I Wish I Could Be Thankful For $70/Hour Pay For Auto Workers

Later today I'm going over to my friends Russ' and Rebecca's house for a Thanksgiving dinner. I wish I could thank God that American auto workers and other workers are making $70 an hour. If it were true, there would be no financial crisis in this country. But it isn't true. It isn't even nearly true. I had lunch with a friend from CitiGroup yesterday. She's an enlightened person who enthusiastically voted for Obama-- and more enthusiastically cheered his appointments of the Wall Street contingent he just hired to fix the economy some sat they were complicit in breaking. Her prescription for the Detroit problem is the plan being pushed by the right: bankruptcy, jettisoning of pensions and, more than anything, abrogation of labor contracts. Like many Americans she has been persuaded that auto workers make $70/hour. I wish it were the case. They don't make half that, however.

I'm not sure what my friend makes per hour. She moves money and monetary instruments around on computers. Her income is certainly closer to $300/hour than it is to the $70/hour she begrudges the auto workers. Since the beginning of the Bush Regime, the rich have gotten richer-- much richer-- and the poor have gotten poorer-- and the middle class has gotten smaller-- and poorer. And this isn't like a coincidence; it's the result of careful planning, Regime policy and legislation. Despite all the corporate scandals that have been one of the more repulsive hallmarks of the Bush Regime-- and despite the much-ballyhooed but toothless "reforms" bandied about-- the asymmetry in the distribution of wealth and income disparity between those at the tippy-top of the economic pyramid (scheme) and the rest of us, has actually gotten much worse every single year single the Enron catastrophe. According to the Economist, in 2004 America's top 2000 CEOs averaged pay raises of around 30% bringing their salaries to nearly $6 million annually. And CEO bonuses at the top 100 companies rose gigantically and are well over a million dollars each. If there is any correlation between overpaid CEOs and stock values, it is a negative correlation, with stock prices actually declining as CEO pay packages rise into the stratosphere. Between 1990 and 2004 the average worker's pay remained basically flat at $27,000 while CEO pay went from $2.8 million to almost $12 million. And in the entire industrial world, the U.S. has the worst disparity between workers and their CEO bosses, far worse than Japan, Sweden, Germany, France, Italy, England, Canada... more in line with places like Saudi Arabia. The Bush Regime agenda of regressive tax policies are at the heart of this. A couple of years ago the NY Times took note that the income gap during the Bush years has widened significantly.

Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000-- receiving their largest share of national income since 1928, analysis of newly released tax data shows.

The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.

The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

We don't pay much heed to the twisted, distorted, corporate-oriented New Republic these days but last week even one of their senior editors, Jonathan Cohn, was moved to debunk the Republican Party talking point that so many have swallowed whole about $70/hour auto workers.

The actual average pay for auto workers by the Big 3 is $28/hour, just under $60,000 a year... before taxes and "hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers." The non-unionized Japanese auto makers operating their scab plants in backward, anti-labor states like Alabama, home of GOP reactionary and corporate shill, Richard "Let Detroit Go Bankrupt" Shelby, don't pay that much less-- approximately $20-26/hour, maybe $10,000 less per year. Cohn wants to get to the bottom of the $70 an hour myth. "It didn't come out of thin air," he writes and, for a change, Rush Limbaugh didn't just pull it out of Bill O'Reilly's ass.

Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages-- again, $28 per hour-- and you get the $70 figure. Voila.

Except... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees-- in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."

Interestingly a fascinating new report on China's economy from the World Bank seems to attribute that country's slowdown to the shrinking share of GDP that has been going to workers (from 50% at the start of the decade to a drastically reduced 40% now). If workers have no money they can't be consumers-- not here and not there. Henry Ford may have been a right-wing jackass and, like many at the apex of the GOP Establishment at the time, an anti-Semitic Hitler cheerleader (if not conspirator), but he understood one thing about business that the Bush economic team never seems to have cared to grasp: if workers can't afford basic products, a consumer-driven economy dies... fast. Ford kept his model T's cheap claiming he wanted his factory workers to afford to buy them. A few nights ago I was reading how WalMart workers-- because they are paid so poorly, primarily due to the Republican Party's obsessive efforts on behalf of their WalMart paymasters to keep unions out of America's #1 employer. WalMart workers are a drain on taxpayers because they get no health care benefits and are as likely to wind up in a taxpayer supported emergency room as to be able to pay to see a doctor. WalMart and the GOP have one priority and one priority only for the first months of the Obama presidency: prevent the passage of the Employee Free Choice Act (EFCA), passage of which is a stepping stone on the road back to a healthy, middle class society that features a more equitable distribution of wealth, historically anathema to right-wing parties and their supporters.

As George Packer points out in this week's New Yorker, the authors of America's financial and economic collapse are not only not being punished, they are still busily gorging themselves on an inordinate share of the GDP. Should they be hunted down and shot like mad dogs in the streets (mostly Wall Street)? No, I believe in fair trials first.

Having brought the American and global economy to its knees through their reckless, shortsighted, downright stupid investments, and then looked to the government for a very expensive lifeline, the leaders of Citigroup, A.I.G., Goldman Sachs, Morgan Stanley, Lehman, and other financial giants are maintaining a carefully nonchalant public posture. Andrew Cuomo, New York’s Attorney General, had to hold a threatening press conference on Wall Street in order to frighten A.I.G. into announcing that raises, bonuses, and lavish retreats will be suspended. But fear is not the same thing as shame. Morally speaking, it’s inferior.

Packer, more of a moderate than I, apparently doesn't go for my shooting solution. He writes he would like to see "these malefactors of great wealth apologize to the country. I would like to see them organize their own press conference in a lineup on Wall Street and, in the manner of disgraced Japanese officials, bow low to the pavement, express contrition, and beg their countrymen’s forgiveness. Such a scene would go some way toward cleansing the smell of the financial crisis." I think they would be happy-- very, very happy-- to do just that so long as they could keep their ill-gotten gains. But Packers says even the apology scenario is sheer fantasy. "[I]nstead, like the parents of two-year-olds, the next Congress should summon them to Washington and publicly punish these executives who, in Kohlberg’s terms, “see morality as something external to themselves, as that which the big people say they must do.”

I like the punishment idea. It should start with confiscation of amassed fortunes.