Transformational UAW Deal? Accept Professors' Pay
According to Forbes:
Labor cost per hour, wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
According to AAUP and IES, the average annual compensation for a college professor in 2006 was $92,973 (average salary nationally of $73,207 + 27% benefits).
Labor cost per hour, wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
According to AAUP and IES, the average annual compensation for a college professor in 2006 was $92,973 (average salary nationally of $73,207 + 27% benefits).
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D. (see graph above, click to enlarge), and 52.6% more than the average worker at Toyota, Honda or Nissan.
Many industry analysts say the Detroit Three, and especially Ford, must be on par with Toyota and Honda to survive. This year's contract, they say, must be "transformational" in reducing pension and health care costs.
What would "transformational" mean? One way to think about: "transformational" would mean that UAW workers, most with a high school degree, would have to accept compensation equal to that of the average university professor with a Ph.D.
200 Comments:
When I think of professors like Ward Churchill at the University of Colorado and the gang of 88 at Duke, I think that $93,000/year is a $193,000 per year to much...LOL!
None the less I'm not about to bash people who've spent a lifetime learning their trade...
The one question I have for you Dr. Perry isn't one of the reasons that UAW members have so many benefits due to the actions of Richard Nixon and his wage & price controls in the seventies?
I agree that UAW workers are highly compensated. I'm not sure the figures are directly comparable for quite a few reasons, but I will accept them for argument’s sake.
You mention that most UAW workers only have a high school education. That’s all that is required for most of the jobs, but many UAW workers have the mental capability of being professors if they wanted to take a pay cut after going to college for years. I personally know quite a few.
Life is nothing but choices and people choose different directions. It looks as if the day of high pay and low skill is a phenomenon of the past. Accordingly, I think the college professor has a higher earning potential than the UAW worker in the future. It appears that future workers will be paid for their knowledge and abilities, so people should invest in themselves by being marketable to many different employers.
I have known auto workers and PhDs. You would go a long way to find a PhD who could work an auto plant job. From this I conclude that a PhD isn't worth an auto worker's pay.
I know a UAW guy from Allison Transmission in Indianapolis who is building an airplane in his garage. He's probably done by now. I saw it while it was under construction and I could see the quality of workmanship inside. Who would you trust to build your plane? This UAW guy or that humanities professor who is so good at committee politics? What would you do with a plane that only turns left?
In 1973,I gave up a substantial scholarship to be a CPA at the University of Michigan-Ann Arbor to be a factory worker. When I hired in, I had a former school teacher working on one side of me and a licensed attorney working on the other side of me on the welding line. It was a terrible job, but it paid extremely well with great fringe benefits. I think I made a good career choice then; however, times change—it would poor choice, and one I would not recommend, today.
Workers at Ford are paid 47% more than workers at Toyota, Honda, & Nissan. GM workers are paid 53% more & Chrysler workers, 58% more. Fine. But this means (inter alia) that their fellow-workers find it far cheaper to buy cars from Toyota, Honda & Nissan. Their fellow-workers demonstrate this by actually buying these Japanese cars -- because then they have money left over to buy other things as well.
What are workers at GM, Ford, & Chrysler whinging about? Their fellow-workers (in other industries) not only have cars, they have other things as well. This is not good?
GM workers' wages are not that much more than the U.S. Japanese automakers, but the total compensation and legacy drives the hourly cost higher. Those costs are allocated across the active workers’ payroll.
The U.S. automakers decided to fund their future retiree liabilities from future profits instead of putting the money in an account when times were good. Although the shortfall is magnified by the unforeseen health care cost escalation, a lack of long-term planning is the real culprit. Does anyone really believe that the Big 3 did not realize years ago that unfunded retiree benefits would be a problem in the future? Workers are expected to save money for future obligations, so why aren’t corporations?
Before the U.S. automakers can realistically be compared to the Japanese transplants, the Japanese need a few generations of retirees and elder employees. Directly comparing the Japanese transplants to the U.S. Big 3 is like comparing the present NFL players to the former players who are 50 to 80 years old.
It’s difficult for old companies to compete against new companies. The old companies and their workers, however, built this country‘s infrastructure, so as bad as the connotation of the word “entitlement” is, they are. The past generations’ contributions to the U.S. and what it stands for just cannot morally be ignored.
We are talking about wrench turners here... A college professor wouldn't CHOOSE to do that work because his mental capacity is better spent teaching others, not trying to remember "Righty tighty, lefty loosey."
Do you really think American factory workers get that much more than Japanese? Then, you need to study your economics a bit better, professor! The American wages include health care -- in Japan, health care is provided by the government.
Moreover, most Japanese workers receive the Asian custom of a 13th month of salary (that is, one extra month at the end of the year as a "bonus" but it's a standard part of pay in many companies). Is this true of Japanese car companies? Economics professor doesn't talk about this part of Japanese employee compensation.
So, if we're comparing American professor salaries to auto workers, we should consider that the American economics professor making the posting thinks wages with health care equals wages without health care. Hmmm. Maybe, the professor should go back to school. Or, maybe, the problem is, our auto companies are as bad at economics as professor is!
I for one cannot understand why American auto companies, put at a terrible competitive disadvantage by our idiotic health care system, don't lobby for something more sensible. Perhaps, its because the execs at the auto companies are too smart to invest in auto company stock, and go for the profitable businesses, like American insurance companies!
BTW, why not include German and other European workers in this comparison? Hmm. Do European workers get more? What has the recent slippage in the dollar done to this comparison? Not questions economic professor seems to have thought about.
I had a professor years back that mentioned when his father (retired GM employee) worked overtime he was making well over $100/hour. This was also during the early 80's. If that's not being overpaid I don't know what is.
If US automakers want to compete then they have to reign in benefits. Yes, they should have to fulfill they're old pension healthcare obligations. But new hires should be getting personal responsibility benefits, what I mean is instead of a pension that enslaves the worker as well as the company, they should have tax deferred retirement accounts, even better the government should eliminate tax on these all together. Secondly they should be lobbying hard for Universal Health Care where the government subsidizes Individual health care accounts that can be used anywhere, and guarantees coverage for catastrophic care.
They should also make better cars, and jump out ahead of the other companies in developing cars that run on renewable energies.
The American worker needs to change too, depending on large profit driven corporations for benefits is foolish, it seems to me like it was a foolish idea from the start. With people living longer lives there is no way we can expect corporations to be able to pay this and generate profits and they are defintly going to get out of it.
Guess we can thank the oil companies for this
for all the people are dissing automechanics, most dont have just a highschool degree, most have been certified by the ASE and have taken classes at vocational schools such as UTI, Wyotech and others. Next year I will be going to UTI, to become ASE certified. Just because I'm going there doesn't mean that I'm retarded, I considered studying quantum physics but overall I concluded that going to school for 8 years and not making nearly as much, really its just simple economics.
P.S. It will only cost me 48,000 for my 18 months at UTI now compare that to what it costs to get a PH.D in a current college or University
IMHO the problem goes way back. It might sound simplistic but really you cant compare American auto's with Euro or Japanese product at all. They just are not competitive. - Why? -Thank ole Henry Ford. He killed off all the forward thinking design/techno real quick. (His Model T after 10 years was half the price it started off at).....So did Ralph Nader and his cronies. Imagine where the US auto industry would have been if the Corvair was'nt nixed. And Tucker...and Cord....and ...the list is endless...So we got cheap, bland and unimaginative cars instead. Go figure.....
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A lot of the comments seem to display a tone of envy. This is not the American Way. It's not right to bitch about how much more money someone else is making, how many benefits they have, and talk as if you want to bring them down a notch. Better to figure out how YOU can make that sort of money and benefits. There is no automatic class-based system in this country that determines up front how much someone with a certain education can make an hour. If the Autoworkers figured out how to get that sort of compensation for themselves (and I think it took some doing, and lots of broken bones) then more power to them! Don't bring them down, bring youselves up! That's the American Way!
CAR-LS JUN-IOR MILK-SHAKE
In terms of the legacy employees that some people mentioned: there are many old college professors too, and it's only because of them that the avg. wage is 90ish grand. Most new Ph.d.s earn something like 35k teaching. Perhaps it'd be more enlightening to compare an auto worker five years into the job and a college professor who just got tenure.
To echo some statements above: I have a graduate degree and am going for a doctorate soon. I'd gladly take a 35k teaching job over a 65k industry job or an 80k auto plant job. Why? I find it more enjoyable and relaxing to teach than to spend my whole day lifting heavy things. I'm just sad that other "blue collar" workers who keep and are willing to keep this country running aren't nearly as well compensated.
I think the term PhD is used very loosely. I think PhDs in a liberal arts are probably as a pool not able to qualify for working in a plant but I know many PhDs on the engineering side that would own on the manufacturing side.
Anywho ... I think its a bit bold to suggest that facts without knowing the basis for the calculations.
This sounds a little bit like sour grapes. If a PhD didn't like what he was making why wouldn't he find a place that would pay him what he wants?
Why does this professor not ask the same question about Coaches in his university or U's across the US? That seems more of a farce than attacking UAW.
Me personally I think the union should be there to protect the worker, but anymore I see unions doing what everyone who wants $$ without working does. Make the working class pay their bills. Look @ the current tax structure. Look @ health care. The poor pays nothing, the rich pay very little compaired to what they make while the middle class pays the majority based on their income level.
So really Mr. PhD why don't you ask the really tough Q's like how the current president can justify spending 7 BILLION on his executive level spending when the former administrations topped out @ $500million. Or why health care costs so much for the middle class or why my (middle class) tax burden is so high compared to a millionaire/billionaire or someone that only make $15,000 a year.
Its called overtime. Its something the government outlined, not the UAW. I myself am an autoworker and the highest paid guys on the lot receive about $35/hr. Factor in overtime, forced 12 hour days for 6 or even seven days a week......that's, my friends is how you get $140k a year here. Guys like me who work only 40 hrs a week make around $70k. Less than your placebo...... :)
This is total BULLCRAP. It doesn't even pass the common sense test. I live in Detroit, and know many many many factory workers. They typically make about 30k-70k.
Could benefits and pensions bring it to 193,000 a year? That is LAUGHABLE. THIS STORY IS BULL.
The costs incurred are probably inclusive of the legacy pension/health care costs for retired UAW workers. The fact of the matter is if they don't cut the labor cost, they will eventually shut down since they can't seem to build better cards at a lower price.
BTW, maybe someone can read whether or not the Toyota, Honda, and Nissan costs include wages/costs from their American plants (of which there are many).
bill w,
The $70 to 75 per hour is an estimated compensation figure, but it is not far off. I sit on a UAW/GM buy or build committee, and in sourcing and outsourcing decisions are made using these figures.
You have to realize, though, that everything, including the kitchen sink, is paid for by the active hourly work force of less than 80,000 using GM's accounting practices. That includes all retiree health care costs (300,000 +), all active employee health care (dental. eye glass, hearing aids. . . ) any unfunded retiree pension costs, jobs bank, sub pay, the employer's portion of F.I.C.A., tuition reimbursement. . . . This is not an exhaustive list (the UAW compensation even includes some employer mandated OSHA requirements). If GM pays any money for the hourly workforce or retirees it is counted as compensation for the active employees. That’s why I made the comment in the earlier post that UAW compensation and professor compensation cannot be directly compared. I don’t believe that retired professor costs are charged to the active professors when compiling compensation costs, but I could be wrong—that’s not my field.
Walt G, you are an idiot.
$15 an hour for a trained monkey is too much. Ship their jobs off to Mexico and China.
Quote: "The old companies & their workers built this country's infrastructure.The past generation's contribution to the US & what it stands for just cannot morally be ignored."
1. GM,Ford, Chrysler build cars that cost far, far more than cars produced by Toyota, Nissan, Honda. When workers buy cars, they look at price (amongst other things, of course.) If workers want to pay higher prices for the _past_ 'achievements'_ of GM, Ford, Chrysler, fine. _Ask_ fellow-workers to pay more for their cars -- & give up other things -- so that the older workers of GM, Chrysler, Ford can be supported.
2. Past 'achievements' were by _past_ generations, _not_ the present one. If older workers want to be paid now for what they did in the past, fine -- let them ask their fellow-workers to buy more expensive cars for this purpose. Their fellow-workers have only to give up a number of other things & buy more expensive cars. That's all.
This one is easy for the finance fancies to get if they just think it through-the value added for autoworkers is higher than that of the average prof - north of $400k/yr/worker. They are just reaping the benefits of their higher productivity.
Plus, autoworkers work way harder than the average prof. I mean sore, bone-tired hard. Look at the demographic data and think about how much you would want to "sell your health," which is a common term amoung autoworkers. - factory rat
I just read in the WSJ that Toyota is now saying that is has been losing money hiring Americans to make their cars and they only did it to get Americans to buy their cars.
Now that Americans are sold on their cars, they are cutting back on factories here, and won't build any new ones.
So GM and Ford are competing with a Japanese company that cynically built factories here in order to sell their cars by pretending they give a darn about American workers.
And now they are retreating back to their workers in Japan
b who all get their health care paid for by the government.
How ironic is that?
Meanwhile, the Blackstone guy got BILLIONS for selling his company.
But we're not supposed to mention how much the incompetent corporate officers of GM, Ford and Chrysler get - THAT is class warfare.
Screaming that workers make "too much" money is oddly NOT class warfare.
The far right WSJ editorial page not long ago said that air traffic controllers, who have our lives in their hands, make "too much" money, while the CEOs of General Motors over the last few decades, who haven't managed to straighten out the mess they made, not even being able to hire an excellent designer, or figure out what will sell, don't make enough - ie mere millions with the best health care and very large permanent pensions forever.
Sudha Shenoy said...
" GM,Ford, Chrysler build cars that cost far, far more than cars produced by Toyota, Nissan, Honda."
That's absolutely false. A Toyota Camry with a 6 cylinder engine is far more expensive than a Chevy Impala and similar cars.
And they rarely give rebates or 0% financing.
And then they twist your arm to get you to come in ever few months and pay them $300 to "maintain" your car, implying that if you don't it will void the warantee.
That $300 includes things like $20 to fill your window washing liquid.
It's a total ripoff.
At 7:03 AM, juandos said...
"When I think of professors like Ward Churchill at the University of Colorado and the gang of 88 at Duke, I think that $93,000/year is a $193,000 per year to much...LOL!"
When I think of the "Christian" rightwing schools "teaching" students that the universe is 6000 years old and that humans existed along with dinosaurs, and they call that "science" I think those "professors" ought to be put in prison or the nut house.
