Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor? 439 comments
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The chart above shows average hourly compensation for the Big Three ($73.20) and Toyota (TM) ($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 (GM), Ford (F) 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?
Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda (HMC) and Volkswagen (VLKAY.PK) take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution.
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This article has 439 comments:
Considering the CEO makes the equivalent of 100-1000 workers, that is the salary I would cut first. Then the upper management that makes 50 times or more what the average worker makes.
I am glad that the guys that get their hands dirty, end up with physical problems from their jobs and sweat each day are making good pay - it is those guys that have the soft hands at the top that should be getting a pay cut.
I find it amazing when people blame the workers and unions for the downfall of the auto industry. When if the CEO's and upper management merely made double or triple the average workers salary over the last 20 years, they would have saved billions.
The problem is the greedy CEO's and upper management, not the workers and unions..
On Nov 10 09:32 AM User 294926 wrote:
> Do a little research before you make a comment like that. The $73
> and hour includes legacy costs. Union member don't make anywhere
> near that much money in reality. That number is at least $15-$20
> high and includes benefits like health care. It's a shame- this guy
> is a Phd yet he makes off the cuff statements like he has an IQ below
> room temperature.
Those guys making 60-70 thousand plus benefits deserve every cent. The CEO's making 10's of millions do not.
On Nov 10 09:42 AM saajjata wrote:
> Legacy costs are not calculated into the hourly rate, they are stated
> in a per vehicle cost. The hourly rate is wages and benefits.
On Nov 10 09:48 AM working at ford wrote:
> The hourly rate is less than 30 per and benny cost about 10 grand
> a year. If these companies go away there is no reason for any employer
> to pay above min wage. How many new cars and tv's can you buy an
> min wage. Mc d's pays almost twice min wage to be able to keep there
> unskilled workforce loyal. Get off your high horse and realize that
> all the benny's you now have are as a result of the unions. Not to
> mention workplace safety rule and labor laws that prevent abuses
> that are in the sweat shops of asia. I don't think many of the complainers
> would last long in a true free market.
There is no happy solution. Shoot em all.
On Nov 10 09:39 AM Midas1 wrote:
> Fox News reported this weekend that GM is seeking multibillions to
> fund their retirees' HEALTHCARE costs. BS!!!! No one is giving
> me a free ride on healthcare. I DO NOT WANT MY TAX DOLLARS PAYING
> FOR ANYTHING OTHER THAN PRODUCT INGENUITY!! Taxpayers fund Medicare--now
> we're supposed to give GM retirees the "cadillac" of healthcare?
> No way. Let them fail. This money should not go to padding pockets
> of overpaid employees whom the union would only allow a simple job
> task and no cross training. GM is never going to match the quality
> of Toyota or Honda as long as the focus is on what more they can
> do to pacify the stupid UAW. It's time to dump the UAW and infuse
> a dose of common sense into the domestics!!
You are wrong- that figure includes legacy costs- trust me.
We all know (or should know) that unions have done immeasurable good for the country. But does that mean that everything they do is good? Does that mean there can be no imbalance on the other side?
Further, do you think Toyota is exploiting its workers? If yes, where are the calls for boycott? If no, how can Detroit be expected to compete in a market with such divergent labor costs?
These are the questions, not whether CEOs are overpaid a-holes. (The answer to this has been well-established already.)
On Nov 10 09:45 AM gkahn wrote:
> Let the first one fail, and the UAW will not see fit to make the
> necessary concesions for survival. This is utter graft. A backwards
> segment of the auto industry held together by taking money from the
> government with political threats. This is exactly the kind of problem
> that plagues our nation and our politics.
Well...THERE'S YOUR PROBLEM>>>
$65,000 a year per worker to build cars? That's insane!
If the auto makers were rolling in dough due to the productivity of those $6k workers I wouldn't have a problem; but they're NOT!
Pay should be cut in half for all employees as a first step and then >>>MAYBE>&... a government handout MIGHT be considered.
Do you want your pay cut in half? When CEO's of most companies make $10's of millions, you have a problem with someone making $65k a year?
On Nov 10 10:07 AM Foster J Fezziwig III wrote:
> Why is this being cast as a choice between union busting and exorbitant
> manufacturing salaries.
>
> We all know (or should know) that unions have done immeasurable good
> for the country. But does that mean that everything they do is good?
> Does that mean there can be no imbalance on the other side?
>
> Further, do you think Toyota is exploiting its workers? If yes, where
> are the calls for boycott? If no, how can Detroit be expected to
> compete in a market with such divergent labor costs?
>
> These are the questions, not whether CEOs are overpaid a-holes. (The
> answer to this has been well-established already.)
On Nov 10 09:14 AM Herbert Hoover wrote:
> Just out of curiosity - How much per hour do the guys at AIG make?
> Oh, I forgot, AIG is a friend of Paulson's, so that's OK.
What I find amazing is people like my parents (who make 30,000 a year combined) complain about unions and the GM guys that make 60-70 a year because that is what they hear on Fox and Talk Radio. When the CEO's at the top make more than a thousand employees combined - their exorbitant salaries are the real problem, but lets blame the guy that is going to have back problems for the rest of their lives for making a decent wage....
I have studied the history of corporations and find it amazing that just 200 years ago newspapers were filled with opinion pages complaining that their bosses made 3-10 times their wages - saying it is outrageous and something needs to be done.
200 years later we seem resigned with the fact that CEO's make 100 to sometimes 10,000 times the wages of the average worker, and yet it is rarely a topic to be found - instead, let's blame that guy making 60,000 that is able to put his kids through college and retire at a good age...
On Nov 10 10:07 AM Foster J Fezziwig III wrote:
> Why is this being cast as a choice between union busting and exorbitant
> manufacturing salaries.
>
> We all know (or should know) that unions have done immeasurable good
> for the country. But does that mean that everything they do is good?
> Does that mean there can be no imbalance on the other side?
