I Don't Understand $70+/Hr UAW Wage

DarqueKnight

ND13 wrote: »

Unless you're independently wealthy and are liquid, you will be affected.

If the big 3 go under, 100% of the US population will be affected. While independently wealthy people will relatively not suffer much financially, there will be heavy social costs associated with living in a country with a trashed economy. Sometimes those heavy social costs can translate to heavy financial and emotional costs.

What is it like being rich in a country where almost everyone else is poor and desperate? Just ask any rich person in Mexico. Ask them about the rampant kidnappings of their children and the need to live in fortress-like compounds with 24/7 armed guards. Even when a ransom is paid, the kidnapped child is sometimes killed out of spite.

The constant threat that your child or spouse could be kidnapped and murdered, even after you pay the ransom is not all the Mexican economic elite have to deal with. There is also the high violent crime rate and constant vandalism to business properties.

What about police corruption? Who does the wealthy Mexican turn to when he or she is a crime victim? The police? Are you kidding? Many of them have turned to the dark side and are on the payrolls of the kidnappers, drug runners, arsonists, vandals, and extortionists.

Added to all this is the constant mental pressure of being "under siege". Who can you trust? Is the housekeeper supplying details of your family's daily movements and routines to kidnappers? Is your chauffeur secretly recording your business conversations to sell information to extortionists and competitors? Is this any way to live?

I have no love for the unholy trinity, but if they go down, they are not only going to take their jobs, but also millions of well-paying auto industry associated jobs with them. Sometimes you just have to hold your nose and take the lesser of two evils.

polktiger

Erik Tracy wrote: »

Yup.

The New York Times did a story on this.

The $70/hr wage was decomposed and analized as:
Base salary of an average of $40/hr + annualized benefits of $15/hr - then the remainder was a 'factor' for what the auto companies have to account for to make up for the pensions of retired auto workers. All that adds up to $75/hr.

But the 'base pay' was compared and found to be comparable to the wage paid to US workers for US based Japanese factories.

The article also calculated that even if UAW were to make salary concessions that the resultant reduction in the price per car would only be about $800.

That certainly is not enough to induce consumers to change their choices.

The bottom line was that most consumers don't want the cars made by American companies - they just....don't....get...it. And what they do make is of inferior quality.

Make a car consumers want to buy and they will buy it.

These are good points, but let's put this in perspective. Since I am the "finance guy" for our business, I can really boil down labor costs, since I write the checks.

Average employee (college degree, most with graduate degree) is $48,000 per year with 15 days paid vacation. That is an average hourly rate of $23.07. The average bonus is about $7,000 so that bumps it up to $26.45.

We pay 100% of the insurance premium for a standard HMO type policy w/ $1000 deductible. Our average cost for this benefit is $1.65 per hour. Employee covers any dependents, dental, cancer, disability, etc on their own through cafeteria plan.

We match employee's contributions to 401(k) up to 4% of their comp. Average $55,000 comp would make the average match $2,200 or $1.06 per hour.

We reimburse continuing professional education, professional licenses, etc which is normally about $1,200 per employee or $.58 per hour.

Worker's comp (professional office) is minimal. Employer share of FICA/Medicare is 7.65% of wages or $4,208 or $2.02 per hour.

When you retire you take your 401(k) and use medicare.

So our actual labor costs run $31.76 per hour. I am not going into burden rates becuase through inept management I can have 5 people supervise 1 and have an absurd fully burdened labor rate.

But, as you can tell from my example $40 per hour average comp + $15 per hour average benefits is a pretty darn hefty average comp package of $114,400 per year. Heck, you get 2 people making this level AVERAGE comp and Obama will call you rich for income tax purposes!

Also, the 4 american cars I have owned have been on par with reliability and maintenance cost as friends driving Accords and Camerys. They are normally stunned when we compare repair bills, but then sight resale value to justify their purchase. The main problem with quality over the last 15 years for american cars i my experience is a perceived one or a function of a correlation between the willingness of the average american car owner to properly maintain their car as compared to the average import car owner.

disneyjoe7

Do you really think the Big 3 filling would be the end of them, or just a chance to reorganize their expenses?

PolkWannabie

In regards to the cost of benefits ...

Most companies figure benefits cost 18-21% of gross ...

If ( and I did say IF ) some group of workers some place is making $30 / hour in wages and when you add benefits on that it takes the cost to $70+ / hour then something is amiss.

Most non union workers don't have

- Company ( or government ) paid pensions let alone pensions that begin after some term of employment that is less than what it takes to get to an age where social security and medicare kicks in whether it pays the bills or not.

- Lifetime medical benefits

The cost of doing business is just that ... It matters not to the business whether the costs are 80% wages and 20% benefits or 40% wages and 60% benefits ... The effect is the same except of course that from the company perspective the higher the benefit cost relative to wages the less bang for the buck.

phipiper10

500,000 people getting paid a pension is a big part of the problem. Pensions are a thing of the past or should be. They should eliminate pensions for all new hires going forward.

You are paying people who are no longer contributing. I'm pretty sure my company isn't going to send me checks when I no longer work for them.

People need to save their own money.

In some places you can get a pension after 20 yrs. So if you started working at 20 for the state you can "retire" at 40 then get rehired in a new position work for another 20 years so you get your regular pay plus pension during that time and when you "retire" the second time you have two pensions. That's absurd.

