ABC's overpaid autoworkers

In an attempt to explain the plight of the Big Three U.S. automobile manufacturers, ABC's World News used a wildly misleading statistic regarding autoworkers' pay. On the December 3 edition of the ABC newscast, reporter Chris Bury took aim at the supposed inflexibility of the United Auto Workers: "But the union did not offer to give back the big stuff, pay and benefits that remain a fundamental problem. Ford, Chrysler and GM pay union workers more than $73 an hour in wages and benefits. Japanese plants here shell out just over $44. For GM, that translates into $1,500 more per car more than Toyota has to pay." This factoid, which is a favorite of the industry--and, increasingly, of the media as well --has been exposed as misleading for some time. In the New Republic (11/21/08), Jonathan Cohn called it "wildly misleading," and cited an analyst for the Center for Automotive Research who determined that "average wages for workers at Chrysler, Ford and General Motors were just $28 per hour as of 2007." The much higher figure, according to Cohn, results from a mathematical sleight of hand--taking "the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers." In other words, costs related to retired workers, who well outnumber current employees, are used to create an inflated figure that is misleadingly labeled as current labor costs. Writing in Portfolio (11/18/08), Felix Salmon called it a "ridiculous number," adding: "Now that GM's healthcare obligations are being moved to a UAW-run trust, even that fictitious number is going to fall sharply. But anybody who uses it as a rhetorical device suggesting that U.S. car companies are run inefficiently is being disingenuous." The United Auto Workers also has a page on their website debunking the industry figures (http://www.uaw.org/barg/07fact/fact02.php). And as the Wall Street Journal reported (11/20/08), "During the past three years, the union agreed to eliminate tens of thousands of production jobs, reduce healthcare coverage for union retirees and slash wages for new hires--moves that essentially level the playing field between the Big Three auto makers and their foreign-owned rivals." The paper went on to explain that these concessions are significant: "Analysts believe the changes will bring the average cost of union labor to less than $50 an hour by 2010 or 2011, in line with Toyota Motor Corp.'s labor costs. The Harbour Report, a closely watched scorecard of auto-plant productivity, earlier this year found that in 2007 the average per-vehicle labor costs for the Big Three in 2007 was no more than $260 above Toyota's"--far from the $1,500 premium ABC claimed GM pays. ABC did include a quote from UAW president Ron Gettelfinger, saying that he "bristled at blaming auto workers"--but ABC's newscast was as much behind the finger-pointing as the industry is. As economist Dean Baker noted (Beat the Press, 11/18/08), this misinformation has serious consequences: "It certainly can affect public support for a bailout if they are led to believe that autoworkers are paid much more than is actually the case." ABC should correct the record.