New York Times Still Pushing $70-an-hour Autoworker Myth
Like a zombie that can't be killed, the $70-an-hour autoworker lie is alive and well, roaming the media landscape -- and still being peddled by The New York Times in Monday's edition.
As Media Matters and other critics reported last week, it's a conservative myth concocted by totaling all wages, plus health and benefit costs to current workers and 450,000 retirees and their families -- and then deceptively dividing that huge total payout by the number of current UAW workers, about 140,000 in Detroit.
Here's what the Times said today in an article about the autoworkers considering concessions:
Some critics have taken aim at the automakers' hourly labor costs, which average more than $70 for senior workers, including wages and the value of benefits like pensions and health care.
Those costs run closer to $46 an hour at nonunion plants like Toyota's factory in Georgetown, Ky., and are even less at newer plants farther South, where foreign automakers have pegged wages closer to local rates.
In fact, as I and others previously reported, The Big Three true labor costs are on the way to matching those offered by non-union Japanese plants in the U.S.
It bears repeating what Media Matters' Eric Boehlert said on the political uses of this myth:
As Rep. Barney Frank (D-MA) pointed out during congressional hearings last week, "There is apparently a cultural condition that's more ready to accept aid to a white-collar industry than the blue-collar industry, and that has to be confronted."
That cultural condition seems to extend to, and be embraced by, today's white-collar press corps.Make no mistake: The $70-an-hour claim represents a classic case of conservative misinformation. It's also a very dangerous one. The falsehood about autoworkers is being spread at a crucial time, when a make-or-break public debate is taking place, a debate that could affect millions of American workers.
What will it take for the mainstream media to accurately report on the actual labor costs in Detroit while Congress is considering whether to give the Big Three a bailout?
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No, the highest senior salaries are more like $500 a hour, when you include top executive salaries.
The CEO's are all above $1500/hr!
You don't know what you are talking about, my attorney makes $500 and hour, $400 if he is in a nice mood. When I paint a painting for my gallery, I can pull $400 an hour. The CEO of these companies make thousands, that $1000.00's
Even just the straight dollar compensation not counting stock options or benefits works out with the CEOs making in excess of $1600/hr!
If you include the costs of past employee benefits in current employee costs you are double-counting.
One way to look at it is this: If I fire a UAW today, what costs will go away? Only the costs of his/her hourly wages and that particular employee's benefits earned today. The past benefit costs will not go away.
That is the problem that the auto companies are facing. They can downsize all they want but it will not change the past benefit obligations. They will have to find some other way to do that.
It is certainly fair to argue that the benefits that employees currently earn today are too high relative to what the rest of us receive. But, it is incorrect from a decision making standpoint to include past benefit costs in current employee labor costs.
There benefits are not to high. Their union bargained for these benefits and received them. If you want better benefits and wages than unionize. The union' s nor any other worker is obligated to be paid wages/salaries and benefits that you receive or any non-unionized worker receives.
This is an attitude that says let's bring everybody down to my economic level.
If the benefits the employees are receiving put the companies they work for at such an economic disadvantage to their competition that they can't make a profit and must go out of business then, by definition, the employee benefits are too high to sustain the business.
Actually, the CORRECT comparison would be to say that the rest of us don't are receiving benefits at TOO LOW a level. The fact of the matter is that there was a good faith contract made between the employer and the employees, and we should ALL be trying for the same thing!
Labor cost are 70 per hour. Those retired workers are part of the labor cost, so including them (because they are still being paid for the LABOR they performed is still labor costs. It doesn't matter what you call it, it still costs 70 per hour for LABOR. I don't get the kind of benefits that UAW get, I work well over 60 hours a week, pay my own health and pay retail for my car and I have to think for 46 of the 60 hours. Screw you and your benefits PEOPLE are loosing their jobs, bailing out the big three won't stop layoffs! 70 dollars an hour is accurate and bullshit.
That's not a labor cost anymore than the electricity to keep the lights on in the factory is a labor cost. It may be essential to the manufacture (in the case of the electricity) or contractually obligated (in the case of the pension and medical for the retirees) but it's STILL not a labor cost!
The ONLY costs that you can count as a labor cost is anything that is DIRECTLY related to the actual current labor force! You can count their wages, the payroll taxes that the employer must pay, the unemployment insurance payments that the employer must pay, and any benefits that the employer either chooses to pay or is contracually obligated to pay for the CURRENT workforce!