>
> Further, do you think Toyota is exploiting its workers? If yes, where
> are the calls for boycott? If no, how can Detroit be expected to
> compete in a market with such divergent labor costs?
>
> These are the questions, not whether CEOs are overpaid a-holes. (The
> answer to this has been well-established already.)
On Nov 10 10:19 AM jarco wrote:
> You must be a union auto worker or organizer. You obviously don't
> know what happens at the executive level especially during difficult
> times. Very few have the talents, education, experience to make it
> all come together and preserve the jobs of everyone involved.
>
>
>
> On Nov 10 09:14 AM Herbert Hoover wrote:
On Nov 10 10:15 AM Tomas04 wrote:
> John
>
> Do you want your pay cut in half? When CEO's of most companies make
> $10's of millions, you have a problem with someone making $65k a
> year?
Think about it: one 10 million dollar CEO = at least 153 employees paid a decent rate.
The, the management staff is probably another 10 million
Why can't we pay the CEO 500,000 a year, the management at 100,000 a year and keep those employees rates fair (so they can live a comfortable life). If we did this, the auto corporations would be able to survive...
On Nov 10 10:11 AM John Pseudonym wrote:
> "The article makes it sound like these people are making 150 grand
> a year, when it is closer to 60 or 70. To me that is a wage they
> deserve"
>
> Well...THERE'S YOUR PROBLEM>>>
>
> $65,000 a year per worker to build cars? That's insane!
>
> If the auto makers were rolling in dough due to the productivity
> of those $6k workers I wouldn't have a problem; but they're NOT!
>
>
> Pay should be cut in half for all employees as a first step and then
> >>>MAYBE>&... a government handout MIGHT be considered.
It does matter that those numbers are wrong. You can't start a debate with bogus facts. The reason the non-union auto makers are gaining market share has nothing to do with unions.
I'm all ears as to the reason then. Big steel left this country in large part due to unions. I don't disagree that it is pathetic companies are paying CEO's the salaries and bonuses they are but wages for manual labor jobs are simply out of touch with reality.
On Nov 10 10:30 AM Tomas04 wrote:
> Shadrach
>
> It does matter that those numbers are wrong. You can't start a debate
> with bogus facts. The reason the non-union auto makers are gaining
> market share has nothing to do with unions.
If this guy has a PhD, then I am Einstein.
The $73 is NOT the employee's income, it is the cost to the Company for each hourly employee. This cost includes wages, employment taxes, benefits, AND legacy costs--health care and pensions for up to 1 million people.
Now, if all the posters here wish to kill the pensions for the retirees, fine. The PBGP is already underfunded by about $50 billion, so another taxpayer funded bail out for the PBGP will be required.
Medicare is in crisis due to chronic underfunding. If these 1 million people migrate to Medicare, another taxpayer funded bail out will be required.
It's OK, though. Niot to worry. The Messiah will fix it by taxing the rich.
.
On Nov 10 09:42 AM saajjata wrote:
> Legacy costs are not calculated into the hourly rate, they are stated
> in a per vehicle cost. The hourly rate is wages and benefits.
Amen, well said.
To all those hyper critical people are going to be out of work too, no Big 3, we can't buy their services/products, like their houses, boats, insurance policies, products, etc. Wake up! Minimum wage gets you no where. Get ready because you're going down with us.
On Nov 10 09:48 AM working at ford wrote:
> The hourly rate is less than 30 per and benny cost about 10 grand
> a year. If these companies go away there is no reason for any employer
> to pay above min wage. How many new cars and tv's can you buy an
> min wage. Mc d's pays almost twice min wage to be able to keep there
> unskilled workforce loyal. Get off your high horse and realize that
> all the benny's you now have are as a result of the unions. Not to
> mention workplace safety rule and labor laws that prevent abuses
> that are in the sweat shops of asia. I don't think many of the complainers
> would last long in a true free market.
Recent "new" product offerings are 4-5 years too late. The Ford 500 was a prime example. Now they're advertising a Lincoln MX getting 24 mph highway. Duh. Check out the competition! A similar BMW, for example gets 30, and at even $3/gallon will more than make up for the slightly additional purchase cost. The big three are far behind the curve
On Nov 10 10:37 AM IXLR8 wrote:
>
>
> If this guy has a PhD, then I am Einstein.
>
> The $73 is NOT the employee's income, it is the cost to the Company
> for each hourly employee. This cost includes wages, employment taxes,
> benefits, AND legacy costs--health care and pensions for up to 1
> million people.
>
> Now, if all the posters here wish to kill the pensions for the retirees,
> fine. The PBGP is already underfunded by about $50 billion, so another
> taxpayer funded bail out for the PBGP will be required.
>
> Medicare is in crisis due to chronic underfunding. If these 1 million
> people migrate to Medicare, another taxpayer funded bail out will
> be required.
>
> It's OK, though. Niot to worry. The Messiah will fix it by taxing
> the rich.
>
> .
The root of the problem is that the big 3 are not making vehicles that the consumer is willing to pay for. Some of this is price, but a lot of it is quality. I had a disucssion with a salseman at best buy and it went like this:
"So, what kind of car do you have?" I asked.
He said, "I own a Honda civic."
"You don't own a domestic?"
"I have a 2001 mercury cougar. I loan it to my brother. I couldn't keep it on the road, it kept breaking down."
"Is your Honda good?"
"Oh yeah, the Honda is perfect."
"So you wouldn't consider a domestic?"
"No, their just nightmares. My Honda is solid, so when it is time to buy another car I'll just get a Honda."
"I'm told that the domestics are better, now"
He shrugged his shoulder, "Maybe, but why take the chance? The Honda's are good."
and, by the way, this kid is about 30. He basically will never even consider a domestic. Basically, the big 3 have soured their customer base. They aren't coming back. That is the real problem.
