The Brian Sullivan Blog
  • December 11, 2008 08:49 AM EST by Brian Sullivan

    Must Read: The Real Story on UAW Pay Levels

    The New York Times did an excellent story on the real story around UAW pay levels and the burden on the Detroit 3.

    The  number "$73 dollars an hour" has been bandied about as an average wage for UAW workers, which that union has denied, but the Times does a great job of working through the figures.    It shows the actual take-home pay levels aren't that different between the UAW and non-union auto companies but rather it is the legacy benefits taking the biggest bite.

    The other interesting aspect is that the total labor cost difference is only about $800 per car between domestic and foreign manufacturers, but because of lower demand and concern over qualty the domestics on average sell their cars for $2,500 less than Toyota, Nissan et al, so the gap is really about $3,300 per vehicle sold.

    This goes back to the point I made yesterday about automaker "viability."  Both of these forces are extreme negatives against the Detroit 3.   No matter how much money we give GM, Ford and Chrysler, until they can either 1) reduce the massive legacy costs and/or 2) eliminate the pricing gap between them and the foreign auto companies then there seems to be little long-term "viability" on the horizon.

Bill

If the UAW was really interested in keeping their workers employed, then wouldn't it make sense to reduce some of the burden on the Big 3, like lower pay. These guys have no problem going on strike for higher wages better working conditions, etc. These are tough times, and we need to pull together to keep all of our workers employed. UAW should make a concession until the economy gets better, or let the Big 3 go belly up, and re-tool!

December 12, 2008 at 8:11 am

Mike

I am so thankful for the Senate! They had enough sense to look the UAW and the Big 3 in the eye and say NO! America is not going to help companies that will not help themselves. As a business person, we must operate with a budget and stick to it. Why can't these guys in Washington figure that out? I would take a big pay cut if I could keep my job. All i have heard is that "no one is going to take a pay cut". Oh yeah, the millionaire CEO's are going to work for $1. The leaders of Delphi (Supplier for GM) did the same thing and where are they at.....Still in bankruptcy. The same place these companies are going. Then we will see how the UAW does in those negotiations!

December 12, 2008 at 8:50 am

Leo Wells

Brian- I appreciate your thoughtful articles. Hope to see you after the first of the year. Have a blessed Christmas.

December 12, 2008 at 9:16 am

Lorin

I think now is the most important time in recent history to think about loyalty to OUR country and the products that we create. Granted some will still buy "foreign" cars for whatever reason and that is a shame. This would be the perfect oppertunity for the Big Three to give the UAW the boot. There are a lot of non union people in need of a job right now and I'm sure a lot of union people would jump ship if it ment keeping their job.

December 12, 2008 at 10:01 am

Gale

Could someone answer the question.....What is the real cost of a vehicle (out the back door of the factory)? What is the profit write-up to my dealer versus that cost? Wouldn't it be fair to say that AFTER breaking the ridiculous UAW contracts, that "the big 3" could lower the profit margin, pass that lower price to the consumer, and make it possible to buy a new vehicle for less that the cost of my home! That still gives people jobs, and the "domino companies" would still be giving jobs & service, AND maybe just maybe the "fat cats" would then see that multi-million dollar salaries, multi-million bonuses, and golden parachutes ARE NOT necessary to be successful. In my business, if there is an item I'm having trouble moving, I lower the price, which in turn lowers my profit, BUT I get it sold, and through volume I end up making about the same amount, while my manufacture partners are trying to stay up with demand with providing More Jobs to others.

December 12, 2008 at 10:13 am

Lya

Having lived in the Detroit area for the last 15 years, I have seen the toll that the UAW and its greed have taken in this new economy. UAW workers laid off, sit home collecting paychecks long after unemployemnt runs out. Retired workers aged 50, collect benefits that are nearly equal to their full pay. They pay nothing for health care, and abuse the system seeking specialists, and using ER visits for routine care. They may have similar take home pay to other workers, but they benefit with lower "overhead" than their counterparts. Another side to this story that no one wants to talk about is that it is union workers that have greatly impacted the housing market in the Detroit area. Union workers seeing their overtime dry up are defaulting on loans that should never have been made. These workers live beyond thier means, and then stick it to us when the well goes dry. The retirees live like kings, the laid off workers sit home collecting money to do nothing, and the ones who work, rely so heavily on overtime to live in fancy homes, and drive gas guzzling SUV's that never see any "sport" but bowling. They say "I need space". FIne, drive a minivan that gets 30 MPG. The big 3 can survive bankruptcy the hard way like Kmart did, and the UAW can learn to live like the rest of us.

December 12, 2008 at 10:23 am

Lya

Keith K. The UAW workers have let the UAW put them out of jobs because they get paid just as much to stay home!!!!!!!!!!! The job banks and other plans set the workers up to have not so much job security as wage security. These workers sit home collecting the same pay as before they were laid off. Try getting that gig. And oll of this with barely a high school diploma. Nice work if you can get it, but this counrty cannot afford it anymore. The BIG 3 have been bailed out before. Don't give them the chance to screw it up again.

December 12, 2008 at 10:31 am

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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