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$75-an-hour autoworkers
Posted Monday, December 1, 2008, at 11:54 PM<< Previous | Read comments | Respond | Email link | Next >>
I was reading Joe Sullivan's Thanksgiving column Friday when one phrase stopped me cold:
"... another day when our automaking brethren have to struggle by on a $75-an-hour paid holiday ..." I took a deep breath and finished reading what is an otherwise lovely column, then sent him an email. He suggested (in a very nice way) putting the note here. It follows, with a few minor edits and a postscript. On 11/28/08 1:28 PM, "McNichol, Peg" wrote: Joe, I can promise you my sister, 14-year veteran autoworker, is not making $156,000 a year, benefits included. Not by a long shot and most certainly this year not by a very long shot, indeed.
The Flint economist who did that study lumped benefits being paid to current retirees into his final figure and it has been rapidly inflated. Since Andrew Ross Sorkin's New York Time's essay a week or so ago -- in which he said autoworkers were paid $70 hourly -- some essays and commentaries have raised the figure to as much as $80.
Here is one attempt to correct the error.
And now for my rant: No assembly line auto worker I know is bringing home $75-an-hour checks, not even with overtime (and there's little to none of that happening this year) and definitely not with benefits, which have been consistently cut over the last 15 years.
The pay is closer to $26, for those in a union, with as many or more years on the job as my sister. New employees are paid much less. Non-union automotive suppliers pay even lower rates, between $7 to $14 an hour, often with few benefits. The good news is, most of that money is spent in the United States.
I don't envy the work done by people in manufacturing, even though they make more than I, often with less education. It's dangerous, mind-numbing and physically exhausting.
More than a decade ago, my best friend Linda picked up her 4-year engineering degree, which she completed while working as a computer-aided drafting contractor for General Motors. The next day, her pay was cut by 8 percent. She earned less last year than two years earlier and was laid off 12 months in the intervening year.
I've read some complaints about GM's job bank, which pays workers who are laid off to do community service jobs (and yes, some sit on their butts). As a contract worker, Linda's not eligible for that, but has spent her Saturdays and Wednesdays volunteering for Habitat for Humanity. She's looking for work in an oversaturated environment, unable to leave the state, what with a husband who has a job (for now) and a mortgage. She also cares for her disabled mother-in-law and a childless aunt in her 80s.
I know so many people like her in Detroit now, and am probably biased, but it just seems like the people on the floor are getting slammed for poor decision making on the part of Big Three executives, none of whom had automotive industry experience before taking the helms of their respective companies -- and one of whom managed to drive his previous company, Home Depot, into the ground before sashaying off with a $210 million parachute.
If you read this far, thank you very much. My rant is over ... :-)
Peg A rant-y postscript I keep hearing people say the U.S. auto industry should be allowed to fail. So shutter the formerly Big Three. But consider what else will deflate when they go: auto parts suppliers, retailers and car dealerships; restaurants and shops clustered around the plants; truck and rail services; insurers (not necessarily automotive -- if the autoworkers' health care premiums disappear, we'll all pay more for medical services); financial institutions with strong auto ties; steel, aluminum, plastic, leather and fake leather suppliers; tire manufacturers; non-profit and sporting events traditionally sponsored by auto companies; advertising and marketing companies; city and state services supported by corporate taxes ... well, you get the idea, right? Not just in Detroit and not just in Michigan. Almost every state has a significant stake in the car biz. Michigan Gov. Jennifer Granholm often says one in 10 jobs in the U.S. has some Big Three link. In Missouri, the 2007 top export, transportation equipment, earned $4.7 billion, according to www.missouripartnership.com. This state's auto-specific jobs amount to just 1.4 percent of the workforce -- 31,0111 people. What happens if those jobs go away? Comments Showing comments in chronological order [Show most recent comments first] |
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i'm sorry Peg but i have little sympathy for the
auto workers of the big 3...the rest of the auto
industry is doing just fine which leads me to
believe the Big 3 have poor management ...bailing
them out isn't the answer , new leadership is...
I happen to agree that new leadership is in order. When a reporter asked one of my sisters who should be the U.S. auto "czar" she replied, without hesitation: Lee Iacocca.