LOL!
Note to Albion: Compensation for Honda, Toyota, and Nissan are for plants in the U.S., not Japan.
Professor, did you even read the Forbes article? It clearly states an important note that the UAW wage numbers are skewed due to higher benefits and pension costs when compared to other groups. You neglected to mention this in your summary; this probably would have saved you (and numerous other sites linking here) some headache.
Wow! Instead of getting a degree, learning a highly complex skill and using my brains all day to keep the systems of a 2 billion dollar corporation humming, I could be installing dashboards for better compensation. Outstanding UAW! How do I get in?
its not that unfair that union workers make more than professors because being a professor doesn't require that you work that many hours.
What pisses me off, is that accountants, lawyers, and, early in their carreers, even doctors work 60-80 hour weeks, doing a highly stressful job that requires a ton of education and make as much or less than these union workers that work 9-5 and have lots of time for their family and friends.
That is BS! I blame my parents for pushing me to use my brain and go into education at a young age, so now i can work ridiculous hours for the same pay. Why do people in general think that doctors, lawyers and accountants make a lot of money? the hours are crazy and you can make the money with a highschool degree. Why are people so stupid? And why do they push this BS on their children?
In all fairness, my Buick has been more useful to me than my college degree.
It cost alot less too.
Professor Perry,
You realize that your graph is mislabeled because it should be labeled “Hourly Labor Cost”. GM's labor cost and UAW employee compensation are not one and the same. Labor cost is aggregated to include benefits that employees do not receive whereas employee compensation is individualized to actual wages and benefits. GM uses quantifiable labor costs to make business case decisions, but no employee actually receives that amount of pay and benefits.
Walt G,
You are making too much sense. You have been warned before (by the idiot who called you an idiot, for example).
I've read several comments that claimed that the Japanese pays for all health care. Besides being an economically ignorant statement, it simply isn't true. There are two ways to get medical coverage in Japan, and all people in Japan legally have to choose one. The first is provided by the government, the second is provided by your employer. Either one requires a 30% co-pay, which wouldn't make our home-grown socialists happy.
Also, people who aren't Japanese, or those with no legal right to be in Japan (such as those with expired visas) are not eligible for "free" health care. Compare that to the US system, which doles out care to millions of free-loading illegal immigrants.
First sentence above should read, "...Japanese government..."
The wages would be far lower if they had left out middle manager pay. Its not just auto assemblers that make simple hourly wages.
This looks like a big collective who used bully and extortion tactics during times when their thievery could be afforded and when there was less competition.
Now we have Climate Change thievery looming and much more competition for consumer bucks.
Like all collective ideas this one was short lived as expected. No collectivist plan can outlive it's first run supporters.
Individualistic entrepreneurs always come along with a much better deal. Without government mandated economy, the collectivist tent folds.
Capitalism works best when not messed with.
In reading some of the comments posted in response to this article, I'm amazed at how absurd some of these statements really are (with the exception of Walt G, who seems to know his stuff). It's almost as if nearly everyone wrote a comment just to see it show up on the screen.
First, like nearly every other profession, being a UAW hourly worker has nothing to do with mental capacity and has everything to do with life choices - whether or not you wanted to go to college and earn for the future or wanted to go into the workforce right away and earn now, would be one of those choices (as well as plenty of others). There is virtually no other job on the planet where a person can have a high school diploma and make over $100,000 in compensation (and enjoy this type of job security) to do one task, or a repetitive set of multiple tasks, day in and day out. While automotive plants have improved in both efficiency and technology over the years, at the end of the day, the entire purpose of the assembly line concept is to keep free thinking to a minimum, and use training received to complete a repetitive task. The statement made by someone that "I have known auto workers and PhDs. You would go a long way to find a PhD who could work an auto plant job. From this I conclude that a PhD isn't worth an auto worker's pay" is an amazingly stupid and idiotic comment. So what this person is saying is that, with the equivalent training, a PhD or a professor doesn't have the mental capacity of a UAW worker to do the same repetitive task? Yet, many PhD's have the mental capacity to teach America's youth and provide the research that often improves the technology used in that same automotive industry or makes it safer for UAW hourly workers to do their jobs? On top of that, your point that you know someone who works at Allison Transmission (which actually was such a money pit of inefficiency that GM just sold it off) that is building an airplane is completely pointless. I know a GM salaried employee, who has since gone back to teach Engineering classes as a college professor, that has been building custom cars and engines since he was 9. Should I not trust his craftsmanship because he isn't a UAW hourly worker? What a joke.
Second, the satement that Albion Turgee made about needing to compare apples to apples (an attempt to show why US hourly worker compensation is so much higher than Japanese hourly worker compensation), in that Japanese healthcare is provided free by the government, is wrong. A common misconception is that universal, government-sponsored healthcare is "free", when this couldn't be farther from the truth. In Japan, if you receive basic insurance from your employer, the employer pays the government for the healthcare, which means these fees are passed along to the employee in the form of lower wages (and other things like small premiums). If you don't receive healthcare through your employer, the government will provide it for you. However, this is done via taxes, as well as a co-pay. So it does appear the article compares "apples to apples". On top of that, certain "specialized" insurance policies exist to supplement government-provided health care in Japan. Again? Not free.
Third, with the exception of the NUMMI plant in California, Toyota is non-union, and Nissan and Honda are 100 percent non-union workers. While they use the UAW wages in areas around their plants as guidelines to setting their own wages, the Japanese auto companies do not have to set hourly wages and compensation this high, and often do not. In fact, the NUMMI plant, with a shade under 5,000 UAW hourly workers, might be abandoned by Toyota in 2009 due to the highest labor costs in the automotive industry (the biggest contributing factor being compensation costs). The bottomline is simple, if compensation costs are too high, profits will drop. Maybe the UAW (and the Big Three) should take a look in the mirror as to why compensation is so high, compared to their Japanese counterparts, and finally accept some blame.
Finally, marciaq, just stop talking...not one thing you said was either a) true or b) made sense. Japanese cars cost less to produce than cars from the Big Three, but GM cars cost less to buy. This is 100 percent true. It doesn't matter if Japanese cars are more expensive at the dealership, production costs do not equal selling price. One of the big reasons why the Big Three's cars cost more to produce is the labor cost. After material and component costs, labor costs play the biggest role in overall production costs. To stay competitive with the Japanese, despite costing more to produce, the Big Three often have to offer a lower sticker price (and sometimes incentives) resulting in lower margins. In its simplest terms (with no external variables), it makes sense that the companies with the lowest labor costs will have lower production costs, which will result in higher profit margins, depending on selling price. While the Big Three can blame itself for its lumbering inability to address environmental concerns until now, sell off unprofitable internal suppliers until it's too late, or until recently design vehicles that the public actual likes and wants to buy, management cannot be held responsible for UAW leadership, who for years took the all-or-nothing strike mentality and may have end up costing itself jobs and influence over the car companies in the end. You do have to give them credit for their ability to somehow show that hourly UAW workers are more deserving of high compensation than those that mold young minds and do the research required to make advances in science and industry. It looks like maybe Professor Perry wasn't too far off in suggesting that in order to remain competitive and survive, UAW hourly workers' compensation costs will have to lower dramatically. Amazing how that works.
Overall, it seems people failed to see the purpose of this article - compensation for hourly workers of the Big Three is way out of control...That's the purpose and that's what the article proves. It doesn't matter if this is because of pension costs or some other cost, because this is what the UAW and the Big Three agreed to years ago and is part of total worker compensation. It also isn't out of line in suggesting that the next labor contract will have to push these annual average compensation (wages+benefits) costs down toward that of a college professor (or that of a Japanese worker) - it's ridiculous to think that a worker, with only a high school education and only required to do a repetitive task 8 hours a day, should be rewarded with that much more compensation than a college professor to begin with. Sadly, it's a direct result of an overzealous, hold-for-hostage union mentality and poor labor cost management by the Big Three. However, as the new Delphi-UAW contract shows, the UAW's influence and pull is starting to wane. With trends how they are in labor today, people shouldn't be surprised if the UAW begins to accept lower wages and benefits as a simple survival mechanism - without the Big Three, there is no UAW.
"Overall, it seems people failed to see the purpose of this article - compensation for hourly workers of the Big Three is way out of control..."
A point that needs to be clarified once again: Labor costs and wages/compensation costs are not the same. Since labor costs are spread across the number of units produced, labor costs can be halved by doubling output while keeping headcount and wages/compensation constant. So, it's not just greedy UAW workers as much as it is inefficient operations (unless the union demands 3 people do 2 people's work). I do project management cost analysis for my union appointed job everyday: I can cut labor costs by sending a more efficient work crew out that makes the same amount of wages/compensation as an inefficient crew. I can cut labor costs without cutting wages because I know the people on the floor; that's why I have the job with management's blessing!
Perhaps Thomas Sowell can clear this up better than I can: “The key flaw in the high-wage argument is that it confuses wage rates with labor costs—and labor costs with total costs.” Source: Basic Economics, A Citizens Guide to the Economy
I am surprised that I have to explain the difference between labor costs and wages/compensation in an economics and finance forum. Wages/compensation are just one of the factors in labor costs.
Well I am a PhD and a missionary and make about 35,000, most of that goes for educational benefits for my two kids.
My fahter and brother were both mechanics and I could say that my brother was smarter than I was.
But to the point, the unions are killing the goose if these figures are anywhere near true which I think they are given the union's power in the past. With gas costing what it does and home prices going down, do you think the unions are going to take a decrease in pay?
The figures cited have unfunded liabilities added in, so they are somewhat deceptive to how people figure their household finances and normally financially think.
Imagine that you had to put groceries, car insurance, electric bills . . . for the rest of you life on your books this year instead of as an as-you-go yearly expense paid out of current salary. Most people would be in bankruptcy using that accounting practice. It causes businesses problems, too. However, it does give stockholders a better idea of how much a company is actually worth.
Active UAW workers are well-paid, but not $146,000 worth—that’s with unfunded liabilities included. They make about $100,000 a year counting everything (wages, insurance, retirement, workers’ compensation, FICA, tuition . . .). Part of this $100,000 is a fuzzy accounting term “other” on our yearly compensation reports. I was curious what “other” meant, so I emailed GM accounting and received a memo in return. Other includes janitorial services in the factories, so if you wish to compare our wages to yours, make sure you count the toilet paper your boss supplies you to wipe your butt. They count toilet paper in our total compensation, so to make an apples-to-apples comparison you must count it in yours, too. There are other surprises in the memo, but I don’t have it on this computer. If anyone is interested, just let me know and I will copy it to this forum later.
Here's why such a high labor cost is reported by GM:
Burden or Manufacturing Overhead Costs
Typical Variable Accounts:
Indirect Labor
Material handling
Working leaders
Janitors & yardmen
Inspection
Set-up
Maintenance
Tooling labor
Laboratory services
Training
Other indirect labor
Non-Productive Labor
Diverted labor
Clean-up and breaks
Fringe Benefits (Hourly Work Force)
Shift differential
Paid lunch periods
Vacation pay
Holiday pay
Payroll taxes
Maintenance supplies
Tool supplies
Eng. & maint. supplies
Janitorial supplies
Power wash supplies
Group insurance
Workmen’s compensation
Employee education
Pension expense
Other benefits
Source: WWP: Supplier Cost Systems Overview 3-4
General Motors Corporation
According to this article non union workers at Toyota’s U.S. plant in Georgetown, Ky are paid more then the average UAW worker. Thus I do believe it's more of a matter of global location.
http://www.autoobserver.com/2007/02/uaw_loses_pay_e.html
Yes, but it’s possible to have low labor costs and high wages/compensation if your operations are efficient, and Toyota’s are (and it keeps the UAW out).
Our UAW/GM team lowered the manufacturing costs (including labor costs) of an operation by over $400,000 per year by installing 2 robots and increasing production 20%. The loss of the jobs from mechanization was through normal attrition and nobody had their wages/compensation lowered. It’s too simplistic to look at wages /compensation alone and determine labor costs of an operation.
Who do you want making the vehicles that you drive to work, take your children to school in, go to church in, return with groceries in and take your grandmother on vacation in? People making minimum wage or the best trained best equipped people in the world? I'm not going to the moon, but I have made parts for vehicles that traveled into space, and the automobile technology of today far surpasses the technology that went into the Gemini flights.
It ain't rocket science you say? Who built your car? I work beside the people who built mine, my friends and neighbors, US Union auto workers, and I'd bet my grandmothers life on it. Would you bet yours?
All this talk about how qualified UAW are to build items, yet they have among the worst reliability ratings in the auto industry!
Paying UAW workers their current salary without tying in responsibility to the product is no different that CEOs being paid regardless of the company's bottom line. I'll give UAW some love when I see their reliability exceed Japanese vehicles. I choose not to hold my breath if you don't mind.
The way I look at it is if these UAW workers went to work in a non-union environment and were paid based on their skills, they would be working at Wal-Mart, the majority at least.
It's very simple - get rid of unions and let people get paid the fair market value of the job they're doing. Anyone who advocates a different system is a crook.
These are some scary words for an economics professor. And it reveals a real lack of knowledge of what is going on with bargaining.
First, the nonorganized assembly plants (the Nissans, Toyotas, Hondas, etc.) pay COMPETITIVE WAGES AND BENEFITS. They do this for a reason -- to keep their workers union-free. That means, their hourly wages and bene packages are COMPARABLE to those negotiated by the UAW. So if you think a production worker earning $23 an hour is offensive because he only has a high school degree, then take your grievance up with Toyota. (note to the world: do you think they are going to continue to pay those "competitive wages" if the UAW contracts are going to be majorly concessionary?)
But union labor costs are much higher. Why? The backloaded costs of retiree healthcare and pensions. Their "legacy costs" are much lower because they are newer operations (not many workers have made it to retirement). Moreover, these companies make it very difficult for workers to make it to retirment (just listen to the difference between a worker who has been at honda for 1 year versus 15 -- ask them about workplace injuries and how accommodating their companies are when their production system caused them to wreck their bodies).
The bottom line is that union negotiated contracts have a long view -- that workers are not fungible robots. that if workers are injured and give their health to their companies, they deserve to be treated well. And what is so wrong about our parents/grandparents (heck, even ourselves) having healthcare from their employer when they retire? or pensions? Isn't that removing the burden from the rest of us? What screws these workers now is that their employers don't have the marketshare. and that has NOTHING to do with their "union contracts" (anyone check out the recent harbour report which reported that almost all of the most productive auto assembly plants in the US are union?). They are even screwed by their own employers because the assembly plants they leave in the US are the heavy gas-guzzling truck and SUV types.
