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Media still wedded to $70+ per hour autoworker falsehood despite GM's recent statements to the contrary

Summary: The falsehood that autoworkers employed by the domestic automakers receive $70 or more per hour in wages and benefits -- advanced by dozens of media figures and outlets while Congress has discussed a potential bailout for the auto industry -- was advanced by automakers during 2007 union contract negotiations. However, while GM recently has reportedly pointed out that its labor cost figure includes benefits to current retirees, the media continue to repeat the $70 or more per hour myth.

Between November 11 and December 4, as Congress has considered a potential bailout for the auto industry, Media Matters for America has found dozens of media figures and outlets advancing the falsehood that autoworkers employed by the domestic automakers are paid $70 or more per hour in wages and benefits, some using it to blame autoworkers for the domestic auto industry's financial straits. The false assertions echo automakers' claims during the 2007 contract negotiations that union workers receive $70 or more per hour in wages and benefits. However, GM recently has reportedly pointed out that the figure representing the hourly cost of labor to U.S. automakers -- a cost that GM reportedly puts at $69 -- includes not only current workers' hourly wages and benefits, such as health care and retirement, but also retirement and health-care benefits that U.S. automakers are providing for current retirees, as Media Matters has noted. Despite the automakers' acknowledgement, the media continue to repeat the $70 or more per hour myth.

In a sidebar to a September 17, 2007, article about contract talks between GM and the UAW, the Associated Press reported: "The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say." GM provided a media handbook in July 2007 that stated: "The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked." From the GM handbook section about "GM Wages":


The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked. This total is made of two main components: cash compensation ($39.68) and benefit/government required programs ($33.58).

The average annual cash compensation for hourly employees in 2006 was $39.68 per hour. Included in average earnings are straight-time pay, Cost of Living Allowance (COLA), night-shift premiums, overtime premiums, holiday and vacation pay. In 2003, GM workers logged 41,363 (hours in 000's) in overtime hours for an average of 371 hours per worker; in 2004, 39,409 overtime hours for an average of 374 hours per worker; in 2005, 33,555 overtime hours for an average of 337 hours per worker; and in 2006, 27,265 overtime hours for an average of 315 hours per worker.

Benefit/government required programs in 2006 added an additional $33.58 for each active hour worked. These costs include: group life insurance, disability benefits, and Supplemental Unemployment Benefits (SUB), Job Security (JOBS), pensions, unemployment compensation, Social Security taxes, and hospital, surgical, prescription drug, dental, and vision care benefits.

The handbook falsely claimed that "hourly workers" received cash compensation and benefits totaling $73.26 in 2006. The UAW noted this falsehood in its "2007 media fact book" about the negotiations, writing that the auto companies frequently cited labor costs that included benefits to current retirees (without indicating that is what they were doing):

In addition to regular hourly pay, the labor cost figures cited by the companies include other expenses associated with having a person on payroll. This includes overtime, shift premiums and the costs of negotiated benefits such as holidays, vacations, health care, pensions and education and training. It also includes statutory costs, which employers are required to pay by law, such as federal contributions for Social Security and Medicare, and state payments to workers' compensation and unemployment insurance funds. The highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll. [emphasis added].

In a prepared statement for his December 4, 2008, appearance before the Senate Banking Committee, UAW President Ron Gettelfinger said:

Contrary to an often-repeated myth, UAW members at GM, Ford and Chrysler are not paid $73 an hour. The truth is, wages for UAW members range from about $14 per hour for newly hired workers to $28 per hour for assemblers. The $73 an hour figure is outdated and inaccurate. It includes not only the costs of health care, pensions and other compensation for current workers, but also includes the costs of pensions and health care for all of the retired workers, spread out over the active workforce. Obviously, active workers do not receive any of this compensation, so it is simply not accurate to describe it as part of their "earnings."

Contrary to its 2007 media handbook statement, GM reportedly told the Associated Press on November 20 of this year:

GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers' wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.

St. Petersburg Times business columnist Robert Trigaux wrote in a December 4 blog post that GM directed him to a New Republic piece headlined "Assembly Line: Debunking the myth of the $70-per-hour autoworker":

In the [December 2] column, I compare the total hourly compensation of a UAW worker at GM, Ford and Chrysler with an average worker's pay at a Japanese plant in the United States. I used $71 per hour versus $42 per hour to point out how uncompetitive the domestic industry is.

