Autoworkers and the $73 and hour myth (Updated: Michael Moore, Pat Buchanan and the Rick Berman ties)

the claim that workers are getting $70 an hour in compensation is just "not true."
The catch phrase that is used to make people hate unions

image by David Horsey- Seattle Post Intelligencer

The corporate war against unions and American workers in general has taken an awful turn, in 'if you repeat it people will believe it is true fashion' the stooges against us are creating more anti-union sentiment with making us think that only unionized autoworkers are making far too much money as opposed to the rest of us here in the U.S.

Alas their fear of the possible passage of the Employee Free Choice Act is making them slam the unions as hard as possible, getting catch phrases like "73 dollars an hour" to become a household phrase, but you my dear reader are much smarter than those who believe this to be true. Finally the numbers have been scrutinized and the sensationalistic numbers have been brought to our attention, the average union autoworker makes around $28 an hour as of 2007 and the new contract signed in early 2008 will limit the top wage of many non-core new hires to roughly $14 an hour with a lower degree of benefit costs also. That's a whole lot less than what a Toyota worker makes here in the US, but it was done to create American jobs.

The average UAW autoworker at the 'Big 3' makes roughly a little less than $60,000 a year and the average non-union autoworker in the U.S. makes roughly $52,000 and considering that most of the nonunion plants are in lower cost of living areas, I would say that both are quite competitive with one another. Basically no one is getting rich who is a general worker at any U.S. auto manufacturing plant. The anti-union forces along with the corporate right are spinning this to create more anti-union sentiment in our country. They fixate on a number that sounds outlandish and just keep repeating it until you say "greedy union worker", when in fact with the way the world is changing even the nonunion manufacturers here will be cutting back and need help eventually as it is very hard to compete globally when places such as Mexico have a minimum wage of $2 an hour, Bangladesh is only $0.06, and Vietnam is $64 an month.

So the choice is your, keep listening to their horseshit, keep hating your fellow American workers, keep letting them get away with outsourcing all of our industry or open your eyes and let them know that you know they are misinforming us. Remember "unions force jobs overseas" or at least that's what they want you to believe.

Yes these are bad times, really bad times, but don't take it out on the American workers, not the union ones or the nonunion ones, we are all hurting, don't let them get away with driving a bigger wedge between all of us, the collapse of GM, Ford and Chrysler will cost us 3 million U.S. jobs, add that to the 50,000+ Citibank workers, and all the others who have recently been laid off and you can see now we as the American working class need to rely on each other now more than ever.

Debunking the $73/hour Myth

Here's the scoop on the pay at the 'Big 3', from the pages of The New Republic
Why Are We Bailing Out Auto Workers Who Make $70 An Hour?
by Jonathan Cohn
Debunking the myth of the $70-per-hour autoworker.

If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers--in particular, the fact that the average hourly employee of the Big Three makes $70 per hour.

That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a forty-hour work week. Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers--many of whom make far less--finance a plan to bail them out?

Well, here's one reason: The figure is wildly misleading.

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.

More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

So the "wage gap," per se, has been a lot smaller than you've heard. And this is no accident. If the transplants paid their employees far less than what the Big Three pay their unionized workers, the United Auto Workers would have a much better shot of organizing the transplants' factories. Those factories remain non-unionized and management very much wants to keep it that way.

But then 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, $28 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. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."

Of course, the cost of benefits for those retirees--you may have heard people refer to them as "legacy costs"--do represent an extra cost burden that only the Big Three shoulder. And, yes, it makes it difficult for the Big Three to compete with foreign-owned automakers that don't have to pay the same costs. But don't forget why those costs are so high. While the transplants don't offer the same kind of benefits that the Big Three do, the main reason for their present cost advantage is that they just don't have many retirees.

