An important article. Truth will prevail.
The Myths of Auto Worker Wages
In recent hearings on the bailout of Detroit's Big Three auto companies, there were some major pieces of disinformation being spread. Here is an example:
Sen. Jon Kyl: "For years they've 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. And for the Japanese auto companies working here in the United States, it's $48."
The contract negotiated with the UAW in 2007 set the average auto worker's wage at $28. The $73 number was arrived at by taking all the costs of retirement and healthcare programs and dividing by the total number of hours worked by all employees. But those total numbers include the costs for the hundreds of thousands of retirees. US auto companies have been in business for nearly a hundred years, and there are still a lot of retirees who are alive and collecting their pensions. The actual value of benefits received by employees is around $10/hour.
Foreign auto companies have two big advantages here: First, the workers who build cars in foreign countries are mostly covered by government pension and healthcare systems, so the manufacturers are not burdened with those costs. Secondly, their local factories here in this country have not been in business long enough to accumulate a large army of retirees. For the local factories, this will even out over time, but in the interim, the Big Three are operating at a cost disadvantage.
The point is, auto workers receive compensation comparable to other workers in this country. So what's going on here? Why all this demonizing of the "greedy" unions who drove the poor hapless auto companies into the ground with their unreasonable demands? It's all about politics.
Making false claims inflating the earnings of unionized workers is part of the Republicans' long-held practice of union bashing. It's intended to create envy and disgust at people making a good hourly wage, and to undermine public support for workers' right to organize and engage in collective bargaining. An hourly wage of $28 per hour works out to a gross annual income (before taxes, Social Security, etc.) of about $58,000. For a typical family of four, this is barely enough to survive these days, and for most families, it probably means that both parents have to work.
Also, harping on imaginary and inflated wages for workers is a way to distract from one of the big problems with the US auto companies (and most US corporations in any sector): executive compensation. For instance, in 2007 General Motors CEO Rick Waggoner made close to $20 million in total compensation. That works out to about $10,000 per hour.
If the bailout is withheld, who will suffer? Will Rick Waggoner go hungry? Of course not. He may have to sell a couple of his mansions, but I am sure he and his family won't suffer. The same is not true for the workers in the shuttered plants. In fact, the total costs of unemployment benefits, welfare payments, Medicaid costs, etc. could approach or even exceed the cost of the bailout. But what of the misery and poverty those people will suffer. Is it their fault that their bosses were blind to the reality of exploding oil prices, insisting on building huge gas-guzzling behemoths because of their short-term profit? No, it was not their fault, and the people who are now trying to shift the blame to them in order to torpedo the bailout are engaging in class warfare of the most despicable kind.
There is a lot more to say about this, but I'll save it for a future article.