So we’re up and running.I have a feeling this week will bring a lot of writing opportunities, but just to hit the ground running I’ll start by copy/pasting something I wrote this past weekend.
I’ve been hearing a lot about how the possible collapse of Ford, GM and Chrysler are the fault of the UAW recently, what with their $70 hourly wages. Senator John Kyl of Arizona recently peddled this argument on FOX News. The problem, however, is that it’s patently false.
Let’s start with the fact that it’s not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research — who was my primary source for the figures you are about to read — average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income — hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.
[T]hen what’s the source of that $70 hourly figure? It didn’t come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits — namely, health insurance and pensions — and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages — again, $24 per hour — and you get the $70 figure. Voila.
Except … notice something weird about this calculation? 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.
The New Republic
This has much less to do with unions (despite the crazy union-busters’ wildest dreams) and much more to do with an awful business model. For years and years, Detroit railed spent millions of dollars paying lobbyists to whine to Congress and get them to oppose higher fuel mileage standards. At the same time they completely ignored the writing on the wall and refused to build vehicles with better gas mileage and better technology (Toyota and Honda were smart and did this, and now they’re in a much better position than anyone in Detroit). Instead of playing with the possibilities of 45-50 mpg, they were building huge, gas-guzzling SUVs and Hummers that would tear them apart once an inevitable gas crunch hits the industry.
Now Detroit finally is starting to think about flex-fuels and hybrids, but the Asians are ahead of them again, as they’re playing with technology allowing transportation on pure electricity. So even if we do bail out Detroit, as is currently being discussed, they’ll be in trouble soon enough because nobody is going to want to buy their awful product that is a) out of date b) lower quality and c) from a failing company.
Bottom line: Detroit is in trouble because of business malpractice and awful management. It has very little, if anything, to do with the UAW or any other union as organizations like Redstate, FOX, Townhall and the National Review assert over and over again.
If we’re going to bailout Detroit (and unfortunately, we will) we should make sure that a) a certain amount is required to go to fuel efficiency technology and b) Detroit is required to pay back a portion of this loan. And if this was a just world, the Detroit executives would be out of job, but I’m much too cynical to believe this will happen.