Media still wedded to $70+ per hour autoworker falsehood despite GM's recent statements to the contrary
Research ››› ››› ERIC HANANOKI
The falsehood that autoworkers employed by the domestic automakers receive $70 or more per hour in wages and benefits -- advanced by dozens of media figures and outlets while Congress has discussed a potential bailout for the auto industry -- was advanced by automakers during 2007 union contract negotiations. However, while GM recently has reportedly pointed out that its labor cost figure includes benefits to current retirees, the media continue to repeat the $70 or more per hour myth.
Between November 11 and December 4, as Congress has considered a potential bailout for the auto industry, Media Matters for America has found dozens of media figures and outlets advancing the falsehood that autoworkers employed by the domestic automakers are paid $70 or more per hour in wages and benefits, some using it to blame autoworkers for the domestic auto industry's financial straits. The false assertions echo automakers' claims during the 2007 contract negotiations that union workers receive $70 or more per hour in wages and benefits. However, GM recently has reportedly pointed out that the figure representing the hourly cost of labor to U.S. automakers -- a cost that GM reportedly puts at $69 -- includes not only current workers' hourly wages and benefits, such as health care and retirement, but also retirement and health-care benefits that U.S. automakers are providing for current retirees, as Media Matters has noted. Despite the automakers' acknowledgement, the media continue to repeat the $70 or more per hour myth.
In a sidebar to a September 17, 2007, article about contract talks between GM and the UAW, the Associated Press reported: "The three automakers lost $15 billion last year. Chrysler pays an average $75.86 an hour in wages, pension and health care benefits, GM pays $73.26 and Ford pays $70.51. Toyota pays U.S. workers about $48, U.S. automakers say." GM provided a media handbook in July 2007 that stated: "The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked." From the GM handbook section about "GM Wages":
The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked. This total is made of two main components: cash compensation ($39.68) and benefit/government required programs ($33.58).
The average annual cash compensation for hourly employees in 2006 was $39.68 per hour. Included in average earnings are straight-time pay, Cost of Living Allowance (COLA), night-shift premiums, overtime premiums, holiday and vacation pay. In 2003, GM workers logged 41,363 (hours in 000's) in overtime hours for an average of 371 hours per worker; in 2004, 39,409 overtime hours for an average of 374 hours per worker; in 2005, 33,555 overtime hours for an average of 337 hours per worker; and in 2006, 27,265 overtime hours for an average of 315 hours per worker.
Benefit/government required programs in 2006 added an additional $33.58 for each active hour worked. These costs include: group life insurance, disability benefits, and Supplemental Unemployment Benefits (SUB), Job Security (JOBS), pensions, unemployment compensation, Social Security taxes, and hospital, surgical, prescription drug, dental, and vision care benefits.
The handbook falsely claimed that "hourly workers" received cash compensation and benefits totaling $73.26 in 2006. The UAW noted this falsehood in its "2007 media fact book" about the negotiations, writing that the auto companies frequently cited labor costs that included benefits to current retirees (without indicating that is what they were doing):
In addition to regular hourly pay, the labor cost figures cited by the companies include other expenses associated with having a person on payroll. This includes overtime, shift premiums and the costs of negotiated benefits such as holidays, vacations, health care, pensions and education and training. It also includes statutory costs, which employers are required to pay by law, such as federal contributions for Social Security and Medicare, and state payments to workers' compensation and unemployment insurance funds. The highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll. [emphasis added].
In a prepared statement for his December 4, 2008, appearance before the Senate Banking Committee, UAW President Ron Gettelfinger said:
Contrary to an often-repeated myth, UAW members at GM, Ford and Chrysler are not paid $73 an hour. The truth is, wages for UAW members range from about $14 per hour for newly hired workers to $28 per hour for assemblers. The $73 an hour figure is outdated and inaccurate. It includes not only the costs of health care, pensions and other compensation for current workers, but also includes the costs of pensions and health care for all of the retired workers, spread out over the active workforce. Obviously, active workers do not receive any of this compensation, so it is simply not accurate to describe it as part of their "earnings."
Contrary to its 2007 media handbook statement, GM reportedly told the Associated Press on November 20 of this year:
GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers' wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.
St. Petersburg Times business columnist Robert Trigaux wrote in a December 4 blog post that GM directed him to a New Republic piece headlined "Assembly Line: Debunking the myth of the $70-per-hour autoworker":
In the [December 2] column, I compare the total hourly compensation of a UAW worker at GM, Ford and Chrysler with an average worker's pay at a Japanese plant in the United States. I used $71 per hour versus $42 per hour to point out how uncompetitive the domestic industry is.