It's very sad to me that there is this vein of sick schadenfreude going through the keystrokes of everyone who has an opinion about Big 3 bargaining. You can have opinions I disagree with, but know the whole story first. At the end of the day, you might say that workers making a product that enriches shareholders beyond their wildest dreams should only make minimum wage. That's your world view. I think that those workers deserve better. And if they come together collectively to bargain, isn't that the freest expression of the free market?
Who do you want making the vehicles that you drive to work, take your children to school in, go to church in, return with groceries in and take your grandmother on vacation in?
Toyota or Honda. Not much of a contest there.
Union auto workers are certainly overcompensated when you consider the total package. And yes, GM, Ford and Chrysler will eventually go out of business because of it, and we wont' have to listen to any more of this working-class-hero b.s.
For example, it's obviously completely irrelevant whether an autoworker is smart enough to be a professor. They aren't professors. I'm sure there are carpenters that could have been brain surgeons if they'd wanted to. But nobody suggests they should be making half a mil per year. Give it a rest.
Nevertheless, the comparison is exagerrated for a couple of reasons. For auto workers, the cost figures are inflated by the enormous expenses of pensions and healthcare benefits for retired workers. The auto workforce used to be much larger than it is, due to automation and foreign competition; therefore, those expenses are spread among far fewer workers today.
Finally, the compensation for college professors doesn't really take into account that many of them could take private sector jobs that pay much more. They choose not to because working conditions for tenured and tenure-track professors are so good. Furthermore, many of them pay themselves salary augmentation out of research grants, which can be substantial and which is not reflected in the figures. My advisor in graduate school owned 2 airplanes. He didn't buy them on his state university salary.
Richard Nixon only had price controls not wage controls & were pushed on him by an overwhelmingly liberal congress in an election year(1972). They were a total failure because when you set price limits people just stop making the product. For that reason it only lasted a few months. Seriously doubt CPA and lawyers would take less money to work on a boring assembly line. Same for aeroplane guy, an enginener would way too bred to work on assembly line. PhD's maybe because a Phd in most cases mean nothing unless you want to teach or be called doctor without going to med school.
Marciaq: "And then they twist your arm to get you to come in ever few months and pay them $300 to "maintain" your car, implying that if you don't it will void the warantee.
That $300 includes things like $20 to fill your window washing liquid."
My family has owned Camry's for the past 23 years. This is the first I've ever heard of this.
I assume the rest of your assertions are as ridiculous as that one?
*** Richard Nixon only had price controls not wage controls ****
Uh, no brainiac, he had both. And in 1971, not 1972. They were not imposed on him by anyone.
http://www.econreview.com/events/wageprice1971b.htm
A discussion of Nixon's WAGE and price controls from his chief economist. Congress was not involved:
http://www.msjc.edu/econ/dpynn/article081902.htm
And your statement that the controls lasted only a few months is also dead wrong (surprise, surprise). From Herb Stein's article:
As it turned out, we were in the price and wage control business not for 90 days but for nearly 1,000.
Ph.D. shoulda been smart enough to get a factory job.
Thanks for article!
Thanks for interesting article.
Excellent website. Good work. Very useful. I will bookmark!
Maybe this isn't the way that people like to think anymore, but I still think that all those numbers are just gigantic. Think about what kind of standard of living you can have with a compensation approaching 6 figures...and it's only going to get better with time.
I'm presently a grad student in engineering (who hasn't yet made the "life choice"), and knowing full well that it's not a great financial decision, I'm pretty inclined to go the Professor route. There are certain benefits that one incurs that are hard to quantify in dollars- getting to mold young minds and be surrounded by the excitement of youth, getting to see new problems, being surrounded by intellectual stimulation, getting to travel the world going to conferences, and perhaps even an extra dose of (possibly undeserved) respect from certain elements of society.
Nonetheless, I do think the average prof ought to be paid more than an auto worker, but not for the reason that the PhD makes them smarter. Remember that for every full prof, there are a lot more (~15) who don't make it to tenure [http://www.its.caltech.edu/~dg/crunch_art.html]. Being a professor isn't like a normal job. It's more like making it to the Major Leagues, except that you have infinite job security and can work until you're 70. I'd love to see the NSF budget triple, professor salaries double, and tenure become a thing of the past in technical fields. Getting a bit off-track, but back to the point- the figures are about professors, not just PhDs. (In fact, if you counted all PhDs, you might well see a much higher figure there.) Case in point- profs are damn good at what they do. They have to be or they'll never make it to tenure. The only reason why they still accept this level of compensation is that their decade of formal education results in a lot more graduates who desperately want to be profs than there are jobs for them.
Then again I think in 30 years there'll be so few US auto-manufacturing jobs that it'll all be irrelevant.
Just think guys with PhD's are making less than those standing on a line putting Z-71 stickers on one side of a vehicle.
And people wonder why the US is losing jobs? What a joke! Union people do not get any sympathy or respect from me. Are these people considered middle-class? I say close all auto plants in the US and send them overseas. American made cars are the worst pieces of junk in the world. Honda makes the best cars, so their workers maybe rate this level of pay. Unions have gone way too far and are no longer necessary in this country. They use extortion(strikes), to get what they want. When you see another industry leave the US, you can thank your local union.
I hope this break the UAW's back. If I was Bob Lutz I would close the plants here and move them to Mexico.
Might as well use NAFT and the Cheap Labor. Quality would probably be better than my last Chevy. It came from the factory out of alignment and center console not even bolted in.
Good UAW quality
It appears to me that the graph is pretty much "all things being equal". It breaks down the labor cost, wages and benefits of the Big 3 PLUS a few foreign companies - and I am assuming the "(in U.S.)" note means those three foreign company's American workers.
One would assume as well that whatever formula was used to come up with finding that GM spends AN AVERAGE of $73.26 per hour in labor cost, wages and benefits was also applied to Toyota, Honda and Nissan. Meaning, Toyota..etc also accounted for their toilet paper while figuring their $48 per hour figure.
This would also apply to the professor.
I have to ask all the people defending that huge UAW labor cost what the difference is between a line worker and a dishwasher? Dishwashers in busy restaurants also work long hours and 6 day weeks, in hot, noisy, not to mention sopping wet conditions. They also lift and pull and tug heavy racks of dishes. If the high labor cost is being excused by heavy physical labor, why isn't your average dishwasher living comfortably? (Yes, I did my share of dishwashing through college - never again).
Everyone feels that America would shut down if their job was eliminated. Everyone MUST have a car, right? Every child must be taught. What if mail carriers all went on strike - absolutely no mail? What if every grocery check out worker walked off the job? Would we all starve? My point is it's very easy to say "my" job is important whereas "yours" is not. You can't justify your salary by how important YOU view your job to be. Surely there are exceptions, but most jobs exist in the first place because they are filling a need in the world.
I'm not saying line workers only deserve minimum wage. I acknowledge the job requires some skill, and is difficult. But I can't think of any kind of skewing of the numbers to justify THAT high of a labor cost. I just can't. Again, there are plenty of physically demanding jobs that are only a dollar or two per hour above minimum wage. It can't be based on a "product need" basis either. I "need" toothpaste, but I'm not about to justify paying a factory worker in that plant $70/hour in labor costs to produce my Crest. I doubt many line-workers would justify that cost either.
Sorry if I'm rambling. I live in suburban Detroit and this subject is being debated everywhere you go here.
as a former ford mechanic the things i have seen our over paid factory workers do time after time would blow your mind. cars with rattles in the quarter panel turns out someone on the line thought it would be so funny to weld there BEER bottle in there, nothing like having a $25,000 car and i have to cut your panel open to get your trash out of there,or the rattle that 15 of us could not find until the factory rep told me to rip the headliner out. there tied between the ribs on the roof was a dime taped to a string that would swing back and fourth to gives us our ting ting noise and a note saying ha ha i wonder how long it took you asshols to find this i remember both customers last words. I,LL NEVER BUY A AN AMERICAN CAR AGAIN!!!! now i own a forign car that has never had a problem runs like a raped ape and gets 35mpg. ihope ever one of you over paid bastards gets laid off, you wouldnt last one day the in my world . i dont do one thing all day long like a trained chimp i do hundreds of different skills and i have to buy my own tools
It is unbelieveable that UAW workers are making $70/hr. Of course, with overtime, benefits, long-term entitlements this may be possible, but also for many other jobs. The mere $93,000/year for a professor doesn't include health insurance, retirement, and other benefits, which are INSANE for ALL government jobs. Really, who deserves retirement after only 20 years of work (unless maybe you are actually 65-70 at 20 years). Typically the salary only accounts for 50% of total employment cost.
Professors also make money on research contracts they bring in, which also is not included in the 93,000 number.
It is typical to assume that the cost of employment for a job in any factory, unionized or not, is greater than $100,000.
Perhaps the auto companies should just shut down until the unions give in or until they can setup their factories in Mexico instead. Anyone who has been in a factory in Mexico can not deny those people work 100% harder than US citizens (for $2.50 / hour). Why do you think they are building all of our houses now? No one here wants to do any real work...
What do middle class workers do with their money anyway? THEY SPEND IT! They spend it on food, services, products, entertainment, and education for their children. Yes, they don't want their children working in factories if possible, despite what you may think. This process of paying middle class production workers decent pay (compensation, that is, which is around $60k to $75k full seniority) that MAKES THE MONEY GO 'ROUND! Pay them just enough to make their house payment and bills and where does that leave the rest of you? They don't have the money to pay for your sevices or send their children to your schools so that you can have your job! This will increase the businesses' bottom line so that overall, the rich get richer and the poor get poorer. Nice. Let's bring down the autoworker and keep exporting all of our money and jobs to foreign countries and lets see where that leads us. We are headed there already.
If you think that America can get away with just having teaching jobs and no actual production of products and pay workers who spend their money, then you are an idiot. How does someone who works hard (literally, back breaking work) supposed to send their child to college so that they don't have to work in a factory their whole life? That's right. There's not free money for these people like the low income. It comes from their own pockets. Where did your college tuition come from? It had to come from somewhere. I'm guessing not all from your OWN pocket either. I'm just saying that middle class workers deserve to be paid well enough to have a good life, send their children to college, and bring the economic classes closer. This can only help America, which is what everybodies motive should be, especially nowadays. Most factory workers have an idea of how hard it is to work for your money, and are generous enough to give money to those who need it with out looking to get something in return, whether that be in big tips, charity, or just having the means to help their children get through rough times. Don't dog these people.
So, according to this statistic, if, lets say that I took a huge pay cut and as a UAW worker I made poverty rate of $15,000/year, my compensation would still be $93,000/year??? What the heck? Just accept that these numbers are skewered to make the article sound better. The only way to make the amount they are saying as COMPENSATION is to work ALL the time. Then you have to accept that it is cheaper to pay the guy the overtime than to hire someone new with full rate and benefits. I think this guy is just trying to get people to hate the unions.
"So, according to this statistic, if, lets say that I took a huge pay cut and as a UAW worker I made poverty rate of $15,000/year, my compensation would still be $93,000/year???"
No, the graph on the top is labeled wrong. Your compensation would most likely be much lower. The labor cost for the company would be close to that number. Again as walt g. repeatedly noted, labor cost is not what the workers receive because it includes the benefits to the retirees.
So, basically, this whole article is a farse and should have never been posted. "Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D." Never mind. Looks like Forbes did get rid of it. I wonder why...
UAW workers I suppose have a right to insist on blaoted compensation packages. But I have a right as a conusmer not to buy domestic cars that remain inferior as a result of U.S. automaker's inablity to compete because of high overhead. Only if Americans stop buying the inferior domestics will the UAW wakeup an end their greed.
It's funny sort of. All this debate and number flying about. Let's remember one of the simplest principles of economics. Something, anything is worth EXACTLY what someone else is willing to pay for it. No more, no less. Debating a philosphy of worth accomplishes nothing more than more debate. If Chrysler, or any of the Big 3 agree on a deal, well, the price they paid is what they think it's worth. Of course they may have wanted to pay less. Conversely, the workers or UAW may have wanted more. Hell, there's nothing wrong with that. If I sell something for $10, would it be a stretch to say that I would have liked to have gotten $20? However, I got what someone was willing to pay.
There is a LOT of blame to go 'round. The UAW, and the workers, have a legitimate point when the point to executive wages. Although in total dollars, there is more savings available through reducing labor costs, but wouldn't it be a great symbolic, if nothing else, gesture if they slashed management jobs AND wages, much like is done do hourly employees? That IS a valid point, like it or not.
I will say that the members of the UAW do need to recognize the fact that, without debate, they are compensated quite well for what they do. Paid quite well as compared to any other job in any other industry, in fact. In absolute, or nominal terms, $35/hour is a very respectable wage whether using your back or your brain. They also have to realize, and this is NOT a judgement of the job they do or they as people, are pricing themselves out of the market. Really there is no debating that, and I don't think anyone is. Now everyone just needs to act accordingly.
Honestly, your a salary employee not an hourly employee. What is not mention is how long the men and women of the formal Big three have many years of tenure on their job. University professors with tenure can not be fired from their job except for unethical behavior which would invovle sleeping with a student, or discrimination. Well that went out the door almost with proposal 2. Anyway, I see you did not mention the large executives' salary where many get paid much more than the average blue collar worker. My God, after long years of hard work white collar professors' envy their salary. This is unethical and unfair. Why don't someone complain more about executives stealing entire pensions and larger amounts of outsourcing which affects the economy in larger amounts, you know structural theories. Please stop attacking the working poor. Yes, people who make under 200,000 yearly. People who have to work for a living. Why not go after the owners? Oh yes, you can't directly that's the bread and butter. I guess you should have chosen a career as a big three executive. Well,it's too late for that now!
pot bellied loser screwdriver turners making $145,000 a year is a tragedy. I buy foreign made cares because the cars are better and because I despise unions. Unions are what make American BAD, not good.
UAW - I hope you can continue buying the cars you make. I am an Engineer and I can't. Good Luck
You forget that GM is providing health care for 1,100,000. retired workers and their families. That is a big chunk of the pay + benifits total. But now that our government has decided to allow cheap foreign cars into the country in huge numbers, GM has perhaps only 80,000 to 100,000 employees, whereas in the past they had 450,000. So the smaller operation is saddled with paying for health care for all those retired workers. Americans say they want something done about health care availability, well how about supporting your home grown businesses? You may not realize it, but a lot of people look down on you for driving an import, me included. I don't care if the import has all the features you want. You shouldn't be shopping on the import lot in the first place, then you would know what features you are giving up. Let's face it, American consumers are greedy, me-first people. That's why they lower themselves to buying imports. This is a phenomenom of young people and city people getting disconnected from the heartbeat of the country.
