The media myth: Detroit's $70-an-hour autoworker
by Eric Boehlert
It's been one week since New York Times financial columnist Andrew Ross Sorkin wrote that at General Motors, "the average worker was paid about $70 an hour, including health care and pension costs."
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Felix Salmon at Portfolio did perhaps the best job explaining the misinformation at play:
The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers. [emphasis in original]
Indeed, according to this Associated Press report, a chunk of GM's $70-an-hour labor costs goes toward paying current retirees' pensions and health-care coverage. In other words, that's money that's not going to end up in the pocket of any autoworker when he cashes his paycheck this week. That's money GM has to set aside in order to pay off costs associated with workers already in retirement. That money has absolutely nothing to do with calculating the hourly wage of a full-time UAW employee today. None.
So, no, UAW workers don't make $70 an hour even if you factor in benefits, because a portion of those benefits are going to people who retired years ago.
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