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UAW Workers Really Do Cost the Big Three $70 an Hour

By: Robert Bluey (Diary)  |  December 9th, 2008 at 09:30 AM  | 

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Big Three Labor Costs

The liberal watchdog Media Matters for America is on a crusade to disprove the so-called “myth” that United Auto Workers employees cost the Big Three automakers more than $70 per hour. In a lengthy article over the weekend, Media Matters cites statements from General Motors to supposedly disprove this “falsehood.” There’s just one problem with Media Matters’ work — it’s all spin.

Last month my colleague James Sherk produced a Heritage Foundation study revealing, “The typical UAW worker at the Big Three earned between $71 and $76 an hour in 2006. This amount is triple the earnings of the typical worker in the private sector and $25 to $30 an hour more than American workers at Japanese auto plants.” (I wrote about it on RedState.)

The report came under attack from the UAW and its liberal allies. Yesterday, in the face of criticism, Sherk stood by his work. Turns out a couple years ago GM, which is now rebutting the figures, reported this: “The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked.”

The left argues the $70-an-hour figure includes benefits to retirees, but the Big Three’s own financial statements dispute that assertion. In the case of GM, the company acknowledges it accounts for retiree benefits when workers earn the benefits, not years later. When GM’s $73.26 is broken down, it pays $39.68 an hour in wages and overtime, and the remaining $33.58 in benefits to current employees (including health costs and future pension payments).

Why does this matter? If the automakers file for bankruptcy, a judge could order UAW contracts to be renegotiated to be more competitive. That’s the last concession the UAW wants to make — and why it’s so important for the left to spin these numbers to look less outrageous.

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  • rbatemanmi

    It’s good to see people “challenging” the numbers put out in attempts to claim victory on both sides of this issue. However, I must point out that Heritage Foundations numbers are a little misleading.

    The Heritage Foundation claims the average worker makes $25.36 per hour while the average Auto Industry worker makes from $70 to $75 per hour.

    However, if you look deeper into the numbers, you see that the auto industry says they paid the average hourly worker from about $30 to about $39 per hour. The Heritage Foundation report also cites $33 per hour being paid in Benefits (health care, dental, vision, etc.)

    Where I object to the graph in the article is, no “benefits” are listed for the “average” worker! This makes it “appear” the auto industry is making 3 times more than the average worker.

    But that’s simply not true!!!! At least it’s not true unless you “assume” NO ONE in the private sector receives health care, dental, optical, or ANY OTHER benefits!

    From talking to HR professionals, the average “health care” benefit is 100% of an employees salary (at least for their planning purposes it is…) If this “average” is true, then the AVERAGE worker in America makes $25.36 per hour but COSTS their employer $50.72. That narrows the cost gap significantly.

    The other item I object to is comparing “skilled” worker pay against an “average”… How can we compare an electricians pay at GM with someone who slings burgers at a fast food joint? We can’t! But that’s EXACTLY what’s happening when you compare skilled workers with everyone else.

    Comeon folks! This class warfare crap is the most idiotic form of “hate” there is! And it plays directly into the hands of the Democrats – the biggest class warfare mongers there are!

    I’m not a member of the UAW, and truly despise all Unions… But I AM a skilled trades worker – and I object to having my salary compared against a national “average”…

    Instead of playing the class warfare fright card, why don’t “we” simply do everything “we” can to earn more?!?!?! To get a better paying job! Or, better yet, instead of complaining, start a business and “see” first hand exactly how much it costs to provide all of the “benefits” and other “perks” employees want these days.

    And lastly, can someone PLEASE disclose exactly how much the “southern” states have given away in “tax breaks”, land give-aways, and other “perks” they used to attract all of the “foreign” auto makers to their states? If we’re gonna point at how much a UAW laborer “costs”, it’s only fair we include the State Tax money and other “give aways” the foreign auto makers got into the pay of those employees.

    • mikefisk

      …yes, the foreign manufacturers received incentives to build plants where they are… the Big Three already have their plants. Tax breaks are fair game to include, but it’s not like the Big Three don’t get anything like that, either.

    • KyleH

      How is pointing out that unions have overpriced their labors as class warfare? Union members do not compete under the same rules that every other workers do. The unions get special laws and deals that are supported by federal and state governments, especially in union states like Michigan. While not entirely to blame, unions and the laws that prop them up do bear a large part of the responsibility for U.S. automakers. It is ridiculous to bail out these industries without address a major problem like this.

  • Achance

    For unionized workers in high-cost states, “loaded” wages, including all benefits and employer contributions runs about 130 – 140% of wages.

    That said, I have said since I first saw it a week or two ago that I believe the “all private sector” figure is too low or is wages alone, not loaded wages.

    Only a genuine liberal would consider a tax not charged to be a cost however.

  • KyleH

    I am a salaried professional employed by a very generous organization. My own benefits are about 25% of my pay. The two biggest contributions are health care and retirement. Health care is on the high end because it covers both my wife and my two children. My employer matches two dollars for every dollar I contribute to my 401k (up to a certain limit).

    I have friends in the auto industry who have told me about their generous benefits, but I am surprised that they are getting benefits that run about 130%, let alone 100%, of wages, especially at the salaries that are reported.

  • Finrod

    I’d include this image in here directly, but since the language violates posting rules (fair warning, fyi), I’m putting a link to it here instead.