Ford's Labor Costs Divided by Hours of Work Is NOT Their Hourly Compensation

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Thursday, 13 January 2011 16:22

The NYT told readers that Ford's labor cost for a worker is now $59 an hour, which is says is down 20 percent from what it used to be. It is important to recognize that this number is not what Ford is paying for current workers' pay and benefits. This includes all payments that Ford makes for labor, including contributions to its pension and health funds for workers who are already retired.

This is an important distinction. Unionized auto workers are paid more than the typical worker, but their pay is not as out of line as this figure implies.