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There are plenty of people in this country who would desperately love to see all unions go away. Over the course of the congressional hearings on an automaker bailout this week many of those people have continually brought up the un-cited "fact" that UAW workers get $70/hour in wages and benefits as opposed to about $40 or so for non-unionized workers at the foreign owned transplants. While the UAW and the Detroit automakers have made more than their share of mistakes and deserve a good chunk of the blame for what is happening, there is a major problem with this particular argument. IT'S NOT TRUE!

UAW members do not take home $70/hour. That is the automaker's cost per active employee. What's the difference? The latter figure is total spent by automakers on wages and benefits divided by the number of active employees. The cost of benefits includes the pensions and health care costs for the hundreds of thousands of living retirees in addition to active workers. Those punching the clock every day, don't get a dime of that. As of last year, UAW workers made an average of $28/hour in wages + $10/hour in benefits. The rest went to retirees, a cost that is borne by the automakers. The reality is that unionized and non-unionized autoworkers actually make very similar wages and benefits. Continue reading after the jump.

[Source: The New Republic, via DailyKos]

You might be wondering why the UAW has had such a hard time organizing the US factories of Honda, Toyota, Nissan and others. A major part of it is because the workers there don't see a need to join. They already make as much as their unionized counterparts. The fact is that in industries like this, companies will often tend to match the compensation offered to union workers just to keep the union out. When I was growing up in Hamilton, Ontario, Canada, there were two big steel companies in town, Stelco and Dofasco.

Stelco was unionized and Dofasco was not. Both companies paid workers essentially the same. My father worked at Stelco and went on strike three times over his 30 years there. Every three years when there was a new contract at Stelco, Dofasco automatically matched it for their employees. If the United Steel Workers at Stelco didn't pay the price to get those raises do you think Dofasco workers would have got them? Not a chance. It's exactly the same with the auto makers.

Since I can't find the precise quote at the moment, I'll paraphrase the late Studs Terkel, who asked someone who was anti-union, "Do you like going home from work at 5 o'clock? Do you like having health care benefits? Do you like having paid time off? You may not be in a union, but if you have any of that, you can thank union workers for it." Before unions fought for reasonable work weeks, health care, and workplace safety in the first half of the twentieth century, few Americans had any of that. Don't kid yourself that big corporations would give any of that from the goodness their hearts.

Yes unions have gone too far at times, but as we have clearly seen with the financial collapse in the last few months, non-union financial "geniuses" are actually far more to blame for the current predicament than those who punch a clock every day. The real reason so many are pushing for chapter 11 is not to save the automakers, because that will almost assuredly not happen. They want to break the union contracts. The problem is doing that will ultimately cost this country a lot more than $70/hour.

It's time to stop demonizing and start addressing the real root causes of this problem. That is the fundamentally flawed mechanism we have for paying for health care in this country and the ability for people to finance the purchase of vehicles. Until we put the screws to the financial "geniuses" things will only get worse.

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    • 1 Second Ago
      • 6 Years Ago
      General Motors states in its filings with the Securities and Exchange Commission that:

      "GM maintains hourly and salaried benefit plans that provide postretirement medical, dental, vision, and life insurance to most U.S. and Canadian retirees and eligible dependents. The cost of such benefits is recognized in the consolidated financial statements during the period employees provide service to GM"

      In other words, GM records the expense for retiree benefits when workers earn the benefits, not years later when they collect their benefits. In less technical language, Ford explains that their total average hourly labor costs include:

      (1) All the dollars paid to employees, (2) the cost of contractual benefits for employees, and (3) the cost of statutory payments, such as Social Security and Workers' Compensation--all calculated on the basis of hours worked by employees.

      These figures are based upon calculations by the Detroit automakers themselves as published in SEC filings, their annual reports, and other materials. According to briefing materials prepared by General Motors, "The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked."
      • 6 Years Ago
      Nobody seems to have read the original TNR article, which clearly outlines how the 2007 UAW contract dramatically reduced the "legacy" burden on the corporate bottom line.
        • 6 Years Ago
        Let me clearly outline something for you and everyone else who's buying into this BS:

        THE 2007 AGREEMENTS DO NOT DO GM, FORD OR CHRYSLER ANY DAMNED GOOD UNTIL 2010! Sorry to yell, but that's when the UAW gets control of the VEBAs and the companies lose the problem of the legacy costs.

