Franklin County Democrats

The official site of the Democratic Party of Franklin County, Missouri

Please enjoy this clip of Michael Moore interviewing Nike CEO Phi Knight from the movie The Big One.

Several questions with inadequate answers are in this clip.  Why does Nike locate factories in nations with oppressive governments, some of whom are accused of genocide?  Why won’t Nike operate a shoe factory and provide jobs in America?  When is enough money, enough?  This clip has CEO PhilKnightKnight squirming.

We may have learned why with the revelation by Stephon Marbury that his Starbury line of shoes, which cost $15, are made in the same plants as Nike shoes and have the same production cost of $5.00 a pair!

Marbury, who currently plays in the Chinese Basketball Association, recently announced the resurrection of his Starbury sneaker line on social media, telling sneaker heads that, like Jordan’s and other brands that come with a price tag of up toward $300, his $15 wares are produced in the same Chinese factories for $5 a pop.

Marbury’s comments come amid decades of conversation and criticism about the rising cost of the athletic footwear and string of sneaker-related deaths in the predominately black, low-income communities. More than 20 years after assailants took the life of teenager Michael Eugene Thomasduring an Air Jordans robbery, urbanites of various ages continue to stand in line for new releases, even as the prices and stakes get higher.

In recent years, Nike has tried to quell tension by implementing RSVP and raffle systems that company heads said would make sneaker purchases safer. But little, if anything, has changed. In 2013, three men in Houston shot and killed a young father during a robbery. Just hours earlier, he purchased a pair of the newly released Jordan Gama Blue 11’s for himself and his son during the Christmas holiday season. The next year, an Ohio couple got pepper sprayed during the release of the Air Jordan XI and another young man lost his life during an altercation at a similar event.

Sell for $300, cost $5 to make – No wonder a patriotic American like Nike CEO Phil Knight won’t manufacture in America.  Even if the cost doubled by employing Americans, the very people that make up a large percentage of his customer base that three hundred dollars show would be thirty times more than the cost of production.

Nike: Just another company that thnks Americans are good enough to be consumers, just not good enough to be producers. NO SHAME, NO GAIN.

Strike While The Iron Is Hot

Darin Gilley

October 6, 2015


In September, Chrysler, Ford, and General Motors all reported double-digit sales gains – Chrysler up 14%, Ford up 23%, and GM up 12%.  All of this while the people building the products continued working under concessionary contracts put in place during the Great Recession.


Times have changed since those contracts were signed.  According to the Associated Press the U.S. market has remained a bright spot as the Chinese market slows down.  The good times will keep rolling according to GM’s chief economist, Mustafa Mohatarem – “The economy still has room to grow and so do auto sales, particularly now that the millennials are entering the workforce and starting households.”


The opportunities for these firms to achieve more sales and greater market share are obvious.  Combine there opportunities with the record-setting profits of the last several years and these are good times indeed for Executives, Management, and Shareholders.  All of these groups are doing better financially than before the Great Recession, financial crisis, and bankruptcies of 2008 -2009.


The expiration of the Collective Bargaining Agreements between those actually building the products that produce the profits and these auto companies is the opportunity for workers to establish working conditions that reflect the success enjoyed by everyone else at these companies.


The fact that the UAW-Chrysler/Fiat proposal was so lacking that sixty-five percent of the members rejected it sends a message,


The fact that Ford was on the verge of a strike over local issues in Kansas City sends a message.


It is time for the UAW and its members to send a message.  As Karl Brauer, senior analyst with KBB pointed out, “sales could drop significantly if automakers and the UAW can’t come to an agreement on new contracts for GM, Ford, and Chrysler.  It wouldn’t take long for a strike at their U.S. plants to crimp vehicle availability.”


Are these companies willing to risk all this momentum in sales, market share, and profits in a hot market to save 3/10 of 1% in labor costs?  Here are the numbers at a typical assembly plant based on the Chrysler proposal of promise –breaking top pay of $25 and a promise-keeping Traditional wage of $28.


Projected production of vehicles in 8 hours                330

Cost of each vehicle                                            $25,000

Value of vehicles produced per shift               $8,250,000 (8.25mil).


What if a Tier 2 employee earned $28.00 per hour but without the Pension or Retiree Healthcare of Traditional Employees? Let’s call this worker TWT2 as earning a Traditional Wage w/Tier 2 benefits.


