# How did US autoworker salaries get so out of whack wth economic reality? **URL:** \ **Category:** Great Debates\ **Created:** [August 19, 2006, 9:39pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378 "2006-08-19T21:39:51Z")\ **Posts on this page:** 12\ **Page:** 2
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [August 21, 2006, 5:51pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/21 "2006-08-21T17:51:08Z")
> [@](#): > > The key word there is UNIONIZED. Unions have long outlived their usefulness. They exist now for the sole purpose of jacking up wages so that the union makes more money in dues. I’ve never understood the idea that unions have “outlived” their usefulness. Most of the people that are claiming this are forced to acknowledge that their were abuses against workers before unions were allowed. And these abuses no longer exist. So how does it follow that unions are no longer needed? To make an analogy that a conservative would understand, suppose we had a state with a stagnant economy. I’m the governor and I propose that we revitalize our economy by decreasing taxes by 50%. The voodoo works and our economy thrives. Should I then turn around and say that now that our economy is strong, the tax cuts have outlived their usefulness and we can raise taxes back up to their old level? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 21, 2006, 6:35pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/22 "2006-08-21T18:35:12Z")
The argument against unions is deeply ingrained in the youth of today. They have not seen a pro union article in print in their lifetimes. Newspapers busted their unions many years ago. You get nothing positive ion the tube either. Unions fought for vacations, overtime pay , 40 hr week, health care etc. When the deed is done ,they will be eliminated. Unions fought for a safe work place too. All this will be ground away like the pension plans and health care. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [August 21, 2006, 6:46pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/23 "2006-08-21T18:46:39Z")
> [@Little Nemo](#): > > Does this figure also represent the average of all employee salaries and wages? I ask because I’m thinking if you’ve got fifty line workers making ten dollars an hour and one executive making four million a year, the average hourly wage for everyone is about fifty dollars an hour. I’d have to look it up (it’s in GM’s 10k), but I’m 95% sure that is all employees. However, the executive compensation package isn’t so large as to skew the numbers as in your example. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [August 21, 2006, 6:54pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/24 "2006-08-21T18:54:51Z")
> [@gonzomax](#): > > The argument against unions is deeply ingrained in the youth of today. They have not seen a pro-union article in print in their lifetimes. Newspapers busted their unions many years ago. You get nothing positive on the tube either. > Unions fought for vacations, overtime pay, 40 hr week, health care etc. When the deed is done, they will be eliminated. Unions fought for a safe work place, too. All this will be ground away like the pension plans and health care. For what it’s worth, I see pro-union newspaper articles all over the place. And the weird thing is, I’m in the same state as you and probably see the same papers. Much of the disdain for unions – among those people that disdain them – have more to do with absurd union contract clauses and perceived ineffeciencies in them, as well as the forced, compulsory participation in unions in those states that are not right-to-work states (such a Michigan). Back when unions did all of the good stuff that you mention, they _weren’t_ “social organizations” promoting all kinds of silly stuff like they do now. The thing is, _good_ unions aren’t irrelevant; there just aren’t any “good” unions (as _I_ define them). Offer people things that they want, and they’ll probably buy in. But have you looked at a normal union contract? It’s full of so much crap that has no relevance in a modern, dynamic workplace. Companies are trying to modernize, and if unions want to survive, they’ll have to modernize, too. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 21, 2006, 8:40pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/25 "2006-08-21T20:40:31Z")
Generally the figures quoted are the costs of the emloyee. to the company The workers make nothing like those numbers. The automation in the last couple decades erased many thousands of workers from the payroll. The cost of labor therefore has diminished in it’s effect on the price of an automobile. ---
**Author:** ![swissmtndog](https://avatars.discourse-cdn.com/v4/letter/s/85e7bf/32.png) [@swissmtndog](https://boards.straightdope.com/u/swissmtndog)\ **Post date:** [August 21, 2006, 11:12pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/26 "2006-08-21T23:12:57Z")
> [@Little Nemo](#): > > I’ve never understood the idea that unions have “outlived” their usefulness. Most of the people that are claiming this are forced to acknowledge that their were abuses against workers before unions were allowed. And these abuses no longer exist. So how does it follow that unions are no longer needed? > > To make an analogy that a conservative would understand, suppose we had a state with a stagnant economy. I’m the governor and I propose that we revitalize our economy by decreasing taxes by 50%. The voodoo works and our economy thrives. Should I then turn around and say that now that our economy is strong, the tax cuts have outlived their usefulness and we can raise taxes back up to their old level? The larger issue that the unions actually had a big part in solving (worker safety) has generally remained solved with the decline of the unions. With the worker’s compensation system, safe workplace rules for most industrial companies are now good business, the incentive to maintain worker safety does not need (in general) the influence of a union. ---
**Author:** ![MLS](https://avatars.discourse-cdn.com/v4/letter/m/919ad9/32.png) [@MLS](https://boards.straightdope.com/u/MLS)\ **Post date:** [August 21, 2006, 11:15pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/27 "2006-08-21T23:15:24Z")
If unions ceased to exist, however, I firmly believe that many employers would cease to take things such as worker safety and other rights and benefits seriously. ---
