Wednesday, November 19, 2008
Lavish:The New York Post today: ... a bailout would be a mistake.
For starters, the Big Three are run as inefficiently as ever. Lavish contracts granted to the United Auto Workers, for instance, put GM on the hook for more than $70 an hour per worker. Dean Baker, yesterday: GM Auto Workers Are Not Paid $70 an Hour and It Matters
The New York Times told readers that GM's autoworkers are paid $70 an hour (including health care and pension). This is not true. The base pay is about $28 an hour. If health care cost per worker average $12,000 per year, that adds in another $6 an hour. If the pension payment takes up 25 percent of base pay (an extremely high pension), that gets you another $7 an hour, bringing the total to $41 an hour. That's decent pay, but still a long way from $70 an hour.
How does the NYT get from $41 to $70? Well the trick is to add in GM's legacy costs, the pension and health care costs for retired workers. These legacy costs are a serious expense for GM, but this is not money being paid to current workers. The person on the line in 2008 is not benefiting from these legacy costs.
It would be helpful if the NYT could get its numbers straight. It certainly can affect public support for a bailout if they are led to believe that autoworkers are paid much more than is actually the case.
posted by Quiddity at 11/19/2008 07:27:00 AM
2 comments
You cite the post, but Baker is talking about the Times. Did both papers cite similar numbers or is Baker talking about the wrong paper?
My neighbor, a Limbaugh/Hannity listener and I got into it the other night. He said let me ask you a question, do you support having a union if it requires the big three to pay $100 an hour when foriegners can move into a non-union state and pay $25 bucks an hour? I said yes I support the union as they have made tons of concessions from multi-tasking to pay and benefits; and besides his numbers are bogus as they must include legacy costs for health care and pensions. I said the big three did not stuff enough into reserves when times were good. I asked how come you want to punish todays workers for poor work by yesterdays actuaries.
He told me I was full of sh it and can never give a straight anwer etc. That's the trouble with arguing with these people. They get the distorted "facts" and when you try to tell them what the real situation is they think you are the nutty one.
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