The Myth of Auto Worker Wages

To Bailout or Not To Bailout.

That is the question of the moment for the U.S. automotive industry.

If you have been following this debate you have probably noticed the growing conservative storyline which is blaming the Big Three's workers for the companies' financial difficulties. Since this is coming from the Wingnut Right, it is of course untrue, and what it really is, is pretty blatant union bashing.

The myth being put forward is that U.S. auto workers make $73 an hour, where as the average hourly cost per worker is only $28.48.

Today while listening to Stephanie Miller, I heard someone explain that this is a lie, and that someone used hinky math to come up with the $73 figure, and now we have conservative talking heads parroting the figure over and over, with no clue how it was established. Based on what I had heard I did a quick Google Search and found a great explanation as to how and why the conservatives are lying.

What I found was an article by Jonathan Cohn who did a really good job explaining why these conservative talking points are a total lie.

Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research -- who was my primary source for the figures you are about to read -- average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income -- hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers. [...]

[T]hen what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits -- namely, health insurance and pensions -- and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages -- again, $24 per hour -- and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that -- probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees -- in other words, the cost of benefits for other people. [...]

Make no mistake: The argument over a proposed rescue package is complicated, in no small part because over the years both management and labor made some truly awful decisions while postponing the inevitable reckoning with economic reality. And even if the government does provide money, it's a tough call whether restructuring should proceed with or without a formal bankruptcy filing. Either way, yet more downsizing is inevitable.

But the next time you hear somebody say the unions have to make serious salary and benefit concessions, keep in mind that they already have -- enough to keep the companies competitive, if only they can survive this crisis.