Roughly speaking, the average hourly pay for a member of the
United Auto Workers currently ranges from $28 to $38 or
so for those hired before September 2007, and between $16 and $20 for workers
hired afterward.
American automakers pay Mexican workers $8 to $10 per hour, including benefits.
Even among the Detroit Three, there is a gap, according to the CAR: GM's labor
costs average $58 per
hour, while Ford is at $57 per
hour and FCA workers average $48.
Mar 26, 2015.
The decline of market share for American automakers, which
started in the 1980s, accelerates. Concessions on Health Care. The U.A.W.
agrees to have auto workers pay for
more of their insurance, reducing G.M.'s health care costs by $1 billion a
year. Oct 8, 2015
Auto
Worker Salaries, by Viveca
Novak,
12/11/08, FactCheck
Q: Do
auto workers really make more than $70 per hour?
A: No.
That figure is derived from what the auto companies pay in wages, health,
retirement and other benefits, and includes the cost of providing benefits to
retirees.
FULL QUESTION
How
much does a UAW member make at a domestic auto plant? Various sites have cited
the figure at an average of seventy-three dollars an hour (The Heritage
Foundation). Keith Olbermann says that the figure is actually at twenty-eight
before benefits, which only add ten dollars to the amount. Other sources
indicate that Toyota workers (who are not unionized) made more last year after
profit sharing was calculated. So clear it up for us. What’s the real bottom
line?
FULL ANSWER
A report from the
conservative Heritage Foundation, opposing the auto industry bailout, said that
members of the United Auto Workers union "earn $75 an hour in wages and
benefits – almost triple the earnings of the average private sector
worker." Later in the report, it’s phrased this way: "The vast
majority of UAW workers in Detroit today still earn $75 an hour."
That
figure has caught hold with some conservatives, and it seeps into media
coverage from time to time as well. A few examples: At a Nov. 19 House
Financial Services Committee hearing on a possible bailout for the auto industry, Alabama
Republican Rep. Spencer Bachus said, "Even with recent changes, the
average hourly wage at General Motors is still $75 an hour. …" Two of his
GOP colleagues on the panel made similar statements. And in a Nov. 18 column in the New York Times, business
reporter Andrew Ross Sorkin wrote, "At GM, as of 2007, the average worker
was paid about $70 an hour, including health care and pension costs."
The
problem is, that’s just not true. The automakers say that the average wage
earned by its unionized workers is about $29 per hour. So how does that climb
to more than $70? Add in benefits: life insurance, health care, pension and so
on. But not just the benefits that the current workers actually receive – after
all, it’s pretty rare for the value of a benefits package to add up to more
than wages paid, even with a really, really good health plan in place. What’s
causing the number to balloon is the cost of providing benefits to tens of
thousands of retired auto
workers and their
surviving spouses.
The
automakers arrived at the $70+ figure by adding up all the costs associated
with providing wages and benefits to current and retired workers and dividing
the total by the number of hours worked by current employees.
Labor Costs Aren’t the Same as
Wages Earned. The result is the per-hour labor cost to the automakers,
which is very different from "pay" or "wages" or even
"wages and benefits" earned by their workers. As David Leonhardt pointed
out in
the New York Times (countering, in a sense, the earlier piece by Sorkin), the
average GM, Ford and Chrysler worker receives compensation – wages, bonuses,
overtime and paid time off – of about $40 an hour. Add in benefits such as
health insurance and pensions and you get to about $55. Another $15 or so in
benefits to retirees (known as "legacy costs") brings the number to
roughly $70.
That
last figure accounts for the biggest difference between labor costs of the Big
Two and a Half and those of the "transplants," as foreign carmakers
with manufacturing facilities on U.S. soil are called. Ford, in material it submitted to Congress for hearings this
month (see "Congressional Submission Appendix (PPT)"), estimated the
transplants’ legacy costs at about $3 per hour, a number that has less to do
with the level of benefits paid than it does with the fact that the transplants
don’t have many retirees yet, according to economist Kristin Dziczek of the
Center for Automotive Research.
The
Ford chart also estimates that, as a result of a historic 2007 labor agreement
with the UAW, the legacy costs of the U.S. automakers are expected to fall – to
about $3 per hour. That’s because the deal calls for a new voluntary employee beneficiary association (or VEBA), a seldom-used
100-year-old tax loophole. A VEBA is a tax-exempt trust that can be used to
fund almost any sort of employee benefit, but they are most commonly used to
pay for health care expenses.
In
an innovative twist, the UAW and Detroit negotiated a VEBA to cover the health
care expenses of retired autoworkers. Under the terms of the agreement, GM,
Ford and Chrysler were to contribute $30 billion, $13 billion and $9
billion, respectively, to a trust fund to be managed by the union. The UAW
would then use the income from the VEBA to cover retiree medical expenses. The
agreement would protect retirees’ health care benefits in the event of company bankruptcy,
while allowing the automakers to shed the bulk of their legacy costs.
When
the new agreement is fully implemented, which should happen in 2010, the U.S.
automakers would still bear labor costs of about $9 per hour more than Toyota,
but that’s far better than the current gap. The 2007 agreement also calls for a
new two-tier wage structure and other concessions from workers.
As
for whether Toyota workers earn more than employees of U.S. domestic
automakers: In 2006, at Toyota’s Georgetown, Ky., plant, workers averaged more in base pay and bonuses than UAW
members at Ford, General Motors and Daimler Chrysler, according to the Detroit
Free Press. The difference was due to profit-sharing bonuses; Detroit’s workers
aren’t getting many of those these days because, well, there’s really nothing
to share. The transplants don’t give out much data, however, so it’s hard to
tell if this pattern is continuing or even if it applied to all Toyota plants
in 2006.
A
final note on all this: Labor costs only account for about 10 percent of the cost of producing a
vehicle. And it’s not the cost of American cars that people complain about;
they’re already often thousands of dollars less than their Japanese
counterparts. Whatever changes may be made in the carmakers’ labor agreements,
we’re convinced, and the recent hearings show, that there are much bigger
problems in Detroit. – Viveca
Novak and Joe Miller
Sources
Sorkin,
Andrew Ross. "A Bridge Loan? U.S. Should Guide G.M. in
a Chapter 11." The
New York Times, 18 Nov. 2008.
Leonhardt,
David. "$73 an Hour: Adding It Up." The New York Times, 9 Dec. 2008.
Roberson,
Jason. "UAW Losing Pay Edge." Detroit Free Press, 31 Jan. 2007.
Sherk,
James. "Auto Bailout Ignores Excessive Labor
Costs." WebMemo
#2135, 19 Nov. 2008.
International
Union, United Automobile, Aerospace and Agricultural Implement Workers of
America. "Wages and Labor Costs." www.uaw.org, Web site accessed
11 Dec. 2008.
"Stabilizing the Financial Condition of
the American Automobile Industry."
Hearing of the House Financial Services Committee, 19 Nov. 2008.
Norb Leahy, Dunwoody
GA Tea Party Leader
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