Legal Commentary

With a bailout/bridge loan for the auto industry a perhaps increasing possibility albeit not a certainty, it's worth checking out an article in today's  New York Times which breaks down the labor costs for the unionized American car makers and their competitors in non-union plants in the U.S. (e.g., Toyota and Honda).

The bottom line is that the difference in total labor costs is partly a matter of wages and benefits to current workers.  Unionized workers get around $55/hr and non-union workers get around $45/hr.  Most of that $10 difference is in benefits, not take-home salary.  But an even more important part of the difference is health care costs for retirees:  about $15-16/hr/worker for the unionized companies, but only around $3 for the non-union companies (note: this can be seen more clearly in a chart that is in the hardcopy version of the article).

The article then points out that this is not a matter of, say, GM providing more generous health care benefits to retirees, but rather at least mostly because GM simply has a lot more retirees than the more recent "transplant" companies.

The article then adds, "These retirees make up arguably Detroit?s best case for a bailout. The Big Three 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."