Countering the False Rumor that Auto Workers make $70 an Hour

I am sure that you’ve heard about the Rumor or the Conservative talking point that the Detroit Auto Workers make $70 an hour. The Conservatives will try and tell you that if you figure in all thier benefits, it totals that amount.

There’s only one little problem with that, the math, is quite frankly, wrong.

Jonathan Cohn at TNR Explains:

Well, here’s one reason: The figure is wildly misleading.

Let’s start with the fact that it’s not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research–who was my primary source for the figures you are about to read–average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income–hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.

More important, and contrary to what you may have heard, the wages aren’t that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can’t be sure precisely how much those workers make, because the companies don’t make the information public, the best estimates suggests the corresponding 2007 figure for these “transplants”–as the foreign-owned factories are known–was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker’s annual salary at $52,000 a year.

So the “wage gap,” per se, has been a lot smaller than you’ve heard. And this is no accident. If the transplants paid their employees far less than what the Big Three pay their unionized workers, the United Auto Workers would have a much better shot of organizing the transplants’ factories. Those factories remain non-unionized and management very much wants to keep it that way.

So, where did this wild figure come from? Jonathan continues:

But then what’s the source of that $70 hourly figure? It didn’t come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits–namely, health insurance and pensions–and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages–again, $28 per hour–and you get the $70 figure. Voila.

Except … notice something weird about this calculation? It’s not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that–probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees–in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com’s Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just “not true.”

I highly recommend that everyone that comes here, go read the rest of this great article. Because it really puts to bed some of the more idiotic rumors and false information. I mean, I have been raising hell about this whole bailout, but it is mainly because of the utter stupidity that is being parroted by the Far Right and by some of the not so far right. I will say this, that if this is the best that right can do, towards the middle class. They can forget about getting elected in 2010 or 2012. Of course, based upon what I’ve noticed as of late, there is not much hope of that happening anyhow.

I would suppose that there are those who might think, that I do not think that there is any problems with the Big Three. Trust me, I do. I also realize that the unions did get a bit greedy in the last 20 or so years. But, I also know this, that the errors that the present management and management in the past made at General Motors, Ford and Chrysler are NOT the fault of the Employees. Nor do I believe that the employees of these fine companies should be punished for the incompetency of these companies. Nor do I blame the employees for the missteps of the Union officials, who were out for their own agendas.

It is just a plain and simple, the Republicans and some Libertarians think that punishing the middle class and allowing those who simply go to work and do their jobs to lose their jobs is perfectly acceptable. I am not one of those people.

In a personal level, my Dad never, ever made more than $21 an hour at his job. He worked for general motors for 31 years. He drove a Hi-lo, otherwise known as a Forklift. He worked for those people faithfully, rarely took off sick, he would work as many hours as they asked him to. Sometimes double shifts, he even worked triple shifts, before they outlawed it. My Father earned his retirement, and now, I have to contend with idiot Republicans, Conservatives and some Libertarians; who want to punish my dad for G.M.’s stupidity. It just is not right.  As far as his benefits go, he’s got some good benefits, but they’re not as nearly as good as they used to be. He used to pay zero for Doctor’s visits and Prescriptions, he now pays a large co-pay for doctor’s visits and prescriptions. I think my Dad has earned every last bit of those benefits, and those Conservative who would want to punish my Dad, I will say to you, what Keith Olbermann said about those in the Bush Administration who knowingly send your Nation’s troops into battle for their second and third terms, despite the fact that some, if not all, are suffering from post traumatic stress syndrome; they can go to hell.

It just seems very hypocritical of this Nation to give Wall Street 700 hundred BILLION dollars, for a damned bailout that did not even really work; but you let the big three ask for a bridge loan and the whole world is like “Detroit can go to hell!” It just does not make any sense to me at all.

Matthew Yglesias and Washington Monthly