Well said.
I disagree. The retired workers should be included in labor costs. The obligation made to pay them for retirement is an added cost to a vehicle, pure & simple. It is probably the biggest reason the 'Big 3" are in the red. Basic economics: A company can't be profitble while paying out to non productive employees. I have family members & friends who are retired auto workers. They have not built a car in 10-15 years, but make wages & benefits that exceed people working every day. Ordinary American families look at this & are shocked. As I said, if you are fortunate enough to work for the union then all of this seems disrespectful, but for the vast majority of Americans they say enough!
As far as the electricity; you'd better believe that is a part of labor costs. Think about it, if no labor is being performed then how much electricity is being used? Whereas if labor is being performed look how much is being used. That is like when a family is at home there is electricity being used that would not be used if they were not home.
Another thing, the $ American families pay for these over priced cars hurt the economy in opportunity costs. Just think of the other goods/services in America that is hurt because people have to spend so much on cars. Americans are tired of it, just like they're tired of the tycoons CEO's getting all the breaks. It is time
Let's see, a few hundred Wall Street Screw Ups @ $100,000,0
I say don't bail out either of them.
Like it or not, the American auto worker has become the icon for American excess (along with the CEO & bankers). A fair wage for someone working in an auto plant is $30k to $40k per year. These workers have been over paid with high wages, huge benefits & pensions that the industry can no longer afford. In the 1950's thru the 1970's these ideals were fine. But, the world has changed. How many industries have retirement packages like the auto industry? These types of jobs/wages/benefits can not survive in today's world, pure & simple. The real problem here? These auto workers expect ordinary people making ordinary wages to go out, spend their hard earned $ on these over priced cars just so the auto workers can keep their jobs & pensions. Well, the American people have had enough! Too many families are stressed due to these ridiculous car payments. yet, if they choose not to buy one of these vehicles they are considered "un-patriotic" etc. It is ridiculous! Unions are fine......
The mean pay for a worker in the USA is around $40,000 yr. The average for an upper tier employee at an American auto manufacturer is $58,000. The average for a LOWER tier worker is less than $30,000! Considering that most of the upper tier workforce in Detroit is within less than a decade of retiring, I would HARDLY call that a problem!
In fact, I would call it a MUCH bigger problem that the CEOs of the big 3 are making more than $1600 PER HOUR!!! I don't make that much (net) in a PAYCHECK of every two weeks!
Are you saying Detroit does not have a problem? We can just take away the CEO pay & everything is fixed? So, no bail out needed after the CEO's work for $1?????
I don't see that as being deceptive, as long as the retiree cost isn't then added to the conversation later.
That is how we did it in econ class at college in the early 90's. Take the total labor cost and divide by hours worked.
How would you like them to figure hourly labor cost?
I would ask them to ONLY consider actual LABOR costs and then divide that by total hours worked. Costs for a previous generation of workers are NOT labor costs. They are equivalent to the still high fuel costs that many airlines are paying, since they sign contracts obligating them to a specific cost for fuel for several years. This allows them to plan more accurately what the costs will be from month to month, but if the price drops for CURRENT fuel and they still have a CONTRACT price far above that, they are stuck with the higher price!
Obviously you didn't learn cost accounting in your econ class. Cost accounting is accounting not economics.
Employee benefits and annual pension costs are part of the operating expenses. You're treading dangerous ground when you're implying that to reduce overall operating costs and benefits that you throw the retirees under the bus.
It doesn't matter what they get paid. If the company doesn't make money, it doesn't matter if they make $1/hour or $100000/hour; either way they have to take a cut and/or layoffs.
So, why are we bailing out $200/hour bankers?
And $15,000/hr bankers!
Of course we're bailing out the banks, not the bankers. Not good either way.
You ask,...
"What will it take for the mainstream media to accurately report on the actual labor costs in Detroit while Congress is considering whether to give the Big Three a bailout?"
It will take the mainstream media being held to a level of journalistic integrity that has been missing since at least shortly after the Watergate investigations. The level of idiocy that we Americans have allowed ourselves to be manipulated by is - frankly - astounding to me. We really do need to restore the fairness doctrine, and give the FCC the independence and will to hold the wingnuts (of both thte minority Left, and the overwhelming Right) accountable for their falsehoods.
Until that point - the Right-wing pundits, bloviators, ditto-heads, and corporate toadies will continue to rule the day.
