Franklin County Democrats

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

Browsing Posts published in September, 2015

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.

 

 

Last week I posted about Peter Kinder and his dramatic change in position on the issue of Right-to-Worse.  Look like the Kansas City Star has dug up a gem from the past in the article Peter Kinder was agaisnst Right-to-Work before he was for it…twofaced

What a far, far cry that is from the Peter Kinder of 2005. Brace yourselves, folks. Political whiplash ahead.

That year, Missouri Republicans were pushing hard for right-to-work. The GOP controlled the General Assembly. The governor, Matt Blunt, was a Republican. So was the lieutenant governor — a man named Peter Kinder.

But bill proponents had a big problem. Blunt opposed the idea. He said there were other ways to create good-paying jobs besides undermining unions.

And Kinder, his sidekick, was right there beside him.

“While Governor Blunt and I are in office, there will be no right-to-work law…” he said in a rousing speech to the Carpenters District. A newspaper reported that his comments were greeted by thunderous applause.

What that statement was not greeted by was ALEC and Koch Brother dollars.  Let’s celebrate GOP Gubernatiorial candidate Peter Kinder and his zealous embrace of a new position on Right-to-Worse with this video of the gorgous Crystal Gayle singing “Why have you left the one you left me for?”

 

This week’s audio netcast;   Why is it that our opponents so steadfastly ignore the truth? Political scientist Arthur Lupia is an expert on ignorance, and he says it’s because people care more about values than about facts. With Scott Walker out of the presidential race and polls showing stronger support forredradio unions, labor leader David Rolf is optimistic about a number of trends, including raising the minimum wage. And journalist Alex Seitz-Wald talks with Bill Press about U.S.-Chinese relations.

It’s enough to make John Boehner cry.  As major factions of the Republican party push for a government shutdown as a way to protest Planned Parenthood.  The fact that this protest is based on highly edited video’s does not give these ideologues much second thought.iud

Thought also takes a second place to wedge politics on the issue of contraception.  From Hobby Lobby to Rick Santorum the belief thag contraception is immoral has led to many unneeded abortions.  Or as the left-leaning rag Scientific American details in this study Contraceptive Implants Are Better At Stopping Teen Pregnancies…

Whereas condoms are best for preventing sexually transmitted diseases, they are often not used, resulting in unwanted pregnancies. Girls need other choices. The evidence favoring long-acting implants such as intrauterine devices (IUDs) is so powerful that in September 2014 the American Academy of Pediatrics endorsed IUDs as the best contraception option for teens, and the American College of Obstetricians and Gynecologists has done the same. Here are some of the reasons: a study of more than 1,400 young women in the St. Louis area published last year in the New England Journal of Medicine found that providing teen girls with IUDs and other hormonal implants reduced pregnancy and abortion rates by more than 75 percent over three years. A 2012 study concluded that women using IUDs were 17 times less likely to get pregnant unintentionally than were women using pills, patches or vaginal rings.

Hedge Fund managers and electric utilities seem to be on a mission to extract as much moolah from your pocket as possible if you or your family have the misfortune of a health issue, even if they helped cause it.  Add to that list the pharmaceutical industry selling you these life-enhancing prescriptions.  Yesterday, we posted a chart showing the prices of certain prescription drugs in other nations and here in America.  Why is the question that jumps to mind.Image result for Image, overpriced drugs

Economist Dean Baker shares his thoughts...

The United States stands out among wealthy countries in that we give drug companies patent monopolies on drugs that are essential for people’s health or lives and then allows them to charge whatever they want. Every other wealthy country has some system of price controls or negotiated prices where the government limits the extent to which drug companies can exploit the monopoly it has given them. The result is that we pay roughly twice as much for our drugs as the average for other wealthy countries. This additional cost is not associated with better care; we are just paying more for the same drugs.

