U of M Economics professor tackles tough question of UAW wages
UPDATE: Link to source finally added. Our bad.
A tip sent us to the blog of Dr. Mark J. Perry, professor of economics and finance at the University of Michigan, who points out that hourly union workers at the Big 3 make on average 57.6% more in a year than a university professor with a Ph.D. Using figures from the automakers themselves, Dr. Perry tells us that a union worker at Ford makes $141,020/year including wages and benefits. A worker at General Motors makes $146,520/year and one at Chrysler earns $151,720/year. According to another report he cites, the average annual salary for a college professor in 2006 was $92,973, which happens to be close to the $96,000/year a Honda, Nissan or Toyota worker makes in the U.S.
Why trot out all these numbers? It's clear that upcoming negotiations between the Big 3 and UAW will likely yield concessions in both wages and healthcare costs. They have to if the U.S. auto industry is to survive. Dr. Perry references those who say the concessions must be "transformational", and to illustrate what that means, he suggests that Union workers would have to accept a wage equal to that of a college professor with a Ph.D.
We get that union auto workers are overpaid, we really do. Dr. Perry, however, seems to imply that there's something inherently wrong with a Ph.D professor making less than a high-school educated auto worker. The wage of a union auto worker, however, should come down because it's artificially high, not because the social order of education dictates that those with Ph.Ds should earn more than those who only finished high school. But hey, maybe we're being too sensitive.
[Source: Carpe Diem]
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Reader Comments (Page 1 of 5)
Who is John Gault? 12:30PM (11/21/2008)
Dr. Mark J. Perry, professor of economics and finance at the University of Michigan doesn’t know much about economics or at least uses flawed numbers. The numbers are very misleading (number is wages and benefits such as healthcare) and not reflective of the autoworkers wages! The average UAW auto worker makes around $29 an hour and would have to work tremendous overtime to earn $150k. I know several Professors w/ PhDs and I would suggest that they don’t work anywhere near the number of hours (much less than 40hrs) of the UAW worker! Let’s also compare apples to apples and include the benefits in the wages of the Professor and see what the wage disparity really is! Besides I know public school teachers making near $100k not including benefits!
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Seminole 4:39PM (7/13/2007)
$151,000!!! Why am I studying to be an accountant? I'm gonna drop out an go work for Chrysler. Sheeez.
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l.i.dave 5:13PM (7/13/2007)
Yeah because only educated people work hard.
Seminole 5:59PM (7/13/2007)
Good job assuming I was saying autoworkers don't work hard, idiot.
I merely was saying that I'm in one of the hardest majors right now to get a good paying job after college, when I could have gone into working for an automaker right out of high school and made $151,000. And universities actually operate in the summer too, most professors I know work during the summer.
You as well as everyone else on this blog know the Unions are corrupt as all hell, and if anything will be the downfall of the U.S. auto industry, its the Unions.
CheezeDog 8:17PM (7/13/2007)
I don't work on anything that deals with the automotive industry, but I know enough to say this sounds like a white wash. Seriously, if you think working in a factory, (much less a car factory is easy.) you should try getting a job at one that then talk.
bw 10:25PM (7/13/2007)
Accounting is a joke of a major, maybe you need to rethink this whole college thing.
l.i.dave 11:07PM (7/13/2007)
No I don't know the unions are corrupt at all. Only fools like yourself assume such a thing probably with out knowing any one in the auto industry.
If the auto industry in America is dying its from lack of vision, not labor. If GM had built on the EV one program and was delivering affordable quality ev vehicles it would probably be gaining market share right now.
I am sure the union will make concession and do it part to help, but when GM turns it all around and starts making money again with products like the Volt they better be willing to return the favor.
Of course you would know nothing about this because you are a student who doesn't understand what it means to work.
snazzum 4:12AM (7/14/2007)
my friend's dad's a manager at a ford plant. she got a summer job paying $25/hr testing the window switch. up/down, next. up/down, next. boring? yes. hard work, no. and that are many menial jobs just like that which pay good money for doing basically nothing. she got alot of reading done that summer.
