Dec 15, 2008
You can’t turn on the TV without hearing some politician denounce the supposed huge “wage gap” between UAW workers and workers at the foreign transplant companies like Honda and Toyota. Supposedly, UAW workers earn $73 an hour compared to $49 an hour at the transplants.
First of all, it’s a big lie. The $73 figure includes not only wages, benefits and contributions for the future pensions of current workers, but also so-called “legacy costs” – money for pensions and retiree health care paid today to retired workers who once worked in GM, Ford and Chrysler’s plants – including those they sold off to other companies. That’s money GM, Ford, and Chrysler were supposed to have put aside already – figured into the price of the cars they sold while those workers were still working. If they don’t have it today, they stole it.
But even if it were true – even if auto workers did make $73 an hour – so what? Based on how much value they produce for the auto companies, they should make even more! On average, an auto worker adds $206 every single hour to the value of the cars they produce.
What’s true for auto workers is true for every worker – the companies take the lion’s share of the value every worker produces.
If auto companies succeed in taking an even bigger share of that value by lowering auto wages, every other company will move to lower wages.