Tuesday, November 11, 2008

Detroit Auto Workers Are Overpaid

While there are other factors behind the deep crisis of the Detroit auto industry, including the deep cyclical downturn and the until recently high gas prices, a key factor behind their problems is that workers are overpaid. As Mark Perry here shows, the total pay (including various benefits) for Detroit auto workers are more than 2.5 times higher than that for the average American worker ($73 per hour versus $28) and more than 1.5 times ($73 per hour versus $48) higher than the total pay of those that work in Toyota factories in America. High pay may not necessarily mean that you are overpaid, but given the chronic losses of Detroit auto companies, clearly Detroit auto workers are overpaid and it is obvious that the very high cost of labor is a factor behind Detroit's problems. While a bailout may save these companies temporarily, a sustainable survival clearly depends on reducing labor costs.


Anonymous Ke said...

It's absolutely disgusting what our auto industry has become. Instead of remodeling the companies to produce more efficient and less expensive cars, they form labor unions to file lawsuits every time a new technology machine replaces the labor of overpaid men. Now GM has gone bankrupt. Instead of allowing the bad companies to go bankrupt to revitalize the American car industry, we're now stealing wealth from the rest of the more productive workers in America to pay for these unproductive mobs.

Jim Rogers said it right. America has become more communist than China.

11:12 PM  
Anonymous Adam said...

To me the American auto industry problem is clear. A good percentage of Americans don’t even consider buying Chrysler, or GM cars. I know many people who have had American made lemons in the past, and won’t buy another. Why buy GM, or Chrysler when you can get a cheaper, and more reliable Honda, or Toyota? I see no reason to bailout failing companies that offers inferior products.

12:24 AM  
Blogger Aragon said...

This column about Cato Institute's grand-old-man isn't particularly about this subject... but check this out anyway.


A certain Stephen Karlson [sic.] appears in a quite positive light there :)

5:20 PM  
Blogger steve@enginpost said...

The biggest problem we have to get past with regard to the auto industry and America, would be that our president-elect has reached his hand too far into the pockets of auto industry union workers to now not bail them out in an election payback.

Poor business should be allowed to die. I am not sure how necessary this bailout really is.

8:11 PM  
Anonymous Anonymous said...

Interestingly, the US auto manufacturers have increased their quality lately. But it's a couple decades too late, and they've already lost a significant portion of potential customers due to too many bad experiences.

Not to mention the poorly-managed businesses themselves... Or the fact that Toyota is arguably more of a US company today than GM...

5:16 PM  
Anonymous Anonymous said...

the over paid cry babies,that think they are OWED everything is sad,fact is they care only for the one the only,producing little and wanting it all,they are over paid,benifit greedy scum sucking,they deserve nothing,wow does the idea of really working offend them,produce a product that can support itself,not just the all so high and mighty worker,that wants to go and be compensated for the rest of there non productive life,before and after substanderd work,and while half these had it oh so easy,that is what makes this funny,these people now may have to really work,and they dont know how,some do,since so many when on strike worked and collected,they deserve NO BAIL OUT

12:15 AM  
Anonymous Anonymous said...

Let these companies collapse. America's dominance in this industry is being hampered by overpaid auto workers that are paid like doctor's. Let these companies go bankrupt so that they can renegotiate their bad labor contracts. The country loses with a bailout and the American auto industry will lose in the end.

9:17 PM  
Anonymous Anonymous said...

Change is needed in car industry more than Washington.

Let the them fail. Bail them out is like bail out Soviet Union before it collapse.

1:31 AM  
Blogger Stevo said...

I don't think it's anyones fault that the industry is dong so badly. It just got fat and sloppy during the good years and didn't think of the future.

7:03 PM  

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