GM is spending about $1 billion to develop the Chevy Volt. Funny how armchair entrepreneurs think they can second guess that kind of commitment. Unless you own a business, you should listen more than you opine. I have been in business all my life, and I can tell you, most people don't have a clue.
Maybe if the auto industry had read the writing on the wall in the 1970s during the FIRST oil crisis, I might have some empathy for their Chevy Volt development costs, Gina. But instead they deliberately suppressed work on alternate-fueled cars, actually bought up and destroyed workable electric cars, and invested their efforts in SUVs in order make use of pickup truck plants.
If the auto industry had worked one tenth as hard on R&D over the last thirty years, I'd cut them some slack. Instead they wait til another (albeit artificial) oil crisis, then belatedly announce their investment in development. Get me my tiny violin...
BTW, Gina, I own and run a business.
I think that the unions had a place and time. But it is not now. They gained too much power, and are powering their members out of jobs. When a worker at a plant in KY working for Toyota makes almost $50 and hour - yet an American manufacturer has to pay an unbelievable rate of $78 an hour. They are pricing themselves out of a job. Maybe it is time to rethink, and renegotiate so UAW workers can keep their jobs. Give them the old - take a paycut or take a hike speech. Otherwise, we are all going to be buying 'imports'. (which by the way, seem to be built much better, and have less maintainence issues)
I just finally went back to an American Car, and frankly, wish I still had my toyota. Less than 40K miles, and shocks are already shot, car is rattling, making squeaking noises. My TOY had over 200K and still ran like a champ. My neice loves it now since she owns it.
Regardless of who makes how much, the North America auto industry and UAW/CAW have priced themselves out of the market - and they should take their lumps. For the rest of us earning far lower wages and benefits to bail them out so they can maintain their lofty standard of living is ludicrous - it's time to bring them back to reality!
Auto workers can make 250k per yr as far as I'm concerned.
However, if their employer needs to be bailed out by the American people, be prepared to take a big pay cut.
All I know is I buy Honda's Cars. Motorcycle, snowblower, generator. The stuff works and is usually priced right. I have bought American (Victory Motorcycle)and realize it is junk.
November 2008; I can understand now why the big three are about to go under. I say the UAW dug the hole let them all fall into it... I vote no on a bail-out
One key factor that has not been discussed is the fact that unions create unproductive work environments. That is, the work rules that don't allow a maintenance worker to remove a cover over an electrical box because the union electrician must perform the task. So the maintenance crew waits around for the electrician to arrive. In general, unions do everything in their power to buck management and block innovative ideas-especially if it means reducing workers. Wages would be far less an issue if unions did not have this kind of power. Another example is the job bank where laid off employees they are paid to sit in a room.
Who is John Galt?
I work for a suppier to GM and Chrysler and have spent many days in assembly plants. To work on the assembly line is a joke, it's worth $10/hr tops. They put in a few screws with there neumatic screw driver and sit down until the next one comes by..
"United Auto Workers President Ron Gettelfinger is an idiot. I hope he realizes that once the union parasite kills its host, its curtains for them as well."
I think that comment was full of insight and wisdom. It is too late in the game for the UAW to understand. Now they want us to bail them out instead of selling cars that people want to drive. It doesn't make sense....
I'm in the wrong business..just imagine, I could have saved all that money I spent on college, got a factory job, doubled my income and saved a ton of money on the Motrin used to deal with the stress of my job..
These professors come from the same group that didn't see the financial crisis coming so much for their mental capability. Some of these professors could not jack up a car or know where the spare is in the car. So should they be paid so much just to teach. I knew a guy who was a judge but didn't know alot about what he was ruling on but some one said because he a lawyer he must know.
This comment has been removed by the author.
sorry, had to edit something...
I am trying to understand something. If we give the automakers a bailout, which could be considered a handout and "socialism", that would mean that the current union contracts for autoworkers stand as is, right? It also would mean they will continue making the same products.
What is so bad about "laissez-faire capitalism", and letting them go belly up? Sales are low, models use too much gas, there are the foreign made cars, if you need one, and then our automakers could revamp their factories to make better environmentally friendly cars, like the electric ones - the EV1s (my friend had one and hated to have to return it to be destroyed, DESTROYED!!! How idiotic is that?) Anyway, while they revamp they could put their workers on a sort of "welfare" program (but those workers with THAT salary, should have saved something by now) and then in new factories, making better cars, they could rehire the workers, still at a decent salary, but not the rates I see here. As a retired RN, I never made that much per hour.
So, why are the big three not doing THAT instead of bailout and continue in the old, failed, non profitable ways?
when you pay a monkey 32.00+ an hour to drive a forklift, and then all the overtime and double time they can possibly stay awake to hang out...the clear answer is "houston you've got a problem" Of course its political suicide for the democrats not to try and help their good buddies the UAW represented folks. Maybe GM and the UAW need to go back to school and learn the word productivity....then they may not be facing bankruptcy... but then again... maybe I'm in left field
There was a time when labor unions served a purpose, those times have changed! In my opinion the only thing worse than hearing that about an auto factory employee getting $140k+ a year in compensation is hearing how much the CEO made.
Walt made a good point about Japanese auto makers and their liabilities not being realized because they haven't been around long enough... I guess their demise will come, unless changes are made. If the auto industry (specifically auto unions) do not change and adapt to allow US manufacturing to become more competitive how can you blame companies from moving overseas.
The UAW workers need to realize that they will bankrupt their company if they continue down this path....
We are getting away from the main issue here. China is going to put cars on the market by next summer at a cost much, much, lower than US autos. How can US auto makers compete against China when the average Chinese auto worker's wage is around $6.00 not per hour but $6.00 per DAY?
It's not just the auto workers in trouble....the whole country has to compete against China's very low paid work force of 2 billion very competitive hard working people.
Every American blue/white coller worker will have too take salary cuts, almost yearly, if they want to compete against China.. or go out of business...sorry to say but that is reality. The end of America's golden age (1945 to 1990)is finished..gone like the plains buffalo herds of the eighteen hundreds. The sooner we can except the fact we are going to have to lower our standard of living, the sooner we can stop fighting amongest ourselves, and take a hard line against China. Thanks for reading Ej
I agree UAW workers make too much. But to say all unions are bad is not fair. I am a former union steel worker (5 years). Talk like this is what cost me my job and eventually the plant I worked in closed. I never made more than 35,000 a year. That wasn't enough to take care of everything my family needed. My family didn't have the money for college so I had no choice but to try and get a factory job. Also, I didn't do good in high school. Now, I make $8.20 an hour working nights at Wal Mart. I know this makes a lot of you happy. The poor kids in this country have no hope anymore when you take away these good paying factory jobs. Yet, blood thirsty Americans love to see it happen.
also to you corporate people on here. i'm have to pay the same amount for daycare as you do, the same amount for gasoline, the same amount for rent/mortgage. it seems as if the educated want the uneducated shipped somewhere offshore to grow old and die. there has to be a middle class in this country or it just won't work. and the middle class is going to involve making 50,000 a year (or about as much as a UAW person). get over it. just because you have an education does not automatically entitle you to a better life. besides, these factory jobs are highly competitive in the first place. and nowadays, you are going up against war veterans to get these factory jobs. are you better than these guys since you have an education. fuck you and your elitist mindset.
Les said...
It all comes down to this. Do you want your employer to succeed or fail?
Out of wack wages are fine if the companies can support them but I'd rather have a well paying job than no job at all.
Unions do a fine job in looking out for the health, safety and welfare of employees but fail to see the whole picture.
There should be no bailouts, and when they go down make them file for bankruptcy. Then fire the management and renegotiate the labor contracts to pay the worker bees about 50-60% of what they're currently making. This is the only way they'll survive over the long term.
The UAW is there own worst enemy. Their employees and paid too well for the copamies to stay in business, and there are too many automobile alternatives that consumers can choose that are rated higher than most of the US branded models. The auto market is down and the worker's retirement, health benefits, and wages are eating up Ford and GM. The Unions have done many great things for workers, but it's caused the companies to no longer be competitive. The Steel industry may be next - similar unions and the demand for steel is down.
Emotions aside, it doesn't matter whether UAW employees deserve what they make or not. Financially, the companies are going under. Ford is probably the only one that will survive. 25B of money will not cure the fact that GM and Chrysler cannot afford to pay UAW workers what they promised last week and ten years ago. Yes it is sad, but it is true. The airlines had to go through this and many people lost what was promised to them. The only positive result is that we still have an airline industry.
Sometimes we just have to hit bottom to realize the error of our ways. Unions were a good idea but since then have been abused. Our factory workers have unfortunately been duped by their union. Bailing out these companies is only putting a band aid on a heavily hemmoraging industry.
They are done. It's over. Please to waste more of whats left of the 700 billion dollars of the bail out money to make people rich.
America's industries are now primarily the bread basket of the world and technology industries such as Google & Microsoft.
Get an education America.
I have a basic question to ask. If the auto industry is now unable to pay the wages it has been paying, why did it not negotiate with Unions more affordable wages to avoid possible bankruptcy?
What happens to retirement benefits if GM goes bankrupt? Who would pay them?
I have a curiosity. If auto makers knew that they were heading to bankruptcy due to very high employee costs, why did they not negotiate with trade unions competitive wages? Or is it that the unions did not believe the threat of bankruptcy and therefore held on?
Apparently Albion Tourgee can't read. The numbers specifically state that they ARE WAGES IN THE U.S (i.e., NOT JAPAN). My powers of deduction tell me that this means Japanese national health care doesn't mean anything in this comparison because the Japanese automakers still have to pay for benefits in the U.S (because these are the wages they pay IN the U.S.).
To those of you who claim that a professor couldn't do an autoworkers job clearly don't have a clue. I would trust a professor has the CAPACITY to learn how a plane works or to learn how a car works and put it together, just as I have learned many trades that are not my own (conveniently, mine is economics).
Lastly, would you really trust an airplane that was built in a home garage? I mean, come on, that's just ridiculous. Sure lots of people probably do it, but just look at the crash statistics of small, personal aircraft vs. commercial aircraft. It's A LOT higher - like hundreds of percent higher (I don't have exact numbers, but I know for a fact that it's a lot higher).
It's ludicrous that university professors get paid less anyway because they provide much greater value to society than does an auto worker. Thus, an autoworker SHOULD be paid less because their output is not all that valuable to our economy. Personally I think even the Japanese companies are paying too much, but that's just me.
Incompetent executives, and labor unions, who by definition demand more money for less work, have destroyed this company.
Yet another situation, just like its described in Econ 101, where labor unions hurt the company, and the competition, Honda and Toyota overtake them easily.
The only way to get a raise is to increase productivity. You increase productivity through technology. Send the
"bolt tightening" jobs overseas, and let those guys make something useful.
Let them fail, its clear everyone involved with these companies are not providing any economic value.
Like it or not, it's all economics. Facts are facts. Most assembly line workers are repeating the same experience year after year. How much continuing education do you engage in? A business cannot continue to increase compensation for a worker for twenty years when a new one can be hired and trained in a relatively short period of time.
Also, all this talk about what the company owes the worker. Why doesn't a worker pay the company a severence when they decide to leave?
In addition, all of you disgruntled workers; how could you stand to continue to work for a company in which you despise the management? What a losing mind-set. Why not seek a more gratifying relationship? If you say you had no options, then you must stop your complaining.
To “I have a basic question”, to answer your Q about who will pay the benefits in case of a bankruptcy, the PBGC pays, this from an ex TWA technician who went through the turmoil of multiple bankruptcies. It’s not very pleasant.
I want to Know how much the average auto worker pays in Union dues.
Charles
Of course if you consider professors work, on average, 4 days weeks X 32 weeks (2 terms per year)which equals about 1024 hours per year, versus 2020 for the auto workers, the professors actually make about $90 per hour vs. $70 per hour for the UAW folks. Apples to apples.
It doesnt matter what the intellectual argument is on what the workers are worth. Over time unions like the UAW can only demand sustainable above market wages if the end product is a monopoly. The J3 broker their monopoly. This is true in government where they maintain strength and in construction and transportation where they hang in through extortion (implied violence and property destruction).
In every other economic segment consumers have voted with their wallets. No amount of financial aid will change this. The free market wins in the long run.
The rise of the unions certainly presented a challenge, but what brought the auto mfrs down was the same thing that ruined so many American industries: the "corporate culture" of greed and the quick fix. Someone posted how years back the automakers opted to fund their workers' pensions from future profits - contributing to the current crisis... the perfect example! If auto execs cared half as much about building great cars as they do about the bottom line (PROFITS, DIVIDENDS, ETC.) they might have a future today. When the idea of building great automobiles takes a "backseat" to stock prices, annual earnings, and profits - consumers will eventually catch on, and they did.
I hate to break this to you but the autoworkers do not make $73 dollars an hour or $150,000 a year. The hourly wage is about $28an hour for established workers and $14 for new hires. The fringe benefits are probably around 10 to 12 dollars and hour. So total hourly pay is about $20 to $40 dollars an hour, depending on seniority.
What most people hear about is a number that combines what auto workers really make along with pensions and health care costs for retirees who outnumber active workers by almost three to one. The companies, at least GM, adds the costs of retiree benefits to the wage package of the active workforce to inflate the compensation number for contract negotiations when the companies need the general public to side with them against the union. This is back-firing on the car companies now that they need federal help because Congressmen are looking at the $73/hour figure and saying that auto workers are over paid. The $73/hour number is as phoney as a three dollar bill.
Auto workers are among the most efficient workers in the world. As a former time study man, I can tell you that each job is set up so that workers must get their jobs done in 55 seconds. A typical plant will produce a car a minute. That adds up to about a quarter of a million cars a year from each assembly plant working two shifts a day. If you think that auto workers are over paid, you should try to work that hard.
I read on this site that someone said that auto workers get a paid lunch hour. That is not true now and never has been. I worked in an assembly plant for 30 years, and a battery plant for 8 years. Your standard work day is 8 1/2 hours and you get a 1/2 hour lunch period, you also get two 15 minute breaks, one in the morning and one in the afternoon. You get paid for 8 hours a day.
Some are complaining about the auto chieftains flew to D.C. in corporate jets. Congressmen are complaining that they should have take a commercial airline flight. It's as though they flew alone and didn't take a staff of people with them as well as security personnel. It is probably as cheap to fly them in a corporate jet as to fly on one of the undependable commercial airliners if you can even get a seat for all of the people in your group.