I'm not in favor of them failing but UAW and everyone on down the line needs to get serious. Fear of letting them go under is preventing any serious change from happening right now. Hopefully I'm wrong.

NJPOLKER

If I didn't witness for myself the total incompetence of the UAW I would not believe it. Seeing is believing thats for sure. Its a long story and I'll try to keep it short. I spent many weeks in the GM Janesville Wi. assembly plant where they built the Yukon and Suburban. I think its still the oldest active assembly plant in the country. The majority of the men and women on the line were some of the laziest pieces of **** I've ever seen. I have and am a Union supporter but not the UAW. The thing that amazes me is the work ethic the folks in the mid-west have is generally second to none. I also spent alot of time in other manufacturing plants and never ever witnessed that level of poor work ethic like the UAW. They are lazy and should be put out to pasture. I do feel sorry for the good UAW people but they gotta go too because they were far and few between.
I was in a good mood a few minutes ago but this whole thing really bothers me. Dump the UAW. One more thing, its not all about the hourly rate but the performance of the workers is garbage.
Drew Crawford

Ricardo

Thinking about having pasta for dinner.

disneyjoe7

Really

NJPOLKER

I may have a steak and potato's
Drew

petrym

I really don't care about who makes what here, the Big 3 are in trouble because of outdated and bloated business models (the UAW and the corporate side too). Let capitalism do it's work and allow the companies to fail so they can rebuild to today's way of doing business... which now that I think about it is pretty *&^%ed too. :mad::p;)

obieone

I've read thru this thread and noticed the one thing no one mentioned about the UAW.
They don't negotiate JUST wages and benefits. They also negotiate job SECURITY.
They demand a certain number of vehicles are made over the life of the contract.
An example: 1,000,000 Excursions, 5,000,000 Tahoes, etc.
The union doesn't give f*ck if those vehicles sell. They still get paid to make them.
And who's left holding the bag......

shack

obieone wrote: »

I've read thru this thread and noticed the one thing no one mentioned about the UAW.
They don't negotiate JUST wages and benefits. They also negotiate job SECURITY.
They demand a certain number of vehicles are made over the life of the contract.
An example: 1,000,000 Excursions, 5,000,000 Tahoes, etc.
The union doesn't give f*ck if those vehicles sell. They still get paid to make them.
And who's left holding the bag......

Ding, Ding, Ding! We have a winner!

It is the job rules that are the crux of the problem with the current big 3 union labor force. The retiree problems are sins of the past. The lack of flexibility and the fierce protectionism by the union are the bigest roadblocks for the automakers today.

dkg999

If you think back a decade or two, or maybe three, the same type of stuff almost brought down rail transportation. It took some hard times and some tough stances by management, along with advances in technology to bring the union demanded rules into line with business needs. It's still not perfect in the rail transportation world, but it got a lot better and more balanced.

LessisNevermore

phipiper10 wrote: »

500,000 people getting paid a pension is a big part of the problem. Pensions are a thing of the past or should be. They should eliminate pensions for all new hires going forward.

You are paying people who are no longer contributing. I'm pretty sure my company isn't going to send me checks when I no longer work for them.

People need to save their own money.

In some places you can get a pension after 20 yrs. So if you started working at 20 for the state you can "retire" at 40 then get rehired in a new position work for another 20 years so you get your regular pay plus pension during that time and when you "retire" the second time you have two pensions. That's absurd.

So then you should be opposed to an employer matching any of your own money too, right? Why do you say the idea of a pension is outdated? God forbid the worker get any perks.....

Pensions were a reward for 20+ years of loyalty to a company...gold watch and all that. Offering a pension should be a badge of honor for a company today, because they are so few and far between. I don't suppose there are any tax advantages for a company contributing to a pension either.:rolleyes:

If you don't have a job that offers a pension, don't begrudge those who do.

shack

LessisNevermore wrote: »

So then you should be opposed to an employer matching any of your own money too, right? Why do you say the idea of a pension is outdated? God forbid the worker get any perks.....

Pensions were a reward for 20+ years of loyalty to a company...gold watch and all that. Offering a pension should be a badge of honor for a company today, because they are so few and far between. I don't suppose there are any tax advantages for a company contributing to a pension either.:rolleyes:

If you don't have a job that offers a pension, don't begrudge those who do.

Most of the pensions were given when the average life expectancy for men was their late 60's. The cost of medical care when full medical benefits for life were offered was no where close to what it is today. Based on todays life expectancy and cost of medical care there is simply no way a company can now (or could have then) planned for the cost they are experiencing. How can you promise something for 30 years or more when you have no idea of the cost. It was probabaly bad business then and it is definitely bad business now.

The 401k contribution is a completely different thing than a defined benefit pension. The company match is based soley on current earnings and most companies match will vary depending on profitability. The cost is defineable, predictable and finite.

If there are pension plans they need to be structured more like the SS benefits. People need to be required to work longer before they start receiving the benefits and they need to be significantly reduced if they are drawn earlier.

polktiger

LessisNevermore wrote: »

If you don't have a job that offers a pension, don't begrudge those who do.

Fine, but if that company goes bust, don't come demanding a handout/bailout from those that are having to fund their own retirement.

Wow, don't pensions sound a lot like a private company version of social security?