The first foreign-owned plants didn't start up here until the 1980s; many of the existing ones came well after that. As of a year ago, Toyota's entire U.S. operation had less than 1,000 retirees. Compare that to a company like General Motors, which has been around for more than a century and which supports literally hundreds of thousands of former workers and spouses. As you might expect, many of these have the sorts of advanced medical problems you expect from people to develop in old age. And, it should go without saying, those conditions cost a ton of money to treat.

To be sure, we've known about these demographics for a while. Management and labor in Detroit should have figured out a solution it long ago. But while the Big Three were late in addressing this problem, they did address it eventually.

Notice how, in this article, I've constantly referred to 2007 figures? There's a good reason. In 2007, the Big Three signed a breakthrough contract with the United Auto Workers (UAW) designed, once and for all, to eliminate the compensation gap between domestic and foreign automakers in the U.S.

The agreement sought to do so, first, by creating a private trust for financing future retiree benefits--effectively removing that burden from the companies' books. The auto companies agreed to deposit start-up money in the fund; after that, however, it would be up to the unions to manage the money. And it was widely understood that, given the realities of investment returns and health care economics, over time retiree health benefits would likely become less generous.

In addition, management and labor agreed to change health benefits for all workers, active or retired, so that the coverage looked more like the policies most people have today, complete with co-payments and deductibles. The new UAW agreement also changed the salary structure, by creating a two-tiered wage system. Under this new arrangement, the salary scale for newly hired workers would be lower than the salary scale for existing workers.

One can debate the propriety and wisdom of these steps; two-tiered wage structures, in particular, raise various ethical concerns. But one thing is certain: It was a radical change that promised to make Detroit far more competitive. If carried out as planned, by 2010--the final year of this existing contract--total compensation for the average UAW worker would actually be less than total compensation for the average non-unionized worker at a transplant factory. The only problem is that it will be several years before these gains show up on the bottom line--years the industry probably won't have if it doesn't get financial assistance from the government.

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.

Jonathan Cohn is a senior editor at The New Republic.

My apologies to my readers for the lapse of writing on my behalf, I needed some time after the election to rest, work has been very satisfying also and I have been trying to have more free time with my family. Fear not I have a lot to say and a ton of ammunition on really bad shit happening against workers in today's America, I even have about 4 stories in the sandbox that need final editing to go forward and get published, but I need some time to focus and get the facts correct and intact.

More child labor in our backyard, more unscrupulous employers rejecting us in favor of undocumented workers with little or no rights and even a touch of good news, a story on more clothing made in the USA.

Update #1:
Michael Moore, Moore on the $73 Myth and the anti-union ties to it, just like I wrote and spoke about last Thursday at the NYC Central Labor Council meeting

Michael Moore on the arrogance of the Big 3
this is from CNN on Nov.19th.

It's more like $41 for the entire package
Another update on the myth from Media Matters (11/22/08), in a story entitled "Media figures falsely assert or suggest autoworkers make $70/hour without noting figure includes benefits paid to current retirees" (In part, entire article at link above):

In a November 18 post on his American Prospect blog criticizing Sorkin's reporting, economist Dean Baker wrote that the $70 figure Sorkin used is distorted by conflating "legacy" costs -- medical benefits and pensions paid to retirees -- with current labor costs:

The New York Times told readers that GM's autoworkers are paid $70 an hour (including health care and pension). This is not true. The base pay is about $28 an hour. If health care cost per worker average $12,000 per year, that adds in another $6 an hour. If the pension payment takes up 25 percent of base pay (an extremely high pension), that gets you another $7 an hour, bringing the total to $41 an hour. That's decent pay, but still a long way from $70 an hour.

How does the NYT get from $41 to $70? Well the trick is to add in GM's legacy costs, the pension and health care costs for retired workers. These legacy costs are a serious expense for GM, but this is not money being paid to current workers. The person on the line in 2008 is not benefiting from these legacy costs.