I would bet that Toyota, Nissan and Honda pay their workers enough to keep them there and attract new workers rather than try and stay non union. Companies want the best people they can get to work for them and that requires paying whatever the supply and demand factor at the period demands. Supply and Demand being the key word here. When labor is in short supply wages raise and when labor is in abbudance wages lower. Something any union boss would agrue against. Unions tradionally and historically want to limit the amount of labor and slow down productivity to artificaialy raise wages. The future of the UAW will be similar to the Building Trades Unions which is shrinking. Less than 15% of Building Trades are done union anymore and I don't ever hear many complaints about Construction people being under paid. Being a union "productive" union worker has to be somewhat of a de motivator when you are 50% more productive than the guy next to you but yet you both make the same money, and of course the union will protect the guy not pulling his load. Let Free Enterprise work, let supply and demand of labor determine wages. Most companies will pay whatever it takes to get good productive workers.
As someone in the know the wage numbers and comparisons are simply misguided and wrong! The average UAW line worker earns approximately $29 hr. and roughly 40% more in benefits (i.e. healthcare) is paid by the employer for a total of approx. $41hr. or $85k a year. While the benefits provided by auto companies have been considered very good for many years they are often less than those provided to public school teachers and University professors. I personal know several public school teacher and not one makes less than $78k and year and several tenured professors and none work more than 40 hour a week and have summers off!
Todd- With all due respect either your professor or his retiree father from GM (who claimed to make over $100 hr. w/overtime) is full of BS!
I think some of the posters on this board have been watching "Good Will Hunting" too much. There is a reason that Will Hunting's story was made into a movie, because it was rare and by exception.
Let's just put it this way, the richest people in the world tend to made their livings using their brains and not their bodies.
I work in a union auto plant and I am in line next to both of the co-founders of google and warren buffet, both of whom turned down their corporate jobs because apparently auto workers get paid higher wages. seems unfair since they founded google/berkshire hathaway and all auto workers do is super easy fun work all day long! yipee!
ps. blog posts are not a scholarly source.
toyota and other companies are deliberately in the "right to work" non-union south, actually, so they have no competition from unions.
Public school teachers making 78k/year working < 40 hours? Where?
Must be long time teachers in CT, NY, NJ, or CA. The nationwide average is $47,602 for public educators, yet these states are well above the average and happen to be where the teacher unions have yet another stranglehold on what should otherwise be a competitive profession.
All the best teachers I've known, public or not, that were worth anything put in far more time than 40 hours each week for far less pay. Even though they deserved considerably more pay based on the success in their classrooms, they were limited to what the district pay scale said they deserved.
And yes, public school teachers deserve to earn more than assembly line workers. Their jobs are for more important, that's just common sense.
After reading this professor's incredibly ignorant attack on people who actually work for a living and fight for better working conditions, I'm glad that I study at the real University of Michigan in Ann Arbor.
The bottom line that it that auto workers are paid too much money for the task that they perform - basically unskilled labor. They learn it all OTJ. Enter at 12.50 - 15.00 per hour, contribute to matched 401k's like the rest of us, work your way up to about 25.00 to 35.00/hr through performance NOT seniority. They do need to be well compensated but not excessively. If this is not enough, get a degree and move up in a different path. If the union doesn't realize that they are part (not all) of the problem and renegotiate their contracts and start bailing, their cash cow ship will sink and they all will be out.
Not without guilt the executive wastes need to stop as well. Run these companies lean and well but not excessively compensated.
The bottom line isn't that these workers are overcompensated. They earn about $30/hour in reality. The $70/hour figure is intentionally misleading, as it includes benefits for current retirees - current employees won't see that money for decades. The point is that this is just another econ professor complaining about unions because they cut into the bottom line. This isn't unskilled labor either - pushing paper doesn't necessarily require more skill than working on a shop floor. Factor in the fact that UAW employees work much longer hours, year-round, and have a much harder job than university professors, and they certainly deserve higher compensation. These workers aren't responsible for the economic crisis, but unfortunately the automakers are going to use either the bailout or bankruptcy to slash their wages and benefits.
Look into the history of why Unions were formed in the first...History tells us that even in the coal mines in W.Va. in the early part of this century. workers severly were exploited by the mine owners.Working conditions
were terrible.The workers had to join together and refuse to work in dangerous mines. With the help of an historic figure "Mother Jones" they began to form unions which forced the millionaire owners to provide safe work place conditions,sensible hours to work by the week, days off, pensions so they could retire and not give their LIVES so the owners could live in luxury. It was totally essential for the workers to join together ...A relative of mine lost her first husband in a mine accident(compensated with enough money for a burial) She married again ...this time the husband was killed in a mine accident,leaving a widow and five minor children ..Again there were no provisions for help. When the owners of mines and factories
and car manufacturing and other places of employment are becoming extremely rich and the workers are in low poverty there is something WRONG.. The workers have a RIGHT toparticipate in the good part too. And yes, teachers should have a union to be paid a living wage. This is what has made this country such a success.
Coming from a bit of a different perspective, a Canadian living in Thailand, I have to say that the USA started the globalization idea when it was ahead of the rest of the world in terms of wealth and technology. It felt it could compete and play by the rules and has very generously done so till now. The latest news is that the rest of the world has now got the technology and the money (see China). America cannot compete anymore because it has lost its biggest advantages. As someone posted, if GM can't compete with Honda in KY, how can it expect to compete with China. So now, the US has to change the rules. The idiots that say export all the bolt turning jobs to Mexico have no clue. If all the jobs that actually produce something are lost, then it is curtains for USA. A nation cannot survive on selling each other hamburgers suing each other or teaching each other to sue each other (professors?). You also cannot survive on brains alone as some people seem to think. The world has also caught up in the high tech area and you put all your eggs in that basket you are in for a rude surprise. Believe or not, Microsoft is stupid enough to set up an RD center in China and proudly touts how many patents have come out of there. They are blowing the only advantage the US has, creativity and brains.
So in the end countries must produce something tangible. Then, to get real wealth, you export the product and aquire another's countrie's wealth, ie China again. The latest great export of the USA has been the subprime mortage hedge funds which has brought world economies to their knees. How many times do you think the world will buy that shit.
Yes, Americans and westerners in general have become lazy and few people want to work manual jobs. Eventually China will grow fat and lazy too and will hire Bangladeshis to do their manual work. It is a normal cycle and even the Romans went through it and eventually disappeared when actual Romans did not want to be soldiers anymore and hire mercenaries. Only problem is they ran rather than fight the barbarians. Now we have all this great history to learn from. Can we? The problem is that mature economies cannot compete with organized developing economies. You also cannot throw out all the hard won gains of a successful society because some upstart dictatorship like China who made all the wrong choices in the past and now pays employees $6 dollars a day. The USA has to tell China that the free ride is over and that some standards must apply. $6 per day in China is true poverty in China believe it or not.
So here is how think things should proceed.
- Chinese companies exporting to the US have to meet minimum international environment rules.
- Employees have to have minimum salaries and benefits.
- Chinese companies have to be privately owned, ie no government operating at a loss until they destroy industries abroad and then raise prices.
- Apply the same rules as China. If you think that GM can just move into China, pay $6 a day and sell every Chinese a cheap car you are sorely mistaken. GM has to do a joint venture with the government where there has to be a total transfer of technology and then the gov will change the rules and kick them out. Just ask Chrysler, Renault and much more who learned the hard way how Chinese take care of themselves. If the Chinese want to sell cars in USA, build a plant here and make the USA gov a partner.
This may sound outlandish but much of the world already operates likes this. Only the US has this fair play ideal.
A good example here is Thailand. The Thais know they cannot compete in car building so they have 100% duty rates on imported cars. But if you want to assemble or build cars here you have tons of benefits INCLUDING tax free holidays, free land, very cheap health benefits, no pensions and salaries of $600US per month (about $2.80US per hour for a six day 9 hour per day work week). Buy the way, the car builders pay the best salaries in the country and are almost responsible on their own for creating a real middle class. Toyota, Nissan, Ford, GM, Honda, Isuzu (mostly owned by GM) have massive massive plants here. How can the USA compete with that? In fact, Thailand is the second biggest manufacturer of pick-ups in the world after the US. I own one and the quality is amazing. By the way, Ford quality here is the same as Toyota, zero defect. This kind of shows you that in the US it is not the design of the cars that is poor, it is the workers or rather the archaic system imposed on them by the unions.
Unions have got to go. They had their time but now the government protects the workers with endless regulation.
- Chrysler is dead but GM and Ford must be saved but not in their current form. Because of their size and the political fallout of letting them fail (Chapter 11), there has to be some compensation. As a test case, the government could pick up the heath care benefits and pensions of all the 1,100,000 retirees (reduced of course because everyone will have to share the pain). Base hourly wages would be reduced to more reasonable levels but taxes would be cut. Employee efficiency would be rewarded and monitored and there would be no guaranteed job for lazy, destructive or people that are not team players. However, productive people could make more than they did under the old system. Capitalism at its best. There is absolutely no point in bailing out the big three if they continue the way they are, waste the money and close next year anyway. The other condition for the bailout is that in the next three years, fully half of cars must be totally electric. The Chevy volt is crap. One billion in development! Unbelievable. Have a look what real American entrepreneurs can do with a few million. www.teslamotors.com
When WWI and II came along, Americans did unbelievable things to defend their way of life and earned the respect of the world. Do you think that the size of the looming economic crash will not affect the American way of life. I am rooting for you guys to show the way for the rest of the world as you have in the past. Obama is the guy that can do it if you all believe in yourselves and stop thinking that the only way to protect your jobs is with gov help, gov money and unions. That is not the American way.
Robert Simpson, Thailand
I laugh at people who say UAW workers are hard workers and should get paid more. I have had harder jobs while going through school and got paid way less. I am a firm believer that compensation is derived from the responsibility of your role and knowledge to do your job. What responsibility do line workers have, hmmmm...stand there and watch the automated machines do their job! What knowledge do they require, hmmmm machine goes down call the company that designed it to fix it! I say let the big three go and get rid of the unions once and for all! UAW workers vote out your union before it is too late, I am sure $20/hr with a moderate health plan will sound better then $0/hr with no health plan when the big three go under.
Interesting post and comments. My husband currently works for Chrysler; and my dad is retired from Chrysler. The $75 figure being thrown around is false. My husband's hourly pay is $29.10 per hour. He works in skilled trades in a highly trained (and dangerous) job within the plant.
Years ago, we would receive statements from the company telling us that my husband's benefits (health care, vision, dental and life insurance) were worth approximately $35,000 in value.
HOWEVER, since that time, our health insurance benefits have decreased each contract. When we go to the doctor, we now pay 50% of the office visit. No $10 or $20 co-pays here: HALF the bill is ours to pay. Gone too is the tuition assistance. No longer are the benefits totaling the $35,000 per year figure.
Each contract, comprises have been made, and benefits lost; all in an effort to save the company money due to profit losses.
With the contract last year, new hired employees will make only $14 per hour; that equals about $29,000 per year. Poverty level for a family of 5 (which mine is) is just over $24,000. Could a family survive on that, yes - barely. Lord help them if an emergency comes up - or they have to make many trips to the doctor paying that 50% co-pay.
Congratulations on stimulating so much dialogue on this subject. You seem to have provided intriguing figures and arguments.
Lots of great information in here. I'd like to start by thanking all of the UAW employees and family members who have come out to give more accurate information. Tracy's post above especially hit me as honest and insightful.
I think the reality is that Americans are not economists. As a collective, we are self-absorbed and short sighted.
I look at the idea of bankrupting the Big 3 and I think, "yes it COULD lead to them being more competitive, but it COULD also destroy the Big 3, move 10% of America's tax base onto unemployment, add all of the Big 3's pensioners on to the US government's tab, and destroy the local tax bases of 5 or more midwestern states preventing citizens there from funding local road repairs, decent public schools, ect."
I look at that as a gamble not worth taking while we are trying to fend off another great depression, but the plain facts are the people in this region are operating in total denial if they think that their fellow Americans in other regions have their backs and share my point of view.
Someone above tried to compare auto workers to teachers and implied teachers made something comparable to UAW worker's salaries. This is not true. I looked into teaching down here in dallas about 10 years ago. Starting salary was 30 -37K annually depending on the district. No OT and no chance of hitting 70K annually in a few years as some respondent auto workers have noted is a legit possiblity.
While I can appreciate that the cost of living may be higher in the midwest, I really doubt the numbers quoted.
Anyway, I personally feel some empathy to how UAW employees are getting kicked around. If is a physically demanding job that is dangerous. I equate it in many ways to working on an oil well. Nobody complains about the salary those folks get...but this is the part you UAW need to get...those folks aren't looking for a taxpayer loan.
You guys are looking arrogant to say "Hey loan me the money to save my 70K job. I'm good for it. And don't freaking ask me to take a pay cut."
The reality is you have all the legislators from your region and a couple here or there in other regions. That is it. You guys need to sell at least half of the remaining legislators to get a loan before Obama takes over. Those guys represent consituencies that see the UAW as the main problem. Those voters are already pissed about the bank bailouts and see the UAW and the Big 3 management as incompetent, greedy, and arrogant. They look at the fact that you cannot produce money making small cars as a product of out of control salaries. Your leadership flying private jets in just made your begging (see it for what it is) that much more resistable to these folks. They don't see any belt tightening from you guys. They are more than willing to roll the dice and see all of Big 3 roll through bankruptcy to get out from under the contracts that they see sinking them.
I think to get this loan done before Christmas, the UAW may very well need to cut worker salaries as much as 25% and management salaries 50% with no bonuses until the loan is repaid. That takes the acknowledged legitimate salary range of $17-35 an hour down to $13-26 range. It still has the Big 3 on the hook for all benefits and pensions.
That isn't so much a "plan" as a marketing ploy to get the rest of America on board with bailing you guys out. I think in terms of Planning, I would ask for more money to refit factories for green cars NOW. Obama will quickly run out of money next year. Asking now would make you guys' leadership look more with the program and would anticipate that likely eventuality.
I think you guys should be bailed out, but frankly there is an attitude of "we aren't asking, we deserve this" that is coming from the UAW and Big 3 leadership that I think is pissing off most of the rest of the country and will likely prevent you guys from getting any more money until Obama gets in. There are a lot of folks who would like to see bankruptcy court break the UAW and don't see any of the likely fallout.