$28.00  Hourly wage

1.12  PSP contribution equal to 4% of wages

$ 1.00  PSP contribution per straight time hour

.30  Flexible Spending Account – $600 per year

$6.78  Hourly cost of Family Health Insurance (1,085 p/mo)

$2.14  GM portion of Social Security and Medicare (FICA)

      .36  Hourly cost of Term Life, Disability, Tuition reimb.

$39.70 Total Hourly Compensation of a TWT2 worker.


$39.70     TWT2 Hourly Compensation

X        8     Hours per shift

$317.60    Total Compensation per shift of a TWT2 employee


$317.60    Total Compensation per shift of a TWT2 employee

X   1000    Employees per shift

$317,600  Hourly Labor Cost Per Shift


$317,600 (wages) divided by $8,250,000 (cost of vehicles made) = 3.8%,


What great savings would be gained by the Chrysler proposal of a top Tier 2 wage of $25.00?


$25.00  Hourly wage

1.00  PSP contribution equal to 4% of wages

$ 1.00  PSP contribution per straight time hour

.30  Flexible Spending Account – $600 per year

$6.78  Hourly cost of Family Health Insurance (1,085 p/mo)

$1.91  GM portion of Social Security and Medicare (FICA)

      .36  Hourly cost of Term Life, Disability, Tuition reimb.

$36.35 Total Hourly Compensation of a TWT2 worker


$36.35     “Meet in Middle” Hourly Compensation

X        8     Hours per shift

$290.80    Total Compensation per shift of a “MIM” employee


$290.80    Total Compensation per shift of a “MIM” employee

X   1000    Employees per shift

$290,800  Hourly Labor Cost Per Shift


$290,800 (wages) divided by $8,250,000 (cost of vehicles made) = 3.5%,


Let’s put it another way.  Are these companies willing to risk all their recent gains for a savings of $26,800 on a shift of production generating $8,250,500? summarized it with “An FCA strike: $1 billion a week in lost revenues.  UAW walkout would quickly cause shortage of popular vehicles.”


Considering the current proposal denies Tier 2 workers a Defined Benefit Pension for the life of the agreement and likely forever this actually lowers total labor compensation over the long term.  Here’s the numbers…


Fiat/Chrysler Retirement Responsibilities


Traditional Member – 30 Year Defined Benefit Pension


$3,170 per month

12 months

$38,400 per year


To put it in weekly terms


$38,400 divided by 52 weeks = $731.53 a week


Tier 2 Member ($15.78) – Current Weekly Contributions to 401k


$40.00 – One dollar per straight-time hour

$25.24 – Four percent of straight-time wages

$65.24   Total FCA responsibility per week



Here’s the numbers if a Tier 2 member receives a raise to $28.00 and the increased 401k match on wages of 6.4%


$40.00 – One dollar per straight-time hour

$71.68 – 6.4% of straight-time hours

$111.68  Total FCA responsibility per week


The Weekly Difference


$731.53   FCA responsibility to Traditional member

$111.68   FCA responsibility to T2 (28.00) 401k

$619.85   FCA Savings per Week


Obviously, this enormous difference could fund a raise to Traditional levels while also addressing other issues and still actually reduce FCA’s total labor costs over time.  As the Tier 2 members grow the retirement costs to FCA decline dramatically.  Eventually, they will pay the weekly match and be done with it, leaving pension costs off the balance sheet as well as freeing up operating capital.


In fact, with the elimination of retiree health care benefits for Tier 2 in combination with the end of defined benefit pensions the company has set in motion a plan to completely divorce itself from the “legacy costs” we heard so much about during the bankruptcy.


Even the current practice, which was not changed in the proposal, of workers not receiving dental benefits for three years and vision benefits for five years is an extreme practice that threatens the benefits of workers in other industries if these practices became acceptable.  So much for gold-plated health care.




The elimination of the Defined Benefit Pension and Retiree Health Care benefits is a trend that has been consistent throughout America for the last twenty years.  It is hard to avoid this trend, particularly following all the screaming about “legacy costs” during the congressional hearings and structured bankruptcy that saved the company.


That said, the enormous savings and cost-shifting the elimination of these legacy costs brings the company should be offset by an increase in wages to employees so they may assume this risk and be able to fund their retirement at adequate levels.  Not to mention their dental care.


