CM in MA

Bailout Watch: Heading for a Populist Backlash?

Mark, it was going swimmingly until the last paragraph. Allow me to rephrase: if we had better socialism for workers we could let capitalism work on companies, but since workers are subject to the vicissitudes of capitalism we're forced into providing socialism for corporations.

Whew, with logic like that, we're doomed. Will the last capitalist out the door please turn out the lights.

The Return of the $70 per Hour Meme

Aliveinamerica, perhaps you misunderstood my comment. The article by Felix S. discusses the following measure: labor costs divided by hours worked. He goes on, correctly in my view, to make the point that this number is useless. As a ridiculous example, a company could add up the costs of a work force that stood around discussing Dancing with the Stars, producing nothing but hot air, pay them their hourly wage and subsequent retirement benefits. Then tote up all the costs for the productionless hours and divide those costs by the hours "worked." This number would mean nothing, just as the number means nothing with respect to the activities of GM. The article had nothing to do with how GM allocates resources to productive purposes or the metrics they use to do so. I was making a rather simple point that to put the hourly wages at GM into a meaningful context (a subject beyond the scope of the article) then production has to be considered. There are other metrics that would also be useful. But what method GM uses to gather and analyze such data wasn't the point of discussion. If the discussion had been a dissection of GM's cost analysis and cost allocation your comment would have been relevant.

On Nov 19 01:27 PM Aliveinamerica wrote:

> Obviously, you like GM has not investigated Activities Based Costing
> (ABC) Labor, especially here is a valuable cost driver for making
> management decisions, especially with a per worker hour cost of $70/hour.
> All labor costs, direct labor and accumulated labor (pensions) should
> be included in this calculation. Move into modern cost analysis which
> is much more accurate than standard costing methods.

The Return of the $70 per Hour Meme

We, that is the collective minds in the U.S., seem to have forgotten that labor is a cost. This is not surprising since we've now spent decades convincing ourselves otherwise. That said, dividing costs by hours worked provides no information not least because the number calculated doesn't measure anything in terms of output. Does anyone remember when we used to think in terms of production in this country? Dividing costs by anything other than units of production makes no sense and provides no actionable information for management.