Rick Berman, the US Chamber Of Commerce and their agenda against the Employee Free Choice Act

I called this one last week, I spoke in front of my fellow New york City Central Labor delegates and noted that the $73 an hour myth was perpetrated by anti-union forces seeking to discredit unions. Here's the payoff, Rick Berman, the corporate lobbyist and spin doctoring lawyer, who's past efforts were defending animal torture by trying to make PETA look bad, defending cigarette companies, trying to lower the legal drinking age and higher the breath test levels for the alcohol companies and trying to defend the fish industry against claims of mercury levels that are dangerous. He is also the creator of The Center For Union Facts, a biased attack site against unions which is funded by McDonalds, Smithfield Pork and others who I cannot name due to court papers being locked.

One of Mr.Berman's front groups, the business-backed Employee Freedom Action Committee has been showing commercials which attack unions. Are we gonna let this corporate shill distort the facts? Here's the scoop from The Hill in a story by By Ian Swanson entitled "Business group blames unions for carmakers’ woes" (full story at link):
Unions are to blame for the Big Three automakers’ problems, according to a television ad meant to stoke public opposition to organized labor’s number one legislative priority.

“Steel, auto, airlines. What do these industries all have in common?” asks the ad sponsored by the business-backed Employee Freedom Action Committee, which was active in several hotly contested Senate races this year. “Hundreds of thousands of lost jobs and union bosses that helped put them out of business.”

The advertisement urges people to fight the Employee Free Choice Act, which unions hope will be taken up quickly by the Democratic Congress and President-elect Barack Obama. The bill would eliminate the requirement for workers to cast secret ballots in deciding whether to organize, making it easier to form unions.

Business groups are paying for the ad to run on CNN and the Fox cable news network Monday through Wednesday, according to the group’s spokesman, Tim Miller. He said the ad buy was “fairly substantial” but declined to specify a figure. A similar ad ran in Mississippi and New Hampshire in conjunction with Senate races in those states, where business groups worked to tie Democrats to the Employee Free Choice Act.

“If Americans like what the unions did to Detroit’s economy, they’ll love what the unions will do to the country,” said Richard Berman, the business group’s executive director.

“The unions have played a significant role in nearly bankrupting the Big Three automakers with untenable inefficiencies which have put tens of thousands out of work,” Bergman said. He said the union bill, known as “card-check legislation,” would do the same to millions of jobs across the country.

Alan Reuther, legislative director for the United Autoworkers, blasted the ad and Bergman’s comments. He said the auto industry’s problems rest on a series of bad trade and healthcare policies, and that the credit crunch is to blame for the current crisis.

Reuther also said major concessions offered by unions in their 2005 and 2007 contracts will result in the elimination of the cost-gap between union and non-union plants. “We feel that we’ve stepped up to the plate,” he said.

He also pointed to a 2007 report by two auto industry consulting firms that found nine of the 10 most-efficient auto plants in North America have workers organized by the United Autoworkers or the Canadian Autoworkers.
It's called Propaganda
"Propaganda should be popular, not intellectually pleasing. It is not the task of propaganda to discover intellectual truths."

You know who said that? Joseph Goebbels, Adolf Hitler's Propaganda Minister in Nazi Germany, he got the people to focus and hate other people, this cycle is repeated over and over throughout history, Goebbels also quips
“The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over”
We have seen this recently in the term "terrorism", which was used against President-Elect Barack Obama by Sarah Palin in a failing campaign.

Now these groups against workers want to use the manifestation of "greedy" union workers, those guys and gals who are making a whopping "$73 an hour", it's all propaganda and many of us are eating it up.

Even Pat Buchanan doesn't blame the autoworkers

from "PJB: Who Killed Detroit?" (11/21/08):
Who killed the U.S. auto industry?

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.
He continues (full article in link above):
It then clamped fuel efficiency standards on the entire U.S. car fleet.

Next, Washington imposed a corporate tax rate of 35 percent, raking off another 15 percent of autoworkers’ wages in Social Security payroll taxes

State governments imposed income and sales taxes, and local governments property taxes to subsidize services and schools.

