NO ONE is making $70 an hour building cars.

[kpete]

The New Republic
Assembly Line by Jonathan Cohn
Debunking the myth of the $70-per-hour autoworker.
Post Date Friday, November 21, 2008

If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers--in particular, the fact that the average hourly employee of the Big Three makes $70 per hour.

That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a forty-hour work week. Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers--many of whom make far less--finance a plan to bail them out?

Well, here's one reason:The figure is 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.

much more at:
http://www.tnr.com/politics/story.html?id=1026e955-541c-4aa6-bcf2-56dfc3323682

[liberal N proud]

1. But those fucking executives are making far greater than that

destroying the company

[Bentcorner]

2. That's not what has been said

From CNN Money:

"The current veteran UAW member at GM today has an average base wage of $28.12 an hour, but the cost of benefits, including pension and future retiree health care costs, nearly triples the cost to GM to $78.21, according to the Center for Automotive Research.

By comparison, new hires will be paid between $14 and $16.23 an hour. And even as they start to accumulate raises tied to seniority, the far less lucrative benefit package will limit GM’s cost for those employees to $25.65 an hour."

http://money.cnn.com/2008/02/12/news/companies/gm/index.htm?cnn=yes

[snappyturtle]

3. I thought they arrived at the $70/hr. figure with healthcare, etc. factored in.???? nt

[sam sarrha]

14. here is the truth.. union workers have taken up to 1/2 wage cuts, Dauch got $8.5 MILLION BONUS>LINK

http://extremeinequality.org/?p=69
"snip...Dauch currently serves as the CEO of American Axle and Manufacturing, an auto parts giant carved out of General Motors 14 years ago. Late this past May, after threatening to outsource “all of our business to other locations around the world,” Dauch forced 3,600 striking workers at his company’s five original American plants to accept a contract that cuts wages from $28 an hour down to as low as $14.35 and slices the company’s U.S. workforce by half.

One month later, in June, Dauch pocketed his reward: a $8.5 million bonus from the American Axle board of directors for his “leadership role” in “the structural transformation achieved under our new labor agreements.”

Dauch has now collected, over the last decade, over $258 million in compensation from American Axle — and, in the process, tossed thousands of U.S. worker families out of the middle class...snip"

[dmallind]

18. Yes - unfair - but numbers don't lie

3600 workers at $14 an hour less for 2000 hours a year is $108M that AA does not pay. Paying him $8M to do it still saves the company $100M

In a decade that would be over $1B.

Even if the CEO worked for nothing he'd save less than a quarter of that.

Somehow I always need to do a disclaimer to this type of post. I agree he is overpaid. I agree a 50% pay cut is draconian. I agree that executive compensation is generally out of control, and I agree he should share the pain with the workforce (although really it looks like jhe did - if over a decade he averaged $25M a year and only got an $8M bonus this year he was cut by more than 50% even though he remains overpaid, unless of course his base slary is $17M which would be unusual), but everybody seems to think that companies can survive without cutting labor costs if only they would deal with executive pay. No matter how top loaded a company is, labor costs always always always far exceed executive costs in any large union operation. If a company needs to cut to survive, it should of course spread the pain, but it cannot in any realistic world spare labor entirely.

[sam sarrha]

25. he shouldn't get a fuck'n bonus for do'n his job at $17 million a year, i have saved companies i hav...

worked for 10's of millions of dollars.. and in the long run many 100's of millions.. and because i clock in i never even got a thank you.

you need to look at what the Boards of Directors get in return for approving these criminal amounts of money.. it's a Rico Violation if the benefit from giving the CEO million$$$ needlessly.. there should be no bonuses if all the workers don't benefit also for helping the company

[dmallind]

35. I could go for that

Bonuses should be for performance. However in teh cold calculus of finance, saving money is performance. But sure, if a companuy makes less profit under a CEO, then I would say it's perfectly appropriate for them to get less or no bonus. It's how it is in some companies. The problem there is even if we enact that by law, companies would simply pay their CEOs more to lure the ones they consider importnat from other companies, and base pay or expenses would compensate for bonuses. The CEO pay dilemma is a perpetuating spiral - comapnies pay more because other companies do, and so on. I'm not pretending I have a solution to it but I'd start wiuth the following if I ruled the wrold.