On Nov 10 10:35 AM shadrach wrote:
>
> I'm all ears as to the reason then. Big steel left this country
> in large part due to unions. I don't disagree that it is pathetic
> companies are paying CEO's the salaries and bonuses they are but
> wages for manual labor jobs are simply out of touch with reality.
>
>
>
> On Nov 10 10:30 AM Tomas04 wrote:
jimrogers-investments....
2. I am not anti-union. I believe unions can be a good thing. Workers should organize to get their fair share of the profits. But that payment should not be written in stone.
If the company becomes unprofitable, then the unions should step up and do what's necessary to save the golden goose; NOT COOK IT!
CEO pay is broken and this is another thing the unions should tackle. Insist CEO pay is no more than 10x the average worker pay and falls at the same percentage as the workers pay in tough times.
What I've described above is not the UAW and that's the problem!
On Nov 10 11:01 AM epeon wrote:
> As far as the big 3 paying $70/hr who cares? They simply put it
> into the price of the car and the consumer has to pay for it. Except,
> oooppps, the consumer isn't paying for it are they?
>
> The root of the problem is that the big 3 are not making vehicles
> that the consumer is willing to pay for. Some of this is price,
> but a lot of it is quality. I had a disucssion with a salseman at
> best buy and it went like this:
>
> "So, what kind of car do you have?" I asked.
>
> He said, "I own a Honda civic."
>
> "You don't own a domestic?"
>
> "I have a 2001 mercury cougar. I loan it to my brother. I couldn't
> keep it on the road, it kept breaking down."
>
> "Is your Honda good?"
>
> "Oh yeah, the Honda is perfect."
>
> "So you wouldn't consider a domestic?"
>
> "No, their just nightmares. My Honda is solid, so when it is time
> to buy another car I'll just get a Honda."
>
> "I'm told that the domestics are better, now"
>
> He shrugged his shoulder, "Maybe, but why take the chance? The Honda's
> are good."
>
> and, by the way, this kid is about 30. He basically will never even
> consider a domestic. Basically, the big 3 have soured their customer
> base. They aren't coming back. That is the real problem.
What perks go along with the job? Any corruption there?
The 'union' way is a way to mediocre product. Talent OR production wise.
On Nov 10 11:05 AM John Pseudonym wrote:
> 1. All wages in bankrupt companies should be cut; hence the term
> bankrupt and no money, as in on the way to zero pay...
>
> 2. I am not anti-union. I believe unions can be a good thing. Workers
> should organize to get their fair share of the profits. But that
> payment should not be written in stone.
>
> If the company becomes unprofitable, then the unions should step
> up and do what's necessary to save the golden goose; NOT COOK IT!
>
>
> CEO pay is broken and this is another thing the unions should tackle.
> Insist CEO pay is no more than 10x the average worker pay and falls
> at the same percentage as the workers pay in tough times.
>
> What I've described above is not the UAW and that's the problem!
Let's start working together, rather than driving ourselves closer to civil war.
www.automotive.com/aut...
On Nov 10 11:09 AM eternitus wrote:
> My thoughts exactly. Unlike with the financials, where one large
> company's failure, if left unchecked, can bring down the whole system,
> completely destroy all our access to credit, and ruin our lives for
> a generation, GM's failure will simply eliminate a poorly-run, noncompetitive
> company that overpays its employees. Even healthy companies with
> good management are destroyed in a financial panic as confidence
> evaporates... not true with the auto industry.
On Nov 10 11:06 AM working at ford wrote:
> Thirty and working at best buy. My guess is he had made more than
> one mistake in his life
It makes you wonder if these companies would be in this mess now if they had done something like that years ago.
I AM a Ford factory worker and I can tell you FOR SURE that that $73 an hour rate absolutely includes legacy costs. Do you know what the Japanese brands legacy costs are as of today? --$0000. Thats right, they are paying out no pensions whatsoever.
The average cost to an American auto company per person working is about $83,000. That amount is wages/bennies. This is a FACT. Now I'm no genius, just a factory worker, but by my math based on 2200 hours a year worked that works out to $37 an hour. Our actual hourly wage ranges from $27-$32, give or take.
I will admit we are 'FAT'. There are definately too many people sitting around doing nothing and getting paid for it. It is much better today than in the past but this is the sole reason that the Big 3 are where they are. I personally blame Ford/Union for this. Decades of no real competition let them get away with this. In no way is it the factory workers faults. This would be the same for any worker in any industry. 99% of the time it is never the workers' fault, it is managements. It's just that now, in this time, all the current factory workers are paying the price for managements/unions carelessness.
Interesting tidbit..When the Japanese start to 'cut' people to make their business flourish, they start at the TOP. In fact, most of the world operates in this manner except for our country. It only makes sense. If a business isn't managed well you don't keep the manager and get new workers. You fire the manager and get one who knows what hes doing.
rant off...
Your point is dramatic and highly disengenuous! The numbers you reference include, "wages, pension and health care benefits". Let's look at the pensions. I have included a section from the article referenced below. Let's do some math: the pension benefits from 540,344 retirees and surviving spouses divide into the number of hours worked per year over 180,681 U.S. hourly workers approximately as follows:
($1500.00/month*12 months*540,344 people)
----------------------... = $25.88/hour
(2080 hours/worker/year * 180681 workers)
The pension plans at GM, Ford and Chrysler are either fully funded or close to fully funded and remove about $25.88/hour from your quoted number of $73.20 for a more realistic figure of $47.32/hour for wages and health care. The trick here is to add in the cost of pension benefits to retirees that are funded by the Big 3's pension funds into the hourly labor cost of active workers. Not a fair comparison when GM has been around for 100 years and Toyota has been making vehicles in any significant number in the USA for only about 20 years. GM's pension plan has about $100 billion in assets and should throw off about $5-8 billion/year to pay the cost of the pensions to the retirees. Ford and Chryslers's plans are in similar shape.
