Apparently my dad is the reason Chrysler’s in trouble but Toyota isn’t.
The New York Times’s David Leonhardt looks at what would be a meme, if the Times were trendier and talking only online: the average Big Three auto worker makes $73 an hour.
It turns out that folks on the line are not in fact grossing $146,000 a year. Leonhardt’s analysis of what makes up that $73:
- Wages (including overtime and vacation pay):
$40 an hour (For the record, when I worked at Chrysler’s Warren Stamping Plant, I made $3.575 an hour, straight time.)
- Cost of benefits like health insurance and pensions:
$15 an hour (Few people see this broken out on their paychecks.)
- Costs for retirees: $15 an hour
As Leonhardt points out, companies like Toyota and Honda haven’t had North American operations long enough to have retirees. Pull that $15 an hour out of the equation and try the comparison. Wages and benefits for Big Three workers: $55 an hour or so. For the foreign-based companies? $45.
He writes, “The Big Three and the U.A.W. had the bad luck of helping to create the middle class in a country where individual companies–as opposed to all of society–must shoulder much of the burden of paying for retirement.”
He goes on to point out that if the government took over two-thirds of the retiree costs, and the Big Three lowered their wages and benefits to that $45, the net effect would be to lower the cost of the average vehicle by… $800.
For $800 less, would you buy an Impala rather than an Accord? Me, neither.
What’s unfolding, in the media and in Washington, is a frantic search for simple solutions to complex problems. On one hand, GM (which has lost more market share than Ford ever had) seems still to yearn for the days of Al Sloan and Charlie Wilson*.
*Not the congressman in the recent movie, but a GM exec sometimes called Engine Charlie who became Eisenhower’s secretary of defense. Wilson said during confirmation hearings that “…for years I thought what was good for the country was good for General Motors and vice versa.”
Workers, meanwhile, note that Firms Too Big to Fail are giving up bonuses. (In an article on attempts to introduce clawbacks into Wall Street compensation, I found an “employment lawyer” huffing that such a thing might not even be legal. I guess because these folks have contracts — unlike, you know, the United Auto Workers.)
(Added later: I had meant to say, as Leonhardt does in his article, that labor costs account for ten percent of the cost of a car. Not the percentage *I* would have guess — how about you? You can argue whether the wages are too high, but not about who’s been calling the shots at the company. )
This post is somewhere between a rant and an elegy, with more than a few glances at what the various subsystems of the auto companies (and yes, the union) have produced. Geary Rummler would be the first to point out that the marketplace (we folks who buy cars) has also had influence — people buying SUVs larger than their first apartments, disdain for public transit (or for paying for it) that produces floods of single-occupant vehicles.
Plymouth Fury photo by gt_hawk63.
Hearse photo by justmakeit / Rachel.