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As pointed out by Inky99 here and here, the popular right-wing meme that UAW workers make $70-plus per hour is nonsense. It's a carefully-constructed lie based on the kind of "fuzzy math" that George Bush once disingenuously decried.

But I believe I've stumbled across an additional reason why $70/hour is bull. For details, see after the jump...

So: I have a Republican friend who routinely repeats to me the talking points he gets from right-wing listserves, websites and pundits. When he started claiming that Big Three auto workers make $75/hour, I decided to start digging. I began with this friend's citation of a Heritage Foundation "chart" on the topic. This bogus chart pegs UAW Chrysler worker compensation for health benefits alone at more than $20/hour:

http://www.heritage.org/...

That $20 is folded into the right's "$75 per hour" claims. It implies a health plan which costs Chrysler somewhere between $25-$40,000/year, depending on how many hours per year you use. That raised a red flag for me... I know U.S. health care can get expensive, but does anyone here of non-retirement age have a health plan whose premiums cost anything like $40K?

Suspecting some self-serving sleight-of-hand from Chrysler in these figures, I then looked into how they come up with this staggering number.

ANSWER: In tiny footnotes to its report, Chrysler mentions without explanation that it is using something called a "FAS 106" number for health care costs.

OK, so what's FAS 106? It's a special accounting method which doesn't in fact represent the actual cost of premiums the company pays for its workers. Rather, it appears to represent a company estimate of the potential value of the health care benefits which an average worker might potentially receive if their insurance provider actually had to pay for a major illness, hospitalization, etc. (FAS 106 accounting also is usually used for retirement benefit estimates, not for 45-year-old active workers, the which the Chrysler report uses as its "typical" worker.) Here is a link to an AARP explanation of FAS 106 accounting:

http://www.aarp.org/...

But the company pays premiums to insurers, not the full cost of every worst-case-scenario illness... That's the whole point of health care insurance, right? Plus, most workers do not get seriously ill in a given year, and so the actual "compensation" is far lower than Heritage/Chrysler want us to think.

Moreover, it turns out the $75/hour figure refers to a workweek of 32.5 hours. But when people hear that $75 figure, they almost surely project its value out based on a 40-hour week instead. So it again sounds higher than it really is.

And then there is the completely unspecified "all other compensation" which Heritage makes no effort to explain, though it makes up another major chunk of that supposed $75/hour figure.

In short, the $70-$75 numbers iare grossly inflated by any normal measure of compensation. Using fudged and projected values, rather than the company's actual contribution to the average worker's health care plan, only serves the purpose of making Chrysler's workers sound more pampered than they are.

And indeed, the document relied upon by the Heritage Foundation turns out to be none other than a Chrysler media "briefing" paper put out to spin its side of negotiations with U.A.W. back in 2006. In short, company propaganda gets laundered as a think tank analysis, and then jumps into the mainstream via Fox, Limbaugh, Kristol columns, etc.

Meanwhile, as Inky has pointed out, the figure is even more distorted than described above, since the $20/hr. figure includes long-term benefits to other, retired workers. So the $70-$75 per hour meme is triply a lie.

But if you repeat a lie often enough, it becomes common "knowledge."

Originally posted to Hudson on Thu Nov 20, 2008 at 06:18 AM PST.

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Comment Preferences

  •  Tips/recs for forensic accounting (28+ / 0-)

    I'm not an accountant, so someone should check my research. But everything else I've been reading suggests this is another piece of the phony $70/hour meme.

    "Animals are my friends. And I don't eat my friends." -- George Bernard Shaw

    by Hudson on Thu Nov 20, 2008 at 06:19:03 AM PST

  •  So ... the true hourly cost is .... ? n/t (1+ / 0-)
    Recommended by:
    fritzrth
    •  I have no idea, but... (1+ / 0-)
      Recommended by:
      jds1978

      You can at least infer from the small print that it's a lot less than claimed by the Big Three and Heritage.

      They are valuing their health care contribution at $40,000, but that represents what they think their contribution might be worth to a worker if they need care. Presumably their actual contribution ism more like 1/4 or 1/3 that amount, if their premiums are in line with common four-person family plans.