The current proposal allows the company to have their cake (elimination of legacy costs) and eat it too (lower wages).  This long term reduction in cost to the company is a direct reduction in the standard of living of current workers.  This is unacceptable.


UAW as Stockholder


Much has been made of the fact that the UAW, specifically the VEBA, is a large shareholder of automotive company stock.  This has led to concern of a conflict of interest.  Is the union more concerned with short term share prices or members long-term living standards?


Negotiations are complex situations so it is difficult to know what strategies and discussions are occurring.  The results, in the form of the defeated FCA-UAW proposal are not encouraging.


What if the UAW took the approach that Harry Wilson, who had control of less than two percent of GM stock, took with GM in seeking a $8 billion dollar buyback of company stock.  GM and Mr. Wilson settled on a five million dollar buyback but the point to be considered is what if the UAW took on the role of activist investor on behalf of its members?


While the conditions and responsibilities of the UAW and Harry Wilson are different the goals are as well.  Mr. Wilson was seeking a massive reduction in available stock to increase the share value.  The UAW would be seeking a package that is fair to its members at relatively little expense to the corporation.  Far less expensive than a strike costing $1 billion a week.


Time to Take a Shot


Athletes invest hours of practice to ready when their opportunity to make the game winning shot arrives.  Scientists study their entire lives for an opportunity to discover something that can make history.  As autoworkers we spend our lives, futures, health, and time with our families to make the products that earn these company’s profits.


As autoworkers we agreed to increase our dues to prepare for a strike if the automakers refused to be responsible and reward workers in good times for the sacrifices made in bad times.  The no-strike clause of the last two contracts is no longer tying our hands.


The system provides a remedy for times when a shared sense of responsibility doesn’t exist, when common sense is betrayed by greed, when shareholder pressure won’t get the job done.


That remedy is the strike.


Like Michael Jordan in the NBA Finals, TJ Oshie in the Winter Olympics, or Babe Ruth calling his shot the chance to make a difference is a rare thing.  Denying these corporations another month of record sales in a hot market may help them gain some perspective.  A perspective that matches all their cliché’ talk of partnership, family, and respect.


Executives, management, and shareholders have all returned to or surpassed pre-bankruptcy levels of compensation.  The people that build the products that earn the profits have yet to do so.  We can no longer accept a proposal that not only doesn’t get back to where we were, it insults the next generation of autoworkers by establishing a permanent lower class of working conditions.


An iron can smooth out the blemishes and imperfections but it works best when it’s hot.  For those outside the industry the importance of this fight is clear.  If massive corporations in highly profitable industries can get concessions in boom times the chances of smaller firms asking the same of their workers increases.  For firms that don’t have to ask, they may unilaterally implement lower wages and benefits regardless of profitability.

Some group of workers must stop the downward spiral in wages and working conditions if other workers are to improve their situation.


October 5, 2015TPP
Contact: Sara Haimowitz, Development Director

CPA Opposes TPP as Harming US Trade, Jobs and Economic Growth

The Coalition for a Prosperous America (CPA) opposes the Trans-Pacific Partnership (TPP) agreement because it will harm American job creation, agricultural and goods production and our economic prosperity.

“US trade negotiators had no strategy to increase American net trade when conducting these negotiations,” said Michael Stumo, CEO of CPA. “Instead, they pursued a deal for the sake of getting a deal, regardless of the result.  The result is another negotiating loss instead of a win.”

We Have Poorly Performing Trade Deals with Most TPP Countries Already: The TPP agreement is promoted as a trade deal with over 40% of the global economy.  That assertion is largely absurd and should be ignored.  The US economy alone is 60% of the TPP countries total gross domestic product (GDP) or economic size.  We have existing and poorly performing trade agreements with seven TPP countries that consist of another 20% of the TPP economic size.  Those countries are Canada, Mexico, Peru, Singapore, Peru, Chile and Australia.  As a result, we are not “opening trade” with 80% of the TPP countries.  Instead, the TPP is a trade agreement on top of existing trade agreements.

No Economic Benefit Expected from other TPP Countries, Including Japan:  We have no trade agreements (except the World Trade Organization agreement) with the remaining five TPP countries constituting 20% of the economic size of all TPP countries.  But there is little reason to believe the US will gain net exports from those countries.  Four of the countries – Brunei, New Zealand, Vietnam, Malaysia – have GDPs smaller than Philadelphia.

