Sunday, December 14, 2008

The Media and Misinformation

Where is the media with this $70-an-hour meme, actively promoted by the anti-union people? The press, on such a central issue facing our country, fails to clearly state the facts and instead perpetuates misinformation with their poor reporting. They sure as hell have held blue-collar workers to a different standard than the white-collar worker.

The media might want to stop echoing the conservative misinformation and the myth about the $70.00 an hour, and review the facts. They also might want to mention that the big three autoworkers recently made significant concessions to management?

The falsehood about auto workers is being spread at a crucial time, especially while a public debate is taking place. The media is willingly and intentionally misleading the American people.


iamcoyote said...

I woke up too late to see if David Gregory is any good at MTP. Not too sorry I missed it.

I'm more concerned about being snowed in with below freezing temps. I'm frikkin' outta beer, man! I'm not sure how long I'll survive. Where's Todd Palin and his snow machine of liberty! A case of Henry's, stat!

idiosynchronic said...

Inside Washington this morning spent 3 minutes ripping the labor cost arguments concerning union vs. non-union wages. Too bad no one saw it in comparison to Press the Meat or CBS's Sunday yak.

Judith said...

Me too. Stocked up yesterday for the storm of the century. Missed Gregory, but who cares, really.

The would be WH Dud is in a psychiatric hospital these days. Diagnosis: Depression. Can't overcome the knowledge that he is a nobody again.

Judith said...

Idio, if people would just stop for a minutes and do the numbers or use their logic.

Judith said...

Idio, does that article say how much the union and non-union workers make? I can't find that piece of information anywhere.

Seven of Six said...

Judith, Gettlefinger, head of the UAW, said the other day (paraphrase), "If we want to compare wages with Southern Auto makers he's open to that. They in fact make more at the Toyota plant, about the same at the VW, and only a dollar less at KIA plant."

Thuy Lam said...

Maybe the compensation numbers are from here.

Link 1

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

And from here Link 2

How can the U.S. auto industry compete with foreign carmakers when the average hourly pay, including all company benefits, for the Big Three workers is about $74 per hour, compared with about $48 per hour for the workers manufacturing foreign cars in the United States.

The company benefits typically comprise holiday pay, vacation pay, disability benefits, health insurance premiums for existing workers and retirees, pensions for retirees, 95 percent pay for laid-off workers and some life insurance payments, etc.

The U.S. auto manufacturers have caved in to the demands of the United Auto Workers union when negotiating labor contracts, and the UAW has been very unreasonable in its negotiations with management.

The fully funded pensions and health benefits enjoyed by the autoworkers are egregious. Health care and pension costs for the Big Three add approximately $1,500 to the cost of a vehicle compared to foreign competitors. Both current and retired Big Three autoworkers enjoy outlandish health benefits with high health insurance premiums.

Seven of Six said...

Thanks for your input muck.

Seven of Six said...

Here Judith, from the NY Times, last Tuesday, December 9th. PA Senator Bob Casey was not happy about the 73 dollar an hour meme.

Seventy-three dollars an hour.

That figure — repeated on television and in newspapers as the average pay of a Big Three autoworker — has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that’s wrong with bloated car companies and their entitled workers.

To the Big Three’s defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit’s decline. “We’ve heard this garbage about 73 bucks an hour,” Senator Bob Casey, a Pennsylvania Democrat, said last week. “It’s a total lie. I think some people have perpetrated that deliberately, in a calculated way, to mislead the American people about what we’re doing here.”

So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).

But the defenders are not right to suggest, as many have, that Detroit has solved its wage problem. General Motors, Ford and Chrysler workers make significantly more than their counterparts at Toyota, Honda and Nissan plants in this country. Last year’s concessions by the United Automobile Workers, which mostly apply to new workers, will not change that anytime soon.

And yet the main problem facing Detroit, overwhelmingly, is not the pay gap. That’s unfortunate because fixing the pay gap would be fairly straightforward.