The health care costs for retirees add about another $6-7 billion spread over the 540,344 retirees for another $15.97/hour using the $6 Billion figure which brings the average hourly compensation per active worker to $31.32/hour (my estimate). Given that the UAW negoatiated a health care VEBA to remove the 540,344 UAW retirees from the Big 3's books after 2010, I would say it is not fair to include health care costs when comparing UAW to Toyota workers.
I have made some educated guesses about what numbers to use but I am sure they hit in the ball park. Taking the costs added by the retirees and adding those costs on to the hourly wage cost of the current workers is not honest. Letting the Big 3 die would be a tragic mistake that would end up costing consumers in the USA dearly over time.
Chuck1962
"Who: Contracts between the UAW and General Motors, Ford and Chrysler cover 180,681 U.S. hourly workers and 540,344 retirees and surviving spouses.
What: The union has named GM its lead company, which means it will negotiate a contract with GM and then ask Ford and Chrysler to accept the same terms. If there is a strike, GM plants will be targeted.
When: Contracts were set to expire Sept. 14 at miidnight. Ford and Chrysler have extended their contracts indefinitely. GM workers could strike any time if talks hit a wall.
The issues:
Labor Costs: 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."
While you're angry with working stiffs making "outrageous" salaries you should go after the cops making 140k a year and firemen making 120k a year. You'll really hit the roof when you find that they can retire after 20 at 90%! Many city cops retire after 20 with 90% and go to work at the sheriff's department or state police while collecting their pensions and retire from there with another 90% pension!
Boggles your Phd mind doesn't it! How DARE they! How dare a mere worker unit make more than a PhD guy! HOW DARE THEY!
PhD guys are so much better, so much smarter and therefore so much more entitled!
HOW DARE YOU SIR!
1) We can't get rid of poor teachers. After your first couple years, you are generally "locked in", and it would take serious underperformance or commission of a crime to get you yanked!! What lesson does that teach? It says to students, "put in a couple good years, then coast." That seems to have become the paradigm for American life.
2) It drives costs out of control. We don't pay based on performance and results. We pay based on what degree you have and how long you've been there. How does that incentivize hard work and extra effort to foster student achievement? I know plenty of teachers who truly care about the students' success and are driven to promote that...I also know a good share who have put in a few years and then simply coast -- the old reuse the lesson plans and rotate the recyclable tests, etc.
On the bailouts in general:
1) AIG has now gotten over 150B?! How do we justify the continual increase? When do we say "you are on your own???"
2) Regarding the "Big Banks" -- the whole injection of capital there was wrong to begin with. The banks who did not properly manage risk should have been allowed to reap the consequences! The government has effectively picked the winners. It doesn't bug me so much that some of the Bigs were prevented from failing, as much as the fact that others which did not mess up had opportunities snagged away from them by this action!!! Why does the Fed think it had the right to intervene in markets this way and thwart competition?? A couple of regionals with good balance sheets could have maybe thought about merging and taking some market share shed by the Big Bank losers...except that the Fed disallowed this natural market opportunity!!
The whole thing is a crock.
Come o think of it I'll bet you'll be really really angry when you discover that the guy flying your over paid PhD butt around works 1200 hours a year max for his $175,000! Thats $145 an hour! How DARE he!!!
Mr PhD guy, you need to get your priorities straight. In a free market, like you freepers love so much, a worker gets paid what someone is willing to pay for their labor. Come on now, you're a freeper aren't you?
Perhaps you're just angry you spent so many years sucking up to department heads you hated to get you PhD and no one will pay you what you think you deserve. Well, PhD guy, Perhaps you should "improve your skill set"!
HOW DARE YOU SIR!
> A true free market would be a scary place - police stations run by
> the highest bidder, schools only for the wealthy, and the disabled
> left on the side of the road. Nothing is scarier than a completely
> free market.
How about schools that wallow in ineffectiveness, police departments that peddle drugs and play to crime, and a health industry so swamped that no one gets served? Familiar, but still scary.
Ultimately, you are not qualified to decide what is just compensation for workers OR chief executives. We have markets for this. The market says that both Big 3 auto workers and muckety-mucks should be making the same wage - $0. These companies are old, uncompetitive, and saddled with debt, even after chronic government bailouts and sizable tariffs; they should have been allowed to die long ago. Their survival now depends upon congressional favors - meaning that the only productive US auto employees at this point are lobbyists.
If you wish to defend the pension bailouts and the tariffs and the huge amount of loan capital that has been extended to this industry, then you have to make the case - who are auto workers to deserve such welfare at the public's - and the car-buyer's - expense?
On Nov 10 10:23 AM User 294975 wrote:
> And how much does a Ph.D. get paid to write articles without any
> thought or reality? The key is total compensation. Where does that
> money go? Back into our economy in the form of cash spending, health
> care, retirement and more. Is this important? I guess if the government
> can support them when they retire and our health care system is willing
> to cut their costs way down to take care of us and if people earning
> money to spend in our great country isn't important, then let them
> go out of business. I'm sure Toyota and Honda will send some of their
> profits back to the US from Japan to support us........NOT.
Our management compensation is way out of whack because our corporate governance is way out of whack. If you have the people skills to get to the CEO slot, are you going to put members on the board that won't give you exactly the pay you want? Yeah, sure you are.
Check out congress. They give themselves a non taxable income with a pay raise every year, 100% pay in retirement, 100% gold plated health coverage for life. Members of congress may disagree with each other on lots of things, but they agree on one thing: looking after members of congress. So we have a congressional governance issue as well as a corporate governance issue.
Unions did good in their time, but they are anachronisms in the workplace now. All of the good they forced has been taken over by the government. We're all union members now, the government is our union. Are there problems with union governance? There sure are. I've worked in union shops and what 'work at ford' says above is true. Too many workers, work to rule, no drive. I've spoken to people who worked at autoworkers during their hayday. People clocking in and then going to sleep in the warehouse for the rest of the day, etc.
