Thursday, January 15, 2009

Differences in Executive Compensation Between U.S. Auto Producers and Transplants Are Larger Than for Production Workers

Found this at http://economistsview.typepad.com/economistsview/2009/01/links-for-20090115.html#c145166162, posted by Bob

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2009&base_name=differences_in_executive_compe

The Washington Post has repeatedly editorialized that auto workers at the Big Three companies should be forced to take pay cuts because they earn $57,000 a year, which is more than workers get at the foreign-owned plants in the United States. Consistent with this editorial position, the paper has an article today about efforts to lower the compensation packages of union workers.

The Post has virtually ignored the much larger gap between executive compensation at the Big Three and at the transplants. While top executives at Japanese manufacturers like Toyota only earn around $2 million a year, executives at the Big Three can earn 10 times this amount.This would seem to be a reasonable focus for those concerned about making the U.S. industry competitive.

--Dean Baker

Posted by Dean Baker on January 15, 2009 6:03 AM
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[The following comment followed the article]

Auto-plant labor is only about 7% of the selling price of a car. In fact, about half the cost at point of sale is added after the vehicle leaves the factory. Where are the analyses in the media of salary and wages in the rest of the process? Could the fact that plant labor is unionized have something to do with it? The salaries of the three major automaker CEO's are not significant in themselves, but there are many manangement personnel and entrepreneurs who are taking a cut somewhere along the line.

Posted by: skeptonomist | January 15, 2009 9:01 AM

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