Having lived through that bailout and been a reporter at the shareholders' meeting where he announced that Uncle Sam would be repaid fully -- and early -- for the help, I understand her answer.
"$7 to $14 an hour"
ahhh so we finally know what they SHOULD be making based on their skills.
Well, Let's just bail out everyone then Peg. We borrowed a trillion to give to the banks, and we could just borrow and borrow our way back to prosperity for every industry that fails. Let's "save" the auto industry, and the banks, and next the airlines AD NASEUM.
No. This thinking is just going to saddle us with more and more debt and the people who screwed up get to keep on going without repercussions.
We have to take the pain and let these industries shake out their stupid and foolish ways. If we just allow the market to do it's job, the CEOs that were stupid will be gone along with the ridiculous Union demands. They both contributed and they both deserve to pay the price. Eventually demand for their products will resume and a smaller and leaner company will return if we don't force that new company to face so much in the way of regulation and union demands that it cannot compete.
People will get hurt, and it is not totally their fault, but the taxpayers will get hurt worse if we keep enabling the behavior that got us into this mess in the first place.
"The pay is closer to $26, for those in a union, with as many or more years on the job as my sister. New employees are paid much less. Non-union automotive suppliers pay even lower rates, between $7 to $14 an hour, often with few benefits."
Peg, Thanks for clarifying that autoworkers are not millionaires. Just listen to the bunch of whinges upset that a blue collar is working and making a "living" wage. $26 per hour woo hoo, yeah...they are really breaking the bank. All of you know due well a family of four can barely live on $14 per hour, much less $7.00.
(and don't bring up "get a better job" or make "Mom go out and work" or "have less kids" Have any of you worked as an autoworker??? Personally?
If not, I suggest you shut your pie holes before someone complains that YOU are overpaid for your jobs. In this days economy (food, housing, fuel, clothing...the basics to get by) are not cheap. $26.00 per hour is very reasonable for a blue collar worker, who does most things in his daily job that most blokes in here wouldn't last a week doing.
You want pride in America??? Then don't treat the blue collar working class, like some $1.00 per hour worker in some sweat shop in Taiwan! By golly, sounds like we have a bunch of Communist in here wanting to just "give" away the automobile industry that was created right here in the good Ole USA. You want a cheaply made rice burner? Then move to China!
You are missing the point that the New York Times was making. If the cost of doing business is an average of 70 dollars an hour per worker by the time it is all said and done and a non-union shop in Tennessee or overseas can do it for half that, you have to find a way to compete.
Even if the take home pay is currently 26 an hour, the company still has to pay for those retirement pension benefits with its current income. Even if the retired workers are no longer currently on the payroll their draw down on the company funds continues to erode the profits of these companies. Pension funds are an ongoing expense pulling on CURRENT income.
A non-union company that does not have that huge expense can survive better in this economy.
If anyone wants to make the ridiculous point that somehow the union labor with its often ridiculous work rules is twice as efficient as the people in Tennessee are, I can start my day off with a very good chuckle.
Maybe if the American auto companies could make vehicles that weren't CRAP, we would buy more of them. Why spend money on a car that starts breaking down at 90,000 miles when you could get a Honda that will go for over 200,000 miles? I don't care who makes the best vehicle, I'll buy it.
jcwill,
"Even if the take home pay is currently 26 an hour, the company still has to pay for those retirement pension benefits with its current income. Even if the retired workers are no longer currently on the payroll their draw down on the company funds continues to erode the profits of these companies. Pension funds are an ongoing expense pulling on CURRENT income."
But let me guess...you're one of those blokes who also thinks we need to abolish Social Security? Soo...if we abolish social security AND their pension funds...what are they supposed to do? Work til death?
One has to consider that these wages and benefits were obtained through negotiations and bargaining. No matter how silly or ridiculous the terms of the contract or agreement may seem, both the company and the union reached a mutual understanding to these terms for whatever reasons.
"Megalo" hit on one point that doesn't make good business sense to me - retiree benefits. While pension funds in theory are supposed to have contributions made during the years of employment that will carry the retirees through their retirement, were these contributions made at a sustainable rate, or are make-up payments to the fund needing to be made? Then, there's still the issue of other retiree benefits such as company-paid health care.
