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Home Publications Blogs Beat the Press The Return of Phony Numbers on Auto Workers' Wages

The Return of Phony Numbers on Auto Workers' Wages

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Thursday, 07 October 2010 21:58

In years past news reports regularly repeated auto company assertions that their UAW workers earned in excess of $70 an hour. Thankfully this inaccurate claim seems to have been largely missing from news reports in recent months.

But, now it is back in the NYT. Our old friend arithmetic can show the problem. We know that the average UAW worker gets roughly $28 an hour in pay. (This is on the old pay scale, many new workers get as little as $14 an hour.) This leaves us with at least $42 an hour going to health insurance, pensions, and other benefits. With a 2000 hour work year this would imply $84,000 a year going to these benefits.

UAW workers do get good health care benefits, but does the average benefit exceed $20,000 a year? That seems pretty unlikely. The pensions are also comparatively generous, but it is a safe bet that GM is not contributing more than $25,000 a year to their workers' pensions on average.

The way that the industry got their $70 plus an hour figure was by including the cost of payments for retirees (e.g. health care benefits for already retired workers) and averaging them over their current workforce. This may be useful for the companies accounting, but it has nothing to do with what current workers actually receive in wages and benefits.

Comments (2)Add Comment
UAW
written by save_the_rustbelt, October 08, 2010 1:58
The $20,000 a year for health insurance could very well be accurate - middle of the road family policies are going int he range of $12,000, and the UAW plans are still very much above average.

Averaging pension costs for retired workers IS deceptive for public purposes. This is economics, not cost accounting.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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