Autoworkers get $75/hr?

[Midpack]

I heard this from a Congressman on CNN this morning and I just couldn't believe it. And then I found this online this evening. I'm sorry, but if any autoworkers are really getting $78/hr even including benefits, they need to go bankrupt. Why would taxpayers bailout workers making $162K/yr for factory work? What am I missing?

"I've got a saw-mill worker in my district who's making $15 an hour,'' Representative Spencer Bachus, an Alabama Republican, said during a House committee hearing today, according to a transcript. "And we're taking his money, and we're paying it to a company that's paying $75 an hour.''
The criticism comes a year after the union agreed to lower pay and end pensions for new hires at GM, Ford and Chrysler.
Under the contracts, hourly pay and benefits for new hires were cut to about $26 from about $78. The 2007 accords also call for creating a union-managed trust that will take over responsibility for retiree health care obligations starting in 2010.

Bloomberg.com: Worldwide

[aaronc879]

I have mixed feelings about this. On one side it's good to see skilled, experienced, factory workers getting paid an income comparable to their white collar co-workers as they deserve. However, in a company like this, it seems everyone whether blue or white collar is over paid and it's simply unsustainable.

[Yankees Rule]

I love listening to all who say let them all go belly up. No bailouts. Zippo. I say do not be so happy with that possibility. If GM Ford and so many other companies go out of business, do you know how to say Depression??

[Texarkandy]

Yup,the republicans are gonna buck Pelosi & her bunch on this one - they might not stop it but they're gonna make some political hay out of it. And I fully support Senator Shelby's statement as follows:

``The financial situation facing the Big Three is not a national problem, but their problem,'' Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said in a statement. ``I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes.''

Bloomberg.com: Worldwide

[. . . Yrs to Go]

Originally Posted by Midpack

Why would taxpayers bailout workers making $162K/yr for factory work? What am I missing?

You must not have noticed that we just gave complete control of the federal government to the party that gets substantial backing from the labor unions.

[. . . Yrs to Go]

Originally Posted by aaronc879

I have mixed feelings about this. On one side it's good to see skilled, experienced, factory workers getting paid an income comparable to their white collar co-workers as they deserve.

The counter argument is that if the workers were producing enough value to support their wages the company wouldn't need a bailout.

[. . . Yrs to Go]

Originally Posted by Yankees Rule

I love listening to all who say let them all go belly up. No bailouts. Zippo. I say do not be so happy with that possibility. If GM Ford and so many other companies go out of business, do you know how to say Depression??

I'm not happy about it. But more money isn't going to fix the fundamental problem that expenses are too high relative to revenues.

I also don't think the economy has systemic exposure to the auto makers the way it does to the banks. If the banks go down, nothing in the economy works. And banks can't function in bankruptcy (see Lehman). There is no Chapter 11 for financial institutions, it's lights out. The autos, however, will continue to make cars even after they file. They will still need workers to make those cars and dealers to sell the cars. Not as many as they used to have, and not at the same price, but that is something that needs to happen . . . eventually.

[DallasGuy]

I think the auto companies should declare Chapter 11 bankruptcy when the time comes, much like many of the airlines have already done, so they can restructure contracts with the unions, etc. and can lower their expenses to better compete with foreign auto companies. It will be unfortunate if you're an auto company worker but if the American auto companies continue to lose money I see no other way out of it other than lowering expenses or raising sales. Since raising sales isn't a good option at this point, lowering expenses is the only way out assuming the government won't be bailing them out.

[Frugality_of_Apathy]

We're well on our way to start bailing out businesses too small to fail?

[dex]

How you account define an hour of work can be very high when all costs are considered - especially from a cost accounting point of view.

It isn't the total salary and benefits divide by annual hours.

It is most likely closer to:
base salary
+benefits
+admin costs
+ Average Overtime
+ (possibly) overhead cost

Divided by
Total average hours worked
Includes overtime
less vacation time
Less sick time
Less training time
Less other non productive time.

Costs for those retired are excluded from the hourly wage but should be considered somewhere.
++++++

The problem is the same with all labor costs and competition be it a tee shirt or a car. Why buy a US car when you can buy a product of equal quality from China or Korea at a lower price? Again, look at the steel industry in the 80s. Is anyone saying we should put money into the US steel industry now? The auto industry is an example of what can happen when you postpone the inevitable - pain for many. The auto industry didn't address their problems in the past; (similar to the US government) so we have greater pain now than if it was addressed in the past.