Seminole 9:19AM (7/14/2007)
CheezeDog: I never said anything about their jobs being easy. But here, watch this video of the process of making a Mini Cooper from start to finish. http://media.putfile.com/Mini-Assembley-Line . In today's factories machines do all the hard work, the workers just check to make sure the machines did a good job, and sometimes they'll install premade pieces like the dash.
bw: If accounting is such a joke why, is Intro to Financial Acct. one of the most failed classes? Why does the CPA exam have a higher failure rate than the BAR or any IT certification exam? Why on average, do people graduating with accounting have the lowest GPA's but the highest starting salaries for business majors? Before you call accounting a joke, you narrow minded nitwit, go take Financial Accounting and Reporting 1, 2, and 3. Lets see if you think accounting is such a "joke" after that.
l.i.dave: I'm gonna have to shout really loud so you can here this with your head so far up your ass and all. How are the auto unions managers not corrupt!? There was an article here on Autoblog about the CUAW boss who was threating GM with a strike at everyone of their plants for possible closing down one in Canada. Don't you think GM knows whats better for itself, and by forcing them to keep open a plant they don't need to, thats costing GM money they don't have the luxury of losing right now?
It's not a lack of vision that is causing the automotive industry to fail, it's the workers. When GM and Ford pay THOUSANDS of dollars on each car they make for healthcare that's a problem. The Industry today has plenty of vision, great products, etc. but the problem is the workers are sucking out money faster then it comes in. You somehow thing EV vehicles are the key to it all ("If GM had built on the EV one program and was delivering affordable quality ev vehicles it would probably be gaining market share right now", "but when GM turns it all around and starts making money again with products like the Volt.") but here's a little does of reality. THEY AREN'T. Not having to pay for Joe Shmoes penis pills is! over $3000 (I remember Ford saying something in that number area) is a ridiculous amount of money to pay to make a $24,000 car. Thats 12.5 percent of every car at that price level going to pay for the workers healthcare.
As far as me not knowing anything about working because I'm a student, it shows how arrogant you are. I started working the day I turned 14 at Publix (A grocery store) then when I turned the legal age to work in Florida (16) I started off as a busboy then worked my way to server. I work 35 hours a week while still going to school. All to be able to afford school and put myself through it alone, without my parents help. So I know what it's like to work, I've been doing it since I was 14. But why am I arguing with you anyways, your just some overweight loser, sitting behind your computer thinking you know all the answers to the world.
Seminole 9:20AM (7/14/2007)
Typo, hear, not here. Sorry.
That One Person 12:21PM (7/14/2007)
Seminole...it's not the workers. It's the management (both UAW and GM/Ford/Chrysler). The workers just do their job. The management on both sides can't negotiate a reasonable contract. The Big 3 and the UAW put themselves into these positions and the Big 3 are trying to get the UAW to settle things down. It seems like the UAW is finally starting to get some sense knocked into their brains.
Also, a lack of vision has a part to play. Remember the 80s and 90s? The Big 3's products were far away from being the best...decent cars but not the best. That has put them into the position they are in today. And they continued this trend up until just a few years ago. If the Big 3 had followed whatever Toyota is doing, things would be different.
Don't blame the workers, ok? I do happen to know a few people who work for the Big 3. They take their job seriously and take pride in what they do. They aren't the full cause of the Big 3's screw ups. Blame the management (for not stepping up and negotiating), the designers (who designed crap like the K-Cars), the engineers, the accountants (no offense to you buddy...and yes, you picked a good course...good luck!) and so on.
Like I mentioned, the workers do what they are told. They aren't the reason why cars were so "crappy". Yes, they do get paid a lot (even though the people I know who work in the factories dont make anything close to what this study says) but that isn't their fault. And if you research you will see that UAW member numbers have fallin pretty significantly in the last couple decades. The Big 3 need to step up. Also, as far as healthcare costs go, the Big 3 aren't the only ones having problems with it. It's expensive for everyone. Oh, and the whole Viagra thing was through GM, not Ford.
