Dean, I am so glad you keep writing about this. Every time I read an article that trots out the hourly pay of autoworkers, I wonder why this figure is supposed to matter. We never seem to hear about the executives' salaries and benefits in the same way; i.e., that these costs are a huge dragging anchor on the corporation.

I know nothing really of economics, but it does seem to me that good planning would always have included these so-called 'legacy costs' and the need to fund them. Good planning would also have worked toward a sustainable manufacturing program, one that didn't try to game the regulatory system for a short-term profit that went not to the legacy costs and the workers, but mostly to the executives and lobbyists. When I think about how the car companies have tried everything except common sense to keep enlarging their market share, with decreasing success but increasing insistence, it makes me doubt their ability to use any further assistance to restructure wisely. No matter what, I think the workers will suffer immensely and I wonder if those writing about the 'high' hourly wage will be thinking they deserve that pain, as though the problem confronting the auto industry is due to the incorrigible greed of the workers and it serves them right to suffer.

So... the foreign companies don't have these legacy costs because they're newer here?

The graph still makes sense in terms of how bad we should feel about the manufacturers going into bankruptcy. If their legacy costs are enormously higher than the competition, that is simply no way to operate a business.

According to a 2005 article in the Boston Globe (http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/06/16/gms_healthcare_dilemma/), GM spent $5.6 Billion on employee and retiree health care that year. One can only assume that the amount has increased sharply in the past 3 years.

So if the US enacted single-payer universal health care, it would save GM (and its unions) over $6B per year. That's a kind of bailout of the auto companies I could support.

The automakers didn't assume that huge pension/healthcare burden out of the goodness of their hearts or because they are morons - it was at least in part a result of tax policy. The government has been in the game all along, and it shares the reponsibility.

The opposition to bailout of automakers by pro-business conservatives has one main objective: breaking unions. If a deal were proposed that involved voiding union contracts you would see them change sides very quickly.

Yesterday on NPR's Talk of the Nation the NYT's senior business correspondent stated the $80/hr figure. I had hoped, vainly, that NPR's labor correspondent correspondent would respond as Dean has. Oh, well!

There are undoubtedly many reasons for the problems the US automakers face, including labor costs. Ever since Reagan broke the ATC union, it has been popular sport to demonize labor. Like Aunt Deb, I, too, wonder why we here so little of executive pay. I don't know if executive pay at the automakers has been several hundreds the multiple of the average worker's, if so, then this is an issue as well. To be fair, executive compensation probably is a fraction of the total labor cost. Still, it is symbolic. If executives are reaching for the sky, why shouldn't the labor force?

Charles makes the same point about national health care that I have long made, and, I believe, Dean has written. Most of the advanced industrial nations, including the Japanese and Germans, have forms of national health care that reduces or eliminates a big expense for their respective manufacturing industries. Unfortunately, this is not Obama's plan. Because it can be called socialism, many people have a knee-jerk repulsion to it. This is probably because it takes a little longer to explain the need for social insurance than it does to mislead people about the evils of it. Too bad. There is a great article in the current New York Review of Books on this very subject by Robert Solow - http://www.nybooks.com/articles/22080. If it could be simplified and widely disseminated, perhaps enough people could be swayed.

If $41/hour is correct, this means an autoworker is being paid $85,000/year, or roughly 50% more than US median income.

Dean, I agree that bailout and bankruptcy are the way for the Big 3 to go, in fact I'd suggest they be merged into one company, but it's not going to be an easy sell to most Americans when so many are losing their jobs and homes without help from the government.

Seeing as though Joe the Plumber claimed he was making $250k/yr., maybe the NYT thought they had some wiggle-room.

Can you someone please explain -- and that's a sincere request, not a rhetorical move -- why a bridge loan like the one Chrysler received in the late 70s, early 80s can't be made to the Big Three? Maybe I'm remembering incorrectly, but those funds were contingent upon major restructuring from top to bottom and were repaid at a profit to the government. So why don't I hear more people talking about that possibility?

Meek:
Dr. Banker's number of $41/hr includes benefits -- health, pension, etc. Does your $56,000/yr median income also include health, pension, etc. or is it only wages?

I make $30,000/yr. Out of that comes my health care and a contribution to a 401K. I work in an industry that does not have "benefits". No paid holidays, so paid vacations, no sick pay. I'm also a single parent. You do the math....

Ellen, I think you would much prefer a job with benefits, vacation, paid holidays, and sick leave. The point I am making or trying to about the attempts to demonize union workers as the source of the Big Three's financial problems is that I can't agree with a solution to their troubles that is founded on reducing all workers to the same struggling conditions you describe.

All arguments and discussion of the bailout seem to accept the premise that the Big Three are unique in terms of the effect their collapse would have throughout the US economy. For one thing, many workers in your situation, Ellen, would be out of jobs as parts suppliers, auto mechanics, car salesmen, etc etc. So we are essentially being asked to underwrite labor while at the same time, we are being told that unionized labor is the problem because of 'legacy costs' and high wages.