Not these benefits aren't a good thing for the retiree - again, they were negotiated benefits that the company agreed to - these retiree benefits do mean that the company is still paying today for work that has occured in the past. Was taught in business classes that it is good practice to contain and to account for the expenses within the period for which the work occured.
Megalo---
I never said that we should not have pension funds, but a person is taking their chances every day when they go to work, hoping that their job is still going to be their tomorrow. When you have an unbelievably generous pension that is paid out by your former company, you are still taking your chances that the company is going to be there. Why should TAXPAYERS have to fund these retirements?
You also guessed wrong on what I think about Social Security. I do think it should available for limited purposes.
Taxes were never intended to be a replacement for people taking care of themselves. When a person is unable to take care of themselves due to no fault of their own, it is possible that taxes can be used as a last resort.
However, it is quite unfair to force a bunch of strangers at the point of a gun to pay taxes to support people who knowingly chose not to save for the future. Tax collection is necessary, but not to the extent we are doing it now.
And PLEASE don't try to insult me by saying that Social Security is anything other than just another tax. If it is not voluntary, it is a tax.
Now this is where I talk about the limited part of where I can support social security. IF a person is unable to work or has truly never been able to save due to no fault of their own, then Social Security has its place.
My position is that we all have to be adults and take responsibility for ourselves. It is shameful to ask others to pay for our retirement if we are able-bodied and the height of chutzpa to demand it of other people by using the power of the state through taxes.
If the goverment does not help the auto industry and the jobs are lost, all of those people will be lined up for goverment welfare programs. They will be in the food stamp line, the medicaid line, the wic line, etc., and you the tax payer will be footing that bill. So pay now or pay later.
Megalo,
They can do what the rest of us do--contribute to our IRA's with OUR OWN MONEY. I imagine that $26 per hour, plus burden, plus pension fund contribution, plus union whatever DOES equal $70 per hour. Or more. The unions have outpriced the labor market only to support a handful of fat cat union bosses. I used to be a union employee.
Also, I don't think we need to let the big three fail, but I think there is a lot of union-related fat that could be cut to reduce the direct operating costs. There are also a lot of executive costs that should be cut.
If the Big 3 go bankrupt, they won't be "shuttered." They'll just have a chance to bring costs and work rules in line with the competition.
I am against the auto bailout for a couple of reasons. First, the companies will just be subsidized for a couple of years and then say they need even more and we'll do it again. Second, Congress wants to tell them how to build cars in return for the money. I don't want the people responsible for the IRS tax code designing cars.
The government has been telling the Big 3 how to make cars for decades; that in itself is half of the problem. The American automobile industry is one of the most, if not the most regulated industries in this country.
The other half of the problem is with the UAW, but not for the faults that most people are pointing out.
The UAW prevents the Big 3 from modernizing their work systems. The ineffecient methods of manufacturing that the Big 3 are forced to use by the UAW in order to prevent job loss due to technological advances were antiquated in the 50's. Honda and especially Toyota have taken advantage of these new work systems and the results show in market share.
JCWill, you wrote "People will get hurt, and it is not totally their fault, but the taxpayers will get hurt worse if we keep enabling the behavior that got us into this mess in the first place."
"The people," in this case autoworkers are taxpayers, too.
When I talk about a bailout, I mean for it to be structured the way it was when Iacocca negotiated Chrysler's, which enabled the company to survive AND repay the government. Did I mention early? Yeah, I'd expect that, too.
I'd also expect auto executives to pay for their own car purchases, take the same percentage pay reductions being asked of the line workers, and for the management staff, from the plants on up, to buy their own gas, too.
Thank you, Peggy. You brought information to the table that very few of us would have the access.
I have long suspected that the $70 an hour figure was "juggled" for it's impact effect upon the uninformed populace. A New World Order stooge, such as Rush Limbaugh, or, Sean Hannity takes such a figure and blows it out there into the ether as if it were fact, and those receiving their entertainment programs, glom onto it as if it were fact, and repeat it. It is an old stragety, which works well. We often used to blame the "communists" for repeating a lie over and over, to make it the "truth." Here is just one instance, where the lie has been told over and over by those whom we trust, until many of the uninformed believe it to be thus.