        Is that clear enough for you, Roderick?

        If GM, Ford and Chrysler go belly up in 2009 (or, worse yet, in the remaining few weeks of 2008) the argument is moot.
          • 6 Years Ago
          My point was not that the 2007 deal would solve everything, or even anything. It is, however, a significant point that had not been addressed at all by anyone in the discussion.

          Moreover, the fact is that the UAW and its members are in no position to shoulder the financial burden of legacy costs immediately, and few (if any) have contended that current wages and benefits represent a substantial detriment to the companies' bottom lines.

          You can cry bloody murder all day, but what is the UAW supposed to do now? If the most recent contract wasn't enough, do you cut wages and benefits of those working today? I think you'd be hard-pressed to find enough money there to compensate for the legacy costs, at least without crippling the workforce.
      • 6 Years Ago

      why not the LS2LS7? said:

      "$28 isn't the starting wage. It's the average wage.

      I also live in Silicon Valley. I find the idea that workers are happy to work for $16/hour here to be hilarious. In-n-Out pays $9.50 to flip burgers.

      You might be right about the thousand resumes thing though, if only because the population of Silicon valley is about equal to that of the top 10 cities (municipalities) in Michigan combined."


      Who says you have to be happy with your job ?

      I don't know anyone who is truly happy with their job.

      A Silicon Valley company offering $16 an hour for a simple assembly line job (plug 'cable A' into 'port B') and requiring zero experience and a high school diploma would definitely get hundreds of resumes.

      There are Silicon Valley companies on Craigslist offering $10-$16 per hour for simple office/admin jobs that don't require any experience or education.

      The Silicon Valley companies offering $16+ per hour are asking for 5+ years of experience related to the job, computer experience and at least a college degree. And this is for simple admin jobs.

      Engineering, management and specialized jobs are obviously on another salary level.
      • 6 Years Ago
      Anybody who's studied industry knows that there is overhead tied to each employee, usually double the hourly wage. A published figure several years ago stated the total cost per each was $95/hr., probably close to today's actual rate or even higher figuring the reduction in production employees and longer lifespan of retirees.
      • 6 Years Ago
      "Unions set the standard on which your pay and benefits are judged. If Company A's Union Employees fight for and get a pay package that's more than Company B's Non-Union package, Company B has to either: Offer a competitive package, or risk losing manpower to Company A and the Union. If the Union (which is comprised mostly of the same blue-collar workers they represent) wasn't there, what reason would EITHER company have to give back to their workers."

      Unless, of course, the unions force the companies to 'give back to their workers' so much that the companies go under, everyone loses their jobs, and no one gets anything.

      You know, like what's happening right now.
      • 6 Years Ago
      why is none of the facts that toyota has 5 layers of management and gm has 15 ever discussed? i for one remember some of the desire to gain a salaried white collar job was for the more income and less physical and mental strain. at last count gm had 266,000 employees, with just under 30 percent white collar. toyota has 234,000 employees with less than 10 percent white collar. having worked for both subaru/toyota in indiana i know the managers are required to produce unlike the whitecollar gm having created the most topheavy auto producer in the world that are on vacation or leave half the time.
      • 6 Years Ago
      I make way less than the proposed "$38/hr" in the article in a very specialized field (concept artist) and that's before ANYTHING is taken out. Also, no benefits except free lunch. I pay my own insurance, have my own retirement plan etc etc.

      I live extremely comfortably with enough money to put in savings. Most of these people are making way WAY more than they should be for the amount skill they possess. This article is whack. Even if they are making $38/hr take home, thats a f*ck ton of money and WAY more than average U.S. income. But as I see it, they are indeed making $70/hr but just have to pay for things just as everyone else does.
        • 6 Years Ago
        Read it again. It's not $38/hr take home. It's $28/hr gross pay (not take home) and $10 in benefits. There are few fields where the benefits for a $28/hr worker would be less than $7-8/hr. For example, $2.50/hr goes straight to the government as employer-contributed FICA.

        Why does anyone bother writing these articles if people aren't even going to READ them?
        • 6 Years Ago
        I did read it. I just misread some parts... difference.

