Do auto industry workers really make $73 an hour? According to the New York Times, Big Three employees aren’t making anything close to $73 an hour, or about $150,000 a year.
Apparently, that wage came from the car companies as part of their public relations strategy during union labor negotiations.
The NYT reports that employees at the Big Three automakers actually make closer to $55 an hour. While GM, Ford and Chrysler do spend about $73 for every hour a unionized worker puts in, not all that money gets dumped in workers’ paychecks.
The $55 an hour comes from a combination of two things. One is $40 an hour in cash payments of wages, overtime and vacation pay. The second is health insurance and pensions, or fringe benefits, totaling about $15 an hour. The $55 an hour figure is a little more than twice as much as the typical American worker makes, benefits included.
Honda and Toyota’s nonunionized workers make about $45 an hour in comparison, the NYT reports.
Another factor that makes up the $73 an hour number is the cost for retiree benefits. These benefits, about $15 an hour, are fixed costs, and the Big Three have a huge number of retirees.
Surprisingly, labor costs only make up about 10 percent of the cost of making a vehicle. Even at $55 an hour, I’m sure a lot of Americans would absolutely love to make that much money.
Image via blog.automotiveaddicts.com.