Its not a myth. It isn't (and generally hasn't been represented as) $70/hour in wages.
Its $70/hour (or a bit more) in total compensation costs per employee.
And yes the current workers don't get the benefit of the amount that goes to retirees, at least not yet (and maybe not ever, since the situation appears rather unsustainable, unless the proposed bailout is going to be an annual thing from now on).
But that doesn't matter, in terms of the burden placed on GM, Ford, and Chrysler by their union contracts. The cost is accurately represented.
And yes the big three and the UAW did agree to change the structure for many future liabilities, but only by the big three handing over billions, that they could really use right now. Its still a cost that they had to pay.
The first foreign-owned plants didn't start up here until the 1980s; many of the existing ones came well after that. As of a year ago, Toyota's entire U.S. operation had less than 1,000 retirees.
Its not just that Toyota and the other companies haven't been around as long. The cost per retiree is less, and also the employment levels where not inflated as much by union contracts and other things that lowered productivity, so the spending per retiree in the future, after the plants have been around a long time, will almost certainly be less than what the "big three" pay now.
And benefit (including retirement) costs for the employees are not the only problem. The union labor force has generally been less flexible, and slowed down productivity improvements.
Which is not to say that the problem can all be put on the unions. Management has been poor, plus government action (like high state taxes in Michigan, state and local laws that support dealers against the manufacturers, and a number of other things) have contributed to the problem.
But the unions are part of the problem, and the $70/hour figure isn't a myth. |