This is not an issue about the free market. The free market doesn’t have patent monopolies. The monopoly power provided by a patent is a government policy to promote innovation. There are problems with patent monopolies in many areas, but nowhere is the issue worse than with prescription drugs.

Patent protected drugs are often essential for people’s health or even their lives. Allowing a drug company to have a monopoly where it can charge whatever it can force the individual, or more typically the insurer or the government, to pay makes little sense. This is like negotiating the pay of firefighters at the point where they show up at your burning house with your family inside. This would give us much worse fire service and many very wealthy firefighters.

A monopoly that allows drug companies to sell their drugs at prices that can be hundreds of times the free market price has all the problems economics predicts when governments interfere with the market. Drug companies routinely mislead doctors and the public about the safety and effectiveness of their drugs to increase sales. The cost in terms of bad health outcomes and avoidable deaths runs into the tens of billions of dollars every year.

Drug companies also spend tens of millions on campaign contributions and lobbying to get every longer and stronger patent protection. The pharmaceutical industry is one of the main forces behind the Trans-Pacific Partnership, and its demands for stronger patent protections is one of the main obstacles to reaching an agreement with the other countries.

We don’t need patent monopolies to support research. We already spend more than $30 billion a year financing research through the National Institutes of Health. Everyone, including the drug companies, agrees that this money is very productive. We could double or triple this spending and replace the patent supported research done by the drug companies. With the research costs paid upfront, most drugs would be available for the same price as a bottle of generic aspirin.

While the measures being proposed by Hillary Clinton and earlier Bernie Sanders don’t go this far, they are a big step in the right direction.

Area doctors Jerry Friedman and Beth Koebel penned An Rx for cleaner air.  This powerful piece details the damage to the health of residents living in the vicinity of the Ameren Labadie Power Plant…Image result for Image, asthma

Coal-fired power plants are polluting the air we breathe and the water we drink. As we have seen in the past with the proposed coal ash landfill in Franklin County, when Ameren is looking for a way to cut corners when it comes to cleaning up pollution, it tends to get what it wants. This time though, Ameren wants the “right” to continue to pollute our air and contribute to asthma and premature death in our region.

Large parts of St. Louis County, Jefferson County, St. Charles County and Franklin County air are not considered healthy due to this coal pollution. For the past few months, the Missouri Department of Natural Resources has been tasked with developing a series of plans to address the dangerous sulfur dioxide pollution levels in St. Charles County and Franklin County from Ameren’s Labadie coal plant.

Sulfur dioxide is a pollutant emitted by coal-burning power plants that exacerbates asthma and can lead to premature death. In 2010, acknowledging the danger that this pollutant posed to asthmatics and vulnerable populations — like children and the elderly — the Environmental Protection Agency took the recommendations of the public health community and revised the standard. Now, five years later, states are in the process of working to meet this new health standard.

 The EPA and the Clean Air Act were both created with the sole purpose of protecting public health and the environment in which we live. The intention with this process is to protect our air and our lungs from unsafe pollution.

On Aug. 27, the Missouri Air Conservation Commission held the first public hearing to consider options to address the sulfur dioxide pollution from Ameren’s Labadie plant. At the hearing, Ameren had the gall to bring in an out-of-state hired consultant to produce sworn testimony that sulfur dioxide emissions do not lead to adverse health effects.

This chart illustrating the difference between drug prices in different countries is an eye opener…

Corrupt former hedge funder Martin Shkreli — who hiked the price of an AIDS pill by 5500 percent overnight — is only the latest example of price gouging in the pharmaceutical industry. But US drug prices have been skyrocketing across the country for years. As the following chart illustrates, drug prices in the US are up to 10 times higher than in numerous other developed countries. Data comes from the International Federation of Health Plans (IFHP) 2013 Comparative Price Report.

drugschart

2013 data from the International Federation of Health Plans

The budget deficit would be reduced, Medicare and Medicaid strenghened and private health insurance premiums would be reduced if Big Pharma faced the same economic environment in the U.S. as they do around the world.   Can Pharma’s stranglehold on Congress be broken with Citizen’s United in place?