---Tobi
I work at a window factory in Wisconsin. Our total labor cost per hourly employee is around $50,000 per year, and people are glad to take those jobs. I don't think these folks are glad to pay more for cars, and maybe soon in taxes, to keep other hourly factory workers in jobs that pay more than twice that much. The intensity of work, danger, and training are similar. There would be little fairness in a bailout at this point.
With all the bashing of UAW employees and championing of Japanese, we fail to see the whole picture. If and when we see it, the whole picture, its only a small piece of the big puzzle. Japan's CEO's get a multitude of the American CEO compensation. Then there also avoid the employee for life. Where the company takes care of the employee and his/her family. They are in fact welcome as a member of a family and are truely concerned. These are not discussed in the business schools, which have made Toyota the darlings of the business programs. They only take what they see fitting and or to their benefit and omit whatever they see fitting.
Maybe we can gain some insight from when Benz purchased Chrysler. The Benz CEO was astonished at how little the UAW workers were compensated in comparison to autoworkers in Germany. But even more in shock that the Chrysler CEO was being paid way more than he the Benz CEO.
Thanks for posting these eye-popping numbers. There's no amount of bailout money that can save this dinosaur-ous business model.
Imran
http://imran.com/media/blog/
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If one more backwoods redneck says something about "do not buy imports" I'm going to start another civil war! Go through your house, and check EVERY appliance and see where it was made. Take it a step further and see where everything in your house was mfg/assembled (clothes, bed, mattress, shower curtain, pillow etc). Guarantee you you will maybe only find a few things assembled/mfg in the USA.
Did you also know that "Ford" either owns or owned MANY or at least hand their fingers in "import" brands? So supporting some of the imports (i.e. Mazda, Volvo, Jaguar etc) is indirectly supporting Ford.
Get an education, learn global economy, and quite screwing your cousins. WAKE UP! Its not 1950 anymore. People need to learn to save money, fight for insurance and quite mooching off companies.
For someone to say a "assembly line" workers work is valued higher than a Profs is completely rediculous and obviously biased. Profs EDUCATE society. They work MANY more hours and dedicate their LIVES to their work...not just "welp, another day, time to go to my mindless job." Educators are the backbone of our society...to the core - NOT assembly line employees that can be replaced in hours. Anyone can do assembly work, its rather easy we (engineers) make drawings/instructions and you follow the instructions. If you know how to read and use your hands you're in. How is that kind of work more important than the person who educates the people who GIVE assemblers a job.
Prof->Eng->Assembler
If you take out Prof from that equation there is no product to build and assemblers and engineers are back to the books studying what profs do to create product.
Professor Mark J. Perry made a nice looking graph. Too bad all the figures are skewed. The first line below the graph states " Labor cost per hour, wages and benefits for hourly workers, 2006." That shows his anti-union bias right there. This wording makes it look like the average UAW employee actually makes that much money. The fact is that the numbers in the graph represent not only employee compensation but also include retiree pensions and benefits as well as many other variables.
I work for General Motors in Lordstown, Ohio. I started there last summer and am currently making $14.00 per hour as an "entry level" employee. We make about half of what the "traditional" employees make. The average union employee makes a bit over $28.00 per hour. Even with their healthcare, cost of living pay and all of the other benefits they receive they don’t make anywhere near $146,000 a year. As for my benefits, I have none. I have only been there six months. Entry level employees aren’t eligible for any benefits until after 7 months of employment. So I just have to wait one more month before I can go to the doctor.
I’m not complaining. I’m one of the lucky ones. I was in one of the first groups that were hires last summer when the plant put on a third shift. About 1000 people that were hired after me won’t be making it to the seven month mark. They will be on permanent layoff as of Dec. 23rd. Merry Christmas!
But then again, I’m sure that makes a lot of you happy. You think all of these jobs should be moved to Mexico anyway. I just hope you are the best at your job because the more layoffs and plant closings that they have, the more people that will be out there competing for your job. Along with that, the higher the unemployment rate becomes, the lower your pay will go. It’s a matter of supply and demand. More people competing for fewer jobs. It doesn’t take a rocket scientist to figure the effects that will have on average salaries.
Alas, “The Big 3 make a bunch of crap anyway. The Japanese companies make much better cars!” Hmm, this must be why the JD Power and Associates report for 2008 shows that all of GM and Fords brands rank above average in customer satisfaction. Chrysler was also above average but their Jeep and Dodge brands were below average. The other below average brands included (from best to worst) Volkswagen, Honda, Toyota, Scion, MINI, Subaru, Suzuki, Hyundai, Mazda, Nissan and at the bottom Mitsubishi. I am sorry to confuse your opinions with facts.
Now on to how easy the UAW workers jobs are. In reality, I have done harder work. But I have also done much easier work. Its repetitive work, I’m on my feet all day. It’s loud and hot and dirty, but I’ve worked at worse places. Then again, I get to raise my hand and wait for someone to come relieve me when I have to use the bathroom. Then I get to hope they make it there in time and that I can make the ¼ mile walk from there to the bathroom before it’s too late. At 42 years old I think I’m a bit old to be peeing myself.
My father-in-law retired from this plant. He has hearing aids in both ears. He has also had surgery on both hands. These are just a couple of the unlisted benefits of working in a loud plant doing repetitive work all day, five or six days a week and anywhere from eight to twelve hours a day. I’m sure the professors have the same problems. Maybe hemorrhoids from sitting behind a desk all day or paper cuts and things like that.
The issues are that (1) unions are anti-capitalistic, resulting in inflated wages and benefits relative to the investment in skills made and value added; (2) as a result American automobile manufacturers are unable to put the same capital to work in new technologies or more reliable vehicles; (3) which causes the American companies to underperform its Asian and European competitors, both in terms of quality and profitability.
If these companies were meant to exist in their current state they wouldn't require federal funding. The only long-term solution that doesn't rely on taxpayer subsidies is for an elimination of the unions and change to salary structures dictated by the market. Unfortunately this implies letting the older employees go and signing on younger talent at more competitive market rates.
I'm interested to read where people think I'm wrong. I suspect it is mostly ideologically rather than rationally.
What is skewed is the idea people have about a professor's workload. It is not a 4 day a week, 32 week a year job. At a research university, it is an 80 hour a week, 48 week a year job.
Bill Chimo: I'm not seeing any anti-union bias in the line "Labor cost per hour, wages and benefits for hourly workers, 2006." It is clear what it means: How much it costs the company per hour to employee an hourly worker.
"Wages and benefits for hourly workers" makes it look like all of the hourly workers are making $73.00 per hour in pay and benefits. When in reality all legacy costs are also included in that figure.
That is not what it costs the company per hour to employ an houry worker. That is what it costs per hour to employ an hourly worker plus pay pension and benefits for at least two retired workers.
That would be like computing the average wage in America by adding all workers AND retirees in the country, then dividing that figure by the number of hours the workers work. It's a BS figure and in no way reflects what UAW workers are compensated.
Had the line read "Total labor cost per hour for hourly workers AND retired employees" then that would have been more accurate.
While I agree union contracts are grossly bloated, where is the outrage over grossly overpaid auto executives? They all contributed to sinking the ship. The only way I want to contribute a dime to any of them is if they completely change their business practices.
P.S. Anyone who thinks professors are not capable of working a line job is whacked. Could the averge UAW member take the place of a college professor? Nope.
I work in the service based industry and feel that with all the schooling and training I have had over the years to perform my job, that I am justly paid, for using my brains and skills. I do not earn an hourly rate that is excessive. I do not have a company paid pension plan, nor lifetime insurance, I do have pride in what I do for a living. Most blue collar workers in this country, I believe are in a similar situation. Social security may not be there for me, when I can no longer work or, most americans my age. So, for the overcompesated auto workers, stop whinning,you have had it %300 better off, than most main stream americans who work just as hard to make a living without all the PERKS. No sane taxpayer wants to give you a comfortable retirement, while they have to continue to work the rest of their life with little or no chance of a comfortable retirement!
All that has been said has some validity... but in the end, it all boils down to this: Greedy unions together with bloated incompetent management have killed the goose to take all the golden eggs at once. Now these poor lil' fellas need tax payer dollars to buy them a new goose!? They should not get the bailout without assurances that they will take better care of the new goose.
The headlines today (12.9.08) suggest that the incoming Obama administration may largely nationalize the auto industry - hopefully only in the short term. Its interesting to ponder what that would do to the payscale. The governments pays most of their PhD's considerably less than $90k/year.
I think it is ridiculous to blame the UAW salary for the problems of the big three. Today's NYT article tries to set the record straight on salary comparisons between foreign auto maker and the UAW. The bottom line is UAW workers make $29 and foreign workers make $26. Two facets of worker salary and compensation do figure into the profitability problems of the big three; first, the big three has to pay medical benefits and the foreign companies rely on national health. Second, foreign CEO make 8 times the salary of the basic worker, but US CEO's make 800 times the base salary.
The real problem is that the Japanese government provides financial incentives to induce the production of innovative new technology and here we disdain government involvement. Take the Prius example, for the first two years of manufacture Toyota lost $20,000 for each car it sold in America, but the Japanese government gave financial incentives that made it possible for Toyota to still make a profit. As a kid from Detroit and having worked in the auto plants and with many friends still working there, I can assure you all that there is no way auto workers make as much as college professors! The "bailout" (read loan) is intended to bust the unions - period. But, we have to do this because 2.5 million JOBS are at stake here, and if you think the economy is bad now, letting the big three go down will result in the depression we all want to avoid.
Let me put this argument into perspective. My son is a graduate of the Air Force Academy and is currently a Major flying F-16's. If we assume his average work week is 80 hours (those of us who have military experience know that may be a low figure), then he currently makes $22.63 per hour. UAW wages are way out of line for the qualification required to turn a nut with an air wrench. Assembly line work doesn't take any skill at all, nor does it require any education. I know, as I have done that kind of work. I am also a retired AF pilot, and I know that profession takes a lot of skill and intelligence. The fact that an assembly line worker with a 9th grade education makes as much as an Air Force fighter pilot is the reason why Detroit is going bankrupt. Paying that kind of wage to unskilled labor is ludicrous. The UAW shares just as much of the responsibility for the financial problems of the Big Three as management. Until wages are brought in line with all other unskilled labor wages, U.S. automakers will always face financial troubles and make inferior cars. I have a 2001 Toyota Sequoia (80K miles) and have NEVER had it in the shop for any kind of repair work. I have NEVER owned a new U.S. car that didn't require some major expense before 40K miles. I'll never buy another American car as long as the Big Three are unionized.
My son is also a college gratuate a a cost of close to $200,000 and in eight years has progressed from $30,000 per year to almost $50,000 which includes nearly 20 hours of work per week of unpaid overtime. But who is complaining, let's solve the problem.
There is a simple solution to help resolve GM’s problem and the GM employees and retirees can help.
GM has 300,000 employees
GM has 475,000 employees receiving pension benefits
If half of this group purchased GM cars (at the employee discount) GM would have a revenue increase of more than 8 Billion dollars.
Economists typically say such a purchase flows though the economy eight fold. Thus there is a positive economic impact to the US of 64 Billion dollars.
Stipulate that GM cars manufactured in the US can be financed at prime rate (GM could make this happen) for five years to encourage the purchase and encourage purchaser not to resell the car for five years.
The originator of this email is not a GM employee or retiree but did purchase a GM car this year and I thoroughly enjoy it. Can’t those people who have benefited from GM for years help their fellow employees and the US out of this mess?
Pass this suggestion on – perhaps it will reach GM Employees and Retirees who will want to step up and help solve this crisis.
Hi Anonymous,
As a former Navy pilot (F-14) and Detroit Auto worker, I don't find much difference in skill level or intelligence. All military pay is lower than civilian pay. Make the comparison between airline pilot and fighter pilot and you can see what I mean. The military is "service" not profit. If you want a for profit military then we all get mercenaries, not fighters for American. I don't blame you for not buying American cars, but bashing unions and making then the fall guy for the big three is ludicrous! The pay is comparable between foreign and domestic auto workers, so that IS NOT why the big three cannot compete.
You make a great point. My brother-in-law works for Nissan in Tennessee. He has been there for about 4 years and earns about $30/hr not counting his benefits(BC/BS insurance, retirement, vacations, and such. I have worked for my local County Hospital as a Paramedic for 12 years and earn $14.50/hr. It's ridiculus that the big 3 should even contemplate begging for a bailout while paying UAW wages.
After spending hours reading all the comments, below are my thoughts:
1. UAW worker salary is out of control. But so is the CEO salary and Executive and Board of Directors compensation. Take for example, Rick Wagoner. He made 50 million last year and that was a 54% raise compared to 2006 !! Raise for what? Under his stewardship GM has lost 72 billion !! Why is this guys still around.
2. The Big three have spent millions, if not billions try to lobby congress to not enact tougher environmental and mileage standards. Perhaps that money should have been used for R&D or better yet, put aside for pension plans.
3. Big three should have to go through bankruptcy to shed the legacy costs. Let's face it. Toyota and others have only been business for the past two decades and don't have much legacy costs.
4. Nationalize heathcare and that should help the American car companies shed healthcare costs and become competitive.
According to the records that the Big 3 sent to the SEC the $70 mark is true. http://www.heritage.org/Research/Economy/wm2162.cfm
NO BAIL OUT! This is a plain and simple case of companies that are no longer viable options. When a company's balance sheet is in the red and they are bleeding out, you only help them if they are willing to help themselves. The UAW has made it very clear they are unwilling to take pay/incentive cuts to save their jobs. So this patient is unwilling to help itself.
I say let them perish. A bailout is a band-aid on a severed limb at this point. Your not going to save the patient and you are going to ruin a good band-aid.
The only way a bail out will work is for the UAW to wise up and realize they must take a pay/incentive cut to survive. This is a "Survival of the fittest" world and the big 3 are too bloated and fat to survive.
The best thing would be for the companies to declare bankruptcy and shed their current contracts with the UAW. Then let the UAW come begging for a new contract. At that point, hopefully the contract could be renegotiated to something reasonable.
As for the folks who have already retired, they need to be paid and lose nothing. They worked for that and were promised that. They kept up their end of the bargain, so should the big 3.
The big 3 should be allowed to take government loans to pay those benefits and they should have to pay that back to the government for their sins of wasting that money.
Wise up America, this is simple math. The goes outtas have to be less than the comes innas or the company fails.