Well, plenty of folks, including UAW and auto industry retirees raised heck, saying the comparison is skewed. Why? Because the figures include workers' wages and benefits and all of the pension and healthcare expenses the domestic industry must pay to its large base of retirees.
I called GM news relations director Tom Wilkinson in Detroit this morning and explained the controversy. He's quite familiar with it. He sent me a recent article by Jonathan Cohn from The New Republic headlined "Assembly Line: Debunking the myth of the $70-per-hour autoworker." The story relies on data supplied by the Center for Automotive Research, all on the up and up. Here's a key paragraph of the story:
"It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that -- probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees -- in other words, the cost of benefits for other people."
However, even though the UAW said in 2007 that "[t]he highest figures sometimes cited also include the benefit costs of retirees who are no longer on the payroll," and GM has acknowledged that its $70 or more per hour figure includes payments for current retirees, media figures and outlets have repeatedly advanced the false claim about autoworkers:
A November 11 Detroit News article reported: "GM may need to reopen the UAW contract and cut hourly compensation for core employees from $71 an hour to about $40.50 an hour, [Deutsche Bank analyst Rod] Lache said."
Syndicated columnist Cal Thomas wrote in his November 11 column:
The latest, but by no means the last supplicant at the public trough, is the auto industry, which wants a bailout to save jobs because its cars are not selling. There is a reason for that and it can be summed up in five words: The United Auto Workers Union.
Half of the $50 billion the auto industry wants is for health care for its current and retired employees. This is the result of increasing UAW demands, strikes and threats of strikes unless health care and pension benefits were regularly increased. While in the past UAW settled for some benefit decreases while bargaining with the Big Three U.S. automakers, according to the Wall Street Journal in September 2006, "on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers." Those increased costs, including the cost of health care, were passed along to consumers, adding $1,600 to the price of every vehicle GM produced. In February 2008, after General Motors offered buyouts to 74,000 employees, the Center for Automotive Research estimated the average wage, including benefits, for current GM workers had dropped to $78.21 an hour. New hires pulled down a paltry $26.65.
Contrast this with non-union Toyota, whose total hourly U.S. labor costs, with benefits, are about $48 per hour. Those lower labor costs mean Toyota enjoys a cost advantage over U.S. automakers of about $1,000 per vehicle. Is it any wonder that Toyota is outselling American automakers and from plants that have been built on U.S. soil? According to James Sherk of The Heritage Foundation [in his October 3, 2007, op-ed], "the typical hourly employee at a Toyota, Honda or Nissan plant in America makes almost $100,000 a year in wages and benefits, before overtime."
During the November 12 edition of Fox News' Live Desk, correspondent Molly Henneberg said that "some House Republicans today voiced concern that bailing out another industry just isn't fair to their own constituents." Henneberg then uncritically aired video of November 12 remarks by Rep. Spencer Bachus (R-AL) during a House Financial Services Committee hearing in which he stated of autoworker compensation: "He [a sawmill worker] is making $15 an hour. And we are taking his money and we are paying it to a company that is paying $75 an hour."
In a November 13 CNN.com op-ed, Daniel J. Mitchell, a senior fellow at the Cato Institute, wrote that the "UAW bosses make extravagant salaries, as well, and even regular union workers make an average total compensation including benefits of approximately $70 per hour, far higher than the average American." WeeklyStandard.com contributor Mary Katharine Ham quoted Mitchell's claim that autoworkers received "approximately $70 per hour" in a November 14 blog post.
During the November 14 edition of Fox Business Network's Cavuto, while discussing the proposed bailout, Bachus said: "There's another problem, and that's a fairness issue. First, at the grass roots, Neil, people who are making $15 an hour and $25 an hour are saying why should my money go to prop up a wage earner or company who pays their wage earners $75 an hour?" Host Neil Cavuto did not challenge Bachus' false claim.
In his November 14 Denver Post column, David Harsanyi wrote that "Dr. Mark J. Perry, a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan, calculates the average compensation for employees of the Big Three auto companies at $73 an hour." In a November 9 blog post, Perry claimed:
"The chart above shows average hourly compensation (additional data source here) for the Big Three ($73.20) and Toyota ($48.00), compared to average hourly compensation for Management and Professional Workers ($47.57), Manufacturing/Goods Producing ($31.59) and all workers ($28.48), data available here.
Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM, Ford and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?