1) No employee can get cash, or paid expenses or amenities euch as cars and lodging, equal to more than 50 times median income (right now that would be about $25M a year - it's plenty high as a limit)

2) Any bonuses paid must be paid to all full time employees based on the same formuala of profits/results and percent of income. So if CEO gets a bonus equal to 1X salary so does everybody else.

3) No payments for leaving a job are legally permissible. This of course would apply to all employees. Signing bonus are pernissible if paid to all new hires at the same rate of salary.

[Hannah Bell]

32. um, he's not the only one.

[dmallind]

33. OK - how many are there?

I did the math as worst possible case for GM assuming everyone made CEO pay and it still came out to be a fraction of labor costs.

A public company will post executive salaries in its annual report - feel free to do the math and let me know if they add up to more than $108M a year.

[Hannah Bell]

44. huh? that doesn't even make sense.

here are the top 5 guys at GM.

They get about 6 million in straight salary, & if we assume that there are health care & legacy costs for execs, too, & like ordinary workers, those costs are more than double salary, the cost for those 5 execs = over 12 million dollars.

That's 12% of 101 million for 5 guys.

Worth it?

http://www.companypay.com/executive/compensation/general-motors-corp.asp?yr=2008

[dmallind]

45. Except you are using different parts of what I said and conflating them

The $108M in labor savingsis for American Axle, which has 1/20th the labor of GM in the US. I admittedly brought up GM, but only to illustrate an example of when you DO look at multiple executives, they end up costing much less than labor. Again if we can find out what all AA executives get paid then we can get the relevant example for AA. I had done this for GM earlier, not for AA.

But to get another example, if GM cut its pay rate like AA did, the annual savings would be 74000 US union workers times $14 an hour times 2000 hours or over $2Billion.

[Hannah Bell]

46. I didn't know where you got the figure from, but that's the one you specified, so that's the answer

you got.

Yes, & if you paid them $2/hr you could save even more. Hell, there are lots of unemployed people, you could just kidnap them & work them til they dropped for even bigger savings.

You don't get it. Development is supposed to make people richer, not poorer; enable them to work less, not more.

If the opposite occurs, someone is stealing. If the opposite occurs, there's no point in "development," it's just another kind of slavery.

You also don't get that the car corps are all financially intertwined; the Japanese, Korean, Chinese, Mexican workers are getting the same story as Americans: "you must work more for less or "our" COMPETITORS will put "us" out of business!"

Who you calling "us," white man? would be my question. The boss got an 8.5 million bonus when he's cutting workers' salaries in half?

Some people will eat any kind of shit, believe any kind of nonsense.

There are no "competitors," get it?

[JHB]

21. They arrive at the $70/hr figure by lumping in everything plus the kitchen sink...

, bathroom sink, toilet bowl, and kittly litter box.

Basically they include past employees (retirees) and their pension and medical expenses as part of the lumped-together "employee expenses", divide that by (current) employee hours worked, and produce that bullshit number that doesn't resemble anyone's actual paycheck.

File under "how to lie with statistics".

[cherokeeprogressive]

27. Well, personally, I think they should throw in EVERYTHING that makes up the bottom line

on the sticker in the window. Do expenses incurred include past employees and their pensions and medical expenses? Yes? Do those expenses become translated into the current selling price of the car? Yes? Then they SHOULD be included.

[JHB]

31. I'm not saying they don't exist. But it's dishonest accounting to lump them together to imply...

...that the number represents the average total compensation by current employees.

That simply obscures the financial picture, not clarify it.

[yodoobo]

29. Well those things are not free and are indeed paid by someone

To arrive at an honest number, you have to include pension and medical expenses.

Retirees, when they worked also had the number of then-retirees attached. Thats just the way the accounting works.

anyway, I don't know why people are freaking out about these numbers. Autoplant work is *HARD WORK* and they fully deserve what they earn.

[JHB]

34. The "freaking out" is over the statistical spin game going on here...

The companies and anti-unionists are trying to paint the union workers as greedy, grasping, overpaid, selfish bastards who'd rather see the companies collapse (with all the ripple effects that such would have throughout the national economy) than give an inch. To buttress that spin, they're lumping many expenses which don't involve current employees with those that do in order to imply that the current employees are the sole beneficiaries of the inflated figure.

