Center For Automotive Research: Detroit Beating The Wage Gap

Edward Niedermeyer
by Edward Niedermeyer
center for automotive research detroit beating the wage gap

Speaking at the same Detroit conference on the auto bailout that Steve Rattner and Ron Bloom attended, the Center for Automotive Research’s Sean McAlinden proclaimed the end of Detroit’s era of unsustainable high wages. In 2007, said McAlinden, building a car in North America cost GM about $1,400 more per car than it did Toyota, thanks largely to a $950 health care charge. Since then, GM’s bailout and renegotiated wage and benefit contracts with the union have actually brought GM’s hourly compensation to just under what the CAR says the transplants pay. The AP reports that McAlinden’s estimate of GM’s average hourly worker salary is $69,368 while the transplant average is $70,185. Better still is McAlinden’s prediction that

between 2013 and 2015, Toyota could even be paying $10 more per hour than GM unless the Japanese company reacts and lowers wages.

And all it took was giving the UAW a $17.5 stake in the new GM!

Of course, there’s some question as to the veracity of anything that comes out of the CAR. Largely funded by unions and the Detroit automakers, CAR’s assesments have been plenty controversial in the past. This time though, it’s hard to see how cooking these numbers helps anybody. After all, the UAW hardly comes out of this looking like roses with its membership… unless we see these numbers used in a union counterattack.

And that’s not a scenario that’s entirely out of the question. After all, GM may be beating the transplants on hourly worker wages, but compare white-collar salaried employee compensation, and it’s clear that GM still pays its non-hourly workers quite well by comparison. According to McAlinden,

Salaried workers at the Detroit automakers made $122,963; at foreign competitors, they made $81,506.

That won’t make the union too happy. But then, they won’t really have much to say until their VEBA fund is able to monetize its stakes in GM and Chrysler. And if those stakes don’t yield enough cash to meet VEBA’s obligations, expect things to get nasty all over again. And then there’s the issue of pensions, which the GAO recently warned could compromise the whole auto bailout. It’s not clear if McAlinden includes these looming pension bills in his compensation analysis, but it’s likely he doesn’t considering GM has no public plan for how to deal with the looming crisis.

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  • Gimmeamanual Gimmeamanual on May 12, 2010

    There was a guy on here a while back that used to show that GM already spent a bit less than Toyota to build a comparable car (Malibu vs Camry), but GM's average transaction prices were WAY lower.

  • Joevwgti Joevwgti on May 13, 2010

    That's pretty hypocritical considering some GM parts, and even their cars aren't made in the USA. Chevy Aveo, anyone? Suzuki/Daewoo econobox much?

  • Inside Looking Out You should care. With GM will die America. All signs are there. How about the Arsenal of Democracy? Toyota?
  • DenverMike What else did anyone think, when GM was losing tens of billions a year, year after year?
  • Bill Wade GM says they're killing Android Auto and Apple Carplay. Any company that makes decisions like that is doomed to die.
  • Jeff S I don't believe gm will die but that it will continue to shrink in product and market share and it will probably be acquired by a foreign manufacturer. I doubt gm lacks funds as it did in 2008 and that they have more than enough cash at hand but gm will not expand as it did in the past and the emphasis is more on profitability and cutting costs to the bone. Making gm a more attractive takeover target and cut costs at the expense of more desirable and reliable products. At the time of Farago's article I was in favor of the Government bailout more to save jobs and suppliers but today I would not be in favor of the bailout. My opinions on gm have changed since 2008 and 2009 and now I really don't care if gm survives or not.
  • Kwik_Shift I was a GM fan boy until it ended in 2013 when I traded in my Avalanche to go over to Nissan.