A November 14 Buffalo News article reported that "[o]n Capitol Hill, grave doubts have been expressed about an auto bailout" and quoted Bachus stating: "I am sure that I am going to be asked, 'Congressman, I work at Honda or Mercedes, I make $40 an hour; why are you going to take my taxpayer dollars and pay it to a company who pays their employees $75 an hour?' "
In his November 15 Newsweek column, Robert Samuelson wrote: "Second, labor costs need to be cut. By Lache's estimates, GM's hourly compensation -- wage plus fringe benefits -- totaled $71 in 2007 compared with Toyota's $47. Health benefits for retirees (many in their 50s, having retired after 30 years) are expensive. These costs contributed to GM's massive cash drain, $31 billion since 2005."
During the November 16 edition of the syndicated television show Inside Washington, as Media Matters documented, columnist Charles Krauthammer claimed: "The bailout as proposed today is a bailout of the UAW; it's not the auto industry. A Big Three worker in Detroit makes $73 an hour if you include all the benefits."
In a November 17 New York Times column, as Media Matters documented, Andrew Ross Sorkin wrote: "At G.M., as of 2007, the average worker was paid about $70 an hour, including health care and pension costs."
During the November 17 edition of CNBC Reports, host Larry Kudlow said: "[T]he Big Three in Detroit have an average compensation per hour -- that's wages, salaries, benefits, health care, pensions -- $72, sir, $72."
During the November 17 broadcast of ABC's World News, national correspondent Chris Bury said that GM has "expensive union contracts that pay $71 an hour in wages and benefits."
In a November 17 blog post, Townhall.com national political reporter Amanda Carpenter wrote: "Mark Perry of the wonderful Carpe Diem blog put together this chart showing the inflated wages the Big Three automakers pay over their competitors. Big Three union workers, with their gold-plated health care plans, make about $73 an hour in total compensation. And, now they're begging Washington for a bailout before they even think about negotiating with the UAW."
During a report that aired on the November 17 edition of Anderson Cooper 360 and the November 18 edition of CNN Newsroom, reporter Randi Kaye said: "It is the engine that's supposed to keep automakers running. But some say the United Auto Workers Union has helped bring the Big Three to a grinding halt. UAW workers earn as much as $75 an hour, including pension and future health care. James Sherk, from the Heritage Foundation, a conservative think tank, calls the contract greedy." Kaye then aired Sherk saying: "Every so often management will try to insist on more competitive contracts and then you'll have the unions go on strike. Rather than take billions and billions of dollars in losses, management caves."
In a November 18 Human Events Online column, as Media Matters documented, Newt Gingrich wrote: "I believe that it would be a mistake for the taxpayers to be forced to bail out Detroit. Companies at which union workers make $71 an hour in wages and benefits -- compared to just $47 an hour at Toyota's U.S. plants -- are not going to be saved by a $25 billion government check."
As Media Matters documented, during the November 19 broadcast of Westwood One's The Lars Larson Show, host Larson said: "When you're paying $73.73 an hour to those people with salary and benefits and your competition is paying $48 to its workers, you're going to get your butt kicked in the marketplace unfortunately."
A November 19 Chicago Tribune article uncritically reported Bachus' November 12 statement that automakers "pay their employees $75 an hour."
A November 19 New York Post editorial claimed, "Lavish contracts granted to the United Auto Workers, for instance, put GM on the hook for more than $70 an hour per worker," as Media Matters documented.
During the November 20 edition of CNBC's Squawk on the Street, Sherk repeated the false claim about autoworker compensation. After co-host Mark Haines asked, "Who's to blame?" Sherk replied:
SHERK: You've got to look for the union label to understand why the Big Three are going under. The UAW, they're insisting on $75 an hour in wages and benefits for their workers. That's triple what most Americans earn. They insist on provisions like the jobs bank where they want their members to get full pay, six-figure salaries to sit around and play Trivial Pursuit and not work. No company can bear up under that kind of competitive burden. And the Big Three haven't been able to.
ERIN BURNETT (co-host): James, when you talk about -- what the union would say, look, they've given a whole lot back even just last year. Obviously, there were issues around that renegotiation, but that they gave some back. Right now today, current UAW members, what do they make versus regular hourly American workers, are they still paid a premium?
SHERK: Oh, absolutely. The concessions they made were only for new hires so virtually everyone working for the Big Three today is still getting $75 an hour in wages and benefits.
BURNETT: Alex, why should they be allowed to get that?
ALEX TAYLOR (Fortune magazine senior editor): Well, they negotiated. I mean, the companies are as responsible for the negotiations as the unions is.
While Sherk was talking, CNBC displayed a graphic saying "Sherk: UAW insisted on uncompetitive pay of $75/hr in wages and benefits":
During the November 20 edition of Hardball, as Media Matters documented, Heritage Foundation senior research fellow James Gattuso stated, "I think that there's no reason that a UAW worker should get total compensation of $70 an hour when the average American only makes about $25 an hour in total compensation." Matthews responded, in part: "They negotiate for their salaries, and they're getting 70 bucks. So that's how the free market works."