It all comes down to this; if you can sell a $15,000 car for $32,000, then go for it. If you can't, then you must get your expenses in line with your competitors. The average UAW worker looks at a $32,000 Mini-van and thinks it looks like a good deal. This is because $32,000 does not represent one full year's take-home pay to them. The UAW workers must realize that they are among the wealthiest people in the entire world. When you produced something that the world wanted, but did not know how to make for themselves, you could get away with this kind of pricing; but that ship has sailed. The same thing is happening in the computer industry. In the 1980's my company charged $200/Hr. for a computer Tech. In the 1990's that became $120/Hr. and today $95/Hr. Why? Competition.
Organized labor is the primary culprit of the Big 3's inability to change and the cause of significantly above-market costs per vehicle. The only way for the Big 3 to survive in the long-term without a government GIFT (i.e. they wouldn't have to pay taxpayers back) is to utilize market-rate labor (NO UNION LABOR) with domestic manufacturing or utilize their production facilities overseas.
I am hopeful domestic production is a plausible option but am fearful that the unions have too big a voice in Congress. Their anti-competitive voice is unfortunately loud when they misrepresent the loss of 3 million jobs. Yes, jobs will be lost if the companies reorganized, but one must not protect the typewriter industry against the computer! Free-market competition is the fabric of our nation's economy. Let's not change that fact in favor of pro-organized labor ideology (i.e. a socialistic principle).
A consumer-driven approach must be taken; if vehicles can be produced most efficiently via overseas production facilities, lower vehicle price tags will be seen in fewer Big 3 showrooms.
The reorganization of the Big 3 is far more likely to promote innovation that "preserving the status quo". We ask "what happened to the electric car"? A decision to save the Big 3 for the benefit of organized labor (i.e. the UAW) is nothing more than promoting the stagnation of the auto manufacturing industry.
Albion - Its UAW workers (working for the Big 3) compared to US workers working in the USA for Japanese auto companies. Look at the graph carefully!
Down with the Overpaid Underclass! Support the White Collar Rebellion!
Dr. Perry and guests,
I read many posts and gained a broader perspective from it, thank you.
Simplifying the complex mix of total labor (past and present)costs and ascribing it strictly to current employees is obviously misleading.
To simplify issues:
Q: Are the UAW overpaid
A: Yes, in the current economy they must be willing to concessions or lose their jobs. Concessions will need to be made in current wage rates and benefits across the board. My local logging and sawmill industies pay $12-25/hr, with most falling in the $14-19/hr range. Logging is the world's most hazardous job. Sawmills are no picnic to work in either. By this example, I am saying that if the UAW workers won't settle for something like a 20-40% pay cut, they may well disappear.
Q: Will UAW worker wage concessions solve the Big 3's problems?
A: Not by a longshot. Healthcare costs are hurting EVERY industry. Retiree pensions and benefits are another huge drag on profitability.
Number time: Everyone knows that the Big 3 employee numbers are shrinking. But, have a growing number of retiree pensions and benefits to overcome in order to be profitable. Just like Social Security...Less people contributing, more withdrawing. A failure to plan ahead for years has culminated in catastrophe.
Conclusion: UAW take a significant pay cut. Lobby pray and work for a significant restructuring that allows your companies to survive, but at least know that you did your part to ensure that survivability. Be flexible in your wage negotiations or proudly and defiantly intransigant, and unemployed.
bwhittaker@centurytel.net
attaching the same part or two to a car does not warrant such a high level of compensation.the auto workers will now pay for the greed of their union over the years.
So I spent 8 years in college, 3 years in residency, borrowed about a quarter million to do it, and now work 60 hours a week as a primary care doctor and work extra evenings at an urgent care center just so that I can make $150K a year and pay those loans, when I could have just joined the union over in Detroit 12 years ago? What was I thinking!
If everyone could take a giant step back, you'd see that, bottom line, the big 3 have got expenses that exceed their ability to pay them. Whether you include retree benefits from hourly cost per employee or exclude them, the bottom line is that financial obligations exceed ability to pay.
So there are a few choices. Increase the price of cars, which is obviously not going to result in higher income - because already sales are too low.
Decreasing costs....materials, labor,[including or excluding retiree benefits], is the only solution.
Unfortunately, many retirees from many employers have suffered decreases in their benefits. And many employers have changed their retiree benefits for current employees.
Current UAW workers don't want to see retiree benefits touched, because it will touch them as well. I can certainly see thier logic.
But there is no way these companies can survive unless they can reduce costs.
If you reduce the cost of materials, it is likely you will have a negative impact on quality - not exactly the way to go, given foreign competition.
What's left is labor. Current labor, at all levels, and retiree expenses. If everyone bears the burden, it will be more bearable.
If no one bears the burden, you're all sunk.
Surely someone can see this.
All the discussion about Nixon and PHD's is just smoke. The Union played a very great role in bringing the dangerous work place to a safe place for workers with a decent wage. Productin increased and quality went up (afer the big three got caught engineering planned failure) Sometime in the 1960's the Union leaders became partners with the DNC and RNC with a single goal of greed. They convinced and/or coerced the membership into supporting their quest. Today many of the UAW memebership believe they deserve all of it and they would if the quality of the products were the best in the market and the level of production was the highest in the market - neither are true. We all get to pay for this sin because our congressional leaders help them hold the big three hostage. So for my vote congress are the resposible parties. They are very good - like the comment about wage & price controls - it would never have been laws if congress did not pass them.
I have always been told, no question is stupid. With that in mind, I have to ask, are all our off shore manufacturing/outsourcing of jobs subject to the same OSHA and EPA standards that exist here in the US applied to other countries? These regulations add much to production costs in the States that may not have to be met by other countries, so in my mind, this is not just about wages. Obviously, all workers deserve a fair wage...in China, with their cost of living, that wage would no doubt be lower, but if the manufactures had to meet the same codes set down in the US for safety and environment, would their goods be that much cheaper? Also, could we not look at the Free Trade Agreement and demand they meet our same standards or we refuse to import their goods? With global warming coming to the forefront, is it a fair playing ground that we meet standards not enforced with all our trading partners? Just an inquiry...please don't blast me here...I want to learn. Thanks!
test mail to see if my comments are finally being printed...sorry for the spam sort of posting.
Nor is correct. The only way that the prices for general goods made in this country can be comparable to imports is by regulating those companies the same as the US companies. Common sense would tell you that if you can cut costs on the manufacturing process, either through child labor, working conditions, or disregard for the environment, you can produce a much cheaper product.
About the big 3 car companies; the Union workers they will have to take substantial wage decreases. For too long they relied on the fact that it was an American product to sell their cars instead of designing and building better quality vehicles. Toyota, Honda, and Nissan build much better cars, even to this day. Furthermore, companies such as Kia and Hyundia are building cars that are cheaper and have almost twice the warranty of America cars, further reducing the desirability of American made cars. Now, you combine the fact that people think that these companies might go bankrupt; the big 3's car sales will decrease dramatically. Why would anyone want to buy a car today if the company might not be around tomorrow?
The first step is the companies need to cut cost wherever they can, management's wages, office supplies, advertising, whatever.
After this is cut as much as possible, they will need to cut the salaries of the workers and renegotiate any health or retirement benefits to be paid in the near future.
Then, they need to try to create cars that people want, that have better fuel mileage, more stylish, and better innovations.
Once those three steps completed, then maybe these companies can become profitable and eventually the benefits and wages can increase. After all, if this problem doesn't get fixed, they will all be out of a job.
OK Folks... most of you need a serious reality check here. Regardless of the total compensation level, dollars per unit sold and all the other economic hubbub, you're pretty much missing the point that the poor professor was trying to make. Autoworkers in general are getting paid well above what their peers are making outside the auto industry, and that they have insurance packages and retirement packages that make most people drool with envy.
Setting aside all but the base pay, and using some of the pay figures posted here, if a run of the mill UAW worker is making $30.00 per hour, they're pulling down a base salary of $62,400.00 per year. I don't care if that UAW worker is a card holding member of MENSA with an IQ of 180, or a certified idiot that can't tie his own shoes, the requirements for the job don't change, and we can assume that they're doing it because if they weren't they'd probably be fired. If you now take a little time to look at what other workers in other industries with similar job training and skill requirements are making and you quickly realize what a sweet deal the UAW folks have going... and oh, by the way, if you want to hang your hat on how tough the job is, or what a toll it takes on your body, take a quick look at the training and physical requirements are for a firefighter, paramedic or police officer. None of those professions pay as well as the auto industry, and I dare any UAW worker to say his job is tougher on the body, more stressful or requires higher skill than that of a firefighter pulling down a full 20 grand a year LESS that what they're making.
As far as all the benefits that the UAW folks get, why do they feel like it's their god given right to get these fantastic packages that make the rest of the world drool. While the "real world" people are out here buying their own insurance, if it's offered at all (mine is 365.00 every two weeks for the family plan), and get offered a 401K plan that MIGHT get an employer contribution if the company performs well (last year we got a match of 1% of our contributions), The UAW guys are standing in line just waiting for the money to fall out of the endless bucket... and before you even go down the "sour grapes" road, nope, not this guy. I'm paid well, my compensation is above the average in the area that I live and above what a lot of my peers with similar training and education are making. I consider myself lucky to work for a decent employer that actually cares about it's people, and the products that we produce.
Sorry guys, I don't see how bullying a company into providing to you just for showing up a package that's better than what the rest of us might get if we bust our butts to make the company successful just isn't good for anybody. This is America folks, back in the old days when we were a successful industrial power, we worked hard to EARN what we deserved, now we negotiate through collective bargaining.
SCREW UNIONS. Bad for business, bad for America.
Anonymous seems t think he would be happy if everyone had life as bad as his. Again, if you lower the pay for auto workers, it hurts the economy and all of us with it. Think people because workers need more pay not less pay and that includes anonymous who hates unions, but probably loves - the hourly wage, weekend, child labor laws, health and safety regulation, the end of child labor laws, LUNCH breaks, and the list goes on and on and on. Without the unions - none of those things would be here today!
Anonymous, when were those good old days you write of? Union membership in the US is at its lowest levels since the mid-1930s. Back "in the good old days" when the US lead the world in industrial production, union membership was more than twice what it is today. You don't know what you're talking about - you should be outraged at executives rolling in millions rather than autoworkers trying to make a decent living.
if you're doing a monkey job, you should get monkey wages! unions have ruined this country! if auto workers are making these high wages, let's start paying the burger flippers more!
LLB - we have never paid people on the basis of the difficulty of the work, or the importance of the work. If that were the case garbage collectors would get paid more that brain surgeons, because without garbage collection the disease levels would be so high no number of doctors could help society. Plus, how many hours do brain surgeons really put in anyway? I mean they really earn a lot of money for like what? Four hours a week?
I'm a current auto worker for a "transplant" company - Honda in Ohio, so I think I can make some insightful comments here.
First, I'm no champion of the UAW but I have to set the record straight on a few items.
First, most people are mislead by the chart of average compensation at the top of this page. As mentioned several other times throughout the posted comments, the labor cost does NOT represent the actual cost incurred to current hourly employees. You can't take pensions for 450,000 retirees, add it to the current 300,000 active employees' wages, and then divide this total by only 300,000! The professor who posted this should be ashamed of misrepresenting this to the average American. After reading the majority of comments, it's clear most people are indeed misled. The fact is the UAW workers actually do earn only slightly more the transplant non-union workers. Thus, it is possible to be a viable company and pay good wages (such as Honda and Toyota).
Second, you can't say that the transplant companies haven't been around long enough to incurr significant retiree costs. The reason is because Honda (I'm not sure about Toyota/Nissan), fully funds its' future pension/healthcare obligations today. Simply speaking, funds $ are set aside today, so that future pension/healthcare payouts are fully accounted for now. I'm no expert, but I thought it was regulated by law that companies were legally required to currently "fund" their future pension obligations, certified by actuaries. I believe the Detroit 3 have done this, so I don't buy the argument of the so-called "Legacy" costs being part of the financial problem for them. However, please don't lump current pension payouts from these funds into the current employees compensation as in the chart above. Only the accrued pension funding for current employees should be included if you want to compare Detroit 3 to Transplant average compensation.
Third, I do believe the UAW significantly hinders productivity, and this is where the true profitable viability of the company is jeopardized. In other words, current wage compensation is roughly equal between the Detroit 3 and the Transplants, but the Transplants get much more work done per employee than the Detroit 3. UAW - forget what you've seen in JD Powers surveys for Labor efficiency comparisons between plants. I've been in many UAW plants and I know first hand the work pace is much slower there than in the transplants - period.
Fourth, the so-called "bail-out" must happen. If the Detroit 3 go into Chapter 7, the entire US auto industry will cease - including the transplant operations. Why - because the supplier base is interwoven between Detroit 3 and the transplants. Although some suppliers could survive, it doesn't do much good build a car with an alternator, but no radiator or tires but no wheel rims, etc. Honestly, I believe the 2.5 million jobs lost is grossly underestimated ... it will be much much higher and with the multiplying effect of the nosedive to the economy from removing all these consumers from the economy, it's just unimaginable the devastation.
Fifth, don't be fooled by thinking the bail-out is a cost the taxpayer. The bail-out is a loan, not a give-away. Taxpayers will not see one penny increase in taxes for this. The fact is, the US government is broke and has been ever since I can remember. The money for the bail-out does not actually come from the government. The government does what it always does, and simply borrows money through selling of treasury securities (takes a loan itself). Therefore, in the end, taxpayers are not funding the bail-out "loan", but rather domestic, and more so, foreign investors are actually funding the loan. I can't believe this fact hasn't been brought up in the media, in all the hoopla bashing of the bail-out arguments.
Sixth, the positioning of the Detroit 3 with large SUV's, and fewer small fuel efficient cars, isn't entirely the fault of the Top Management. The Detroit 3 actually is a victim of US Government Policy. Why? The Japanese, Korean, and European automakers are in an environment where their governments artificially inflate fuel prices to 3~4 times that of US fuel prices. This causes the market to demand highly fuel efficient vehicles, which these companies have gladly provided, evolving the technologies with each new vehicle evolution over several decades. I've seen the perfect storm coming for over ten years now with the US auto industry. With Congress' reluctance to artifically inflate US fuel prices, there has been no market demand for fuel efficient vehicles until recently. The Detroit 3 can easily retool factories to produce these vehicles, (they already have the technology), but this doesn't happen overnight ... it takes years to restructure/retool factories and suppliers. The best global auto companies take a minimum of 3 years to bring a new vehicle to market, mediocre companies can take up to 5 years. But I digress. I know what you're thinking ... what about CAFE? CAFE is a joke and is something obviously developing by politicians that don't understand economics. Sure, you can force companies to build fuel efficient vehicles, but you can't force people to buy them. Americans have wanted to buy the large SUV's and Minivans since fuel prices were low. Like any good company, the Detroit 3 have been supplying the vehicles that the customers want to buy, not the expensive small fuel efficient cars the government tried to force them to build. Anyway, you can see my point. The Detroit was inadvertly "set-up" by the US government. When fuel prices skyrocketed, the foreign automakers already had the capacity for fuel efficient vehicles to capitalize on this. Not necessarily because their CEO's are superior, but because their home markets already had them structered for this. In contrast, the Detroit 3 capacity was tied up with Light/Truck capacity, with years to retool capacity linked to increasing capacity of fuel efficient vehicles. This, coupled with the surprising credit crisis in effect now, has broke the straw on the Detroit 3 back. By the way, don't think the foreign automakers won't lose money during the current credit crisis and resulting recession. I'm sure Honda, Toyota, and Nissan alike, will all post financial losses for the 4th quarter and well into next year.