        I personally make less than $28/hr gross in my field and have no benefits. If I made $10/hr in benefits, I'd be making more than that. I personally have to set that money aside (healthcare and retirement plan). If I got a $10/hr raise at work to pay for that, I'd only have to pay for fed/state taxes and SS, like these workers.

        My opinion (like this article titles itself) is that they make more money than they should for their skill sets, most likely thanks to Unions. These groups would rather see the companies fold than to work something out that works better for everyone.
      • 6 Years Ago

      My parents always told me when I was younger, you have two choices in life “pay now and play later or play now and pay later”.

      "You know I challenge you and lots of other UAW haters on this blog to go work on an assembly line for week and see if you like it."

      This reminds me of a few friends from High School who always used to scoff at “suit & tie or stuffy office jobs”, now are regretting such attitudes today as they wake every day to perform back breaking labor jobs with no end in sight until their bodies break or they hit retirement.

      How many of these factory line UAW workers if asked the question “what if you could go back in time to 8th grade, what would you change”, how many do you think would say “I would focus more on my studies so I could attend college or a trade school and not work as a laborer"? It’s not the role of the unions to correct personal mistakes and lifestyle choices, it is there to provide a safe working environment, acceptable working hours and some benefits.

      Have you ever heard of "you reap what you sow"? Maybe it's not on advertising billboards everywhere, but it's fairly well accepted in the civilized world that if you do not apply yourself in high school, you do not get in to college. No college = labor jobs. Labor jobs = low pay and a lower lifestyle.

      The reason most labor jobs pay low, it's not a skilled position, ANYONE can replace you and be up to speed in a matter of a week or two. You are not valuable, you possess no more then the next laborer in the context of the job at hand.

      Someone in accounting or the MIS would take months to replace and get up to speed and their jobs are far more complex than simple repetitive labor, hence the higher value on said employees and their respective salaries.

      For every one engineer graduate in this country, India turns out 3. Labor jobs have lost their value as a means of living a nice lifestyle, unions have to wake up to this fact. Education & valuable skills is what will determine one's lifestyle in the near & distant future. Nothing can change that.
        • 6 Years Ago
        I agree in general. However, remember, these people do have to live. I'm not saying you can't live on $28/hr (far from it), but we can't have the jobs pay so low that people won't take them. Also, if there are no retirement benefits at all for these people (at least health care until Medicare takes over), then the taxpayer will just end up paying for their health care out of taxes anyway.
      • 6 Years Ago
      thanks for putting out the truth about how much union employees get paid. The mainstream media just likes to throw out $70/hr just so they can see the big 3 fail.

      I'm not quite sure what you are proposing we do to fix this mess though.
      • 6 Years Ago
      The perpetuated misinformation on this thread is astonishing.

      1. Mortgage crisis was the result of lowering loan standards due to "diversity" i.e. loaning to minorities. If you are referring to the Community Reinvestment Act (CRA) Lehman and AIG which both got spanked on mortgages were not required to follow federal mortgage guidelines as they did not fall under CRA.

      2. Toyota and Honda pay less than Big 3 Union wages. In fact, they pay more.

      UAW Losing Pay Edge: Foreign Automakers' Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle

      Please Google the article.

      3. If union strikes are such an effective negotiation tool, can anyone list the number of strikes within the past decade that did not result in the loss of wages and jobs to the union's detriment?

      4. Legacy Costs? Certainly it's an issue, but has anyone ever heard of a PENSION FUND? Isn't that what is supposed to pay for legacy costs? What happened to the fund? You know that bank of dollars that was saved for each employee as a deferred compensation agreement that saved the autocompanies millons if not billions in wage taxes since the money didn't go directly to the worker when times were good? Perhaps it was mismanaged?

      4. Lastly, why doesn't anyone ever talk about CAFE standards impacting Big 3 sales. If you make $5K on a truck, but lose $1K on say a Ford Focus, why should Ford be forced to sell a Focus? CAFE is why, $5.50 for every 10th of a mile over Federal Average over your entire fleet. What ever happened to letting the market decided on fuel economy?