The United Auto Workers struck repeatedly to win the highest wages and most generous benefits on earth — vacations, holidays, work breaks, health care, pensions — for workers and their families, and retirees.

Now there is nothing wrong with making U.S. plants the cleanest and safest on earth or having U.S. autoworkers the highest-paid wage earners.

That is the dream, what we all wanted for America.

And under the 14th Amendment, GM, Ford and Chrysler had to obey the same U.S. laws and pay at the same tax rates. Outside the United States, however, there was and is no equality of standards or taxes.

Thus when America was thrust into the Global Economy, GM and Ford had to compete with cars made overseas in factories in postwar Japan and Germany, then Korea, where health and safety standards were much lower, wages were a fraction of those paid U.S. workers, and taxes were and are often forgiven on exports to the United States.

All three nations built “export-driven” economies.

The Beetle and early Japanese imports were made in factories where wages were far beneath U.S. wages and working conditions would have gotten U.S. auto executives sent to prison.

The competition was manifestly unfair, like forcing Secretariat to carry 100 pounds in his saddlebags in the Derby.

Japan, China and South Korea do not believe in free trade as we understand it. To us, they are our “trading partners.” To them, the relationship is not like that of Evans & Novak or Fred Astaire and Ginger Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only want to defeat the Redskins. They do not want to put their franchise out of business and end the competition — as the Japanese did to our TV industry by dumping Sonys here until they killed it.

While we think the Global Economy is about what is best for the consumer, they think about what is best for the nation.

Like Alexander Hamilton, they understand that manufacturing is the key to national power. And they manipulate currencies, grant tax rebates to their exporters and thieve our technology to win. Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us.

That’s Asia’s idea of free trade.

How has this Global Economy profited or prospered America?

In the 1950s, we made all our own toys, clothes, shoes, bikes, furniture, motorcycles, cars, cameras, telephones, TVs, etc. You name it. We made it.

Are we better off now that these things are made by foreigners? Are we better off now that we have ceased to be self-sufficient? Are we better off now that the real wages of our workers and median income of our families no longer grow as they once did? Are we better off now that manufacturing, for the first time in U.S. history, employs fewer workers than government?

We no longer build commercial ships. We have but one airplane company, and it outsources. China produces our computers. And if GM goes Chapter 11, America will soon be out of the auto business.

Our politicians and pundits may not understand what is going on. Historians will have no problem explaining the decline and fall of the Americans.
Mr. Buchanan points towards over-government and unfair trade. I was happy to see his views, I'm so sick and tired of reading the propaganda that is today's mainstream, the likes of the US Chamber and Rick Berman who claim more unfair trade is a good thing for America make me sick. One commenter on the above article, Kurt2208, states:
Free trade agreements work fine with countries like Germany, England, japan and Canada which have close to the same standard of living. They do not work with third world and communist countries. As the traiter Dubya leaves office he is pushing another trade agreement with Columbia. I believe he should be tried and convicted of treason and shot!!!
Hope that last line doesn't get him in trouble. They might even call him a 'terrorist". We toss $700,000,000 billion on the banking industry that got us in this mess and when it comes to unionized workers the talking points start. Do you know what the US Chamber of Commerce and Mr.Berman had to say about the banking bailout? Nothing.

Now they blame the workers. Fucking amazing.

GM sent me an E-Mail on the crisis
I own a Chevy Impala
Despite what you may be hearing, we are not asking Congress for a bailout but rather a loan that will be repaid.

The U.S. economy is at a crossroads due to the worldwide credit crisis, and all Americans are feeling the effects of the worst economic downturn in 75 years. Despite our successful efforts to restructure, reduce costs and enhance liquidity, U.S. auto sales rely on access to credit, which is all but frozen through traditional channels.