Well said doc.
Exactly! We don't get facts anymore - all we get is spin. As you can tell by the comments here there are so many ways to calculate labor costs that just publishing a number doesn't tell you anything. It never did.
The number needs to be accompanied by an explanation of what's included in it.
Union busting is all I have to say.......
The Corporate lobbyists have been running the show on Capitol Hill,andThe Dept of Labor has never met a union it DIDN'T like,under Elaine Chao. I have not seen ANY effort at accountabilty for overblown CEO pay,pension,and bonus,nor a new business plan requested when awarding $700 bn with no questions asked to the WallStreet Casino Capitalists. This criteria for automakers,as opposed to a blank check for WallStreet is the last gasp of the dying GOP ,an UNfond adieu to the unions ,before exiting stage left at the White House.
Your VERY FIRST link is to The New Republic, which states, "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."
The employees aren't getting PAID $70 per hour, $70 is the COST to the company! Econ101 folks.
Badbone is adept at selective quotation that distorts the entire meaning and point of Cohn's column, and all the other articles and data quoted in my column. I hope he'll be able to find work in a future Palin presidential campaign or with Fox News, given his talent.
His statement ignores a) the ironic use by Cohn of the word "Voila" to lampoon such simplistic analysis swallowed by right-wingers and b) the following paragraphs after Cohn said, "...benefi
"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.
EXACTLY!!!! I've got one of the better benefit packages around, and I'm making almost exactly what an UPPER TIER UAW worker makes. When I look at everything that is paid into my benefits (both by me and by my employer) it comes out to be around $15/hr. However, that figure includes the amount that BOTH my employer and I pay for my health insurance, life insurance, dental insurance, vision insurance, pension, 401(k), AND what my employer pays for Social Security and Medicare. While I think that the UAW has a better deal on the HEALTH insurance (including medical, dental, and maybe vision) than my union got for me, everything else is likely to be similar! Even if we assume that the UAW got enough of a better deal to DOUBLE my figures, you're STILL only looking at $30/hr, which is not $42!!!
These benfits include benefits for retirees. The active employees are not being paid $70/hr and the individual benefits are too high. Besides the employees are not paid directly their benefit amounts; therefore, they live only on the net wages they see in their paychecks, which comes to about $918 net/wk. That's only about $47,736 a year in take home wages. Not much to raise a family on today.
You can decrease the active workers' net pay by increasing their personal costs to all their benefits as well as have retirees contribute more of their fixed income to their benefits. How impoverished do you want the average worker to get? Why do you have so little respect for the hard working blue collar worker? Do you hate union that much or you want to drag everyone down to your level?
My father supported a family of 7 kids with a factory job and a stay at home Mom throught the and 70's befotre he retired. He never made more than $20,000/yr. He couldn't do it today.
You need to take a course on cost accounting!!
I am so tired of the media reporting on information that it does not understand. it gets repeated and repeated until it is taken as fact. I am also saddened by the fact that liberal media is part of this and does not do its homework.
As I have stated before, these costs of the pensions to retirees are an administrative cost, not a cost of current employees. Yes, it impacts the cost of vehicles, but it not related to the actual cost of employing current auto workers.
Why are we so outraged by the CEOs taking private jets but are not outraged by the cost of their past decisions? This is their cost which should be added to their current compensation, not the cost of current workers.
What if the media talked about the compensation of auto execs in terms of the cost of their compensation and past employee benefit decisions? Then we would have a clearer picture of the cost of automobiles.
I should also point out that I would fail any student of mine that made such a ridiculous allocation error.
Perhaps, the media should be treated to a short course in accounting.
EXACTLY! It makes as much sense as the Big 3 counting the cost of electricity in the plants as a LABOR cost, since it's essential to the labor performing their duties! BUT IT'S STILL NOT A LABOR COST!
Corporate Greed Knows No Bounds. Even if it were true which it isn't, it still doesn't compare to Lawyers, Doctors, Political Shills, TV Reporters. Celebrities. Corporate America has been trying to F---with the American Worker since Idiot Boy Ronald Regan Broke Patco. I am a union member in The Grocery business, and that also has an Urban Legend Status, that Grocery workers make bundles of money. There are so many rooms in Hell for all the lies told by corporate shills, including the not so liberal New York Times. If only they would be forced into the shoes of working people. I'd like to throttle these creeps. How do you spell Creepy?: WALL STREET BAILOUT
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