On Thursday, the New York Times ran a piece on General Motors' plans to build a new subcompact car in the United Sates with union labor. Deep into the story, the reporters (Bill Vlasik and Nick Bunkley) cited the following figures on auto workers' salaries: "Where the average G.M. worker earned over $70 an hour in wages and benefits before bankruptcy, the figure is now about $57, according to a study the Center for Automotive Research in Ann Arbor, Mich.," they wrote.
Indispensable economist Dean Baker, who writes a blog critiquing media outlets for their mistakes on economics, takes issue with the numbers. He writes:
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.
And lest you think I'm giving undue weight to Baker's point, note that CBS ran a similar story two years ago, debunking the $70-per-hour figure and also arriving at $28.
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