Labor Killed Detroit? Not So Fast

http://www.usnews.com/blogs/robert-schlesinger/2008/12/10/labor-killed-detroit-not-so-fast.html

December 10, 2008 02:53 PM ET | Robert Schlesinger

The New York Times has an interesting op-ed news analysis column on its front page today that breaks down the much-touted $73 per hour that the average auto worker allegedly pulls down.

Of course, most of us would be delighted to make $73 per hour, which would be an annual salary of roughly $150,000. The piece does a nice job of breaking down the origin of the $73 per hour figure: Detroit auto workers actually make about $55 per hour, which is about $10 an hour more than their nonunionized counterparts who work for Japanese companies; the rest of the money attributed to Detroit salaries are legacy costs of the generations of auto workers who came before.

The crucial point, though, is this $15 isn't mainly a reflection of how generous the retiree benefits are. It's a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You'd never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the "$73/hour" pay of Detroit's workers with the "up to $48/hour" pay of workers at the Japanese companies.

And then, here's the money part (as it were) of the piece:

So here's a little experiment. Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That's roughly the gap between the Big Three's retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.

Do you know how much that would reduce the cost of producing a Big Three vehicle? Only about $800.

FULL story at link.