What is happening is that we are competing, at all levels, with workers who are more desperate than we are. Both the illegals here who will live and work under conditions we would never tolerate, and with workers in places where people have too many babies they can't afford and are even more desperate than the illegals here.
And just like the union workers have taken it on the chin from that competition, the time is coming when the management workers will take it on the chin. Why pay someone who is so incompetent they cost their company billions of dollars exorbitant rates of pay when you can hire offshore workers that can't do any worse for 10% of the amount?
And as long as people in those third world countries don't limit their population growth so the desperation eases, there is nowhere to hide. It is going to happen. It is as assured as watching a tsunami wave sweep in towards shore.
The American way of life and standard of living was predicated on a lack of competition both in production and access to raw materials. That is now ending. And so our way of life has to end.
That doesn't mean we can't have a decent way of life, and a decent country. We still have a lot of innovation, of educated workers, of industry, and research. But it means there is no going back to the glory days where we lorded it over the world, and were able to indulge in excess.
Now, eventually the people in those places where they breed without restraint will get some clue and realize they don't like watching their children suffer, that they want to do right by their children, and will limit their population growth. At that point, among other good things that happen, the supply of labor becomes constrained again, and workers wages go up. Then there will be a boom that will make anything in history look like it was playacting. And all sorts of positive effects will occur; the end of war, and poverty, and hunger.
But that is a ways off yet. And we might not get there.
There is a tremendous difference in responsibilities between a ship master, an airline pilot and a guy bolting bumpers on an assembly line. No doubt the job is important, but it does not rise to the level of expertise required of the ship master and the pilot.
On Nov 10 12:56 PM bosun.j wrote:
> Hey PhD guy! You're a smart guy, what percentage of a Cadillac's
> price is labor? AND what percentage of a Lexus' price is labor? Now,
> What percentage of each vehicle's price is executive salaries and
> bonuses? You're a smart guy, huh?
As a retired ship Master I can speak with some authority here. An auto worker works allot harder every day than I ever did. Sure some days I worked around the clock when going in and out of port. Some days I spent all day doing payroll. Over all, I made decisions that occupied a few hours of a day. I was paid what my union negotiated for me. No more, no less. Period.
This is supposedly a free market. In a free market what something costs is based mostly on what someone is willing to pay. That goes for labor too.
My, aren't you the compassionate conservative! "so that they die a quicker and more efficient death. They are most deserving of everything they get."
Palin make you feel like a real man for the first time did she?
Not specifically on point but I worked a couple of years ago in a manufacturing plant and my job consisted of running a test machine on component parts. When I started, a "good" shift with two workers would process around 400 parts combined. Like you I did not work hard; I just worked steady. My shift (two workers) processed 550-575 per shift of which I ran 350-375. I was despised by my coworkers who worried they would be replaced because management now knew they could process more. Fortunately it was only a temporary job for me.
On Nov 10 01:35 PM bosun.j wrote:
> shadach:
>
> As a retired ship Master I can speak with some authority here. An
> auto worker works allot harder every day than I ever did. Sure some
> days I worked around the clock when going in and out of port. Some
> days I spent all day doing payroll. Over all, I made decisions that
> occupied a few hours of a day. I was paid what my union negotiated
> for me. No more, no less. Period.
>
> This is supposedly a free market. In a free market what something
> costs is based mostly on what someone is willing to pay. That goes
> for labor too.
The union has no place in America today!
On Nov 10 09:41 AM Jeff from PA wrote:
> Given the fact that the CEO's and higher management makes millions
> to tens of millions per year, I am more concerned about their pay
> then those making even 70 dollars an hour (which by the way is not
> even near what the regular worker makes).
>
> Considering the CEO makes the equivalent of 100-1000 workers, that
> is the salary I would cut first. Then the upper management that makes
> 50 times or more what the average worker makes.
>
> I am glad that the guys that get their hands dirty, end up with physical
> problems from their jobs and sweat each day are making good pay -
> it is those guys that have the soft hands at the top that should
> be getting a pay cut.
>
> I find it amazing when people blame the workers and unions for the
> downfall of the auto industry. When if the CEO's and upper management
> merely made double or triple the average workers salary over the
> last 20 years, they would have saved billions.
>
> The problem is the greedy CEO's and upper management, not the workers
> and unions..
On Nov 10 09:14 AM Herbert Hoover wrote:
> Just out of curiosity - How much per hour do the guys at AIG make?
> Oh, I forgot, AIG is a friend of Paulson's, so that's OK.
It’s interesting that Mr. Obama stressed that he would bring back manufacturing jobs to Ohio earlier this year. With rates per hour like the big three it WILL NEVER HAPPEN.
His plan to redistribute wealth will only encourage even higher salaries, which in turn will increase the price of cars, which in turn will result in lower sales. You don’t need to have a PHD to figure this out.
The UAW and company management have it all wrong, when competition is involved you can’t keep asking for more, you have to adapt to what’s really going on. Both the union and management are too stupid to keep alive and should not be allowed to continue in a welfare (Uncle Sam will bail you out) mode
I'm all for unions when there are labor abuses and underpaying going on...but we are seeing the opposite: a distortion of the market wages for unskilled labor.
On Nov 10 09:48 AM working at ford wrote:
> The hourly rate is less than 30 per and benny cost about 10 grand
> a year. If these companies go away there is no reason for any employer
> to pay above min wage. How many new cars and tv's can you buy an
> min wage. Mc d's pays almost twice min wage to be able to keep there
> unskilled workforce loyal. Get off your high horse and realize that
> all the benny's you now have are as a result of the unions. Not to
> mention workplace safety rule and labor laws that prevent abuses
> that are in the sweat shops of asia. I don't think many of the complainers
> would last long in a true free market.
"Thirty and working at best buy. My guess is he had made more than one mistake in his life"
Wow.
