Is the compensation number accurate or misleading?

http://mediamatters.org/items/200812060002

"...Contrary to an often-repeated myth, UAW members at GM, Ford and
Chrysler are not paid $73 an hour. The truth is, wages for UAW members
range from about $14 per hour for newly hired workers to $28 per hour
for assemblers. The $73 an hour figure is outdated and inaccurate. It
includes not only the costs of health care, pensions and other
compensation for current workers, but also includes the costs of
pensions and health care for all of the retired workers, spread out over
the active workforce. Obviously, active workers do not receive any of
this compensation, so it is simply not accurate to describe it as part
of their "earnings."..."

"...GM, which negotiated the four-year deal that serves as a template
for UAW deals with Chrysler and Ford, says its total hourly labor costs
dropped 6 percent this year from pre-contract levels, from $73.26 in
2006 to around $69 per hour. The new cost includes laborers' wages of
$29.78 per hour, plus benefits, pensions and the cost of providing
health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza
said...."

"...In the [December 2] column, I compare the total hourly compensation
of a UAW worker at GM, Ford and Chrysler with an average worker's pay at
a Japanese plant in the United States. I used $71 per hour versus $42
per hour to point out how uncompetitive the domestic industry is.

Well, plenty of folks, including UAW and auto industry retirees raised
heck, saying the comparison is skewed. Why? Because the figures include
workers' wages and benefits and all of the pension and healthcare
expenses the domestic industry must pay to its large base of retirees.
...."

"..."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."..."

"...However, even though the UAW said in 2007 that "[t]he highest
figures sometimes cited also include the benefit costs of retirees who
are no longer on the payroll," and GM has acknowledged that its $70 or
more per hour figure includes payments for current retirees, media
figures and outlets have repeatedly advanced the false claim about
autoworkers:..."

So basically, this $70/hour number is including the health care costs of
twice as many retires and their families as there are current workers.
Plus the amount that the auto companies are currently paying in pensions
for twice the amount of retirees as there are current employees. Of
course they aren't paying the pensions of current employees now.

"Tim" > wrote in message
...
> So basically, this $70/hour number is including the health care costs of
> twice as many retires and their families as there are current workers.
> Plus the amount that the auto companies are currently paying in pensions
> for twice the amount of retirees as there are current employees. Of course
> they aren't paying the pensions of current employees now.

I doubt that is correct. Generally pension costs are accrued for current
employees and put into a trust, so they are not paying pension costs for
those already retired, but they are paying into the pension fund trust for
those who are currently working.

However, one problem is that if the pension fund suffers investment losses,
then GM would have to make up the difference. Conversely if the fund is
doing better than expected in its investments, the company can reduce or
skip contributions. But apparently the GM pension fund is doing OK because
of its conservative investment strategy (probably bonds), and GM says it
does not plan to add any money to the fund for the next three or four years.
http://www.nytimes.com/2008/11/25/business/25auto.html

The health care cost for retirees is more complicated, and you can read
about it in the above article. Note that anyone over 62 is eligible for
Medicare, but the GM health care plan is way over the top compared to what
most retired Americans have available to them.

Mark A wrote:
> "Tim" > wrote in message
> ...
>> So basically, this $70/hour number is including the health care costs of
>> twice as many retires and their families as there are current workers.
>> Plus the amount that the auto companies are currently paying in pensions
>> for twice the amount of retirees as there are current employees. Of course
>> they aren't paying the pensions of current employees now.
>
> I doubt that is correct. Generally pension costs are accrued for current
> employees and put into a trust, so they are not paying pension costs for
> those already retired, but they are paying into the pension fund trust for
> those who are currently working.