      "Animals are my friends. And I don't eat my friends." -- George Bernard Shaw

      by Hudson on Thu Nov 20, 2008 at 06:25:17 AM PST

      [ Parent ]

    •  The "average"Auto Worker is making a very small (2+ / 0-)
      Recommended by:
      Bendygirl, Fossil

      fraction of the "average" AIG,CITIBANK or any other wall street creep and his work isactually producing something other than useless and worthless paper.

      If this country doesn't rescue the Auto industry it deserves the consequences which will be worse,in my opinion,than the Great Depression.

      Al these "suits" you are seeing on TV telling you their jobs "create wealth" have played this country.They've created  NOTHING and that reality is finally being reflected in the stock market.

      http://dumpjoe.com/

      by ctkeith on Thu Nov 20, 2008 at 06:41:58 AM PST

      [ Parent ]

  •  Here's the big question, though (1+ / 0-)
    Recommended by:
    Hudson

    I've seen that figure used to argue that the U.S. automakers can't be competitive because their worker costs are so much higher than the foreign auto makers.  In other words, it's a comparative number -- U.S. worker "cost" is at $70, while foreign auto makers' worker "cost" is at $44 or somewhere around that.  The argument is that a Toyota plant costs only 62% (or so) as much as a UAW worker.  

    Here's the question -- when doing that comparative analysis, is it an apples to apples comparison?  In other words, is the $44 for non-UAW workers based on the same kind of numbers and calculations as the $70?  If so, then the absolute numbers are less important for the argument -- if the ratio (based on an "apples to apples" calcuation) is still that the UAW workers "cost" over 1/3 more.  

    Does anyone know the answer to that?  

    •  Here's another question..... (1+ / 0-)
      Recommended by:
      Bendygirl

      if foreign "transplant" companies pay 2/3ds the UAW rate then why aren't their cars a lot cheaper?

      If Liberals really hated America we'd vote Republican

      by exlrrp on Thu Nov 20, 2008 at 06:45:23 AM PST

      [ Parent ]

      •  Because according to the CEO's there is more in (0+ / 0-)

        them.

        To me, that is one of the real problems this week.  The CEO's admitted that there is $2,000 in costs related to labor/retirement in US cars that there isn't in the foreign cars.  This allows the foreign cars to have more "gadgets" and be viewed more favorable by the consumer.

        I don't agree with the $70 number but I think that arguments for the bailout based on the refutation of the $70 an hour number are useless.  Whether it is $70 or $40 or $30, it wasn't working and GM says it has no money.  Sometimes we fight perceived demons.  Our economic issues and the issues related to the bailout are so far beyond bickering over who between management, subs and the union should "change" if there is a bailout.

        If there is going to be a "bailout," there needs to be a plan.  The big 3 management has made it very clear that they don't have a plan and they don't plan on looking at the situation in a truly productive way until after they get the money.  . . and they won't get the money because of their arrogance.

        There are many falsities and fearmongering that are being spread by the companies.  If you are going to look truthfully at the issues and you take any of the suppositions of the big 3 as correct without verification, then you are being misguided and it will never work.

        Quite frankly, it seems to me that what needs to happen is a revolution.  For those of you in the auto industry, Americans cannot save your jobs.  In my opinion, what it is going to save your jobs if you, and you and you.  As union members you are organized--this gives you a heads up.  I don't have the answer and I am not in the industry, but how many of you go home at night and say "I could run this company better than management."  Instead of fighting the $70 an hour (which is totally irrelevant to the situation), spend your energy figuring out how you are going to take control of the company and make it viable.

        •  You are completely missing the point. (0+ / 0-)

          Instead of fighting the $70 an hour (which is totally irrelevant to the situation)

          Wrong. There's a specific reason workers costs are being inflated on the balance sheet: to hide wasteful spending in other areas.

          Our next mission: take down John McCain and Joe Lieberman to get to 60 in the Senate in 2010.

          by eclecticbrotha on Thu Nov 20, 2008 at 09:37:18 AM PST

          [ Parent ]

          •  GM has no cash, (1+ / 0-)
            Recommended by:
            Bendygirl

            that is the problem.  I get the mismanagement, but hammering the $70 an hour just incites more.