[Yankees Rule]

Why have the american auto companies not been able to build a 4 door sedan like the honda accord or the toyota camry

Incompetence?

[REWahoo]

There appears to be a question of just how much UAW workers get paid. From a Time article: "Is General Motors Worth Saving?"

The carrot for GM is that any new workers it hires in the U.S. will make $13 to $14 an hour and collect limited benefits rather than work for $29 an hour and get full benefits — the old UAW wage.

Could current UAW benefits actually be worth $46/hr? ($75 - $29 = $46) That seems beyond reasonable to me, but after decades of contract negotiations anything is possible.

[armor99]

Originally Posted by aaronc879

I have mixed feelings about this. On one side it's good to see skilled, experienced, factory workers getting paid an income comparable to their white collar co-workers as they deserve.

I find that statement humorous. A worker does not DESERVE any particular salary. They only deserve the best salary that they can negotiate with their employer. How much does your employer think you are worth? Are your skills needed and in short supply? How sharp are your sills compared with others in your organization? These are the sorts of things that determine your salary. Oh wait... I forgot... we are talking about a union here... where you do not get to negotiate your own salary... you have given up you right to do that over to someone else. Well... you deserve what you get then....

[dex]

Originally Posted by aaronc879

I have mixed feelings about this. On one side it's good to see skilled, experienced, factory workers getting paid an income comparable to their white collar co-workers as they deserve.

There are very few skilled workers on an assembly line - if any. The whole idea of an assembly line is that the worker is like the exchangeable parts of the automobile.

[Texas Proud]

Originally Posted by dex

There are very few skilled workers on an assembly line - if any. The whole idea of an assembly line is that the worker is like the exchangeable parts of the automobile.

thanks for stating somethnig people don't understand...

Remember back in the early 70s when the auto industry was in trouble from the invading Japanese cars Well, a LOT of 'skilled' workers came down south to find work... some were welders which we needed... but guess what, they all wanted $25/hr (back then we paid $7 or $8) BUT DID NOT KNOW HOW TO WELD... they had a machine that did the work and they pressed a button...


To ME, the auto industry is saying... 'we sell small cars at a loss, we sell SUVs at a gain... so we want to get a bail out so we can ramp up our volume of small cars'...

[Independent]

I think dex is correct. Here is the UAW take on this:

How much are current UAW auto industry wages?
In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour of straight-time labor. A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor. Between 2003 and 2006, the wages of a typical UAW assembler have grown at about the same rate as wages in the private sector as a whole – roughly 9 percent. Part of that growth is due to cost-of-living adjustments that have helped prevent inflation from eroding the purchasing power of workers’ wages.

Why is the figure cited as hourly labor costs by the companies so much higher than the wage rates?
In addition to regular hourly pay, the labor cost figures cited by the companies include other expenses associated with having a person on payroll. This includes overtime, shift premiums and the costs of negotiated benefits such as holidays, vacations, health care, pensions and education and training. It also includes statutory costs, which employers are required to pay by law, such as federal contributions for Social Security and Medicare, and state payments to workers’ compensation and unemployment insurance funds. The highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll.

Wages and labor costs - UAW Bargaining 2007

We all know that "benefits" can make labor costs noticeably higher than straight wages, but the ratio seems amazing for auto workers. I expect that the companies are including health care for retirees (which is a negotiated benefit in the union contract) as part of their total labor costs. So how many retirees are there?

Number of active workers:.. 181,000
Number of retired workers:.. 420,000
Number of surviving spouses: 121,000

So for each active worker, the company is probably picking up the medical costs for 2-3 "older" people, not all of whom are old enough to qualify for Medicare.

From other sources, I've read that the most recent contract gives GM the ability to "buy out" current UAW members and replace them with much cheaper new workers. GM is also getting out of some of the medical costs. Overall, Toyota had a $30 per hour advantage in total compensation costs. The new contract cut this in half. The "final assembly" process at auto plants uses 20-30 labor hours per car.

Those are the facts. My opinion is that $27.81 ( $57,800 with no overtime) is a very high salary for unskilled work.