The consequences of the domestic auto industry collapsing would far exceed the $25 billion loan needed to bridge the current crisis. According to a recent study by the Center for Automotive Research:

• One in 10 American jobs depends on U.S. automakers
• Nearly 3 million jobs are at immediate risk
• U.S. personal income could be reduced by $150 billion
• The tax revenue lost over 3 years would be more than $156 billion

Discussions are now underway in Washington, D.C., concerning loans to support U.S. carmakers. I am asking for your support in this vital effort by contacting your state representatives.

Please take a few minutes to go to www.gmfactsandfiction.com, where we have made it easy for you to contact your U.S. senators and representatives. Just click on the "I'm a Concerned American" link under the "Mobilize Now" section, and enter your name and ZIP code to send a personalized e-mail stating your support for the U.S. automotive industry.
Update #2♦:
Spotted a new blog by the autoworkers who are trapped in this mess, it's called Joe The Autoworker, go stop bye and show some support for our fellow American workers


Anonymous said...

I realize that the average union autoworker's salary of $60,000 is not considered big money in many circles, but it sure beats the $38,000 this 12th year high school teacher makes in Florida. Yes, it is true, I can leave at 3:00, but what you don't take into consideration is that I am in my classroom at 6:30 a.m., and when I leave at 3:00, after a day of multi-tasking and teen-ager back talk, I take another hour or two of work home with me. Even though I have a 37.5 hour work week, on paper, I work closer to 50 hours a week, and take classes every "free" summer so I can keep my certification up to date.
OK, so I shouldn't whine....I made the choice to teach, and most of the time, I care about what I do. I do, however find it hard to be too sympathetic about the auto industry's situation, and the unions, when autoworkers are making far more than either my husband or I am, and both of us are in demanding jobs that require education, training and responsibility, and entail hours of uncompensated overtime every week. Frankly, autoworkers have had it pretty good, and have come to believe that they are worth their disproportionatly high wages. It may be a shock to find that without the muscle of the unions, they would be making 10-20.00 and hour like the rest of us poor slobs!!!!

Joe638NYC said...

I find it terribly sad that you only make $38,000, maybe you should get a union there. I know that even the talk in certain places in Florida can get a person fired, I know I mentioned it to a nurse in hospital who stepped out for a break after 12 straight hours and decided to tell me. She quickly shut me up and said that she could be fired on the spot for talking about a union.

Teaching is a very difficult job, sometimes very thankless.

Unfortunately you didn't read the part above where new hires would only make $14 an hour. That is roughly $29,120 a year for 40 hours of hard labor each week, forever.

I'd rather be a teacher and get the holidays and summer off.

Old Leftist Curmudgeon said...

I certainly agree with you that a figure like $70 per hour for autoworkers' pay must be seen in the light of what it includes, and that $28/hr, if you disregard benefits, might be more accurate. Nearly any employer in the US will tell you that, when you add in benefits and so on, an employee costs the company about three times what the "salary" or "wage" is. Thus, $28 vs. $70 sounds about right to me.
Still, my sympathy for these workers, I'm afraid, can only go so far. If they make $60,000 annually, or $52,000 annually (in the non-union, "transplant" auto plants), that's more than I generally earned, in white-collar jobs, with 10 years of college! (And I see you got a comment from a poor teacher in FL who only makes $38K. That's criminal. I could tell her that teachers in Chicago make much more than that--but admittedly Chicago teachers having a union is probably a factor in what they earn.)
Another point is, Why must autoworkers get pensions and health-care benefits after they leave their jobs? Both of those benefits are rare (or have gotten rare) in the US. I recently left my job, retiring early at age 64; but if I had stayed until 65 I would not have received any health care benefits in retirement.
So, despite what you write, I feel that many unionized American workers have simply priced themselves out of the world market and that, plain and simple, is why manufacturing jobs have been outsourced and moved "offshore." Please see the posting "A Balanced View of Unions" on my blog, www.mourningdovehill.blogspot.com

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