Tell me, Mr. assembly-line-worker, what is it that you do that makes your job so much more valuable or prestigious than someone working at Best Buy? Not everyone is lucky enough to get a union job that pays $30/hour to do absolutely nothing. YOU are what is wrong with the system.
I guess we'll find out how well your bolt screwing abilities translate to the outside if Ford goes under, and neither I nor the employees of Best Buy will feel any sympathy.
The answer is yes. Why?
The foreign makers have the benefit of green-field plants sited in low-cost areas, probably with long-term tax breaks from state and local governments, and an initial workforce likely cherry-picked to be younger rather than older.
Now that the earliest foreign plants are getting close to 30 years old, the true legacy costs for the foreign makers is just starting to emerge. I'm guessing wages and pensions are not that different between domestic and foreign US plants after adjusting for location cost-of-living. Perhaps the retiree medical for domestics is more generous, I'm not sure.
Given a level playing field, the difference is probably not much.
The Big 3 were prepared for a garden variety recession, but unfortunately we're looking at a near-depression, especially if the Big 3 goes under (if one goes, the others will likely have to quickly follow to maintain parity -- however, nobody wants to buy a car if they think the manufacturer is not going to be around to back a warranty -- so sales may drop to near zero while companies are in Chapter 11.)
Should we destroy the lives of as many people as possible because the government (aka the public) mismanaged housing, energy, credit and the economy generally? Or should we give as many people as possible a chance to get through this?
The writing has been on the the wall for twenty years now that employment-based health-care is a big handicap for US industries versus foreign competitors. Basically, nothing was done about the health care system.
We better start revisioning what work is about or there won't be any manufacturing in N.Am at all....
How? By printing money? There is no wealth being created to pay for the bailouts. It's simply a transfer from public to private hands. And it's those same private hands that have proven they are incapable of building a sustainable business.
Do you also advocate the public paying the mortgages of people who signed up for the cheap ARMs or bought a house way beyond their means? When you make stupid decisions you should have to deal with the consequences, whether it involves your house or a multi-billion dollar industry.
If it IS a free economy, then the big 3 will go out of business as a result of caving in to too many union demands. That's not the subject. The subject is that they are trying to claim our tax dollars, which is the opposite of free market.
Perhaps if the government takes a passive equity stake, there is a chance of recouping the investment when there is a recovery.
Regarding mortgage workouts, that is another tough situation.
The consequences of both situations go way beyond just those directly involved.
On Nov 10 08:31 PM fergus wrote:
> "Should we destroy the lives of as many people as possible because
> the government (aka the public) mismanaged housing, energy, credit
> and the economy generally? Or should we give as many people as possible
> a chance to get through this? "
>
> How? By printing money? There is no wealth being created to pay for
> the bailouts. It's simply a transfer from public to private hands.
> And it's those same private hands that have proven they are incapable
> of building a sustainable business.
>
> Do you also advocate the public paying the mortgages of people who
> signed up for the cheap ARMs or bought a house way beyond their means?
> When you make stupid decisions you should have to deal with the consequences,
> whether it involves your house or a multi-billion dollar industry.
>
>
>
On Nov 10 11:28 AM A Ford Worker wrote:
> I just scanned thru alot of these and by no means read all the comments.
> Let me make a few myself though.
>
> I AM a Ford factory worker and I can tell you FOR SURE that that
> $73 an hour rate absolutely includes legacy costs. Do you know what
> the Japanese brands legacy costs are as of today? --$0000. Thats
> right, they are paying out no pensions whatsoever.
>
> The average cost to an American auto company per person working is
> about $83,000. That amount is wages/bennies. This is a FACT. Now
> I'm no genius, just a factory worker, but by my math based on 2200
> hours a year worked that works out to $37 an hour. Our actual hourly
> wage ranges from $27-$32, give or take.
>
> I will admit we are 'FAT'. There are definately too many people sitting
> around doing nothing and getting paid for it. It is much better today
> than in the past but this is the sole reason that the Big 3 are where
> they are. I personally blame Ford/Union for this. Decades of no real
> competition let them get away with this. In no way is it the factory
> workers faults. This would be the same for any worker in any industry.
> 99% of the time it is never the workers' fault, it is managements.
> It's just that now, in this time, all the current factory workers
> are paying the price for managements/unions carelessness.
>
> Interesting tidbit..When the Japanese start to 'cut' people to make
> their business flourish, they start at the TOP. In fact, most of
> the world operates in this manner except for our country. It only
> makes sense. If a business isn't managed well you don't keep the
> manager and get new workers. You fire the manager and get one who
> knows what hes doing.
>
> rant off...
>
>
To all you union workers, I don’t give a rat’s ass if you break a sweat and go home with a sore back each day. There are tens of millions of manual laborers in this country (albeit creating higher quality products or services than you auto losers). Why don’t we just pay them all $70/hour as well? Unemployment would skyrocket and that is a fact. This is America, not communist Russia, Cuba, or China.
If you didn’t want to break your backs doing manual labor your entire life, guess what, you should have made better decisions when you were younger (saved money, joined army, gone to college and studied your butts off to get one of those soft, white collar jobs that you all so obviously covet). I’m betting you autoworkers were to damned lazy for all that though (which by the way is probably why the products you create are inferior to those made by the Japanese). Now you want to blame others for you personal failures and bad decisions and demand a ridiculously high wage for the low-skilled labor you perform.
Your life is a product of your decisions, take some responsibility and stop blaming the evil, greedy CEO’s. Those CEO’s and the shareholders that pay their salaries make your employment possible.
The UAW and other unions have done more harm to this country than any other group. The selfish union workers that vote for a paycheck every election rather than vote for what is best for our country every four years deserve exactly what is coming. This is karma, plain and simple. You reap what you sew you character lacking, no honor, selfish pieces of excrement. The damage you’ve done to this country by voting for your jobs is coming back to bite you all in your collective arses. The chickens have come home to roost. Screw you all.