Mother Jones takes a look at how Scott Walker’s collapse will affect the GOP primary…

A sullen Scott Walker appeared at a brief press conference in Madison, Wisconsin, on Monday afternoon to announce that he was Collapse“suspending” his presidential campaign, citing an overcrowded field. Walker never mentioned Donald Trump by name, but his exit underscored how the bombastic businessman turned GOP front-runner has altered the race in a way few would have predicted. Walker, who began the year with a commanding lead in Iowa and what many suspected was the explicit support of the libertarian billionaire Koch brothers, polled at less than one-half of 1 percent in the most recent national polling. He encouraged other remaining GOP candidates to follow his lead, “so the voters can focus on a limited number of candidates who can offer a positive conservative alternative to the current front-runner.”

Despite his strong start and sterling conservative credentials—winning three elections in the once-progressive bastion of Wisconsin and breaking the backs of public unions in that state—Walker’s standing has tumbled steadily in recent weeks. In the latest GOP debate on CNN last week, he looked flat and hesitant to jump in amid a format encouraging the candidates to spar with one another. His constituents were also turning against him, withhis approval rating reaching an all-time low last month. Even some of Walker’s political allies in the Republican-held Wisconsin legislature criticized Walker after he tried painting himself as a political outsider, despite having held elected office for 23 of the 25 years since he left college.

The St. Louis Post-Dispatch has this story on an opinion piece written by Lt. Governor Peter Kinder in which he issues not so veiled threats to Republicans that voted not to override Governor Nixon’s veto of Right-to-Worse legislation.  The Kansas City Star story is a little juicier...twofaced

Missouri state Rep. Sheila Solon has had enough of fellow Republican Lt. Gov. Peter Kinder’s assertion that opponents of anti-union right-to-work legislation were “joyously yukking it up and high-fiving” union members following this week’s defeat of the legislation.

“Lt. Governor Kinder was on the dais observing the vote and multiple news media outlets and cameras documented the vote,” Solon wrote. “I believe a review of the footage will show all of us sitting solemnly at our desks preparing for the next vote. The Lt. Governor’s statement describing the circumstances is absurd.”

But Kinder fired back late Saturday with a statement indicating that other witnesses observed what he described — though he admitted that Solon may not have been involved. And, Kinder produced one, Rep. Mark Parkinson, a St. Charles Republican.

“Peter Kinder’s description is dead on accurate,” Parkinson wrote on Twitter. He said the celebration occurred not in the House chamber, but in the Capitol rotunda.

Solon of Blue Springs was one of 20 Republicans who sided with Gov. Jay Nixon and opposed an override of his right-to-work veto during Wednesday’s veto session.

On Thursday, Kinder issued an op-ed asking whether advocating for right-to-work remains a cornerstone of the Missouri GOP in the future. Kinder, a three-term lieutenant governor, is the early front-runner for the GOP gubernatorial nomination next year.

Then he wrote this:

“Does that future belong to those GOP representatives seen, moments after their 20 votes sustained a Democratic governor’s veto, joyously yukking it up and high-fiving the delirious (and shrinking) crowd from Big Labor?

My, my, my how times change.  I can clearly rmember Peter Kinder approaching me after a UAW rally in downtown St. Louis a few years ago.  At the time, I was President of UAW Local 1760 and sat on the board of the UAW St. Louis City CAP Council.  Mr.  Kinder approached me after the rally and asked if the UAW would consider endorsing him, after all “I’m a good guy, I drive a Ford, we could work together.”  Of course, I reminded him that decision was made far above my pay grade but I appreciated his interest in working with the UAW.

I wonder if any of the Republican representatives Mr. Kinder is threatening would be interested in that story?

 

Powered by WordPress Web Design by SRS Solutions © 2017 Franklin County Democrats Design by SRS Solutions