The fifth country – with which we have no bilateral trade agreement – is Japan which constitutes 14% of the TPP countries’ GDP. However, Japan cannot – or will not – substantially increase the purchase of US goods for several reasons.  First, the yen has devalued by over 55% in three years.  This devaluation from Prime Minister Abe’s aggressive monetary strategy. The result is equivalent to a tariff on US goods and a subsidy to Japanese exports. The Japanese consumer’s purchasing power has been severely devalued.

Japan has increased it’s value added tax from 5% to 10% effective this month. This 5% consumption tax increase will be paid by US exporters when crossing the Japanese border.  In contrast, Japan’s average weighted tariff is a mere 2.5%. The US cannot win by negotiating tariff reductions when other countries then raise border adjustable consumption taxes.

Japan operates a nationalistic, partially closed economy strategy. They grew from post-World War II depression based upon net exports and spurring diverse industry growth under government strategic planning.  The country will not change to become a net importer of US goods after signing the TPP deal.

There are many other reasons the US congress and the public should oppose the TPP:

Ignores Balanced Trade and Domestic Growth: US trade bureaucrats negotiated the TPP without regard to the forty straight years of US trade deficits.  They also ignored the relative decline of US manufacturing market share in the world as compared to the growth of China’s and Europe’s global market share since 2000. Instead, the deal will spur continued decline in relation to other developed economies.

Korea Agreement Failure Repeated: The agreement doubles down on the model that produced the trade deal with South Korea. The US trade deficit with South Korea worsened by over 70% after that deal was implemented in 2012. Congress needs to find out why before approving new agreements.

Currency Manipulation Failure: The Administration refused to follow Congressional instructions on currency as set forth in the recently passed Trade Promotion Authority legislation. Currency devaluation, as Vietnam recently did, makes any trade deal concessions meaningless.

Central Planning of Outsourcing: The TPP negotiators agreed to manage the decline of US based manufacturing and agriculture including dairy, beef, and autos through deals on more import penetration to the US to displace our industry.

Windfall for China: Rules of Origin are weaker than prior agreements. A more substantial portion of goods can be made in non-party countries like China and still receive favorable trade treatment.  China conceded nothing to receive this misguided benefit. Instead of containing China, the TPP incentivizes more production in China and other non-party countries.

Globalizes the Legislative Process: The agreement harms US sovereignty by globalizing rules that should be dealt with by Congress regarding pharmaceuticals, health and safety laws, and many other regulatory standards. Industries now have one-stop-shopping with trade negotiators to get rule changes rather than asking Congress to consider the national interest.

Globalizes Courts: The TPP grants jurisdiction to global courts that foreign corporations can use to invalidate US federal, state and local rules and laws. The US federal and state courts set up by our constitutional system are avoided.

Tax Bait and Switch: The agreement allows other countries to raise border adjustable consumption taxes (value added taxes or goods and services taxes) to replace any tariff reductions or other concessions. Just as under NAFTA, CAFTA and European trade, American companies will still face similar export charge hurdles as tariffs are reduced but other border taxes rise.

The Coalition for a Prosperous America is a nonpartisan, nonprofit organization representing the interests of over three million households through our agricultural, manufacturing and labor organization members.

Robert Kuttner of The American Prospect examines the political positions of various candidates and concludes Bernie Sanders Is About as Radical as Harry Truman…FeeltheBern

But Bernie is no more radical than, say, Harry Truman, FDR or LBJ (when he was thinking about domestic policies). My friend Peter Dreier, a few months ago, performed a real service when he compared key Sanders positions with public opinion generally.

As Dreier reported, overwhelming majorities of Americans support a higher minimum wage: 74 percent think corporations have too much influence; 73 percent favor tougher regulation of Wall Street; 58 percent support breaking up big banks; 79 percent think the wealthy don’t pay their fair share of taxes; 85 percent favor paid family leave; 80 percent of Democrats and half the public generally support single-payer Medicare for all; well over 70 percent of Americans support workers’ right to unionize; and on and on.

No wonder Sanders is gaining ground.

Republicans have been disparaging Democrats as socialists — even centrist ones like Barack Obama — ever since FDR. So if this be socialism, let’s make the most of it.