In a November 20 commentary on WorldNetDaily.com, Heritage Foundation fellow and former Rep. Ernest Istook (R-OK) wrote: "As noted by The Heritage Foundation's James Sherk [in a November 19 Heritage Foundation "WebMemo"], "The typical UAW worker at the Big Three earned between $71 and $76 an hour in 2006. This amount is triple the earnings of the typical worker in the private sector and $25 to $30 an hour more than American workers at Japanese auto plants. The average unionized worker at the Big Three earns over $130,000 a year in wages and benefits." In a footnote about his claim, Sherk wrote: "Based on a 35.5 hour workweek, the average hourly hours worked at DaimlerChrysler in 2006. DaimlerChrysler Corporation, "Chrysler Labor Talks '07: Media Briefing Book," p. 38, at http://chryslerlabortalks07.com/Media_Briefing_Book.pdf."
During the November 20 edition of Fox Business Network's America's Nightly Scoreboard, host David Asman asked Kristina Rasmussen, director of government affairs for the National Taxpayers Union (NTU): "Is there a little more support, a little more sympathy for the auto companies than there would be for the financial institutions?" Rasmussen replied: "I don't think so because when you think about it this way, a union worker that's making $75 an hour is earning practically what a member of Congress earns per hour. So if you look at it, who's actually getting what money, I don't think the sympathy is very strong." Asman did not challenge Rasmussen's false assertion. In a November 17 "Open Letter to the United States Congress," NTU government affairs manager Andrew Moylan wrote that "USA Today reported last year that workers for the 'Big 3' domestic automakers earned $73.20 per hour in total compensation, which is more than 50 percent higher than Toyota's U.S. workforce average of $48.00 per hour."
In a November 21 Townhall.com column, Republican strategist Rich Galen wrote: "According to published reports, the average United Auto Worker union member makes about $73 per hour."
As Media Matters documented, in a November 21 blog post on the Daily Beast website, MSNBC host and Daily Beast "insider" Mika Brzezinski asserted that "the average Big Three automaker union worker's compensation is $73/hour -- two and a half times the average for the taxpayer being asked to bail them out."
During the November 21 edition of Fox News' Happening Now, host Jon Scott uncritically paraphrased Rep. Bachus' statement regarding Big Three autoworkers' compensation. From Happening Now:
SCOTT: I'm sure you know that, you know, this is not necessarily split down party lines. There are Democrats who really want this bailout. There are some Republicans who really want it. But let me read a quote from your fellow Republican, Spencer Bachus of Alabama who says he's got hundreds of employees, car employees who work in his district, foreign car makers. He says, "Congressman, I work at Honda, I work at Mercedes, I get 40 bucks an hour. Why are you talking about giving my tax dollars to people who make $75 an hour for GM up in Detroit?"
REP. JOE BARTON (R-TX): Well, the folks that work at the GM assembly plant in Arlington, Texas, in my district, don't make $75 an hour. If you take off their health benefits and pension benefits, it might be in that range, but their actual hourly salary wage is around $20 an hour, something like that. It's kind of ridiculous with a Democrat-elect president, a Democrat Senate and a Democratic House; we can't make up our mind what to do to help one of the mainstays of the American manufacturing base. It's ridiculous in my mind, all the money we're going to loan to Detroit is borrowed money anyway. What difference does it make whether it comes out of the financial bailout pod or the money that's already been set aside for environmental regulations?
During the November 22 edition of Fox News' Beltway Boys, co-host and Roll Call executive editor Mort Kondracke said that the "UAW has to reduce its basic overall compensation package to the level of the Toyota plants and the other foreign plants in the United States. Which is to say, down from something like a 75 percent -- $75 an hour pay package down to either the $40s the way Toyota has."
In his November 23 El Paso Times column, Joe Muench wrote: "Here's why an auto giant may well come to El Paso: Detroit is being crippled by union demands, workers making $70 an hour, plus benefits we dream await us only in heaven. They can't make a car in Detroit, anymore, for the price of a three-bedroom ranch-style house. We don't need $70 an hour because we've never dreamed of making $70 an hour. And benefits? We're in heaven if the insurance company actually covers most of a bill."
In his November 23 Tennessean column, Westwood One-syndicated radio host Phil Valentine wrote: "Because of the labor union, wages and benefits amount to $75 per hour at GM. The average for wages and benefits of an American autoworker at a Japanese plant is around $45 per hour. The average for the private sector as a whole is closer to $25 per hour. Here's what your typical GM worker gets because of the historic extortion of the UAW: over $150,000 per year in wages and benefits."
