Detroit Automakers Bring Wages and Benefits in Line With Toyota
GM, Chrysler and Ford have closed the wage gap with Toyota and are now paying roughly the same amount to their hourly employees, according to the Center for Automotive Research.
For instance, economist Sean McAlinden told the Associated Press that the total cost of wages and benefits now cost GM approximately $58 per hour compared to $56 per hour for Toyota. In fact, in the next few years Detroit’s wages will decline further because it will be hiring fewer skilled-trades workers and hiring more workers at a lower, post-bankruptcy wage.
This could lead to Toyota paying as much as $10 more per hour than its American rivals by 2013 unless the Japanese automaker follows GM’s lead.
In 2007, GM paid an average of $1,400 more per vehicle than Toyota in North American labor costs with most of this coming from a $950 charge to fund health care for retirees. Economic woes and bankruptcy filings allowed Chrysler and GM specifically to change the dynamic by negotiating with the United Auto Workers. The union agreed to cut the wage for new hires in half to $14 an hour, while also reducing pension and health benefits. Automakers also transferred retiree health-care costs to a trust run by the UAW.
The remaining wage gap for Detroit now lies with salaried workers, who make an average of $122,963 compared to $81,506 for competitors. A cynical person might note how quickly the automakers were able to slash wages and benefits for their lowest-paid workers, while a $40,000 discrepancy for well-compensated salaried employees remains entrenched.