4 commentsDo auto workers really make more than $70 per hour?
I’d heard this a lot, from a lot of news outlets, but FactCheck.org provides some clarification:
At a Nov. 19 House Financial Services Committee hearing on a possible bailout for the auto industry, Alabama Republican Rep. Spencer Bachus said, “Even with recent changes, the average hourly wage at General Motors is still $75 an hour. …” Two of his GOP colleagues on the panel made similar statements. And in a Nov. 18 column in the New York Times, business reporter Andrew Ross Sorkin wrote, “At GM, as of 2007, the average worker was paid about $70 an hour, including health care and pension costs.”
The problem is, that’s just not true. The automakers say that the average wage earned by its unionized workers is about $29 per hour. So how does that climb to more than $70? Add in benefits: life insurance, health care, pension and so on. But not just the benefits that the current workers actually receive – after all, it’s pretty rare for the value of a benefits package to add up to more than wages paid, even with a really, really good health plan in place. What’s causing the number to balloon is the cost of providing benefits to tens of thousands of retired auto workers and their surviving spouses.
The automakers arrived at the $70+ figure by adding up all the costs associated with providing wages and benefits to current and retired workers and dividing the total by the number of hours worked by current employees.
I’m not making a claim about bailouts or the auto industry one way or the other, but I’d seen that $70 number so often that I thought it was true.
4 comments
While it is a misrepresentation to call the $70 figure an “hourly wage” it remains a rough estimate of the cost per employee to the automakers, so I still think the figure is relevant to the bailout discussion.
To put that into an hourly figure is a really misleading and dishonest way to aggregate the personnel costs, though. Wages are hourly figures, people don’t add pensions and health plans in, and when people see $70/hr, it clearly invites them to compare it to other hourly wages that aren’t computed the same ridiculous way.
Forgot to mention: the topic of wages is fair game, I’m just protesting the way the $70 number has been thrown around.
I think it’s misleading to represent the $70 figure as an “hourly wage” as it relates to workers, yes, but I still think it is an accurate reflection of how much each employee costs the automakers per hour when you factor in benefits. I think the figure is valid but not in the context in which it’s been used.
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