In theory but not in practice. Here is an article that explains that. It
is a 3 1/2 year old article but the concept is there. I hope you
understand it better than I do.

http://www.washingtonpost.com/wp-dyn...2005Apr18.html


"...Now, as we all can see, pension and health care obligations are
eating GM alive. The bill for the "free" lunch has come in -- and GM is
having trouble paying the tab. In the past two years, GM has put almost
$30 billion into its pension funds and a trust to cover its OPEB (Other
Post Employment Benefits) obligations. Yet these accounts are still a
combined $54 billion underwater. ..."


>
> However, one problem is that if the pension fund suffers investment losses,
> then GM would have to make up the difference. Conversely if the fund is
> doing better than expected in its investments, the company can reduce or
> skip contributions. But apparently the GM pension fund is doing OK because
> of its conservative investment strategy (probably bonds), and GM says it
> does not plan to add any money to the fund for the next three or four years.
> http://www.nytimes.com/2008/11/25/business/25auto.html
>
> The health care cost for retirees is more complicated, and you can read
> about it in the above article. Note that anyone over 62 is eligible for
> Medicare, but the GM health care plan is way over the top compared to what
> most retired Americans have available to them.
>
>

Pension plans and healthcare plans are two different animals. What was
said about the pension plan is basically correct but GMs healthcare plan is
a current business expense.

GM is self-insured and thus is eligible for Medicare reimbursement for each
retiree that is 65 or over. Every retiree MUST sign up for Medicare at
age 65, opt for, and pay for Part B out of their SS check.


"Mark A" > wrote in message
.. .
> "Tim" > wrote in message
> ...
>> So basically, this $70/hour number is including the health care costs of
>> twice as many retires and their families as there are current workers.
>> Plus the amount that the auto companies are currently paying in pensions
>> for twice the amount of retirees as there are current employees. Of
>> course they aren't paying the pensions of current employees now.
>
> I doubt that is correct. Generally pension costs are accrued for current
> employees and put into a trust, so they are not paying pension costs for
> those already retired, but they are paying into the pension fund trust for
> those who are currently working.
>
> However, one problem is that if the pension fund suffers investment
> losses, then GM would have to make up the difference. Conversely if the
> fund is doing better than expected in its investments, the company can
> reduce or skip contributions. But apparently the GM pension fund is doing
> OK because of its conservative investment strategy (probably bonds), and
> GM says it does not plan to add any money to the fund for the next three
> or four years.
> http://www.nytimes.com/2008/11/25/business/25auto.html
>
> The health care cost for retirees is more complicated, and you can read
> about it in the above article. Note that anyone over 62 is eligible for
> Medicare, but the GM health care plan is way over the top compared to what
> most retired Americans have available to them.
>

"Mark A" > wrote in message
.. .
> "Tim" > wrote in message
> ...
> I doubt that is correct. Generally pension costs are accrued for current
> employees and put into a trust, so they are not paying pension costs for
> those already retired, but they are paying into the pension fund trust for
> those who are currently working.


If this were an absolute truth, the government pension schemes (CPP in
Canada and OAS ? in the US) wouldn't be in trouble.... As it stands (and I'm
no spring chicken), In will be lucky to see much in the way of returns from
my CPP "investment".

Employees are an expensive thing to have.... add a collective bargaining
agreement that brutalizes the employer with "work to rule" efforts and what
can only be called "denial of service" attacks (strike actions).. and people
can get paid much more than a task is worth in absolute terms...

My wage and benefit package costs MY employer much less than a unionized
auto assembler costs one of the detroit 3.... What is real strange is that
MY job requires that I know how these things are built and ALSO how to fix
the friggin' things... Something that Lou down at lug nut installation
doesn't need to know...

