Detroit: The Blue-Green Bailout

Timothy Carney had an excellent post in yesterday’s DC Examiner regarding the possible bailout of the Big Three automakers.  Carney points out that a bailout of the car companies will allow the federal government to force all kinds of environmental restrictions on automobiles.  Greater fuel efficiency, alternative fuels, punishment for gas guzzling, etc., are just a few of the possibilities.  Forcing these changes immediately will be prohibitively expensive for an industry that is claiming that it just needs help getting back on its feet.  This won’t help.

Add to the green portion of the bailout that the federal government won’t go after the resource draining unions.  According to CNSNews, the average auto worker could cost the company about $133,000 year in total employment costs (this is not just the worker’s pay):

One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry.

He explained that in 2006, widely available industry and Labor Department statistics placed the average labor cost for UAW-represented workers at the former DaimlerChrysler at $75.86 per hour. For Ford it was $70.51, he said, and for General Motors it was $73.26.

“That includes the hourly pay, plus the benefits they’re receiving and all the other costs to General Motors, Ford and Chrysler, including legacy costs – retirement costs, pensions, and so on – so it’s looking at the total labor costs per hour worked for workers,” Perry said.

For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44.

“So we’re looking at somewhere around a $29 per hour pay gap between the Big Three and the foreign transplants that are producing cars in the United States,” Perry, chairman of the economics department, told CNSNews.com.

The average union worker at Chrysler, meanwhile, received 150 percent more in compensation than U.S. workers generally.

“Using Bureau of Labor Statistics numbers, the average compensation for manufacturing workers is around $31.50, and the average hourly compensation, including benefits, for the average worker in the U.S. economy is around $28.50,” Perry told CNSNews.com.

If you annualize Chrysler’s labor cost of $75.86 an hour per worker over a 35-hour week, for 50-weeks a year, the yearly compensation comes in at almost $133,000 per worker per year.

So the federal government’s plan is to force automakers to take on hugely expensive “green” initiatives while offering federal protection to the excessive cost of union labor.  Apparently, two wrongs will somehow make a right?

Share this post!