Factchecking. How quaint.

One of the prime “outrages” fueling the brawl over the Big Three bailout is the apparent disparity between pay for Big Three workers versus those employed by the foreign auto manufacturers in their plants in right-to-work states.  The implication, of course, is that the UAW is to blame for the automakers’ troubles.  It has been debunked over and over again, but when have we ever known Republicans (I’m looking at you, Bob Corker) to let the facts get in the way of a good story?

David Leonhart takes them all on in today’s NYTimes, and does an admirable job.

First, he unpacks the $73 figure the shriekers insinuate is paid to UAW members for every hour they work.

The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn’t made up. But it is the combination of three very different categories.

The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.”[…]The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck.[…] The third category is the cost of benefits for retirees. These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix.

Without benefit of any mathematics beyond simple arithmetic, he clearly shows that workers at the Big Three don’t make significantly more than the nonunion employees at other auto plants.

So much for the big mean union workers driving those fine upstanding US automakers into the ground.

Then, he takes on the meme that, because of the unions, $2000 is added to the cost of each US automobile and, after all, who would want to pay $26,000 for a car that the Japanese automakers sell for $24,000?

So here’s a little experiment. Imagine that a Congressional bailout effectively pays for … 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.

It’s utterly refreshing to see this sort of fact-checking.  More of this, please.

5 Responses to “Factchecking. How quaint.”

  1. Mark says:

    First of all – the $73/hour number is – and always has been – a worthless number that is so disingenuous as to undermine many of the good arguments against the bailout (of which they are very, very many). Indeed, the way in which it is calculated would mean that if the Big Three laid off more workers, the number would get even bigger.

    Second of all – the per car argument is much more important. Here, he acknowledges that at least $800 per car is added due to the UAW’s influence, which is not chump change.

    This is not to say that Detroit’s problems are solely the result of union leadership. However, to say that the UAW is free from blame here is not accurate, either. Indeed, just as there can be good and bad management, there can also be good and bad unions – and, as far as unions go, the UAW’s leadership is about as bad as it gets (and yes, I am more than willing to point to unions with what I think is “good” leadership).

    But no one who is opposed to the bailout thinks that Detroit’s problems are just the result of the unions, only that the UAW is a significant contributing factor. But so is bad management, bad public relations, and poor market research.

  2. DrGail says:

    Mark, you make a good point that the $73/hour number would get even larger if the Big Three laid off more workers.

    I disagree, however, with:
    But no one who is opposed to the bailout thinks that Detroit’s problems are just the result of the unions,

    In fact, much of the hyperventilation about how the Big Three got into so much trouble centers precisely around the unions, and most especially the union workers’ rates of pay and the benefits extended (by contract) to retirees.

    This has been the mantra of senators from right-to-work states with Japanese, Korean, or European auto plants. That their hidden agenda is to turn public sentiment against unions in general and to weaken the UAW in particular is apparent to many of us, but the message still gets promulgated that “union workforce = need for Big Three bailout”.

    Rather than sharing the stage with bad management, bad PR, and poor market research, the efforts to blame the UAW deflect attention from other, more pervasive, reasons for the demise of the Big Three. It is for precisely that reason that I thought the David Leonhart article was so significant.

  3. tas says:

    This is not to say that Detroit’s problems are solely the result of union leadership. However, to say that the UAW is free from blame here is not accurate, either.

    I disagree. It was Detroit that chose not to compete with foreign companies in the smaller car market, otherwise known in the parlance of recent times as “cars that sell”. Where is GMs answer to the Toyota Yaris or Honda Fit? The Chevy Aveo? Please. As for Ford, I’ve driven their Focus and that car is a piece of shit as well.

    And where is GM or Ford’s answer to the Toyota Prius? We’re all still waiting for that one — we’ve been waiting for a decade.

    GM et al. don’t have a viable product on the market to sell right now. Their product line is geared towards cheap gasoline but they didn’t have a plan for high gas prices. The UAW can’t be a scapegoat for poor management.

  4. Mark says:

    tas – My point is that Detroit’s problems are a combination of a wide variety of factors – building cars that no one wants is a big part of it, to be sure, and no honest observer will say otherwise. But to simply point to one factor and say that it is the sole contributing factor is terribly simplistic – failures of this magnitude take a lot of work from a number of quarters; even by Leonhart’s estimation, the UAW results in an additional $800 per car. To put it another way, people would be willing to buy more crap cars if those crap cars were significantly less expensive than the good cars. Conversely, people would be willing to pay more to buy a good car than a crap car. But in this situation, people are left paying more money for a crap car.

    And, as I said, the UAW leadership is outright terrible – in my experience, there are only one or two other unions that are in its ballpark in terms of corruption and failing to truly look out for its membership’s best interests.

    Now, perhaps you could say that ultimately the problems caused by bad labor deals are the fault of management, who agreed to the bad labor deals. Which certainly has a lot of truth to it. But if that’s the case, then we’re left with a conclusion that labor unions, particularly the UAW, have a pretty strong hand when it comes to dealings with management, and thus don’t need additional legislation to make that hand even stronger.

  5. Mark says:

    Just to make one thing very clear – criticism of union leadership does not equate to criticism of union workers.

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