wrote:
> "Mark A" > wrote in message
> .. .
>> "Tim" > wrote in message
>> ...
>> I doubt that is correct. Generally pension costs are accrued for current
>> employees and put into a trust, so they are not paying pension costs for
>> those already retired, but they are paying into the pension fund trust for
>> those who are currently working.
>
>
> If this were an absolute truth, the government pension schemes (CPP in
> Canada and OAS ? in the US) wouldn't be in trouble.... As it stands (and I'm
> no spring chicken), In will be lucky to see much in the way of returns from
> my CPP "investment".
>
> Employees are an expensive thing to have.... add a collective bargaining
> agreement that brutalizes the employer with "work to rule" efforts and what
> can only be called "denial of service" attacks (strike actions).. and people
> can get paid much more than a task is worth in absolute terms...
>
> My wage and benefit package costs MY employer much less than a unionized
> auto assembler costs one of the detroit 3.... What is real strange is that
> MY job requires that I know how these things are built and ALSO how to fix
> the friggin' things... Something that Lou down at lug nut installation
> doesn't need to know...
>
Maybe you should join a union. Or do you like being paid less?

"Tim" > wrote in message
...
> http://mediamatters.org/items/200812060002
>
> "...Contrary to an often-repeated myth, UAW members at GM, Ford and
> Chrysler are not paid $73 an hour. The truth is, wages for UAW members
> range from about $14 per hour for newly hired workers to $28 per hour for
> assemblers. The $73 an hour figure is outdated and inaccurate. It includes
> not only the costs of health care, pensions and other compensation for
> current workers, but also includes the costs of pensions and health care
> for all of the retired workers, spread out over the active workforce.
> Obviously, active workers do not receive any of this compensation, so it
> is simply not accurate to describe it as part of their "earnings."..."


Semantics. It is still the cost of every hour of labor no matter how you
assign the costs. Other car makers do not have that pension portion to
contend with. GM, OTOH, has not only today's labor to pay, but yesterday's
too. That pension should have been funded by some other method than the
Ponzi scheme they used. Other companies got into the same problem over the
years, making promises to pay based on what will happen in the future.

Jeez... I love the way some of you guys pretend to know stuff....

I do well... I do very well, thank you.... and I do very well because I know
my stuff and I apply myself in a free market. If I were to become a union
member, I would take a drop in pay... honest (wanna see tax slips?).

A trade union is socialism at its purest.... Communism, if you will.... we
are all equal, comrade... oops, I meant brother... we don't need to be
good - we only need to be together... unionism/socialism/communism.... this
kills individuality... it kills achievement... it pays people to do as
little as possible....

But, I digress.... I am an automotive service technician... I have learned
my craft well... I study, I train, I learn... Currently, I work in the
service department of a Ford store in Canada. I am in control of what I get
paid.... I use my reputation and knowledge and abilities as bargaining
chips....

I will do my best to teach an apprentice what I know.... but he will never
be allowed to ride my coat tails to a better place...

It's not that I like "being paid less".. it is that I can't afford to join a
union and go there.

"Tim" > wrote in message
...
> wrote:
>> "Mark A" > wrote in message
>> .. .
>>> "Tim" > wrote in message
>>> ...
>>> I doubt that is correct. Generally pension costs are accrued for current
>>> employees and put into a trust, so they are not paying pension costs for
>>> those already retired, but they are paying into the pension fund trust
>>> for those who are currently working.
>>
>>
>> If this were an absolute truth, the government pension schemes (CPP in
>> Canada and OAS ? in the US) wouldn't be in trouble.... As it stands (and
>> I'm no spring chicken), In will be lucky to see much in the way of
>> returns from my CPP "investment".
>>
>> Employees are an expensive thing to have.... add a collective bargaining
>> agreement that brutalizes the employer with "work to rule" efforts and
>> what can only be called "denial of service" attacks (strike actions)..
>> and people can get paid much more than a task is worth in absolute
>> terms...
>>
>> My wage and benefit package costs MY employer much less than a unionized
>> auto assembler costs one of the detroit 3.... What is real strange is
>> that MY job requires that I know how these things are built and ALSO how
>> to fix the friggin' things... Something that Lou down at lug nut
>> installation doesn't need to know...
> Maybe you should join a union. Or do you like being paid less?

