And the lawmakers may give them what they want using the taxpayers' money for a simple reason: jobs.
However, the average American were not too keen on granting the top executives of General Motors Corp., Ford Motor Co. and Chrysler LLC, the requested rescue package after reading is several reports that the average hourly employee of the Big Three makes US$ 70.00 per hour.
This is really an awful lot of money. Seventy dollars an hour in wages works out to almost US$ 150,000 a year in gross income, assuming that there are forty-hours of work in a week.
According to Forbes, labor cost per hour, wages and benefits for hourly workers in 2006 are as follow:
- Ford: US$ 70.51 (US$ 141,020 per year)
- GM: US$ 73.26 (US$ 146,520 per year)
- Chrysler: US$ 75.86 (US$ 151,720 per year)
The average United Auto Workers (UAW) worker with a high school degree earns 57.6 percent more compensation than the average university professor with a Ph.D. (see graph above), and 52.6 percent more than the average worker at Toyota, Honda or Nissan.
Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers - many of whom make far less - finance a plan to bail them out?
Well, here's one reason: The figure is wildly misleading.
The New York Times debunks the claim that the Big Three auto workers earn more than US$ 70 an hour. That number really came from the car companies themselves during union negotiations, writes David Leonhardt, but it is not completely accurate since not all of that goes to the worker's pocket.
Here's how it breaks down:
- Cash: All the basics - wages, overtime and vacation pay - add up to US$ 40 an hour.
- Extras: Health insurance and pension costs total about US$ 15 an hour.
- Retiree benefits: These are fixed costs, and the Big Three have a huge pool of retirees out there, Leonhardt writes. They add up to about US$ 15 an hour.
"There is good reason to keep GM and Chrysler from collapsing in 2009. (Ford is in slightly better shape.) The economy is in the worst recession in a generation. You can think of the Detroit bailout as a relatively cost-effective form of stimulus. It’s often cheaper to keep workers in their jobs than to create new jobs."But, he adds, the Big Three will have to get smaller to survive.