[unclemick]

I suspect if one ran a business version of: The Red Bead Experiment on the auto boys - the $75/hr would be only one element of the problem.

heh heh heh - makes a great flash point though.

[youbet]

Originally Posted by Independent

I think dex is correct. Here is the UAW take on this:

Those are the facts. My opinion is that $27.81 ( $57,800 with no overtime) is a very high salary for unskilled work.

Thanks for doing the research Independent. $27.81 plus a comprehensive benefit package is indeed pretty nice pay for unskilled work, or any work for that matter......

Unions have served an important and positive role in our society/economy IMO. I've been a member and a manager at organized plants and have seen the good and the bad.

At the final job I held at an organized facility, the union (USW) had, IMO, moved from benefitting members to threatening their jobs. Since they were a small local (for USW), their pay and benefits coat-tailed onto contracts won by larger locals (usually the mills in NE Indiana) and they only negotiated local issues. This gave them way, way too much time to fuss over work rules and other issues unique to our operation.

For example, they managed to negotiate the make-up of crews brought in to do maintenance on Saturdays. If I brought in a couple of millrights, a machine operator and machinist on Saturday to do a repair, I also had to bring in a janitor to clean up afterwards. There might only be 20 - 30 mins of sweeping to do around the equipment we were working on, but no one other than the janitor could do it. Minimum hours worked had been negotiated at 4. We'd be in from 7:00 AM to 3:30 PM (8 hours with two paid 15 min breaks and one unpaid 30 min lunch) and the janitor would come in from 11:30 AM to 3:30 PM (4 hours with one paid 15 min break) and just "hang around" until the end and sweep up.......

In the end, they went out on strike because the owners put some demands on the table that would have weakened this local's ties to the large locals at the nearby mills. It was a bitter strike and after a few months, the owners threw in the towel and announced they were shutting down. I got to stay on for almost a year disassembling the plant along with several other supervisors. That was a great year as I learned a number of trade skills and got myself in great shape!

A month or so after the announcement of the plant closure, the union members were allowed in, a few at a time, to empty their lockers. It was really sad. One of my pressmen (I was the litho sup) sat on a bench in front of his locker, face in his hands, weeping for at least ten minutes........ He had worked at this plant since graduating from high school moving up from machine operator to apprenctice to journeyman pressman. He lived in the neighborhood and was married with a couple of kids. Life changed forever for that family.......

I moved on to a job in a traditionally non-unioned industry (electronics/telecommunications) and things worked out OK. There were ocassional warnings that the IBEW was going to try to organize the place, but management shut down domestic manufacturing and moved it, primarily to Asia, before that could happen. I got to spend my final 3+ yrs with that company flying back and forth assisting with the transition.

I'm afraid the Big Three are going to have to go through some sweeping changes which will be akin to what the steel mills went through....... All the big plants in the rust belt will be gone. Non-union competitors manufacturing in the south and offshore will eventually flourish as they fill in the void. Union freindly organization rules and tarrifs on auto-related imports by the Obama administration will allow unions to get a foot in the door at US locations of Honda/Toyota etc. and their suppliers, and the cycle will start again.....

Anyway, that's what I think will happen and I'd be glad to wager a friendly pint with anyone who forcasts another scenario.

[Midpack]

Why on earth should taxpayers go further in debt to bailout big three workers who make far more in wages and benefits than most taxpayers? Autoworkers have benefits most of us lost 10-20 years ago, but we're obligated to help maintain their benefits with our tax dollars? A bailout won't fix the underlying financial/management problems with the automakers, it just forestalls the 'sweeping changes' that are needed. We already threw $25 Billion at the problem, how long did it take to burn that up, a few months? There is blame to go around, but if the automakers aren't primarily to blame for their predicament, why don't we see Toyota and Honda looking for a bailout? I manage one of the highest paying employees in my area (near Chicago) and my guys average less than $40/hr with benefits and everything - they should help bail out people making products few people want while getting paid $73.20/hr?

The chart below shows average hourly compensation for the Big Three ($73.20) and Toyota ($48.00), compared to average hourly compensation for Management and Professional Workers ($47.57), Manufacturing/Goods Producing ($31.59) and all workers ($28.48).

Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM, Ford and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?

Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda and Volkswagen take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution. Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor? - Seeking Alpha

[youbet]