            Can we agree that GM has been run to the ground?  If so, then right this moment, we need to be talking about how to fix it, not indepth detailing of the corruption of the management.  There will be plenty of time for that.

    •  okay (3+ / 0-)
      Recommended by:
      Hudson, bustacap, coffeetalk

      let me see if I can answer this for you.

      The calculation of "$70" is based on retiree and surviving spouse pay as well. These are calculated into the overall costs on a per worker rate.

      Toyota and Honda do not have such calculations because they are new to the US in terms of plants.

      Not all Toyota cars are made non-union. This is the list of Union Made cars in the US and Canada:

      UAW CARS
      Buick Lucerne
      Cadillac CTS
      Cadillac DTS
      Cadillac STS
      Cadillac XLR
      Chevrolet Cobalt
      Chevrolet Corvette
      Chevrolet Malibu/Malibu Hybrid
      Chrysler Sebring
      Dodge Avenger
      Dodge Caliber
      Dodge Viper
      Ford Focus
      Ford Mustang Ford Taurus
      Lincoln MKS
      Mazda 6
      Mercury Sable
      Mitsubishi Eclipse
      Mitsubishi Galant

      Pontiac G5
      Pontiac G6
      Pontiac Solstice
      Pontiac Vibe
      Saturn Aura/Aura Hybrid
      Saturn Sky
      Toyota Corolla*

      UAW PICKUPS
      Chevrolet Colorado
      Dodge Dakota
      Dodge Ram Pickup*
      Ford Explorer Sport Trac
      Ford F-Series*
      Ford Ranger GMC Canyon
      Isuzu i-Series
      Lincoln Mark LT
      Mazda B-series
      Mitsubishi Raider
      Toyota Tacoma
      *

      UAW SUVs/CUVs
      Buick Enclave
      Cadillac Escalade
      Cadillac Escalade ESV
      Cadillac SRX
      Chevrolet Suburban*
      Chevrolet Tahoe/
      Tahoe Hybrid
      Chrysler Aspen
      Dodge Durango
      Dodge Nitro
      Ford Escape/Escape Hybrid
      Ford Expedition
      Ford Explorer
      Ford Taurus X
      GMC Acadia
      GMC Yukon/Yukon Hybrid  GMC Yukon Denali
      Hummer H1
      Hummer H2
      Hummer H3
      Jeep Commander
      Jeep Compass
      Jeep Grand Cherokee
      Jeep Liberty
      Jeep Patriot
      Jeep Wrangler
      Lincoln Navigator
      Mazda Tribute/Tribute Hybrid
      Mercury Mariner/Mariner Hybrid
      Mercury Mountaineer
      Mitsubishi Endeavor
      Saturn Outlook

      UAW VANS
      Ford E-series
      Chevrolet Express Chevrolet Uplander
      GMC Savana

      CAW CARS
      Buick Lacrosse
      Chevrolet Impala
      Chrysler 300
      Dodge Challenger
      Dodge Charger Ford Crown Victoria
      Lincoln Town Car
      Mercury Grand Marquis
      Pontiac Grand Prix

      CAW SUVs/CUVs
      Chevrolet Equinox
      Chrysler Pacifica
      Dodge Magnum
      Ford Edge Lincoln MKX
      Pontiac Torrent
      Suzuki XL7

      UAW/CAW PICKUPS
      Chevrolet Silverado* GMC Sierra*

      UAW/CAW Vans
      Chrysler Town & Country Dodge Caravan

      IUE SUVs/CUVs
      Chevrolet TrailBlazer
      GMC Envoy
      GMC Envoy Denali
      Isuzu Ascender
      Saab 9-7X

      Not all GM, Chrysler and Ford plants are represented by the UAW, other unions also represent workers in these plants and operations including operations at some Toyota and Honda factories.

      The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

      by Bendygirl on Thu Nov 20, 2008 at 06:48:32 AM PST

      [ Parent ]

      •  Thanks, (1+ / 0-)
        Recommended by:
        Bendygirl

        it does seem that the idea that workers in long-standing U.S. plants "cost" a company significantly more than others:

        The calculation of "$70" is based on retiree and surviving spouse pay as well. These are calculated into the overall costs on a per worker rate.