Well, plenty of folks, including UAW and auto industry retirees raised heck, saying the comparison is skewed. Why? Because the figures include workers' wages and benefits and all of the pension and healthcare expenses the domestic industry must pay to its large base of retirees.


I called GM news relations director Tom Wilkinson in Detroit this morning and explained the controversy. He's quite familiar with it. He sent me a recent article by Jonathan Cohn from The New Republic headlined "Assembly Line: Debunking the myth of the $70-per-hour autoworker." The story relies on data supplied by the Center for Automotive Research, all on the up and up. Here's a key paragraph of the story:

"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."

However, even though the UAW said in 2007 that "[t]he highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll," and GM has acknowledged that its $70 or more per hour figure includes payments for current retirees, media figures and outlets have repeatedly advanced the false claim about autoworkers:

November 11-15

A November 11 Detroit News article reported: "GM may need to reopen the UAW contract and cut hourly compensation for core employees from $71 an hour to about $40.50 an hour, [Deutsche Bank analyst Rod] Lache said."

Syndicated columnist Cal Thomas wrote in his November 11 column:

The latest, but by no means the last supplicant at the public trough, is the auto industry, which wants a bailout to save jobs because its cars are not selling. There is a reason for that and it can be summed up in five words: The United Auto Workers Union.

Half of the $50 billion the auto industry wants is for health care for its current and retired employees. This is the result of increasing UAW demands, strikes and threats of strikes unless health care and pension benefits were regularly increased. While in the past UAW settled for some benefit decreases while bargaining with the Big Three U.S. automakers, according to the Wall Street Journal in September 2006, "on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers." Those increased costs, including the cost of health care, were passed along to consumers, adding $1,600 to the price of every vehicle GM produced. In February 2008, after General Motors offered buyouts to 74,000 employees, the Center for Automotive Research estimated the average wage, including benefits, for current GM workers had dropped to $78.21 an hour. New hires pulled down a paltry $26.65.


Contrast this with non-union Toyota, whose total hourly U.S. labor costs, with benefits, are about $48 per hour. Those lower labor costs mean Toyota enjoys a cost advantage over U.S. automakers of about $1,000 per vehicle. Is it any wonder that Toyota is outselling American automakers and from plants that have been built on U.S. soil? According to James Sherk of The Heritage Foundation [in his October 3, 2007, op-ed], "the typical hourly employee at a Toyota, Honda or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime."

Thomas' column appeared in papers such as The Columbus Dispatch, The Washington Times, The Charlotte Observer, and The Salt Lake Tribune.

During the November 12 edition of Fox News' Live Desk, correspondent Molly Henneberg said that "some House Republicans today voiced concern that bailing out another industry just isn't fair to their own constituents." Henneberg then uncritically aired video of November 12 remarks by Rep. Spencer Bachus (R-AL) during a House Financial Services Committee hearing in which he stated of autoworker compensation: "He [a sawmill worker] is making $15 an hour. And we are taking his money and we are paying it to a company that is paying $75 an hour."

In a November 13 op-ed, Daniel J. Mitchell, a senior fellow at the Cato Institute, wrote that the "UAW bosses make extravagant salaries, as well, and even regular union workers make an average total compensation including benefits of approximately $70 per hour, far higher than the average American." contributor Mary Katharine Ham quoted Mitchell's claim that autoworkers received "approximately $70 per hour" in a November 14 blog post.

During the November 14 edition of Fox Business Network's Cavuto, while discussing the proposed bailout, Bachus said: "There's another problem, and that's a fairness issue. First, at the grass roots, Neil, people who are making $15 an hour and $25 an hour are saying why should my money go to prop up a wage earner or company who pays their wage earners $75 an hour?" Host Neil Cavuto did not challenge Bachus' false claim.

In his November 14 Denver Post column, David Harsanyi wrote that "Dr. Mark J. Perry, a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan, calculates the average compensation for employees of the Big Three auto companies at $73 an hour." In a November 9 blog post, Perry claimed:

Compensation Chart

"The chart above shows average hourly compensation (additional data source here) for the Big Three ($73.20) and Toyota ($48.00), compared to average hourly compensation for Management and Professional Workers ($47.57), Manufacturing/Goods Producing ($31.59) and all workers ($28.48), data available here.

Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM, Ford and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?

Perry sourced his information to the September 17, 2007, AP article discussed above and to a 2007 DaimlerChrysler document.

Continued Here:
Media Matters - Media still wedded to $70+ per hour autoworker falsehood despite GM's recent statements to the contrary
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