This fall will see the launch of the new diesel powered versions of the Chevrolet Colorado and GMC Canyon.  Like their gas-powered siblings these trucks are made in Wentzville, Missouri by many residents of Franklin County.

Here’s one of the first reviews,this one from Road and Track...

What is impressive, however, is the Colorado’s overall refinement. It’s a diesel, yes, and it makes some diesel-y noises now and then, but it happens far less often than you’d expect, and even when it does, the notes are appropriately tough and brawny, not cheap and clattery. Mostly, however, what you’ll notice is the smoothness of the power delivery, the quietness in the cabin, and the near-instantaneous thrust upon a light kick of the business pedal.

Behind the wheel, the Colorado diesel is a revelation. Modern, comfortable, and high-tech, it’s just like a full-size pickup at 3/4 scale–which is to say it’s not giving anything up to a modern premium sedan the way the trucks of 20 years ago did. Hook up a trailer and just go–there’s an integrated trailer brake controller, engine braking (Jake Brake!), and a slick six-speed transmission that keeps the revs low even as it does work normally left to trucks with twice the cylinder heads.

Talking Points Memo is carrying this story about an attack ad in Louisiana aimed at Senator David Vitter.  You may remember David as the holier-than- thou Senator from Louisiana caught in a Washington D.C. prostitution sting.  Things went from bad to worse as his fetish for wearing diapers was DiaperVitterrevealed. I hope you get a giggle out of this ad, I did.

PBS Frontline takes a look at the transformation of the National Rifle Association from a common sense advocate for the second amendment to a stealth lobbyist for the gun industry.  Enjoy this episode of Frontline – Gunned Down: The Power of the NRA.

You have to hear about the relative marksmanship of NRA President Wayne LaPierre .

Watching this brings to mind the many conversations I had with Frankilin County residents that worked at Integram as far back as ten years ago.  Many of my co-workers were members of the NRA but the majority of them recognized the organizations role in politics by changing the meaning of the acronym to the National Republican Association for their seeming unquestioned endorsement of the GOP candidate in any two way race.

Those conversations came to mind with this story, NRA Caught Illegally Funneling Buckets of Cash to GOP Candidates...

The issue is not just that my donations ended up in a political fund account, but the way the NRA solicited them — and presumably those of thousands of others. In fact, each of these transactions almost certainly violated multiple provisions of the Federal Election Campaign Act (FECA) and a legion of state and federal antifraud statutes designed to protect the public from phony charities and false or misleading solicitations.

After the NRA entered politics heavily in the 1970’s, their tactics have become exponentially slimier. In the interest of increasing the bottom lines of gun manufacturers, who are some of their biggest donors, the NRA has become an advocate for the use of firearms by anyone, including criminals, by opposing laws designed to protect the public from felons and the mentally ill from purchasing them.

This particular scam, though, may be more than the high-powered lawyers of the NRA can handle, as federal law clearly states that solicitations for political purposes must be clear and transparent.

The NRA’s brazen shell game with donations: A Yahoo News investigation

Burlow explains further:

If a private citizen says he’s raising money for a cancer charity and deposits the money into his personal bank account, he can be prosecuted for committing a fraud. Similarly, under federal election law, corporations like the NRA that set up what are known as “connected PACs” must inform potential donors if a PAC is the intended beneficiary of a solicitation. The NRA can’t claim to be raising money for the corporation — to finance such things as its lobbying or research initiatives — and then deposit that money into the account of its PAC. But that’s precisely what the NRA did when it solicited my contributions.

Wonder when the NRA will get back to representing gun owners and citizens instead of the gun manufactureres

Science Alert has this story on Sweden shifting to a 6 hour day...

While impressions of staff being happier and full of energy aren’t exactly scientific basis for declaring 6-hour work days as ‘better’ than the 8.7-hour work day endured by the average American, we do have evidence that what we’re doing right now isn’t working.six

A study published in The Lancet last month analysed data from 25 studies that monitored health of over 600,000 people from the US, Europe, and Australia for up to 8.5 years found that people who worked 55 hours a week had a 33 percent greater risk of having a stroke than people who worked a 35 – 40 hour week, and a 13 percent increased risk of developing coronary heart disease, while a separate study found that working 49-hour weeks was associated with lower mental health, particularly in women.