        Toyota and Honda do not have such calculations because they are new to the US in terms of plants.

        It seems, from everything I've heard, that thes retiree and surviving spouse costs are a large part of the "cost" difference.  I've heard on the "talking head" shows a lot of discussion about the cost of retiree health insurance being a big issue for the "Big 3."

        I have heard on TV (talking head shows again) that this additional cost amounts to something like $2000 per car and thus, for the same price, a Toyota can put $2000 more in the way of "upgrades" over a similarly priced Ford, for example, leading to the public perception that foreign made cars are a better value.  Any thoughts on that?  

        •  The UAW (0+ / 0-)

          agreed last year during the GM strike that GM would actually start paying some of those health care costs. They also agreed to 2 pay tiers, with new workers making considerably less.

          UAW has given up a lot AND given into GM's demands for more local agreements which further hurts UAW's bargaining position.

          The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

          by Bendygirl on Thu Nov 20, 2008 at 07:38:37 AM PST

          [ Parent ]

        •  R&D as well (1+ / 0-)
          Recommended by:
          bustacap

          Japan automakers have R&D funded or partially funded through government grants. GM, Ford and Chrysler don't have the same luxury.

          I don't know the exact dollar figure in relation to these differences, but what it does end up meaning is more profit for the Japanese manufacturers.

          The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

          by Bendygirl on Thu Nov 20, 2008 at 07:40:44 AM PST

          [ Parent ]

  •  uniongal (5+ / 0-)

    post this stuff on Uniongal, sort of, I looked at the hourly rate of executives at the automakers.

    Here are the numbers for the UAW autoworkers by company.

    Chrysler $29-$33:
    Ford $26-$33
    GM $26-33

    And there's also more on the UAW site on the contracts by company.

    The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

    by Bendygirl on Thu Nov 20, 2008 at 06:36:03 AM PST

    •  Toyota is about the same. (3+ / 0-)

      I read an article that showed Toyota paying $3 more per hour than the average Big Three folks get. That's only hourly wages, of course.

      "Animals are my friends. And I don't eat my friends." -- George Bernard Shaw

      by Hudson on Thu Nov 20, 2008 at 06:43:44 AM PST

      [ Parent ]

      •  not always (1+ / 0-)
        Recommended by:
        decisivemoment

        in some places where their factories compete for skilled labor (some production line jobs are actually skilled), then the answer is yes, they do.

        But benefits and especially retirement are the huge difference between the new Toyota plants in the US and GM, Ford and Chrysler. These are also fees they don't have to pay in Mexico and Canada. I believe it was Toyota (might have been Honda) that built a factory in Canada primarily because of this issue, it simply made more sense for them as these costs would not be part of their over all labor costs. I believe that factory is also represented by a union, Canada has strong labor laws.

        The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

        by Bendygirl on Thu Nov 20, 2008 at 06:52:32 AM PST

        [ Parent ]

  •  When I was in the carpenter's union... (3+ / 0-)
    Recommended by:
    Bendygirl, bustacap, PAbluestater

    In the late 70s, the pay was $15.53/hour. The complete charge to employers at the time   was about $29/hr, about twice the hourly pay. This included everything: medical,dental, vacation, retirement, SS, payroll taxes etc.
    We had top of the line everything. thats why  I can't understand the "$75/hr" claim, the benefits are way out of line as regards the pay.
    I don't understand the $20/hr medical benefit. Even at 32.5 hrs per week, thats still $650 per week, $2600/ month, $31,200 /year, just for medical benefits alone.---who pays that?
    And figuring they get a huge discount for volume, its especially absurd.

    If Liberals really hated America we'd vote Republican

    by exlrrp on Thu Nov 20, 2008 at 06:41:06 AM PST

  •  heh (3+ / 0-)
    Recommended by:
    Bendygirl, Hudson, PAbluestater

    Just like "mark to market" accounting - a total fraud.  

    Help build the Progressive Governing Majority at Open Left

    by Scientician on Thu Nov 20, 2008 at 06:50:31 AM PST

  •  I heard that "Auto workers make too much" (7+ / 0-)

    horse shit yesterday, and my first thought is that it is the opening volley for an all out, no-holds-barred onslaught on Labor Unions.  The right is smarting from their election year failures, but tthey are not finished trying to ruin the middle class.  The story is going to become "If not for those stinkin' Unions....."

