AUTOWORKER WAGES…. To help explain the crisis facing the U.S. automotive industry, a growing number of conservatives have begun blaming the Big Three’s workers for the companies’ financial difficulties. Sen. Jon Kyl (R-Ariz.), for example, recently argued on Fox News, “For years [the companies have] been sick. They have a bad business model. They have contracts negotiated with the United Auto Workers that impose huge costs. The average hourly cost per worker in this country is about $28.48. For these auto makers, it’s $73.”
Jonathan Cohn explained today that the conservative talking points are “wildly misleading.”
Let’s start with the fact that it’s not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research — who was my primary source for the figures you are about to read — average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income — hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers. […]
[T]hen what’s the source of that $70 hourly figure? It didn’t come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits — namely, health insurance and pensions — and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages — again, $24 per hour — and you get the $70 figure. Voila.
Except … notice something weird about this calculation? It’s not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that — probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees — in other words, the cost of benefits for other people. […]
Make no mistake: The argument over a proposed rescue package is complicated, in no small part because over the years both management and labor made some truly awful decisions while postponing the inevitable reckoning with economic reality. And even if the government does provide money, it’s a tough call whether restructuring should proceed with or without a formal bankruptcy filing. Either way, yet more downsizing is inevitable.
But the next time you hear somebody say the unions have to make serious salary and benefit concessions, keep in mind that they already have — enough to keep the companies competitive, if only they can survive this crisis.
Something to keep in mind as the debate continues on what to do with Detroit.