Ed Pawlowski wrote:
> "Tim" > wrote in message
> ...
>> http://mediamatters.org/items/200812060002
>>
>> "...Contrary to an often-repeated myth, UAW members at GM, Ford and
>> Chrysler are not paid $73 an hour. The truth is, wages for UAW members
>> range from about $14 per hour for newly hired workers to $28 per hour for
>> assemblers. The $73 an hour figure is outdated and inaccurate. It includes
>> not only the costs of health care, pensions and other compensation for
>> current workers, but also includes the costs of pensions and health care
>> for all of the retired workers, spread out over the active workforce.
>> Obviously, active workers do not receive any of this compensation, so it
>> is simply not accurate to describe it as part of their "earnings."..."
>
>
> Semantics. It is still the cost of every hour of labor no matter how you
> assign the costs. Other car makers do not have that pension portion to
> contend with. GM, OTOH, has not only today's labor to pay, but yesterday's
> too. That pension should have been funded by some other method than the
> Ponzi scheme they used. Other companies got into the same problem over the
> years, making promises to pay based on what will happen in the future.
>
>

So what do you want the UAW/CAW worker to do? Take less than the
non-union worker so that these benifits can be paid to retired workers?
If they expect UAW/CAW workers to cost the same amount to the company as
non-unionized workers, then they better just determine the cost of the
current workers and project their pension and healthcare costs and leave
out current retirees' costs from the formula.
Don't blame the worker because the company didn't plan correctly.
By the way, the same thing is happening with our national retirement plans.

wrote:
> Jeez... I love the way some of you guys pretend to know stuff....
>
> I do well... I do very well, thank you.... and I do very well because I know
> my stuff and I apply myself in a free market. If I were to become a union
> member, I would take a drop in pay... honest (wanna see tax slips?).
>
> A trade union is socialism at its purest.... Communism, if you will.... we
> are all equal, comrade... oops, I meant brother... we don't need to be
> good - we only need to be together... unionism/socialism/communism.... this
> kills individuality... it kills achievement... it pays people to do as
> little as possible....

Trade unions just make the equation one employer negotiator, one
employee negotiator. What could be fairer?

>
> But, I digress.... I am an automotive service technician... I have learned
> my craft well... I study, I train, I learn... Currently, I work in the
> service department of a Ford store in Canada. I am in control of what I get
> paid.... I use my reputation and knowledge and abilities as bargaining
> chips....
>
> I will do my best to teach an apprentice what I know.... but he will never
> be allowed to ride my coat tails to a better place...
>
> It's not that I like "being paid less".. it is that I can't afford to join a
> union and go there.
>
> "Tim" > wrote in message
> ...
>> wrote:
>>> "Mark A" > wrote in message
>>> .. .
>>>> "Tim" > wrote in message
>>>> ...
>>>> I doubt that is correct. Generally pension costs are accrued for current
>>>> employees and put into a trust, so they are not paying pension costs for
>>>> those already retired, but they are paying into the pension fund trust
>>>> for those who are currently working.
>>>
>>> If this were an absolute truth, the government pension schemes (CPP in
>>> Canada and OAS ? in the US) wouldn't be in trouble.... As it stands (and
>>> I'm no spring chicken), In will be lucky to see much in the way of
>>> returns from my CPP "investment".
>>>
>>> Employees are an expensive thing to have.... add a collective bargaining
>>> agreement that brutalizes the employer with "work to rule" efforts and
>>> what can only be called "denial of service" attacks (strike actions)..
>>> and people can get paid much more than a task is worth in absolute
>>> terms...
>>>
>>> My wage and benefit package costs MY employer much less than a unionized
>>> auto assembler costs one of the detroit 3.... What is real strange is
>>> that MY job requires that I know how these things are built and ALSO how
>>> to fix the friggin' things... Something that Lou down at lug nut
>>> installation doesn't need to know...
>> Maybe you should join a union. Or do you like being paid less?
>
>