That distorts the reality of the situation rather than clarifying it.

[alcibiades_mystery]

40. you have to include it as a cot, but to say it is compensation for current workers is a fucking LIE

[LaurenG]

4. I think this is an outrage - How dare they say such stupid crap about wages

and pretend it's all true. This deserves a K and R along with all the other posts saying the same thing.

[sam sarrha]

12. southern senators are trying to destroy the American competition for their Foreign car factories..da

[Warpy]

5. The way they answer that is to say the larger per hour figure

includes things like health insurance.

Well, no health insurance costs that much. Even when you figure in company OASDI contribution, pensions, life insurance, and workmen's comp, that figure doesn't approach the higher figure.

It might get close to it if they're working overtime on a holiday for double time and a half. Otherwise, no way.

The had to have averaged it all out with executive pay packages. That's the only way they could possibly have come up with such a lavish salary for a line worker.

[lazer47]

6. Even if they were,,,,WTF is the problem,,???

[LynneSin]

7. Hell if they were I'd quit my job and be an automaker

seriously!

[cosmik debris]

13. AMEN!

The implication is that workers don't deserve a high standard of living, but executives do.

And that pisses me off!

[blurp]

8. The truth is that previous employees were making even more

It's retired auto workers that are getting paid so much.

It would be more accurate to say retired auto workers working 20 years made well over $70/hour in future promised benefits.

They're collecting those benefits now which pushes up the average.

[CK_John]

9. Take home pay, without adding in pension, health, and retired worker benefits

is shortsided math. These are the costs for UAW and not for management executives. Those are costs on another ledger.

[sam sarrha]

10. randy rhodes yesterday was saying wages in foreign factories in the south are essentially the same

[onehandle]

11. Ed Schultz is talking about that lie right now. He and his wife were watching CNN...

A Heritage Foundation talking head threw it out on Anderson Cooper, with no source named, and was not called on it.

[dmallind]

15. But they COST that

Hence the competitive disadvantage.

And no matter what you feel about corporate pay excesses (chances are I would agree, but that doesn't matter) the difference in the NUMBER of executives versus labor means that the biggest cost driver is the latter by a mile. If the top 100 executives at GM all made as much as the CEO (which they don't) and all could be removed and replaced for free (which they can't) the sum total saved would be $570M a year.

The difference between GM's $70 an hour total cost and Toyota's $48 costs $3.2B in the US alone.

Any change to profitability cannot come from executives alone, or even mostly.

[MessiahRp]

24. The article I read said Toyota's costs were $59 a worker

and that GM's new deal gets them down to $62.

Rp

[dmallind]

37. So when that new deal is in place that would mean

74,000 x 2000 x 3 or 444M a year. That's much better than 3.2B indeed , but bear in mind those executives can now claim credit for saving $8*74000*2000 or over $1B a year in labor costs, which will probably get them bigger bonuses.

But then this new deal is not one labor welcomes is it?

[amandabeech]

48. The word is "welcomeD." The article describes the 2007 contract.

It is not theoretical.

The Big 3 are supposed to pay into the trust through 2010, and then be done with retiree health benefits.

If the Big 3 hired anyone today, it would be at $14 an hour and no guaranteed pension benefits--just a group 401(k) called a defined benefit plan.

Most of what the Senators were arguing over (I didn't see the House) were executive compensation and the "job bank" where laid off workers got 95% pay while they looked for a new job or waited for a new position at the company. It's being phased out, but lots of Senators got really worked up over it.

[Indiana_Dem]

16. That's STILL more than I make an hour as an RN of 11 years.

The $70/hr isn't base bay. It's usually what is made in overtime on the weekends & holidays. I make around $40k full-time as an RN. They do make more than many college educated people--and they have better benefits. That's a fact.

[hogwyld]

23. Looks like college was a waste for me too

Instead of taking on all that debt, studying my ass off, and working my way up to middle management, I shoulda been one of them there auto workers puttin' on them thar lug nuts. After 20 years in this industry, I pull a salary of 55k. On the bright side, I get to work all the overtime I want, on the down side, I don't get paid any extra.

