Epiphanyblog

All about ideas…

Actual UAW wages

with one comment

According to an article by David Leonhardt, published in the New York Times on December 9, 2008, the salaries and benefits for UAW workers is much less than has been reported:

The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.” It includes wages, overtime and vacation pay, and comes to about $40 an hour.

The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so.

Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.

However, the UAW on their website states salaries and benefits as much lower:

Wages for UAW members at Chrysler, Ford and GM range from about $14 an hour for newly hired workers to $28 an hour for assemblers to $33 for skilled trades workers.

Typical hourly wages at Honda, Nissan and Toyota are only slightly lower. Due to the effect of profit-sharing formulas, however, there have been some recent years in which a typical Toyota worker has taken home a larger annual paycheck than a typical GM worker.

In addition, overall labor costs at Ford, GM and Chrysler were dramatically lowered by mid-contract changes in 2005 and the 2007 UAW labor agreement. As a result of major changes in retiree health care, lower wages for newly hired workers, and other contract concessions, the labor cost gap between domestic and foreign nameplate producers will be nearly or completely eliminated. One independent analyst has projected that GM could soon have lower labor costs than Toyota. (Detroit Free Press, Jan. 13, 2008)

Only current legacy costs of retirees have pushed the Big 3 to purported $70/hr. As David Leonhardt wrote in his article,

These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix — dividing those costs by the total hours of the current work force, to get a figure of $15 or so — and end up at roughly $70 an hour.

The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.

Advertisements

Written by Valerie Curl

December 13, 2008 at 4:54 AM

One Response

Subscribe to comments with RSS.

  1. I am doing research in an on-going debate I have with my very conservative brother-in-law, and I found your blog and its sources very helpful. Thanks for consolidating all
    the work for me!

    Angela

    January 4, 2009 at 7:28 PM


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: