Dollars & Sense: Beware Fudged Facts About US Auto Wages

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Beware Fudged Facts About US Auto Wages
by Dollars & Sense

From EPI:

With some senators turning down a rescue package for the auto industry based on their demands for immediate wage cuts for the people who build the autos, it's important that journalists are clear about what the wages levels actually are. Widespread claims that autoworkers currently receive over $70 per hour are false.

In a recent New York Times story, reporter David Leonhardt explains in detail. A graphic that accompanies his story shows that at Ford, whose figures are comparable to the other two companies, the average worker’s current compensation (wages plus benefits) adds up to $55 per hour. Of that amount, about $12 is the cost of benefits like health care, while wage-related costs such as paid holidays, vacation, sick days and overtime add about $14. The average wages that show up in current workers' paychecks average $29 per hour before taxes – a solid, middle-class income, to be sure, but far from the $70 that many are claiming.

So where does the claim of $70-plus per-hour come from? The only way to get to that number is to add in the "legacy costs" – the health and pension benefits paid to the huge number of Big Three former employees who are now retired. At Ford these costs add another $16 per hour to the company’s cost calculations.

The Times graphic shows that, compared to the Big Three, Japanese carmakers' US plants pay an average base wage that is about $3 less per hour, and average compensation is about $10 less per hour, mostly because of less generous benefits.

http://www.dollarsandsense.org/blog/2008/12/beware-fudged-facts-about-us-auto-wages.html