Sadly, the only way GM and the unions (both at fault for many reasons given above) will restructure is through some drastic act like reorganizing through bankruptcy. Bankruptcy isn't necessarily the end of a company, but gives it a chance to get out of the mess it's in and have somewhat of a fresh start.
Giving taxpayer money (or just printing it) to the current dysfunctional companies would only prolong their painful demise. They need to be motivated to change.
Their main business plan seems to be to ask the government for money (Oh yes, they did kill the electric car a while ago and plan a new one in a small production run in a couple of years).
Q: Why aren't stockholders insisting on throwing out upper management? Is so much of the stock owned by "insiders" who are benefiting from the status quo?
To all you union workers, I don’t give a rat’s ass if you break a sweat and go home with a sore back each day. There are tens of millions of manual laborers in this country (albeit creating higher quality products or services than you auto losers). Why don’t we just pay them all $70/hour as well? Unemployment would skyrocket and that is a fact. This is America, not communist Russia, Cuba, or China.
If you didn’t want to break your backs doing manual labor your entire life, guess what, you should have made better decisions when you were younger (saved money, joined army, gone to college and studied your butts off to get one of those soft, white collar jobs that you all so obviously covet). I’m betting you autoworkers were to damned lazy for all that though (which by the way is probably why the products you create are inferior to those made by the Japanese). Now you want to blame others for you personal failures and bad decisions and demand a ridiculously high wage for the low-skilled labor you perform.
Your life is a product of your decisions, take some responsibility and stop blaming the evil, greedy CEO’s. Those CEO’s and the shareholders that pay their salaries make your employment possible.
The UAW and other unions have done more harm to this country than any other group. The selfish union workers that vote for a paycheck every election rather than vote for what is best for our country every four years deserve exactly what is coming. This is karma, plain and simple. You reap what you sew you character lacking, no honor, selfish pieces of excrement. The damage you’ve done to this country by voting for your jobs is coming back to bite you all in your collective arses. The chickens have come home to roost. Screw you all.
French automaker Renault has dependably delivered shareholders $2 billion - $3 billion a year profits for the past couple of years.
Renault produces the hugely successful Logan in Romania, a large and affordable car for emerging markets which is extremely reliable and cheap to maintain.
Cost of auto-labour in Romania: $324 / month.
Why should shareholders and taxpayers tolerate anything else?
Nothing against people with an education. I have an advanced degree myself. I do have a particular dislike for those who apparently believe their advanced degrees make them better than people with little education. Some of the brightest people sailed with had no degree and could run circles around most PhDs I've met.
My objection with Mr. PhD is a class issue.
On Nov 10 08:34 PM Chris B wrote:
> Damn, bosun.j, what do you have against people who get an education?
> Your rants border on hateful... did you do bad in school or something?
>
>
> If it IS a free economy, then the big 3 will go out of business as
> a result of caving in to too many union demands. That's not the
> subject. The subject is that they are trying to claim our tax dollars,
> which is the opposite of free market.
I wouldn't mind if the UAW worker did a good job washing the windows, but oftentimes they don't even get washed. Maybe that's why I've heard so often UAW stands for U ain't workin'.
I said to one UAW worker "if this ends you'll be lucky to make half what you do." The response was: "well, you know, I had to pay $800 for my daughter's dance lessons." Ok, that makes real sense. I think UAW and America is not in Kansas anymore. Can you say "entitlement" neighbor? THe piper's piped--and the bill is there to be paid so is the government going to rape the average American so that one person can pay the $800 quarterly dance bill?
On Nov 10 09:14 AM Herbert Hoover wrote:
> Just out of curiosity - How much per hour do the guys at AIG make?
> Oh, I forgot, AIG is a friend of Paulson's, so that's OK.
Finally the government cannot afford to let these car manufacturers fail because many millions of ancillary jobs depend on them. A partial list might be: car sales, part manufacturers and sales, car repair (mechanics), etc. It is foolish of you to be cavalier about such a serious issue.
" I just viewed some segments regarding the US automakers and whether or not they should receive government assistance or should go into bankruptcy. I appreciated the discussion held among Scott Cohn, Melissa Lee, Charlie Gasparino, Phil Lebeau and Herrick Feinstein attorney Stephen Selbst. I also caught a short segment in which a Rep. Paul Ryan stated that the litmus test for whether or not a company should receive government assistance should rest upon the answer to the question, 'Does the failure of this company respresent systemic risk?'
In these segments and any others I have viewed regarding the fate of the automakers, the main risk that is usually mentioned is the potential for the loss of 2.5 to 3 million jobs. This is bad enough on its own. However, there are a few additional systemic risk issues I wish CNBC would cover as well. First of all, according to Cramer, there are $68B worth of GM bonds in the financial system. The potential for these bonds to fail should be enough of a reason to consider that a GM failure does represent systemic risk to the financial system.
I am writing to request that Charlie Gasparino and/or someone else on CNBC research and report the facts on the following issues:
1) Are there, in fact, $68B worth of GM bonds in the market and what would happen to the bonds should GM declare bankruptcy?
2) How many bonds are outstanding on Chrysler and Ford?
3) Does the $68B bond figure for GM include the financial paper held by GM's Financial division, GMAC/Homecomings Financial, or would the failure of GMAC represent an additional risk to the fragile financial system?
4) What, if any, connections does AIG have to bonds, CDOs or CDSs written on bonds or CDOs issued by the 'big' 3 automakers? If any of the big three go into bankruptcy, will that then represent another risk to AIG's financial position?
5) Aside from AIG, what other companies might be severly adversly affected by the failure of the financial products connected with the big 3 automakers?
These are the main questions I can think of at the moment that I would like to see added to the coverage regarding the bankruptcy/bailout debate.
Please broaden your coverage of the issue so viewers can get a wider viewpoint on the issue to help us and our lawmakers make up our minds."