And whoever mentioned the $25 an hour job of rolling up windows, where was that person working at? I had a couple friends who worked on F-150s (one installing rear axles and the other putting in engines) and they were paid $19 an hour.
Also, there are temp workers in Ford factories but are not part of the UAW. Snazzum, if you have been in any Big 3 factories, you would know this.
Plain and simple, dont blame the workers, people. Blame the damn management of both the Big 3 and the UAW.
J. Clarkson 6:07PM (7/14/2007)
So you think adding and subtracting is hard? Try calculus, thermodynamics, heat transfer, or fluid! Just because your accounting major has the lowest GPA doesn't mean your major is the hardest. It could mean that people in your major are less academically inclined. One of my roommates was a business major at U of M, 2 other roommates and I are engineers, guess who was the one that always had lots of free time and watched TV 24/7? I'd like to see an accountant design some cars, which automakers rely on to make profits. Alright, now go back to your cube and crunch some numbers.
Andrew 4:43PM (7/13/2007)
Just goes to show that getting an education isn't worth all that much ;-)
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l.i.dave 5:23PM (7/13/2007)
You know most of you guys come on and quack about the free market and blah blah blah.This is it, employees negotiating wages through their unions. Free market.
University professors don't work for multi billion dollar corporations. They also have 4 months a year off.
I don't know why all of you are so threatened by the salaries of other people? Auto worker is a hard job. It's so annoying to see a bunch of guys who probably make less then 45k a year and almost certainly can't bench press 100 pounds come on and attacks their fellow Americans. Half of you would wash out in a week, but you feel the need to bash these guys.
Big Rocket 7:12PM (7/13/2007)
l.i.dave @ Jul 13th 2007 5:23PM wrote:
"Auto worker is a hard job. It's so annoying to see a bunch of guys who probably make less then 45k a year and almost certainly can't bench press 100 pounds come on and attacks their fellow Americans."
I seriously doubt l.i.dave has ever set foot in a Big 3 manufacturing facility. I visited several GM and Ford facilities in the Detroit area, and in every one of them, there were overhead cranes with push buttons to lift heavy items. Bench press 100 pounds to push these buttons? Please.
snazzum 4:12AM (7/14/2007)
unions artificially skew the market. if you're working for big 3 plant, you can't not join the union - the unions have tactics to make you comply. while at one time, unions had an important role in standing up for workers, now they just bully both management and the workers.
Brian W 4:45PM (7/13/2007)
I doubt the Professor has to work the overtime it takes to make those wages at Toyota and Honda.
I work for an union automaker and I made 51,000 last year, I wish I knew where all the high paying union jobs are that they quote all the time.
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James 7:10PM (7/13/2007)
The report is skewed. The numbers for the autoworkers include salary, benefits, pension, etc., whereas they are only quoting average professor's salaries.
Benefits do account for a large portion of total payroll spend, typically around 20%. On top of that, the automakers have huge pension liabilities.
kballs 10:23PM (7/13/2007)
The numbers are also likely skewed by higher paying managerial and/or executive jobs.
Think of it like this:
10 workers
9 make $50k
1 makes $1mil
average = $105k, but most don't make that
median = $50k
That's an extreme example, but it doesn't take very many managers making $200k to vastly skew the numbers.
This guy is just pissed because he thinks he's so much smarter than an auto worker (factory or engineer) that they shouldn't be allowed to make more than him... but if he's so smart he'd be using medians instead of averages because they are way more meaningful when it comes to calculating "what everyone makes".
snazzum 4:12AM (7/14/2007)
kballs: management and executives are not hourly workers. this professor presented the data to show why the market is messed up in the big three. unions cause wages to be higher than the skills of the workers are worth compared to non-unionized workers. this overcompensation is hurting American automakers. read and understand before you make assumptions.