**Author:** ![Frankenstein\_Monster](https://avatars.discourse-cdn.com/v4/letter/f/ccd318/32.png) [@Frankenstein\_Monster](https://boards.straightdope.com/u/Frankenstein_Monster)\ **Post date:** [August 22, 2006, 10:37am UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/28 "2006-08-22T10:37:22Z")
> [@China Guy](#): > > GM and to a lesser extent Ford’s problem is with _unfunded_ pension liabilities. In other words, GM didn’t account for the costs of it’s retirees and that’s one of the things killing GM. That’s not what I heard. From the Wall Street Journal (requires paid subscription): [As Workers’ Pensions Wither, Those for Executives Flourish](http://online.wsj.com/article/SB115103062578188438.html) > [@](#): > > To help explain its deep slump, General Motors Corp. often cites “legacy costs,” including pensions for its giant U.S. work force. In its latest annual report, GM wrote: “Our extensive pension and [post-employment] obligations to retirees are a competitive disadvantage for us.” (…) But there’s a twist to the auto maker’s pension situation: **The pension plans for its rank-and-file U.S. workers are overstuffed with cash, containing about $9 billion more than is needed to meet their obligations for years to come.** In other words, GM’s pension fund for workers is actually **overfunded**. And… > [@](#): > > All of these assets are earning investment returns, which offset the pensions’ expense. GM lost $10.6 billion in 2005. But deep as its losses have been, they would have been far worse without the more than $10 billion per year in investment income that the GM pension plan for the rank and file generates. “GM has often said its U.S. pension plans added about $800 to the cost of each car made in the U.S. in 2004.” In truth its pension plan for workers adds about $200 of _extra income_ per car to GM’s bottom line. ---
**Author:** ![Alex\_Dubinsky](https://avatars.discourse-cdn.com/v4/letter/a/dbc845/32.png) [@Alex\_Dubinsky](https://boards.straightdope.com/u/Alex_Dubinsky)\ **Post date:** [August 22, 2006, 12:42pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/29 "2006-08-22T12:42:44Z")
Unions were necessary when there were monopsonies. A monopsony is a monopoly which buys instead of selling (ie it buys labor). A monopsony, like a monopoly, holds huge power to get things its way without caring for what is fair. The single factory in a town can screw over its workers any way it wants. Unions, being monopolies, were a solution to fighting monopsonies. These days, however, there exist far fewer monopsonies than there used to be. In given industries there is more competition, and there is also more competition between industries. There’s a wide array of factors which have increased competition and have prevented companies from growing large and abusive. A union which has no power to oppose becomes as tretcherous and detrimental to society as a monopsony with an ununionized workforce. It becomes a clique which drums up wages for itself by preventing other workers from entering the trade. Most directly, this also hurts consumers (besides workers). However, more important is that monopolies increase inflation (because of their power to demand more money), making it necessary for the Federal Reserve to take fiscal measures which end up reducing employment and GDP across the entire of economy. Monopolies in the form of corporations do this, and monopolies in the form of unions do this equally well. I praise the oncoming age, free of monopolies and monopsonies. But if this age is to arrive, unions must go as well (else they be the powerful evil). This is why unions have outlived their usefulness and now do more harm than good. > [@](#): > > > [@](#): > > > > All of these assets are earning investment returns, which offset the pensions’ expense. > > “GM has often said its U.S. pension plans added about $800 to the cost of each car made in the U.S. in 2004.” In truth its pension plan for workers adds about $200 of extra income per car to GM’s bottom line. “Offset” doesn’t mean completely overpower and eliminate. The math must be $800 lost - $200 gained = $600 lost. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 22, 2006, 7:48pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/30 "2006-08-22T19:48:00Z")
[http://www.pww.org/article/articleprint/3513](http://www.pww.org/article/articleprint/3513) The rates are always exaggerated , This is more in line.The rates of course are dropping fast. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 22, 2006, 8:06pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/31 "2006-08-22T20:06:55Z")
[http://www.freep.com/apps/pbcs.dll/article?AID=/20051126/BUSINESS01/511260313/1014](http://www.freep.com/apps/pbcs.dll/article?AID=/20051126/BUSINESS01/511260313/1014) This is another article showing where the numbers are derived. The pay rate is nothing like this post suggests.Read recently when GM shut a plant in the US they were simultaneously building one in China. Cars will still be made but not here. The danger is that when the automobile industry was created ,it also developed a middle class with it. That is going fast. These people supported bars ,restaurants, intertainment venues. etc. They were able to buy the vehicles they made. They wont any longer .Neither will the Chinese workers, who will be paid poorly.Short term fix for profit ,long term problems. ---
**Author:** ![AskNott](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asknott/32/5790_2.png) [@AskNott](https://boards.straightdope.com/u/AskNott)\ **Post date:** [August 22, 2006, 8:29pm UTC](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378/32 "2006-08-22T20:29:20Z")
> [@Danalan](#): > > Most people weren’t expected to live to 65, much less 10-20 years beyond that age. Before I retired in 2003, a union benefits officer told me that the average auto worker dies less than 5 years after retiring. So you see, we are doing our part to save General Motors, by dying. [Previous page](https://boards.straightdope.com/t/how-did-us-autoworker-salaries-get-so-out-of-whack-wth-economic-reality/369378.md?page=1)