Who the hell cares what a college professor makes?!? If this guy is complaining about his salary versus an UAW worker---Then maybe he should offer something more worthwhile and what people really need, instead of just talk, talk, talk, and more talk about how to become a "good employee"...while businesses all over this country contiue to "screw" the American Worker---I think that "whatever they are paying so-called college professors"....ITS WAY THE HELL TOO MUCH!!!
Hmm... On one hand I'm pissed about this, but on the other hand this gives me an idea. Let's just get all the highly skilled scientists and engineers together and form a union. If the UAW disappeared overnight, they could easily find replacements at the local high school (who might need a few months of training), but if, say, all of America's nuclear or chemical engineers decided to walk out one day, civilization would essentially collapse overnight. All nuclear power would immediately go out, oil refineries couldn't run amongst other things, and replacements for those people would be an 8 year, $250,000 PhD away from existing. If a bunch of uneducated wrench turners can hold the Big 3 and the U.S. government hostage and demand ridiculous wages despite being completely replaceable, why can't the highly educated and skilled folk? We have a much, much better bargaining position than they ever did.
And to say the least, I have no pity for any of these people. I've worked my ass off to get a college education and become an engineer, and the UAW is out there demanding equal or better pay than I hope to get when I graduate, along with a government bailout (which comes out of my pocket) to make sure things stay that way? I have only one word for that: COMMUNISM.
Anyone who wants a decent job in America without needing a union to twist their employer's arm only needs to spend 2 years and $5000 (which can be covered by scholarships and aid if you're poor) to go to a community or technical college and gain some useful and immediately applicable skills. In my opinion, this is what the government should be spending its $17 billion on rather than keeping some guy with a GED's salary above $100k. I'll never buy an American car unless you commies give me every cent of that money back.
FUCK THE UAW.
The UAW and its members are the leech of the U.S.A economy. American automobile sucks big time. No argument about that. And screw the patriotic crap about keeping Americano jobs in the Americano land. I am not buying Americano made automobile until they are compatible to quality, endurance like Toyota... What a sick organization fills with sick people.
Quote:
$15 an hour for a trained monkey is too much. Ship their jobs off to Mexico and China.
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Thank you Sir, you took the words right out of my mouth. As a matter of fact I would believe that a monkey can do less harm to the U.S economy than these UAW leeches. Retiring at 55 working at an automobile manufacturing plant: WHAT A JOKE ! Dude, people need to get a grip in life. Something is worth some kind of value when the market is willing to pay that certain value. In case of the "SMALL 3" deteriorating American auto makers, it ain't worth JACK. I wouldn't drive a GM car even if it is given to me free.
Quote:
I have known auto workers and PhDs. You would go a long way to find a PhD who could work an auto plant job. From this I conclude that a PhD isn't worth an auto worker's pay...
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From your uneducated, ignoramus comments and line of thoughts, I CONCLUDE that you are a DONKEY !
Quote:
At 7/13/2007 1:29 PM, Anonymous spike said...
A lot of the comments seem to display a tone of envy. This is not the American Way... If the Autoworkers figured out how to get that sort of compensation for themselves (and I think it took some doing, and lots of broken bones) then more power to them! Don't bring them down, bring youselves up! That's the American Way!
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"That's the American Way !" has also made the majority of Americano individual and family up to neck in dept, houses foreclosing upon like flies, car repossession like maggots on a dead bloated rat. This is a bankrupted nation filled with bankrupted dwellers. The UAW and its members are the death blow to the Americano automobile industry and yet they still denied their wrong doings and their leeching attitude. Comparing an UAW worker to a university professor is like comparing a mangy, scabby dog to a Sahara desert lion... What a nerve !
nice post
M.Myers I say i would trade places from my employment to a a uaw auto workers job any day i work in a foundry which rakes in millions of dollars a year ,they are taking everything away and ramming it down our throat, my father worked in a union shop for 25 years and he benefited from it day one on his job so to all you educated slobs dont complain when someone makes a living wage, would expose yourselves to lead chromium cleaning solvents cupola dust,etc.hats off to the uaw they get paid a fair days wages for sacrificing to do the things others wont do put that in your educated pipe and smoke it.
Hi Doc,
Just came across your blog while doing a little research for my own blog.
These are some pretty sad numbers. I don't get how a high equivalency exam leads to a professional wage for installing rubber thingys on the brake pedals.
In years to come, the U.S. is going to be a really good example of natural selection if we don't get our act together.
the unions should be disbanded!!!!! that would be the best solution.
the unions should be disbanded!!!!! that would be the best solution.
Hi, Good thought provoking blog. I am not one to "envy" the auto worker, the baseball player or the movie star. The important difference between the auto worker and the other two examples of "jobs" is that the auto worker's compensation is artificially propped up by the unions even in the face of economic catastrophe. If the auto industry could have responded to the world wide economic changes in the way that busnesses do when they're not handcuffed or otherwise "fixed", then I betcha we'd still be competitive. C'mon folks, stop changing the subject to a referendum on the merits of being a college professor vs. a factory worker. That's just losing sight of the original statistics that show American Auto workers making far more then any other AW's in the world. Isn't the issue about getting the big 3 back to a point where they are competitive? If they don't change, no amount of money thrown at them will ultimately make a difference.
Wow, there are a lot of people here talking about stupid things like government healthcare, blah blah blah.
Look, I know as human beings you're all about as greedy as it gets, but come on.
My father broke his back working for the Police Jury, first (manually) building bridges, then (manually) digging ditches. Once everything became mechanical he got his CDLs & adapted to using machines.
All this work got him? Less than $25,000 a year for 20 years. He slowly worked his way up to have the second most powerful job in the jury and that pays about $50,000 for running an entire county's drainage, roads & bridges.
All this blah blah blah, I'm worth more because I say so is plain stupid. Just because you were born doesn't entitle you to JACK.
If my father could support a wife and two kids on less than $25k 20 years ago, I think you're doing pretty good to make 60k these days.
Get over yourselves.
By collectively holding the auto companies for ransom over the past decades, yes the auto workers have been able to make the kinds of deals that have give them salaries and benefits equal to almost none in any country at any level of manufacturing. If other facets of manufacturing ran on the same models, we would be paying $15,000 for a North American manufactured mattress with 6 springs that only lasts 3 years or buying a superior, cheaper model manufactured in some foreign country.
History has shown that to counter the highest cost to build cars in the world, car makers have had to outsource the manufacture of most components and reduce the quality of the cars in an effort to remain competitive in a world economy. This seems counter-intuitive to me. Henry Ford had the right idea. Raw materials went into the factory and cars came out. If that were the case today, I suspect that a Chevy would cost the same as a BMW but nowhere near the quality.
These workers have had it too good for too long. It's time for a major adjustment. The recent meltdown is an opportunity for the car companies to clean house and that means getting workers that are overpaid by a factor of 2 back into reality.
I live in Canada. I was upset at GM's deal with the CAW that saw them reduce their wages by 10%. I applaud Chrysler's moxie. They're threatening to pull out of Canada unless the CAW make concessions equal to 25%. Personally, I think that their aim is still low.
Most of you leaving these comments are spoiled greedy brats. Because you don't have something neither should anyone else. The UAW is nothing more than an organization of working people just like the rest of us. If you use the same formula that GM is using "(including SSC and all your other benefits)"you will find your own wage is probably on par with those of the UAW. Don't be fooled by the $72.00 per hr hype. Stop and think about it. Will it really be a better world once we are all reduced to working for minimum wage? That spells third world country. These executives are stripping these companies of all their profits and those of you blaming tha UAW are supporting their efforts. GM's payroll consists of roughly 25% union employee's. Do you honestly believe they are the culprit?
"Come Now"
Sorry friends but I served in Vietnam for Uncle Sam at $320.00 a month so you, me and these corporations can do bussiness in a safe and friendly environment. This was not by choice. You damn right I earned the right to be paid an honest wage for an honest days work. Remember, these executives are only employee's just like everybody else. If you want to cut wages start there.
*clears throat*
American autoworkers are among the most productive workers in the world. According to the U.S. Census Bureau, the typical autoworker produces value added worth $206 per worker per hour. This is far more than he or she earns in wages, even when benefits, statutory contributions and other costs are included.
How much are labor costs in relation to the total price of a new vehicle?
The total labor cost of a new vehicle produced in the United States is about $2,400, which includes direct, indirect and salaried labor for engines, stamping and assembly at the automakers’ plants.
This represents 8.4 percent of the typical $28,451 price of a new vehicle in 2006. The vast majority of the costs of producing a vehicle and transporting it to a dealership and preparing it for sale – including design, engineering, marketing, raw materials, executive compensation and other costs – are not related to direct or indirect manufacturing labor.
And you should see the kind of profit numbers my fellow UAW Defense workers produce for our company. $25 BILLION! Our CEO received a $15.4 MILLION dollar bonus for FY2008. All but one person on the board of directors was awarded no less than a $1 milion dollar bonus. And yet, they add NO VALUE to the product we put out the back door.
The best way to recover the auto industry? Lean out some the N.V.A. (non-value added) "dead weight" engineering, management, consultants, lawyers, clerical, ect. from the payroll.
i am an auto worker, but i will not say for which company (big3). scew all of you who say we arent educated. i have more knowlege in my little finger then a phd's entire brain. i chose this career because i make great money and benefits and the work isnt that tough to do. dont be jealous because i only work 8 hours a day and still have more money to spend on vacations, new cars and season tickets. deal with it.
I'm a family practice physician and the average auto worker makes more than I do yearly. frankly, thats just bullshit. if both your car and your body broke down critically what would you want to spend your money on, fixing your f.....ing car or curing your cancer? society obviously decides what their priorities are and they have spoken. being called an ignorant auto worker is less offensive to me than being under valued for trying to save lives. and oh......unlike you, my job is not easy. gimme a break.
You have a bad attitude doc. This is a free country and prices for products and services here are set by supply and demand, not by your inflated opinion of yourself. My cleaning lady makes more than most of the people on her block because she does work that no one else wants to do, and she is in demand. As a former member of Mensa, I can tell you that the high IQ people in that organization come from all walks of life. Genius can apply itself to manufacturing as well as doctoring. Don't look down on others, and don't assume that you are more worthy, talented or wise just because you earned a degree.
figures don't lie but liars figure!
professor you have delibeately skewed the facts. why? i do not know what you have to gain unless it is sympathy. you have succeded i do feel sorry for you. i hope you receive the attention you deserve. here are some facts i am an auto worker. i do belong to the uaw. i worked over twothousand hours last year. i earned sixty two thousand dollars. use these figures and lets see what kind of story you can fabricate
OK all. Try being a supervisor in a UAW shop, and "ask" for something to be done. Replies are guaranteed: "Ain't my job", "I'm on lunch", "I have to go to the bathroom", "Why me? You never make so-and-so do this shit!", "Not with my senoirity, I won't"...Or the best: "WAH WAH, I WANT MY SHOP STEWARD"
Unionization has harmed more than just the car industry. Government is badly hampered by it. Recently my sister, who is an expert in her field, has had multiple unqualified people with higher seniority apply for her job. In each case, her boss rejected the applicant, and the applicant appealed the rejection. Fortunately for her, these folks have all found employment elsewhere before the appeal process had been completed. Bottom line: a qualified, experience government worker can be ousted by an inexperienced, incompetant worker with more seniority.
I think your article its very important and interesting,good work.thanks for sharing!!
Oh this is so old now,2007, but still. Auto workers do not make 70usd an hour. That’s nonsense. The figure comes from including cost of retirees, which is bogus of course, but if it helps your argument, who cares about the truth? Certainly no one who has to produce copy for conservative ‘think’ tanks. Let’s see, if we use the same logic for new Army recruits, they would start at… base pay, plus benefits, plus cost of all pensions being paid, plus all VA service, health, cemetery… hummm… A new recruit makes about 208usd an hour. Good pay for a 17 year old high school dropout.
People think they know it all about autoworker pay. They don't. The pay scale is exaggerated by propagandist like the Ph.D. In 1988, the car plant where I worked was closed. We made $12.50 and hour and, according to GM's annual statement of total income showed that we had about $7 per hour. When propagandist exaggerated our income, we would look at our checks and ask each other where the rest of the money went. It certainly was not on our pay checks. GM reported in its annual reports that we were making $35/hour. The wild accusations on this website are exaggerated by multiples.
The Japanese companies had two big advantages over U.S. companies like G.M. First of all as one commenter stated, the Japanese government paid for health care. What no one mentioned was that the yen was very under valued. We built an American car that sold for $10,000. A $10,000 Japanese car sold in this country actually cost two million six hundred and fifty thousand yen. the dollar was far overvalued in the exchange rates and that gave the Japanese companies a huge advantage over American car companies.
The big wage differences mentioned in the debate over autoworker wages that were rampant in 2008 were also exaggerated. Toyota workers actually had more total remuneration that UAW workers received. Retiree benefits were paid for by a contribution for each hour worked. The company funded that program ahead and had to issue a report to all employees.
To add to my recent comment. For every auto worker in the plant where I worked, there were 55 cars built each year, 55 for every worker in the plant. Considering the labor cost of each car that we built, it was slightly less than $800 per car. That was less than of the sales price of about $10,000.
I'd like to correct two errors in mt previous messages. I mentioned that our hourly wage in 1988 when the Leed's plant was closed, was $12.50. The $7/hour figure was for all of our benefits, health insurance and retirement included. So, our total compensation package, according to GM was $19.50 on straight time pay.
Also when referring to the cost of labor for building each car was about $800 or less than 10% of the sales price for the cars that we assembled at Leeds.
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