Friday, August 17, 2007

Growing Pay Gap:Union Leaders Gain, Workers Lose

During the toughest economic times for organized labor in decades, union leaders are more likely to keep their jobs and get raises than the members they serve. A Detroit News analysis (Labor Bosses Don't Share Workers' Pain) revealed a growing pay divide between labor bosses and the rank and file who pay their salaries with their dues.

Decrease in Michigan union membership since 2002:
-14.2% (see chart above, click to enlarge)

Decrease in Michigan jobs at union halls since 2002: -1%

Increase in amount each union worker pays since 2002 to support union payroll costs: +21% (see chart above)

Increase in pay gap since 2002 between Michigan's 50 top-paid labor leaders and union workers: +$18,000

Average pay of Michigan's 50 top-paid union officials in 2007: $186,000

Number of labor officers and staffers in Michigan earning more than $100,000 in 2006: More than 1,000

Average pay of labor officers and staffers vs. the average Michigan union worker: More than 2X

Salaries of two secretaries at Local 659 in Flint: $101,000 and $95,000


7 Comments:

At 8/17/2007 11:25 AM, Blogger Walt G. said...

A touchy subject as pay issues always are. People tend to judge themselves and others by how much they earn. I guess that’s why one of the first things we ask other people when we meet them is where they work. Think about it: Very few people own up to being a garbage man regardless of the pay and benefits.

Do you suppose that if union officer pay is determined as a percentage of what the members earn, executive C.E.O. pay should be capped at a percentage of what their workers earn? U.A.W. President Gettelfinger earned $158,530 in 2006 to run a union worth slightly less than 2 billion dollars (Source: Detroit News June 22, 2007). Is that really out of line for someone with his responsibilities?

 
At 8/18/2007 6:27 AM, Anonymous Anonymous said...

The job positions you point out within the union hierarchy have even wider margins within the big four automakers compared to their manufacturing workers.

 
At 8/18/2007 6:34 AM, Blogger juandos said...

Hey walt g regarding your question about Gettelfinger - a very good question sir...

Let me play devil's advocate here and ask the obvious, "what are U.A.W. members getting for Gettelfinger's $150K+?"...

 
At 8/18/2007 8:17 AM, Blogger Walt G. said...

"Hey walt g regarding your question about Gettelfinger - a very good question sir...

Let me play devil's advocate here and ask the obvious, "what are U.A.W. members getting for Gettelfinger's $150K+?"..."

The same thing that stockholders of any company receive from their C.E.O. How many C.E.O.s of two billion dollar companies make $150,000 per year? I don't think you can blame job losses of American workers entirely on unions and their leaders. Possibly part of the problem, but globalization is much more complex than to be explained away by a reductionism theory of union wage premium job loss. It's an entirely new world out there now that operates using new, or no, rules.

 
At 8/19/2007 8:23 AM, Blogger juandos said...

Hey Walt G, good reply sir and I knew you wouldn't disappoint...

Your comment: "I don't think you can blame job losses of American workers entirely on unions and their leaders" is IMHO exactly on target...

Your other comment that caught my eye: "It's an entirely new world out there now that operates using new, or no, rules"...

Actually aren't they really still the old same rules without government intervention?

I sometimes wished that my fellow union members would read Basic Economics - A Citizen’s guide to the Economy
By Thomas Sowell
(just 48 pages) just so they all could get a better handle on what arena we are in...

 
At 8/19/2007 9:51 AM, Blogger Walt G. said...

"Actually aren't they really still the old same rules without government intervention?"

Yes, but the U.S. economy was artificially stimulated after WWII. Because of a decimated Europe and Orient the U.S. was king of the producers filling a pent-up demand for the consumer. If you wanted it, you had to buy U.S. products. That's no longer the case, but some people are slow to change. As they should be, customers are the king, now.

I went over to my sister’s house yesterday and received a surprise. She bought a Toyota Prius that gets something like 5000 miles to a gallon of gas (I know, I’m exaggerating). She bought it back in June, but was afraid to tell me about it. My dad came up from Arkansas to work at GM, and 6 days after I turned 18, I hired in the same plant. I think my sister was a little ashamed about the Toyota giving our family’s GM work history.

Although I was upset, it was not with her, I was upset that GM does not make a car that she wanted to buy. The hourly worker at GM seems to get the blame for GM’s unprofitably; however, the truth is if GM built cars that people wanted much of the problem would disappear.

I’ll take my part of the blame for the problem; there are deeper problems than UAW worker compensation, though. According to the 2007 Harbour Report and GM’s 10K filing with the SEC, the labor cost of manufacturing (using worker-hours per vehicle) to make a car (both salary and hourly) is about 8% of the total price of a new car. So, for a $30,000 car, that’s about $2400. The UAW can help some, but we can’t make up for poor business decisions. GM has something like 43 different mirrors for cars and SUVs while Toyota has 6 or so. In addition, UAW hourly worker compensation is closer to Toyota hourly compensation than GM executive pay and Toyota executive pay is by a ton.

Because the UAW is currently in a contract year most of the attention is focused on the hourly worker. However, most of GM’s problems can’t be solved at the hourly-worker level. That doesn’t mean the UAW won’t try to help. There really isn’t a choice.

 
At 9/14/2007 10:07 AM, Blogger DumDum said...

You are leaving out one of the HUGE problems that the UAW created (or at least instigated) which is the enormous healthcare liability hanging over the big 3, but GM especially. GM has almost 5 retired workers (or dependents) for every 1 active employee.

So, combine the excessively high pay (relative to skill required) and the almost unparalleled benefit costs, and you have yourself a serious overhead problem, courtesy of the union. In the long-term, unions destroy businesses. Now, the UAW is looking to enroll Casino workers, because they are running out of autoworkers and car companies to ruin.

To your point, I think that if GM was ahead of the design curve they might be able to overcome the cost. But, all one need do is go the GM dealership an look around to see evidence of that not being the case.

 

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