    Knowledge is a deadly friend, if no one sets the rules, The fate of all mankind, I see, is in the hands of fools....

    by minerva1157 on Thu Nov 20, 2008 at 06:52:07 AM PST

  •  This is all about destroying (5+ / 0-)

    the UAW union base and boosting regional interests.  Every one of these southern senators railing against a "bailout" is, in reality, speaking for the foreign auto plants located throughout their region.

    And yes...the pay is comparable.  The difference we're seeing right now is that the workforce of the American automakers are aging...makes one wonder what will happen to workers at Toyota, Honda, etc., 20 years down the road.  The message I'm getting is that its ok to promise workers anything then ditch them when it comes time to fulfill those promises.

  •  This is Great Information (3+ / 0-)
    Recommended by:
    Bendygirl, Hudson, bustacap

    Your post, and those of others are exposing the rethug urgency to drive the economy to failure and wipe out the unions.  How else does one explain the anti-labor bias in economic packages.

    The other distortion is to concentrate on the administration and management of the B3.  This is a red herring, especially when such concerns about the bailout of wall street gamblers provided such weak-wristed provisions that it does not prevent bailout money from being used to prop up bonuses for those who created economy-wrecking virtual money.

    First, let us focus on stabilizing actual productive jobs and manufacturing in America, and then we can argue all we want to about ensuring that the B3 is more aligned to a social contract with America.  But then, why is it that we expect such social contracts (such as supporting the goals of energy policy) from these and other automakers and seem to think that retailers and financiers are exempt from any social contract with working America.

  •  So what is the REAL average? (0+ / 0-)

    Thanks for telling us about the myth; perhaps you could find out what the actual hourly wage is.

  •  I've been shocked (2+ / 0-)
    Recommended by:
    Bendygirl, Hudson

    by the extent to which Kossacks have swallowed right wing talking points on the auto industry bailout.  It's good to see someone starting to have a go at breaking down where the right comes up with its figures.

    Never forget that the Heritage Foundation, to an extent unseen in almost any other Beltway think tank, was set up with a specific set of political goals in mind as opposed to objective research.  Nothing else on the right or the left is as politically focused.  And in Heritage's case, the goal is to make rich peoples' lives easier -- by cutting their taxes and driving unions out of the businesses they own.  More than any other think tank, they will distort and lie in support of an agenda.  As such, they should not even be viewed as a think tank, but rather as a PR agency operating on behalf of Republican trust fund babies.

    You'll find valid research from think tanks ranging from Center for American Progress and PFAW on the left all the way to Cato on the right.  You won't find it at Heritage.  

    So don't fall for the $70-an-hour baloney.

  •  couldn't sell this w/out talk radio monopoly (3+ / 0-)
    Recommended by:
    Bendygirl, Hudson, bustacap

    the coordinated uncontested repetition of these lies and distortions until they are acceptable in the rest of the media is a technique the GOP will continue to use throughout obama's admin, like they did with clinton, until progressives take talk radio seriously and pass demonopolization or some new kind of Fairness Doctrine.

    ignoring the talk radio monopoly continues to be the biggest political blunder in decades

    by certainot on Thu Nov 20, 2008 at 08:21:10 AM PST

    •  Good point. (0+ / 0-)

      The spread of this bogus meme shows how the machinery of the whole right wing noise machine works.

      "Animals are my friends. And I don't eat my friends." -- George Bernard Shaw

      by Hudson on Thu Nov 20, 2008 at 08:54:50 AM PST

      [ Parent ]

    •  yep (0+ / 0-)

      and it's why crap like "secret ballot" are used, to insight Americans about Employee Free Choice, through the Wingnut soundmachine. I've got my fingers crossed that this time around, Employee Free Choice passes, is signed by President Obama and then makes it possible for workers to have that right, once again.

      The most important word in the language of the working class is `solidarity.'--Harry Bridges, longshore union leader

      by Bendygirl on Thu Nov 20, 2008 at 01:40:56 PM PST

      [ Parent ]

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