[readmoreoften]

43. So? Our wages are suppressed because too many college ed'd workers have resisted unions.

Too many college educated people these days identify with the values of management. They think unions are for "blue collar types" who are "beneath them" so unionization campaigns in professional circles fail and their unions are easily busted when they don't. Other industries have been declassified from union eligibility--like nurses, resident MDs, and college TAs--by the Bush administration, which said that nurses/residents/TAs weren't "workers" but rather managers or students or both and therefore ineligible for unionization. (Nurses are managers because they sign each others' paperwork, by the way.)

It's our fault for not fighting, not the blue collar worker's fault for being smart and class-conscious enough to strike and stand together and reap the benefits.

[Hannah Bell]

47. I'd say 90% of white collar workers identify with the values of mgt. & owners.

Which is why things are how they are.

Well, sow the wind, reap the whirlwind.


PS: Have to say, though, probably 50% of working stiffs also identify with the values of management.


We're soaking in them. From birth.

[readmoreoften]

50. Corporate bullshit: You're soaking in it!

(Just like Rosie the waitress.)

Actually, no. My company doesn't need a union. We're like a family. Nobody should come between us. I love our products so much that I get a free widget a year instead of the ten grand in salary and benefits I actually should be getting. But that's okay because I'm really an OWNER. The company lets me buy stock with my pay at an extra special price! I'm totally on the inside. I only make $7 an hour but I now am the proud owner of $1000 worth of stock. It's a streamlined process. I don't ever see that pay at all. It just stays in the company--excuse me, my company until I get fired or quit and have to cash out (within two weeks regardless of market conditions). I haven't paid attention to the market. I hear it's doing poorly, but I'm sure my company is not in danger because that's what the bosses told us. They're not really bosses tho, they're like older brothers and sisters in our corporate collective. Anyway, everyone knows "nothing outperforms the stock market" so heck, that $1000 could be worth ten grand by now. Who needs a stinkin' union! Sure you make $30,000 a year more, but you have to pay like a $1000 a year in dues!!!! So it all evens out. Besides, I'd rather have my corporate family profit from me than a stinkin' meddling union. (Plus they're all Jews and Communists, but that's besides the point.)

(Don't make me add the tag...don't do it...don't do it...)

[Hannah Bell]

51. Zactly. Who could ask for more?

[amandabeech]

49. The point of the article and the 2007 contract is that the benefits have been decreased.

My uncle retired from the line at GM and there's no way I would hold up for the 25 years that he did.

They HAD better benefits, but those are being phased out under the new contract. His health benefits are going to be decreased, and his pension will probably be next. Don't forget, the old guys gave up take home pay for retirement benefits, and a lot of them are too old to work. My uncle is 88 and is suffering from congestive heart failure.

I don't mean to denigrate your post, but you're going to have to take a lot of nasty strikes with the uncertainty that you'll have job at the end in order to get the wages and benefits that my uncle has.

If your union is prepared to do that, then you might do better when you retire, too.

[napi21]

17. There was a thread yesterday that explained how they got the $70 figure.

They took the wages paid & the cost of benefits (including pensions paid to retirees) and divided the total costs by the number of hours worked which equaled the $70.00/hr. The misleading part is that all those retirees who are now receiving their pensions do not currently contribute to the # of hrs worked figure. THAT'S why they're always complaining about the "Legacy Costs"!

IMO it's the companies who screwed that up by not contributing to the pension funds over the years and constantly said they'd catch up when business got better! It never did, and now there's not enough $$ in the pension fund to pay what they owe.

[newtothegame]

19. I don't blame the workers at all...

but I'd love to make $60,000 without a college degree.

[1gobluedem]

22. Would you love to stand in one spot for eight hours a day?

Putting the same bolt in place hour after hour after hour? In an airless, often overheated or too cold, noisy factory?

I sure wouldn't. I think they -- and other line workers -- earn every penny they make especially when they are manufacturing things that we need or want. I'm glad I don't have to do it and I'm grateful they do. So if they make $60K and have some left over to live a good life outside of work, well, they've earned it.

