The Swarm

Mix it up with The Bee's editorial board.

November 21, 2008
Automaker woes and retiree health care

If you want to see why the Big Three face such a daunting financial picture, consider the following:

 

According to the United Auto Workers, General Motors, Ford and Chrysler in 2007 had 180,681 active workers that received salaries and benefits.  Yet the Big Three also paid health benefits for 640,344 retirees and surviving spouses.

 

Put another way, 75 percent of the people receiving health benefits are not active workers who are on the payroll producing cars. Ouch.

 

Continue reading to see the distribution of wages and benefits.

 

So when you see the figure that U.S. auto workers, on average, make $70 an hour, take it with a grain of salt.  That figure includes retiree pension and health benefits.

 

U.S. auto workers, on average in 2007, actually made about $28 an hour in wages. Benefits add about another $10.

 

So where does the other $42 come from? Jonathan Cohn of The New Republic explains in a piece called "Assembly Line: Debunking the myth of the $70-per-hour autoworker":

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.

 So if Americans are serious about making the U.S. auto industry globally competitive, they need to address the health insurance issue.  People need health insurance in the interim years between leaving a company and the time they become eligible for Medicare, the federal program of health insurance for the elderly.  There's no reason why U.S. companies should be paying those costs, a competitive disadvantage since the rest of the industrialized world finds other ways to assure that people have health coverage.

 

 

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About The Swarm

The Swarm is written by members of The Sacramento Bee's editorial board. They meet daily and are separate from the newsroom. Views included here are those of individual writers, and do not necessarily reflect those of a majority of the board or the positions expressed in The Bee's editorials.

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