Entitled Workers

With the auto bailout saga coming to a crescendo, many pundits and shills have pointed to the Big Three's "entitled workers" as part of the problem. By entitled workers, the pundits actually mean the hourly unionized workforce, and in uniquely American fashion, they suggest that the key to economic prosperity is to pay people less. These folks tend to float a figure of $73/ hr as representing the B3's labor costs.

Of course, nobody actually gets $73/hr. That number was created by the B3 during collective bargaining. It includes 1) an hourly wage, vacation pay, and overtime pay ($40), 2) the cost of benefits ($15); and 3) legacy costs or the cost of retiree healthcare($10). The hourly wage component plus the benefit component is only $10 higher than the wages/benefits paid by Honda, Toyota and Nissan (about $45/hr).

So let's imagine that we cut the B3's hourly workforce cash to $45/hr. And let's imagine we can eliminate the $10 in legacy costs. The result, each B3 car would be a whopping $800 cheaper. In other words, not much difference. Labor costs are just not the big scary monster we make them out to be.

In fact, labor costs will be decreasing soon, as the new UAW contract says that new hires will get about one half the hourly wage their predecessors got. Moreover, the cost of retiree healthcare is beeing shifted to union.

So don't worry, autoworkers will soon loose their place in the middle class and the pro business pundits can perhaps take a day off -- without pay.