Is the compensation number accurate or misleading?

http://mediamatters.org/items/200812060002

"...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 The $73 an hour figure is outdated and inaccurate.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."..."

"...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...."

"...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.
...."

"..."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:..."

So basically, this $70/hour number is including the health care costs of
twice as many retires and their families as there are current workers.
Plus the amount that the auto companies are currently paying in pensions
for twice the amount of retirees as there are current employees. Of
course they aren't paying the pensions of current employees now.

 

I doubt that is correct. Generally pension costs are accrued for current
employees and put into a trust, so they are not paying pension costs for
those already retired, but they are paying into the pension fund trust for
those who are currently working.

However, one problem is that if the pension fund suffers investment losses,
then GM would have to make up the difference. Conversely if the fund is
doing better than expected in its investments, the company can reduce or
skip contributions. But apparently the GM pension fund is doing OK because
of its conservative investment strategy (probably bonds), and GM says it
does not plan to add any money to the fund for the next three or four years.
http://www.nytimes.com/2008/11/25/business/25auto.html

The health care cost for retirees is more complicated, and you can read
about it in the above article. Note that anyone over 62 is eligible for
Medicare, but the GM health care plan is way over the top compared to what
most retired Americans have available to them.

 

In theory but not in practice. Here is an article that explains that. It
is a 3 1/2 year old article but the concept is there. I hope you
understand it better than I do.

http://www.washingtonpost.com/wp-dyn/articles/A64599-2005Apr18.html


"...Now, as we all can see, pension and health care obligations are
eating GM alive. The bill for the "free" lunch has come in -- and GM is
having trouble paying the tab. In the past two years, GM has put almost
$30 billion into its pension funds and a trust to cover its OPEB (Other
Post Employment Benefits) obligations. Yet these accounts are still a
combined $54 billion underwater. ..."

 

Pension plans and healthcare plans are two different animals. What was
said about the pension plan is basically correct but GMs healthcare plan is
a current business expense.

GM is self-insured and thus is eligible for Medicare reimbursement for each
retiree that is 65 or over. Every retiree MUST sign up for Medicare at
age 65, opt for, and pay for Part B out of their SS check.

 

If this were an absolute truth, the government pension schemes (CPP in
Canada and OAS ? in the US) wouldn't be in trouble.... As it stands (and I'm
no spring chicken), In will be lucky to see much in the way of returns from
my CPP "investment".

Employees are an expensive thing to have.... add a collective bargaining
agreement that brutalizes the employer with "work to rule" efforts and what
can only be called "denial of service" attacks (strike actions).. and people
can get paid much more than a task is worth in absolute terms...

My wage and benefit package costs MY employer much less than a unionized
auto assembler costs one of the detroit 3.... What is real strange is that
MY job requires that I know how these things are built and ALSO how to fix
the friggin' things... Something that Lou down at lug nut installation
doesn't need to know...

 

Maybe you should join a union. Or do you like being paid less?

 

Semantics. It is still the cost of every hour of labor no matter how you
assign the costs. Other car makers do not have that pension portion to
contend with. GM, OTOH, has not only today's labor to pay, but yesterday's
too. That pension should have been funded by some other method than the
Ponzi scheme they used. Other companies got into the same problem over the
years, making promises to pay based on what will happen in the future.

 

Jeez... I love the way some of you guys pretend to know stuff....

I do well... I do very well, thank you.... and I do very well because I know
my stuff and I apply myself in a free market. If I were to become a union
member, I would take a drop in pay... honest (wanna see tax slips?).

A trade union is socialism at its purest.... Communism, if you will.... we
are all equal, comrade... oops, I meant brother... we don't need to be
good - we only need to be together... unionism/socialism/communism.... this
kills individuality... it kills achievement... it pays people to do as
little as possible....

But, I digress.... I am an automotive service technician... I have learned
my craft well... I study, I train, I learn... Currently, I work in the
service department of a Ford store in Canada. I am in control of what I get
paid.... I use my reputation and knowledge and abilities as bargaining
chips....

I will do my best to teach an apprentice what I know.... but he will never
be allowed to ride my coat tails to a better place...

It's not that I like "being paid less".. it is that I can't afford to join a
union and go there.

 

So what do you want the UAW/CAW worker to do? Take less than the
non-union worker so that these benifits can be paid to retired workers?
If they expect UAW/CAW workers to cost the same amount to the company as
non-unionized workers, then they better just determine the cost of the
current workers and project their pension and healthcare costs and leave
out current retirees' costs from the formula.
Don't blame the worker because the company didn't plan correctly.
By the way, the same thing is happening with our national retirement plans.

 

Trade unions just make the equation one employer negotiator, one
employee negotiator. What could be fairer?

 

I'll represent myself, thank you. Then I know what is fair for me.

 

That's nice. But when an employer can threaten to fire individuals if
they don't take what they are offered, they have the upper hand. This
just equalizes things for the worker.
Wouldn't make sense to have every employee getting a different wage.

 

How do you know that GM is not taking that money from the trust and
including it in the calculations? It might already be paid for but since
they are paying it out now, they are using it as a current expense?

 

It was poor planning a long time ago. Never said the worker should take
less, but the company has to get out from under a debt that is going to kill
them. The company and union are at fault with many of the problems and both
have to work tegether to get out of the situation. Maybe some sacrifce for
both is to ther mutual benefit (and that includes retirees)

Right now our business is slow as 50% of or business is tied to new
construction. No bonus and I'm not expecting an increase next year. Nor
will I complain as I'm still getting a check every month, unlike many
others. When things turn around, the bonus will be back.

Never did.

They call it the Social Security Administration.

 

You only get paid more in a union until the company goes out of business, or
ships the job overseas.

 

Union negotiation of pay negates the reality that some people are better
employees than others in terms of productivity and quality of work, and that
they should be paid more. When you have a union that negotiates pay based on
seniority, then there is no incentive for an employee to work harder or
improve the quality of their work.

 

When an employee can threaten to quit when they are not paid what they can
get elsewhere, they have the upper hand. Most non-union employees have
changed jobs many times in their career, and bettered there pay each time
(not just cost of living increases). I have gone back to work previous
employers, each time at significantly higher pay.

Employees who cannot get the same or higher pay elsewhere are generally not
worth what they are paid.

The main reason that everything is made in China these days (with the
exception of cars, but that is probably coming) is primarily because of
labor unions.

 

What happens to your job if Ford goes out of business?

 

I thought trained monkeys could do these jobs.

 

It is simply not true that workers at the Big 3 get paid the same (or less)
than the other auto-workers in the US. They get paid more. That is
irrespective of any pension or health care obligations that the Big 3 have
for their retired workers. When I say they get paid more, I mean salary,
pension accruals, and health care accruals for current employees.