In a November 24 editorial, the Lansing State Journal wrote: "Factoring wages and benefits, the Detroit 3 compensate workers at a rate above $70 per hour, according to figures from the companies and the Center for Automotive Research in Ann Arbor."
During the November 24 edition of MSNBC's Hardball, as Media Matters documented, Republican strategist Todd Harris claimed that union autoworkers earn "70, $75 an hour." Harris' claim echoed host Chris Matthews' assertion on November 20.
As Media Matters documented, the Pittsburgh Tribune-Review published a November 25 op-ed by Sherk claiming that "UAW workers are among the world's most affluent. They take home an eye-popping $75 an hour in wages and benefits -- triple what the average private-sector worker earns." According to Nexis, Sherk's op-ed also appeared in the Sun Journal (Lewiston, Maine), Providence Journal-Bulletin and The Monitor (McAllen, Texas).
In his November 26 syndicated column, Ben Shapiro wrote: "General Motors Corp., Ford Motor Co. and Chrysler are in danger of bankruptcy. It isn't because they lack the technical know-how or the manufacturing capacity -- it's because the United Auto Workers have made the cost of labor untenable. Writing Nov. 19 in the New York Times, former Michigan Gov. Mitt Romney stated that because of the UAW, American cars cost an average of $2,000 more to make than foreign cars. The average UAW worker makes $75 per hour in salary and benefits, as compared to $42-$48 per hour for workers in Japanese plants in the United States."
As Media Matters documented, The Washington Times published a November 28 op-ed by Heritage Foundation president Ed Feulner claiming that "UAW employees earn three times as much as an average blue collar worker makes -- $75 per hour on average in wages and benefits."
A November 28 Charleston Daily Mail editorial claimed:
James Sherk, labor policy expert for The Heritage Foundation, notes in a new paper that in 2006, the average worker in the private sector earned $25.36 an hour - $17.91 in cash wages and $7.45 in benefits.
In 2005, workers at Japanese auto plants in the United States earned significantly more - $42 to $48 an hour in wages and benefits, or more than $80,000 a year.
But Sherk says a typical member of the United Auto Workers at Chrysler, Ford of General Motors was paid between $71 and $76 an hour in wages and benefits in 2006. That's more than $130,000 a year.
So the United Auto Workers are asking people who make a third as much as they do to make sacrifices so Big Three union employees do not have to.
That's simply outrageous.
November 30-December 4
A November 30 Chattanooga Times Free Press editorial (retrieved from Nexis) claimed that "the typical United Auto Workers union employee of GM, Ford or Chrysler reportedly made between $71 and $78 an hour in 2006, or about $130,000 in wages and benefits."
As Media Matters documented, in a December 1 editorial, The Washington Times wrote: "As Washington Times reporter David M. Dickson recently reported [in a November 24 article]: 'Before contract negotiations between the UAW [United Auto Workers] and General Motors commenced last year, UAW workers earned between $70 and $75 per hour in wages and benefits.' "
A December 1 San Diego Union-Tribune editorial claimed, "Union workers at the Big Three earn about $75 an hour in wages and benefits."
In a December 1 Barron's article, senior editor Jay Palmer wrote that "the Big Three's union workers still earn an average of just over $70 an hour, compared with about $40 for Toyota and Honda's U.S.-based nonunion employees."
As Media Matters documented, on the December 2 edition of Fox News' The Live Desk, co-host Trace Gallagher said that auto workers "are making 73 bucks in wages and benefits."
As Media Matters documented, in a December 3 column published in The Washington Times, syndicated columnist Jack Kelly claimed that "GM, Ford and Chrysler pay their employees an average of $73 an hour." Kelly's column also appeared on RealClearPolitics.com.
As Media Matters documented, on the December 3 edition of CNN's Situation Room, host Wolf Blitzer claimed that an autoworker who belongs to the United Auto Workers "makes $73 an hour, on average, when you factor in all the benefits, compared to $48 an hour for nonunion autoworkers here in the United States."
On the December 3 broadcast of ABC's World News, as Media Matters documented, Chris Bury again claimed that "Ford, Chrysler, and GM pay union workers more than $73 an hour in wages and benefits."
As Media Matters documented, in his December 4 Boston Herald op-ed, talk radio host Michael Graham wrote: "Our congressional delegation overwhelmingly supports throwing another $34 billion at GM and the gang so that United Auto Workers members can keep their $78-per-hour jobs."