The real problem is that many people don’t want to buy the cars that Detroit makes. Fixing this problem won’t be nearly so easy.

The success of any bailout is probably going to come down to Washington’s willingness to acknowledge as much.

Let’s start with the numbers. The $73-an-hour figure comes from the car companies themselves. As part of their public relations strategy during labor negotiations, the companies put out various charts and reports explaining what they paid their workers. Wall Street analysts have done similar calculations.

The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn’t made up. But it is the combination of three very different categories.

The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.” It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That’s why $73 is sometimes $70 or $77.)

The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so.

Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.

The third category is the cost of benefits for retirees. These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix — dividing those costs by the total hours of the current work force, to get a figure of $15 or so — and end up at roughly $70 an hour.

The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.

These retirees make up arguably Detroit’s best case for a bailout. The Big Three and the U.A.W. had the bad luck of helping to create the middle class in a country where individual companies — as opposed to all of society — must shoulder much of the burden of paying for retirement.

So here’s a little experiment. Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That’s roughly the gap between the Big Three’s retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.

Do you know how much that would reduce the cost of producing a Big Three vehicle? Only about $800.

That’s because labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle. An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say. Even so, many Americans no longer want to own the cars being made by General Motors, Ford and Chrysler.

My own family’s story isn’t especially unusual. For decades, my grandparents bought American and only American. In their apartment, they still have a framed photo of the 1933 Oldsmobile that my grandfather’s family drove when he was a teenager. In the photo, his father stands proudly on the car’s running board.

By the 1970s, though, my grandfather became so sick of the problems with his American cars that he vowed never to buy another one. He hasn’t.

Detroit’s defenders, from top executives on down, insist that they have finally learned their lesson. They say a comeback is just around the corner. But they said the same thing at the start of this decade — and the start of the last one and the one before that. All the while, their market share has kept on falling.

There is good reason to keep G.M. and Chrysler from collapsing in 2009. (Ford is in slightly better shape.) The economy is in the worst recession in a generation. You can think of the Detroit bailout as a relatively cost-effective form of stimulus. It’s often cheaper to keep workers in their jobs than to create new jobs.

But Congress and the Obama administration shouldn’t fool themselves into thinking that they can preserve the Big Three in anything like their current form. Very soon, they need to shrink to a size that reflects the American public’s collective judgment about the quality of their products.

It’s a sad story, in many ways. But it can’t really be undone at this point. If we had wanted to preserve the Big Three, we would have bought more of their cars.

That's why I defend the Union. The problem is only 10% the Union's fault.

I'll be the first to say "legacy" costs are what hurting the Union's reputation but like any job... these men and women put their whole lives into this... under this agreement and now Southern republi-con politicians want to take this away.

We have had corporate management living high off the hog for years, after multiple warnings, yet they did nothing or ignored change.

I know federal prison guards who make $55 an hour not counting benefits. Don't pay them, they are off to join the Marshall's office or Blackwater. They are Union as well. I don't here that get mentioned.

Anjha said...

MTP is on right now on Kong and it is pretty goo.

Gawddamned Mitt Romney repeated that 73 dollar an hour meme and Jennifer Granholm called him on it. Said it had been debunked but she should have done so in a more forceful way rather than her pretty smile kinda way. Romney can walk on her because she is so pleasant and he lies so easily.

Why do these fuckwads lie so easily?

It is unbelievable to me. These fuckers just let the shit flow off their tongues.

I often wonder if they really believe this tripe.

Comparing the wages between the unionized shops and the non-union shops is comparing apples and oranges. There are bonuses and shit at Toyota that do not happen at GM, addition, the foreign auto plants are not willing to open up their books. Gettelfinger said that they would LOVE to compare, they just need to look at all of the records.

Judith said...

Thanks Seven of Six. I have a clearer picture now.

Muck sure is cute.