And as we reported earlier this month, we probably shouldn’t even be forced to clock on at 9am anyway, with expert Paul Kelley from Oxford University’s Sleep and Circadian Neuroscience Institute saying that society is in the midst of a sleep-deprivation crisis, because our 9-5 working hours are at odds with our internal body clocks. ”Staff should start at 10am… Staff are usually sleep-deprived,” Kelley said. “Everybody is suffering and they don’t have to. We cannot change out 24-hour rhythms.”

Hear that? Everybody is suffering and we don’t have to. I guess until the rest of the world catches up with Sweden – which btw is also making moves to become the world’s first fossil fuel-free nation

What Autoworkers Are Paid vs What Media Says We Are Paid

Darin Gilley

September 30, 2015


Today we learned that our cross-state neighbors in Kansas City have given the Ford Kansas City Assembly Plant a five day notice of intent to strike if management won’t address issues related to their local contract.  This event in combination with the proposed contract between Fiat/Chrysler and the UAW being voted down will lead to many stories over the next few days about autoworker pay and benefits.  In this article I will dissect a recent such piece and list the actual amounts autoworkers are paid to expose the incomplete/biased reporting done by corporate media on these issues.



Corporate propaganda is the best way to describe an article by Keith Naughton of Bloomberg News.  “Ford seeks to shake stigma of Detroit’s most generous automaker” is written in the voice of the investor class while hoping no one checks their math to convey a message that automakers in general and Ford in particular are “beset’ by high labor costs.  Unfortunately, I checked their math and this article will show that labor costs are a very small portion of the cost of an automobile.


Let’s focus on the part of the article under the heading Contract context…


Ford ended up with Detroit’s most expensive labor contract because it didn’t seek bankruptcy protection back in 2009 like GM and Chrysler. Those companies have since been allowed to hire as many so-called second-tier workers as they want starting at “entry-level” pay of $15.78-an-hour, while only a limited slice of Ford’s workforce can be paid less than the top-end $28.50 rate.


Back in the dark days of 2007, the union agreed to the two-tier system, with less-expensive benefits and lower pay, to try to end losses at the Detroit Three. During the government-sponsored bankruptcies of GM and Chrysler in 2009, those companies were given the freedom to hire an unlimited number of workers at the lower wage. Only Ford still has a cap that requires a maximum of 28 percent of its labor force receive the lower pay.


Ford hit that threshold early this year, which triggered a clause requiring some of the entry-level workers’ pay be bumped up to $28.50, the rate veteran workers receive, from $19.28, the top end of the second-tier wage scale. The company said it has given that hefty raise to more than 800 workers since February.


As a result, Ford’s average U.S. labor cost, including benefits, is about $57 an hour, $10 more than at the U.S. operations of Fiat Chrysler or Toyota Motor Corp., according to CAR, based in Ann Arbor, Michigan. Chrysler has hired 15,050 workers since 2011, leaving 45 percent of its workforce earning the lower wage.

GM, which has hired 9,100 workers since 2011, has seen less benefit and has average U.S. labor costs of $55 an hour, according to CAR. Fewer than 25 percent of its workers have the lower wage.


Let’s address the issues one at a time.


First, the cap on the number of Tier 2 workers at Ford is 20% not 28%.  Probably a typo, bad but we all make mistakes.


Second, and more problematic is the statement that a pay increase of $9.22 for 800 workers out of a workforce of 50,000 results in an average hourly labor cost of $57 an hour.


This figure was obtained from the Center for Automotive Research (CAR).  Much like the debunked figure of $75 an hour put out by General Motors prior to the 2007 negotiations this figure includes benefits paid to retirees and retirement benefits to be paid to Traditional workers that will become non-existent over time as current Tier 2 workers will likely never receive retiree health care.  While a Defined Benefit Pension is on the table this round of negotiations current Tier 2 workers will not receive this benefit.


As such, active labor costs should reflect this fact.

Here’s a look at the actual paycheck and total compensation costs of a newly hired Tier 2 worker and at a Traditional pay rate with Tier 2 benefits…


Projected production of vehicles in 8 hours                330

Cost of each vehicle                                            $25,000

Value of vehicles produced per shift              $8,250,000 (8.25mil).