      Look it up. Last year GM sold over 8 million vehicles world wide. That is the SECOND highest amount of vehicles they've ever sold in the history of the company. So why the loss?
        • 6 Years Ago
        your mortgage crisis comment is off topic
        and I think it's unfair to sight minorities.
        ...I had read that the "minorities" are
        actually doing a good job of making payments.

        .... I won't say anymore on that

        but just wanted to say hey man, not cool.
        • 6 Years Ago
        I didn't see my 1st apology post ... post. By my own admission, I can see how my statement could be seen as a criticism of minorities, when in fact I meant to say that miniorities (like myself) can be and are good credit risks.

        Regarding mortgages, spot on that the discussion is out of scope, but I was simply respond to a previous post.

        Last, no one held a regulatory gun to Lehman or AIGs head to leverage their assets 30X over. That was an act of pure greed considering they were making billions off mortgage prior to melt down.

        It didn't help that debt rating agencies like Moodies were pressured into overstating the quality of the debt that Lehman and AIG were buying.
        • 6 Years Ago
        The comminity reinvestment act just said they had to offer mortgages in areas where they take deposits. That didn't mean they had to give out poor loans (higher risk should mean higher interest rates). It also didn't mean they had to give loans to people with no incomes or jobs (who don't make deposits).

        The problem was greed and foolishness. As you say, they bought repackaged assets. And they did it without evaluating them properly. The banks also competed to give loans for over 100% value of the house! That means people were being PAID to take loans by these banks. Some of these loans were 5/1, 3/1 or even interest-only!

        That's the problem, not the CRA. The CRA is just another attempt for the people in banks who acted like idiots to try to make excuses as to why they couldn't manage to do their own jobs.
        • 6 Years Ago
        RRL: 1. Mortgage crisis was the result of lowering loan standards due
        to "diversity" i.e. loaning to minorities. If you are referring to the
        Community Reinvestment Act (CRA) Lehman and AIG which both got spanked
        on mortgages were not required to follow federal mortgage guidelines
        as they did not fall under CRA.

        True, but they bought the re-packaged derivatives that was the result of the CRA.

        The fact that they didn't create the cancer [Congress!] didn't deliver it [Fanny/Freddy!] doesn't mean that they didn't almost (or in Lehman's case, did) die from it. For those left, we're struggling trying to keep the patients alive.

        How is that not still the fault of CRA and other politically-correct, outcomes based policy making?
      • 6 Years Ago
      wow. i'm not surprised at all the hate. most of you sound jealous of the "unskilled middle class". some of you have even stated that you make less than these workers. is something holding you back from finding a job that pays more? why can't you squeeze your boss for another two bucks an hour? because your skills aren't in demand or you are bad at bargaining, that's why. as the big 2.x downsize, auto workers will be in much less demand and the wages will hold or begin to fall. whatever the cost of a UAW worker is, it will need to change. the companies realise this and as they adjust the UAW will have to adjust to survive. no doubt it'll be ugly short term but it has to happen soon.
      • 6 Years Ago
      Maybe GM should stop making such a poor product and most of this argument would be a moot point. They have consistently put a shoddy product out there and now they are paying the price.
        • 6 Years Ago
        You really need to get your head out of your biased arse. Most GM and Ford meet or exceed Toyota, Honda, and Nissan in initial and long term quality.
        source: J.D. Powers
        For GM and Ford, this is the first time in their long history they have asked for help. Datsun (nissan) and Toyota right from the start had heavy subsidies from the Japanese government in order to get a foothold in the US. And believe it or not, even though the Japanese government denies it, they still have closed markets to the US and Germany. As does the South Koreans, 400,000 cars imported the the US, and only 4,000 allowed into Korea.
        They estimate 3.5M auto related jobs if the domestics fail. Another residual 2M to 5M non auto related jobs in and around auto factories and suppliers would be in danger. Depression of 1929 anyone? Naw. This one will make 1929 look like a brain fart.
        And another point. The transplants only came here to avoid the quotas Reagan wanted to put in place to keep the American auto industry in place. Regardless of who it is, domestics or implants, it's very expensive to build a car in the US. If the big 2.5 go down, I guarantee Toyota, Nissan and the likes will have no reason to build here and employ here and will move to Mexico or back home faster than a (American quality) built ZR1 on the drag strip.
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