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The United Auto Workers Union And The Failure Of The Big Three

Posted in auto industry, Chrysler, Detroit, Ford, GM, Politics, Scandal by Vito Rispo | December 9th, 2008 | 2 Responses |

Unions are one of the major points of contention between most economists and non-economists. For the most part, economists see unions as a disruptive force, pushing prices up to artificial highs, thereby increasing unemployment and hurting the economy. Most non-economists have the opposite view, and consider unions to be a force of good, helping the common man.

Dr. Mark Perry, professor of economics and finance at the University of Michigan, has a blog entry about how much members of the UAW make, if they really are “middle-class”, and if maybe their astronomically high wages might have had something to do with the failure of the big three. Read on:

There is a reason that 61% of the American public opposed a Detroit bailout. It’s because those UAW workers aren’t the regular middle class Americans that Detroit’s making them out to be.

According to the data collected over at Dr. Perry’s blog, a UAW assembler earned 91% more in monetary wages (not including benefits, which are substantial) than an average non-UAW worker doing the same job in manufacturing sector; and a UAW electrician earned 123% more in wages than the average non-UAW manufacturing worker. Dr. Perry asks “Is there anything so special about auto assembly manufacturing work that it justifies a 91% premium over the rest of the manufacturing sector?”

He brings up the hypothetical case of a married couple who are both UAW workers. Their combined income is $139,000, putting them well above the “middle class” range. In fact, they’d be in the top 10% of American households. Even a household with one UAW assembler is in the top 35%. What does this mean? Most UAW workers have only a high school degree, and they’re doing a job that most Americans could do. It just doesn’t jive economically, it’s not sustainable, those wages had to come down to realistic levels eventually. And that’s just whats happening now with the ongoing failure of the Detroit automakers.

(via Carpe Diem)

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2 Responses

  1. Sofar says:

    I wish I made $33,560. I’ll never get into the union, though.

  2. Keith says:

    Only 8% of a vehicle’s costs are in labor…get some perspective and facts. Lowering the wages of UAW workers isn’t getting at the problem. It’s assigning a scapegoat.