These are the costs to GM of an hourly employee (Wages and Benefits)


$15.78   New hire and Temp hourly wage

.63   PSP contribution equal to 4% of wages

$1.00   PSP contribution per straight time hour

30   Hourly cost of Flexible Spending Account – $600 p/yr

$6.78   Actual 2014 Hourly Cost of Fam. Health Ins.(1,085p/mo)

$1.21   GM portion of Social Security and Medicare (FICA)

.36   Hourly cost of Term Life, Disability,Tuition reimb.

$26.06   Total Hourly Compensation of a Tier 2 worker


$26.06    Tier 2 hourly compensation

X       8    Hours per shift

$208.48  Total compensation per shift of a Tier 2 employee

$208.48     Total compensation per shift of a Tier 2 employee

X 1000     Employees per shift

$208,480   Hourly Labor Cost Per Shift


$208,480 (wages) divided by $8,250,000 = 2.5%


What if a Tier 2 employee earned $28.00 per hour but without the Pension or Retiree Healthcare of Traditional Employees? Let’s call this worker TWT2 as earning a Traditional Wage w/Tier 2 benefits.


$28.00  Hourly wage

1.12  PSP contribution equal to 4% of wages

$ 1.00  PSP contribution per straight time hour

.30  Flexible Spending Account – $600 per year

$6.78  Hourly cost of Family Health Insurance (1,085 p/mo)

$2.14  GM portion of Social Security and Medicare (FICA)

.36  Hourly cost of Term Life, Disability, Tuition reimb.

$39.70 Total Hourly Compensation of a TWT2 worker.


$39.70     TWT2 Hourly Compensation

X        8     Hours per shift

$317.60    Total Compensation per shift of a TWT2 employee


$317.60    Total Compensation per shift of a TWT2 employee

X   1000    Employees per shift

$317,600  Hourly Labor Cost Per Shift


$317,660 (wages) divided by $8,250,000 = 3.8%


Please keep in mind that the industry standard for labor costs prior to the recession was between 7-8% according to Steven Rattner, Chairman of the Auto Task Force, also known as the “car czar.”  This figure can be found on page 308 of his book “Overhaul.”  It should also be noted that Single employee’s total compensation will be less that the listed figures due to a smaller Flexible Spending Account and lower health insurance costs.


What this article, and most of the reporting on this years negotiation is missing or avoids pointing out is the active labor costs.  The active labor costs are those received by people actually building the product.  These costs will be below the industry standard even if Traditional wages are paid.


This is easily illustrated by using the Center for Automotive Research (CAR) hourly labor costs for other automakers, which do not include retiree health care and pension amounts in their total labor cost figure.  With the exception of Chrysler these automakers never provided retiree health care or defined benefit pensions to their U.S. workers.


CAR – Ford Labor Costs    $57

CAR – GM Labor Costs      $55

Actual Tier 2 Labor Costs           $26

TWT2 Labor Costs                     $39


CAR – Toyota                      $55

CAR –  Chrysler                    $52

CAR –  Honda                       $50

CAR – Nissan                       $47

CAR – Hyundai                     $44

CAR – VW                            $38


Obviously, a $39 per hour Total Labor Cost for a Traditional Wage Tier 2 benefits worker is at the bottom end of the labor scale for active employees. Unemployment and Workers Compensation costs are not included but these should be a small percentage of Total Labor Costs.  This figure would allow for enhanced PSP/401k benefits, COLA or increased profit sharing, and other benefits to be included and still remain “competitive” in terms of labor costs.


As negotiations progress on a new UAW-D3 contract notice which stories include the inflated CAR figure for labor costs, which include the legacy costs of retiree healthcare and pensions much of which should have already been funded and which informed authors use the actual labor costs involved in building a vehicle.


In the last few days automakers have reported their 2nd quarter 2015 financial results.  Despite being “beset” by high labor costs Ford and General Motors reported record quarterly profits of $1.9 and $2.8 billion respectively.


Honest reporting on the state of the industry would note that Executives, Management, and Shareholders have all returned to pre-crisis levels of compensation.  The people actually building the products that produce the profits have not.


By paying Traditional wages with enhanced benefits the company wins by avoiding having retirement legacy costs on their balance sheet and maintaining a competitive labor rate.  Workers win by earning a middle class wage.  America wins by seeing its investment in these firms repaid with stable communities, a growing middle class, more small businesses, a stronger Social Security system, and a reward for the risk of bailing out these automakers.



Powered by WordPress Web Design by SRS Solutions © 2015 Franklin County Democrats Design by SRS Solutions