[uncle ray]

28. i would too.

and i don't blame the workers either. but their compensation is high for the work performed. i know someone will want to flame me for saying that, but i know the level of skill involved. i am a toolroom machinist by trade. i have the ability to make literally anything out of metal, from scratch. i can sit at the computer with a CAD program and program a machine to make the parts, or i can do it on a manual machine. short of making a circuit board and vulcanizing rubber, i can make a car from scratch(and DO, that is my hobby, really). i can hammer out a fender from scratch with hand tools, or powered tools that i did build with my own hands. but nobody is paying that kind of money for the real skills i possess. so if i have to, i apologize for my opinion on what an assembly line worker is paid.

note too that the $28/73 figure thrown around is for assembly line labor, not the "skilled labor" as i do, which IS paid more than the average assembly line worker. those people work at subcontractors, not at the big 3s plants so they are currently off the radar of the discussion of wages.

i have in the past worked in estimating in manufacturing, and in the rest of the manufacturing world, the numbers are more like $16 an hour average "pay" and TOTAL business overhead including wages, benefits, the actual building etc. is about $45 per hour per employee. it's been a few years so the overhead could be higher, but if anything the wages are going down. total employee compensation is probably around $30-35 an hour. currently in much of manufacturing the billable rate is around $75 and up an hour, meaning the company is expecting $30 an hour profit on a persons labor. this isn't speculation, this is from experience.

[NoGOPZone]

30. I know at least two people in my company making well above that without any degree

but somehow, no one seems to mind, because they've 'earned' it. How they have escapes me, however.

[JohnnyRingo]

20. Our union hasn't made a "demand" since 1976

The key word at negotiations has been "concession".

The union's role has been one of compliance in the name of keeping the company afloat with lower wage tiers and reduced benefits for new hires. Out sourcing jobs, while leading to a smaller workforce was accepted as well.

Have we been too greedy? Maybe we should have been paying the company for giving us a warm place to go everyday.

[MJJP21]

26. I don't think

the 28 dollar figure calculates the other costs for hiring that employee. First of all the employer pays twice the rate for social security . If the employee pays 1 dollar the employer pays 2.(rounded off example) The figure also doesn't factor into the figure the employers contribution to the pension plan, nor the health insurance. As an example when I lost a very good job several years ago I was eligible to obtain health insurance at the whatever my employer was paying. Lo and behold if I wanted to keep my health insurance on my own it would cost me $1100.00 per month. Thats right per month not per year. I also don't believe the figure calculates the out of pocket for the employer on vacation time which has to be picked up by someone. There may in fact be whole lot more benefits that employees received that I am not aware of such as uniforms, training, bonuses etc. Lets not forget if the figures calculate overtime into the workers yearly take. Overtime compounds all those other factors I noted above. Another example of this is where I worked I received education benefits, and so did my children. (non union company by the way). I am not bashing unions and am not saying that the big three don't need help but I am taking issue with the claim that total compensation does not come near the 70 dollar an hour mark. I think it can and often does.

[mdmc]

36. In the 70's the UAW median income was $45 per hour

which is over $80 per hour today... Not that the UAW is making $80 per hour now.

But back in the day, those workers were makin md ducats.

[patriotvoice]

38. The Rule of 4: take the wage price, multiply times 4. That's your wage cost.

In business of any scale, you can quickly estimate the actual wage cost by taking the market wage price and multiplying by 4. When I pay a programmer $75 an hour, I bill him at $300 per hour to cover his costs, which includes profit, taxes, office space, connectivity, utilities, health care, retirement, business cards, shirts, and toilet paper. In my experience, I have found that estimate to be spot on.

It is totally reasonable for the wage cost to be $70/hr for an assembly line worker priced at $17.50/hr.

[MindPilot]

39. I know this to be true. My employer is totally up front with those figures

I make $32.00 an hour. My wage cost to my employer is $122.80 per hour. That is what I'm worth to the company I work for.

[lebkuchen]

41. GM bellies up and the execs start blaming labor unions

while execs make tens of millions in salary.

sick

NOW they say they will sell a couple of corporate jets but that this decision has nothing to do with the congressional hearings. What a bunch of lying bastards.

I own every Michael Moore video, but until today I hadn't comprehended the depth of these CE Os' unconscionable craven business practices. I won't consider buying an American-built car until those management positions are filled with people possessing a conscience aimed toward the betterment of the USA rather than the current philosophy of self-enrichment at any cost.

[readmoreoften]

42. When I was working as a TA at NYU making $19K, they said we made $50K

because they included health care and the possibility of tuition remission for those who needed it (which many did not since they were in the dissertation phase of their PhDs.)