David Leonhardt does a good job of explaining the lies surrounding the bogus $73 per hour compensation that the Big Three autoworkers supposedly receive–even if he does so rather elliptically. Here’s how that $73 figure is reached:
You’ll notice that past compensation is a big part of the problem. As Leonhardt puts it:
The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.
These retirees make up arguably Detroit’s best case for a bailout. The Big Three and the U.A.W. had the bad luck of helping to create the middle class in a country where individual companies — as opposed to all of society — must shoulder much of the burden of paying for retirement.
What has struck me throughout all of these discussions, however, is that Honda’s and Toyota’s current lower wages and benefits are seen as ‘natural’, while the Big Three’s are seen as inflated. It’s odd to hear progressives and liberals argue that the Big Three autoworkers really aren’t getting paid that much more than Toyota’s.
No one is asking why foreign-owned companies in the U.S. aren’t paying their workers more. After all, if they’re making a better and more profitable product, shouldn’t their workers get paid as much? (and before you get all het up about the cost of labor, even at the Big Three, according to Leonhardt, labor costs account for ten percent of the cost of a car).
There’s a very simple reason why the foreign-owned companies don’t pay their workers as much: they’re based in states that make it very difficult to organize unions. This isn’t the free hand of the market or some organic, inviolate phenomenon. There’s nothing ‘natural’ about it. It’s simply a result of the lack of bargaining power for workers.
So why aren’t progressives (well, never mind them…)….so why aren’t liberals responding by asking why do U.S.-located Japanese car factories pay so poorly?