On Nov 10 09:41 AM Jeff from PA wrote:
> Given the fact that the CEO's and higher management makes millions
> to tens of millions per year, I am more concerned about their pay
> then those making even 70 dollars an hour (which by the way is not
> even near what the regular worker makes).
>
> Considering the CEO makes the equivalent of 100-1000 workers, that
> is the salary I would cut first. Then the upper management that makes
> 50 times or more what the average worker makes.
>
> I am glad that the guys that get their hands dirty, end up with physical
> problems from their jobs and sweat each day are making good pay -
> it is those guys that have the soft hands at the top that should
> be getting a pay cut.
>
> I find it amazing when people blame the workers and unions for the
> downfall of the auto industry. When if the CEO's and upper management
> merely made double or triple the average workers salary over the
> last 20 years, they would have saved billions.
>
> The problem is the greedy CEO's and upper management, not the workers
> and unions..
On Nov 10 09:32 AM Tomas04 wrote:
> Do a little research before you make a comment like that. The $73
> and hour includes legacy costs. Union member don't make anywhere
> near that much money in reality. That number is at least $15-$20
> high and includes benefits like health care. It's a shame- this guy
> is a Phd yet he makes off the cuff statements like he has an IQ below
> room temperature.
Let's see; $11/4 =$2.75 per pick up. x 60 min/hr = $165/hr. x 60/45 = $220 per hour. This guy is non-union and more likely than not an illegal alien, so the trash hauler is making a mint. $73/hr doesn't look so bad viewed in this context.
Common sense says you can't pay workers low wages and expect them to pay high health care insurance costs and high gas costs for their cars and homes, not to mention the high costs of housing and food and other numerous expenses.
Our teachers are doing as good a job as they can, considering they are teaching to the NCLB testing.
Capitalism works when we all buy from each other. When many of the groups have no money to spend that creates problems.
Universal Health care would work. We already have Medicare, Medicaid, VA health care, Schip and other children's insurance. We even pay for the cadilac insurance of the elected government. Health workers and Physicians could still make excellent money, but there is no need of paying the insurance companies their 20% profit.
The CEOs need to be cut back to 10 times what the average worker earns.
The stock market takes their cut of the profits by dividends. A few years ago, our broker said he was putting all his retirement money in Ford because they paid high dividends. I hope he isn't retiring any time soon.
In other countries the workers can take less pay because they have free health care and other benefits that we have to pay for.
It may be that price roll backs, cut CEO pay, universal health care. Our necessities should be heavily regulated, especially gas, electricity and health insurance and health care.
American workers would be happy to work for lower wages, if they paid for reduced costs of health insurance, health care, housing, gas and electricity, ect.
Keep in mind the buying power of the dollar has fallen to at least half of what it was when Bush took office. So $65,000 is really more like $32,000 in buying power.
On Nov 11 09:14 AM Tao wrote:
> Workers have to earn enough to pay their standard expenses and they
> should also earn enough so they can afford to do something they enjoy,
> like going to the movies or dining out or a once a year cruise. They
> also need to take care of their retirement.
>
> Common sense says you can't pay workers low wages and expect them
> to pay high health care insurance costs and high gas costs for their
> cars and homes, not to mention the high costs of housing and food
> and other numerous expenses.
>
> Our teachers are doing as good a job as they can, considering they
> are teaching to the NCLB testing.
>
> Capitalism works when we all buy from each other. When many of the
> groups have no money to spend that creates problems.
>
> Universal Health care would work. We already have Medicare, Medicaid,
> VA health care, Schip and other children's insurance. We even pay
> for the cadilac insurance of the elected government. Health workers
> and Physicians could still make excellent money, but there is no
> need of paying the insurance companies their 20% profit.
>
> The CEOs need to be cut back to 10 times what the average worker
> earns.
>
> The stock market takes their cut of the profits by dividends. A few
> years ago, our broker said he was putting all his retirement money
> in Ford because they paid high dividends. I hope he isn't retiring
> any time soon.
>
> In other countries the workers can take less pay because they have
> free health care and other benefits that we have to pay for.
>
> It may be that price roll backs in housing, gas, electricity, cut CEO pay, universal health care, etc. would make it possible to work for less.
> Our necessities should be heavily regulated, especially gas, electricity
> and health insurance and health care.
perhaps an explicit definition of this will leave gm out in the cold.... It is too bad the management they of at least ford and gm seems good today,,,,, but look at what inherited.......are you listening george meany, wherever you are????
On Nov 10 09:48 AM working at ford wrote:
> The hourly rate is less than 30 per and benny cost about 10 grand
> a year. If these companies go away there is no reason for any employer
> to pay above min wage. How many new cars and tv's can you buy an
> min wage. Mc d's pays almost twice min wage to be able to keep there
> unskilled workforce loyal. Get off your high horse and realize that
> all the benny's you now have are as a result of the unions. Not to
> mention workplace safety rule and labor laws that prevent abuses
> that are in the sweat shops of asia. I don't think many of the complainers
> would last long in a true free market.
Most likely that guy doesn't get the $11 all to himself. It probably goes to the company, and he probably gets $10/hr or less.
But in the unlikely event that the guy did own his own garbage company and drove the truck himself and was the only worker, that $11 has to cover the cost of maintenance on the truck, gas, a place to process the trash, and then unless he has his own landfill he'll have to pay for someplace to put it, not to mention he'd have to pay the full SS tax on his income.
So your illustration really isn't comparable.
On Nov 11 08:49 AM pockyclips 2020 wrote:
> Sounds expensive, but let's crunch some numbers. I pay some guy
> $11.00/month to pick up my trash 4 times. It takes him about 45
> secs to pick up my trash.
>
> Let's see; $11/4 =$2.75 per pick up. x 60 min/hr = $165/hr. x
> 60/45 = $220 per hour. This guy is non-union and more likely than
> not an illegal alien, so the trash hauler is making a mint. $73/hr
> doesn't look so bad viewed in this context.