I have often railed against the hiring of CEO's to lead companies when that person had no grounding, or, experience in that companies particular product, or, service. I worked for a radio station in Muscle Shoals that was pruchased by a newspaper chain from Iowa. They knew nothing about broadcasting. They brought in their form of organization, that included an onsite chief financial officer to whom you would have to go to and get a request from to get a box of staples from the supply cabinet. It was the most rigid, non-creative, non-responsive form of management that I have ever seen in radio. They didn't understand on the air talent, nor how to deal with them. It soon became an oppressive and depressive work environment.
Perhaps my words, and phrasing is more acidic and rancid than yours in describing what has happened to this country, but we are, if not on the same page, at least in the same chapter. I detest the hiring of persons to lead companies who have no product, or, service experience associated with that company. These CEO's seem to be hired for reasons not clearly understood by us. I had forgotten that Chrysler's CEO, Rick Nardelli, is the one who had done such a "great job" for Home Depot. While Rick Wagoner has been with GM for over 30 years, he has always been in the financial end of the company. The same goes the former CEO Jack Smith. They had no practical experience in design, or, actually building the cars. The fact that they were in the financial end of GM, is not a plus, since GM is in such a financial mess.
When these dummies are attacking the workers, and the union, they never bring up the compensation that these CEO's and top executives receive, nor do they mention their retirement programs, healthcare plans and the like when they ***** about that of the workers who actually build the cars.
Thank you for a truly informative piece.
Do you know what the problem with statistics is? They are only accurate if EVERYONE INVOLVED IS SURVEYED. Taking a hundred, or a thousand or so people scattered across the country with varying incomes, and varying costs of living, and actually trying to base out whole countries economies on that single study is ******* STUPID, to say the least. Yet we all wonder why our economy is so screwed up right now. I don't know, maybe I just don't get it. When it comes to money, I base my figures on FACTS, not averages or miss-informed statistical analysis.
Peg, where does the billions of dollars that GM is burning pay for? As a former gm employee at an assembly plant (salary staff), I still can't believe that level 8 and above managers (30+ at my plant) employees get a new lease car with gas every 3 months.
The union rules need to change as well. Anytime an outside contractor comes in to do work, all union employees are offered 12 hours of overtime saturday and sunday. That's time and half on anything past 40 hours and double time on sundays. During a holiday these empoyees get triple time. This practice seriously drives up the cost of any project. I realize this is a practice that was agreed upon by the company, however, the union needs to make concessions in order for the company to survive.
Your sister may not make $75/hr--but I'll bet she makes more than YOU. And is her job that much more important than yours? Did she have to pay for more training out of her own pocket than you? What makes a worker on an assembly line so valuable?
The point is that $75 an hour(or whatever the correct number is to reflect current wages plus pensions) is built into the prices of new cars, and the car buying public has said "enough!".
If the automakers let the union negotiate them into this position, then shame on them. It's not up to me to pay for their mistake.
For those interested in a little light reading - found the 2003 Collective Bargaining Agreements for GM, Ford, and then-Daimler-Chrysler which give indications to wages paid through the term. The newest agreements (2007) are available through the BLS.gov or DOL.gov websites by special request.
If the people 'on the line' are making these numbers, one can only speculate as to what the line supervisors and on-up make.
Caution - these are huge files, the GM contract is 957 scanned pages, wage brackets are around pp. 55-60 or so:
GM - http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1236&context=blscontracts
Ford - http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1230&context=blscontracts
Daimler-Chrysler - http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1429&context=blscontracts
Fxpwt -- Beware the old contracts (which included some concessions); the new ones reflect lower pay, higher fees to employees.
My sister, her family's main breadwinner, told me last night she's been informed to expect an $11-an-hour pay cut.
This happened to American Axle workers a while back. Interesting side note: this GM supplier managed to radically cut its cost to do business, but turned around and raised prices being charged to GM.
As for why my sister and other line workers get paid more -- because they most do dirty, difficult, dangerous and demanding work. One of my brothers-in-law lasted just a few weeks, working part-time, doing the same work one of my sister has been doing for 14 years. Another sister, who spent more than a decade in one of those non-union shops, has a series of scars from equipment-and-supply related injuries.
Look, I'm not a huge defender of the UAW or unions in general.