Labor unions have already given up a great deal in an effort to sustain these companies. From my point of view, as a consumer and concerned enviro, the companies have not shown a similar willingness to work with either labor or consumers to improve their product and insure their future.

>You do the math....

You're falling for it, Ellen. The "split the working class" trick.

You should be glad there are people of basic education that are making a lot more than you... you should say "good for them, and hey that's what I want too".

Instead you want to bring them down to your level? WTF sense is there in that.

It would be very interesting to have a retired auto worker to give his final salary and year of retirement along with his current retirement benefits. I think that would put an end to a lot of the discussion about the economics of a bailout. I personally think from what I've heard that their retirement benefits are far out of the average for most workers in the U.S. today (and have been since WW2).

Anonymous says to Ellen: "You should be glad there are people of basic education that are making a lot more than you... you should say "good for them, and hey that's what I want too"."

That's a fine attitude to have, but Ellen shouldn't be taxed to bailout those workers who make two or three times what she makes. It's one thing for union workers to fight for and win a high wage. Good for them. It's another thing for union workers to demand that Ellen reach into her purse to subsidize their high income, especially when it's their high incomes that have helped bring their employer to the brink of failure.

Ethan:

Fair enough, median income doesn't include benefits, but it's still a very tough sell...

I think unions are fine, but the Big Three's impending bankruptcy means that wages and benefits in future will have to be closer to what non-bankrupt, non-union,
non-American companies provide to their workers, which ain't much.

The woes of Detroit are a great argument for national health care, but don't hold your breath.

Meanwhile, automobile production remains a global industry with too much capacity and plenty of cheaper labor around.

58K (28 x 40 x 52) a year in wages. Nothing to get envious of. Workers need to realize that non-union wage changes are often correlated to union wage changes. Be careful what you wish for. If union rates are cut what do you thing will happen to non-union wages?

I was talking with a nurse one day and asked her if she was a union member. She said "no", and that she "didn't need" a union. Later on in the conversation I asked her whether nurses in the other hospital across town were union members. She said "yes" and went on to say that her wages (and those of other nurses in the non-union hospital) seemed to follow those in the union hospital.

She didn't grasp that the unionized nurses in the hospital across town were of great benefit to her because her employer was using union wages/benefits as a yardstick on which to base their non-union nurses compensation.

VGR wrote, It's another thing for union workers to demand that Ellen reach into her purse to subsidize their high income, especially when it's their high incomes that have helped bring their employer to the brink of failure.

That's a reasonable claim, but why should Ellen be forced to help pay landowners their 10--20% of GDP, which is a hell of a lot more than the subsidy to autoworkers?

And the autoworkers (usually) work for their living, which is more than you can say for landowning parasites.

I'm not convinced that it does matter. Sure, the $70 may be a gross overstatement, but the fact of the matter is that there are a lot of factors contributing to (i.e.) General Motors' financial problems. I would start with: every car they've made has been overpriced, from the get-go, by something like 20-30%

Lumping all three US automakers is somewhat inappropriate as well. I just read where all of Ford's cars are now rated average or above by Consumer Reports (I believe), the only one of the Big Three to do so and on par with many of the other "better" manufacturers. Sure, it still struggles with model life cycle, and model types, but quality has improved (I do not work for Ford, nor own any stock). Of course, this has been preceded by years of mismanagement. What is unfortunate is that if GM goes down, the others may be taken with them. Perhaps GM should be allowed to go bankrupt, then if the suppliers that would end up threatening Ford and Chrysler need help, they get it.

The problems with the US auto industry is manifold. All of the problems derive specifically from management. Sure, union workers get paid well, but that was a factor that had to be managed. With all the anger I have for bailing out these guys, failing to do so in todays economic climate seems to be short-sighted. It seems more logical than handing banks 700 billion.

"the foreign companies don't have these legacy costs because they're newer here?"

No, the foreign companies don't have these costs because they located their US factories in right-to-work states, which means that the union doesn't have the kind of power to dictate terms that they do in Detroit.

Comparing what an executive makes (although I am in complete agreement that it is excessive) to someone bolting a door panel to the frame (or whatever) is ridiculous. Unionized employees are oblivious to reality (I am in a union and have plenty of examples to work with) and will eventually suffer the consequences - I'm quite confident they'll be blaming it on someone else.

No one, including Ellen, is being asked to give anybody anything. The auto companies are asking for loans, not gifts, so the money will be paid back. Until this credit crisis, they were well on their way to financial recovery.

I retired from GM this year. Last year I made a bit less than 60K. My pension, after taxes, is $2800 per month. And guess what? I earned it. It's not a gift from the benevolent corporate masters. It is deferred compensation, earned by me, during my 31 years of service.

