/27/2008 - 11:03
Wow this is a interesting discussion, I wonder what our country feels is a fair wage to live a decent american dream life. I curently am 54 and make 45000.00 a year running a company. My wife does not work and is our grandchildren babysitter.My healtcare sucks and we our just getting by. Infact we have no money for xmas and will probably get behind in our bills to cover winter heating cost. My son in law says my problems are due to not going to higher education for me after high school. My problems began when the clothing industry left this country where i spent 35 years.I guess what my comment is, what should a GM worker make. It seems to me that if a one person household makes under 50000.00 they will barely get by.
Mr Bill (not verified) on Fri, 12/12/2008 - 09:30
The biggest problem is that the UAW, along with all the unions now days, is that they got big on protecting the worker from anything that now they have become the problem. Let me explain; If you work for a union, and you are a hard worker that does what they are supposed to do, work hard and safely, the union has negotiated the same pay for you that the slacker down the line makes. If, on the other hand, you are the slacker, the union has probably represented you when the company tried to trim the workforce of the slackers and problem people. You have done your time and have seniority, you don't have to work as hard now because the union will take care of you.
I have worked as a contractor in union shops and in every one of them, I have seen the union protect the slacker while doing nothing for the hard worker. The hard worker gets no more pay than the person who doesn't work as hard. What is the incentive then to work harder? If you get hurt on the job, through your actions or not, you are set for life. At 2 different places I did work for, I watched people get light duty for such things as "pulling a muscle in his back while wiping his @$$", "pulling a muscle in lower back moving a pallet of paper" -- trying to move about 500 pounds himself by pulling on a pallet of paper rather than wait the 3 minutes it took for a fork truck to get over to move it. In both cases, the company was not at fault but the employee ended up with workmans compensation and light duty. I have watched hard working people realize that if they work harder than the next person, it gets them nothing! Therefore, why work harder? These people do their time and get higher on the list and then when layoffs come, they are protected.
The bottom line is that I determine what I make by my hard work and determination and don't understand why others can't/don't. The unions were great when they started. They performed a valuable function and great things came from them. OSHA for one. But, the unions have outlived their usefulness. They protect the bad worker while at the same time not doing anything for the good one. If the job is terrible, leave. If the job is unsafe, call OSHA. If you don't like what you are paid, negotiate a better salary or leave.
As a result of unions, the big 3 have been done in. I own a 1995 Mazda 626 with over 200K miles on it and it still gets about 30-34 MPG. I owned a 1999 Ford Aspire that was a POS but I needed something and didn't have the money at the time to purchase anything better. My Ford was built in Korea and my Mazda was built in the USA. Was I un-American to purchase the car built in America because it is foreign, or to purchase the car with the American name built in Korea?
My wife was wanting to get a truck to replace my car so we could haul our camper easier. I told her I would keep my car, we could trade in her Ford Windstar (we originally wanted a Honda Odyssey but they are in high demand and the waiting list was 6 months for a used one) for a Toyota truck instead. WHY? I know that a car with the Toyota, Mazda or Honda name will be quality built and last. Those cars are made in America by Americans, but the difference is that they are not made by someone who doesn't care about the quality because he is getting paid the same as the next person. They are made by someone that if they don't pull their weight and work, they get fired!
On a last matter, expecting anyone in congress to agree on lower pay or less benefits is a lost cause. When people are willing to spend 1 million dollars for a job that pays about 200K those congressmen are not likely to give it up. It is as rediculus as Kennedy or Rangle sitting on an ethics panel, or Dodd and Frank lecturing the CEO's of the big 3 or Fannie Mae. We live in a society that awards bad behavior by re-electing them.
Darren Griffith (not verified) on Wed, 01/28/2009 - 21:09
I respectfully disagree that the big three make unreliable vehicles; the problem is they don't do so consistently. I bought a Ford Countour in 1996, and it proved to be a very reliable vehicle with great gas mileage. Based on this experience I bought a 2000 Ford Focus which had 14 recalls, some of which such as rear wheel bearing failure and cruise control malfunctions were very dangerous. I then bought a 2005 Chevrolet Cobalt SS which proved to be a great car until I replaced it with a Volkswagen GTI this year. I also have a Dodge Neon as a winter car with 122,000 miles that has proven reliable, a 1992 Chevy full size pickup with 227,000 miles on the original clutch, and a 1992 Chevrolet Corvette which has also been great. My point is that although I have generally had a good experience with most of these vehicles, I have had friends who have had big problems with many of these same models. My brother has had four Toyota Corollas in a row with zero issues. Why would he trade up to something else when he knows the Corolla is ALWAYS going to be a good car? All of these manufacturers need to concentrate on making a few models that are consistently good, rather than constantly searching for the next big thing.
As for the American auto workers wages, I do believe they make way too much money. Whenever semi skilled labor makes more than graduate level professionals, there is a problem there. My Uncle worked at the GM Lordstown facility for over thirty years. In that time, if he were still alive he would freely tell you that he basically drove a golf cart around the facility, glad handing people and checking up on his department periodically. In the last few years he worked there before he retired in the mid 1990's he was making over $65,000 a year. That is ridiculous, and he told me then wages like he made would spell the end of GM.
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