At it's best, when Walter Reuther was leading Detroit's union, it was a resource for people to improve safety and get fair wages. Among the reasons Reuther, a tool-and-die worker, was so respected by people (besides being shot up, as was his brother Victor, during the big fight in the 1930s) is that he never took wages higher than his fellow tool-and-die coworkers. He wore a shirt and tie to the plant. He respected the work he did; respected his coworkers and understood the balance (and friction) it takes to run a company and be fair to workers.
I've interviewed UAW leaders while reporting for other media. It seemed to me some of them really lost the point of giving workers a voice for safety and fairness while recognizing the importance of good corporate management.
Companies that respect workers don't need unions, in my opinion.
Some disclosure: Throughout my career, I've been forced to pay union dues as a condition of employment; barred from joining a union because my job category was excluded; crossed a picket line (it wasn't my union or my company; I was a federal employee at the time); happily paid union dues and supported the system; and happily worked in a job where no union was present or needed (including in my current position).
I'm looking forward to reading the car companies' proposals.
THIS JUST IN:
http://www.foxnews.com/story/0,2933,461145,00.html
The incredibly unbelievable "jobs bank" program is going away. I wonder what other fluff the unions will concede. The union fat cats are getting scared, and it will only help the US auto industry.
The collective "reset button" just got hit on our country, and it is about time we all took a look at our consumerism and greed.
Definently not a Rust Communications company. That would mean only $6.00 an hour with little benefits.
GM stands for government money.
Here are the three proposals:
Ford: http://www.ford.com/about-ford/news-announcements/press-releases/press-releases-detail/pr-ford-motor-company-submits-29508
Chrysler:
http://www.media.chrysler.com/dcxms/assets/attachments/CommitteeHearing.pdf
GM:
http://www.media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=827&docid=50755
This seems to be a tough one to get right - and I won't claim to do much better. Mr. Rust was accurate in his 'accounting' of wages, and you were right drilling down to the actual wage earner. Where I think you are a little off base is in your Update. I don't think anyone 'wants' any of these huge businesses to fail. Filing for bankruptcy may result from failures, but it is not failing. That's why we have backruptcy laws. It allows the business certain protections while they reorganize and repair those issues that have got them into the condition they're in. Why not let the system work? Ford seems to be in recoverable condition. Chrysler, with their German ownership might have other options. GM is probably in the worse shape, and will probably have to make the most stringent decisions to survive. None have to be shuttered. Someone is going to sell us cars - hopefully cars that we want, not some government mandated number. This is as much political as any issue we face. The auto industry spends millions on politicians, and some Michigan elected officials have serious personal financial ties to on company or the other. So far mostly what we're hearing are gun to the head threats about the consequences of not bailing these folks out. Some things don't change, now do they?
Not to drive it into the ground...but I heard the president of the UAW in St Louis on the radio this morning talking about that $70 an hour figure that's being thrown around. He clarified that if you added up all the current wages, benefits, and what is paid to retirees and divide by the number of current employees, it comes to "around" $70 an hour. He also said that wages accounts for only about 8% of a car's cost. I doubt that he was including benefits and retirees in that.
The number may be closer to $70/hr than $75/hr, but Peg is simply wrong to say that the $75 includes retirees. Please read this article for an explanation
http://www.heritage.org/Research/Economy/wm2162.cfm
The short answer is you may not legally account for future liabilities that way.
The short proof is that GM has about twice the retirees per worker as Chrysler and about two and a half times the retirees per worker as Ford. However they all pay about the same. This could not be true if Peg's premise was correct.
The Heritage Foundation is not an original source, but has aggregated data from various sources.
There is a big difference between the cost of labor (which includes salaries) and the hourly wage a worker sees on a paycheck. This was one of several distinctions I tried to make in the post above.
The workers have made a series of adjustments, including accepting pay freezes, decreases and plant closings. This seems to be overlooked when some direct all the blame on workers for American auto companies' financial problems, which I would say is an unfair assessment.
I'm not defending the auto union, rather, pointing out that workers do not take home $75-an-hour pay checks.
Again, the cost of labor is a very different calculation.
Hi My Sister,
Good, thank you for trying to let people know the truth, and I don't have numerous scars because I was careless, I worked in metal stamping for 14 years.