One "legacy" is the cost of the successful 1998 "productivity" strike that the UAW "won."

Workers that "finish their quota" go home early - some after putting in a half-days work.

Bosch Automotive pulled (jobs paying $80k up to $120k a year) out of Grand Rapids, MI after upper management had a plant meeting begging workers to work. Rank and file responded: F-off!

Workers would take hour long smoke breaks, wander around the plant, play slow-down games, etc.

You want to "help" the Big-3 - eliminate the UAW.

It is long past due its shelf life.

karmic backlash ?
does all of this ( big three auto-capitalism) go back to the calculations of costs of the part for the ford pinto to keep it from exploding , versus thecosts of the lawasuis paid out to the families of the victims ?
remember what the great humanitarian , GOD , capitalist JESUS said , " prophets , er! i mean profits over people ! "

When the Japanese built assembly plants in the US, our domestic auto companies were already doom with it's legacy cost while the Japanese enjoy no such costs. I find this so unfair. In Japan they have also effectively closed it's auto imports. Dumping cars in the US was a common method on getting on top. Our US government has failed us again by allowing unfair trade competition, to the point where the Japanese has practically wiped out our auto industry. It looks like the trend will continue until there are no industries left in the US.
The link below will show how Japan got to dominate one industry after another. I feel sorry for the younger generation!

http://www.uwsa.com/issues/trade/japanyes.html

$30/hour is still a substantial salary for a job that requires no secondary education. I'm a mechanical engineer for a major defense contractor and that is about what I make with a four year degree in engineering. I'm not saying these guys should be making minimum wage, but if you can make $65K a year moving sheetmetal in and out of a press or torquing a few fasteners down, then why in the hell did I go to college?

Heck i would be happy with 30 dollars per hour. I am a Registered Nurse with a Bachelors Degree in Management and only make $20.00 per hour. My husband works in a large major manufacturing plant and makes $12.00 per hour.

I believe the majority of individuals in America are underpaid. I think CEO's need to get off thier high horses and start spreading the wealth. This country has an excess of minimum wage jobs that can't support anyone.

I believe that unskilled labor shouldn't make that much I went to school to learn my trade and don't make near what a unskilled installer makes. Shake your guys heads and wake up to reality. 15/hr max before benefits for a unskilled laborer.

I've always thought that if the "news industry" (no longer an independent "Fourth Estate," really), were to make it a practice of including the total perks package of each company executive in every story, it would begin to change things a bit in this "society" of ours.

The "press" might also toss in the number of separate residences for each of these gents (and some ladies). It could be done as a standing hyperlink on the web, but, because it is so extremely relevant to every story, these perq/perk packages should be IN every story.

It would be a good idea to briefly put, in a "lower third," the total money package each reporter, news anchor, host is paid as well. Knowing that the figure is being displayed every newscast might prevent (for example) the Charlie Gibsons of the world from making gaffes about $200,000 a year income being "middle income" (instead of in the top 3.5%). New York Mag had Charlie at $7 Million/year in its 2005 who-makes-what "salary guide." Hank Paulson was listed at $29.7 million/year.

It would be a useful exercise to put in time/money comparisons interactively, e.g.: "While delivering that 32-second interview, CEO Paul Plutocrat made $965,000; I (or "this reporter") made $18,000, and the Macdonalds burger-flipper, seven cents (7¢). [These figures not calculated just yet; I'm working on it. See results later at this site: www.inkywretch.com]

Most of the advanced industrial nations, including the Japanese and Germans, have forms of national health care that reduces or eliminates a big expense for their respective manufacturing industries. Unfortunately, this is not Obama's plan. Because it can be called socialism, many people have a knee-jerk repulsion to it.

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How do numbskull blue collar idiots make more than most ofthe u.s.? These people need to get back to what they are worth nothing but for making crappy cars that fall apart. Good riddence to this sort of problem and all those who contribute to it. I'll be glad to see no more GMC's on the road. I bet that big obnoxious GMC logo on the front of their cars gets taken off out of embarrassment.

I think all Autoworker's need to get in the real world. It is un-believable that you feel you can take a early retirement at 5o and receive more money and benefits so early. I have friends that have MS and BS degrees that worked hard for the education that makes less than that at 50. I have kin who retired from GM that dropped out of
High School later to get a GED and our now retired receiving GM pensions. That is why the average American can not afford to buy a new car. I am happy they receive it but don't try to convince me it is a good thing live in the real world.

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It could be done as a standing hyperlink on the web, but, because it is so extremely relevant to every story, these perq/perk packages should be IN every story.

Hey,you will do better.your posts have inspired me! - I love the way you directly get to the point, and then work outwards. I’ve been trying to do figure out what I want to say about ,that would allow me to do exactly the same thing.