GM Paid $73.26 Per Hour For Labor Costs In 2006

Mark Perry
updated | Author's Website

Both in the comments on this blog and elsewhere, serious questions have been raised about the $73.26 total labor cost per hour that GM (NYSE:GM) pays its hourly workers. For example:

1. Felix Salmon at Portfolio.Com writes “You might expect it from right-leaning commentators like Will Wilkinson. You wouldn’t expect it from someone like Mark Perry, who lives in Flint, Michigan. And you certainly wouldn’t expect to see it in the New York Times, from the likes of Andrew Ross Sorkin. But all of them are perpetuating the meme that the average GM worker costs more than $70 an hour, once you include health and pension costs. It’s not true.”

2. A comment on this CD post says “Have you still not figured out that the $70/hour figure is complete rubbish? That doesn’t exactly reflect well on your credibility.”

Let me quote directly from General Motors Manufacturing and Human Resources website (click on “Other Benefits”):

The total of both cash compensation and benefits provided to GM hourly workers in 2006 amounted to approximately $73.26 per active hour worked. This total is made of two main components: cash compensation ($39.68) and benefit/government required programs ($33.58).

The average annual cash compensation for hourly employees in 2006 was $39.68 per hour. Included in average earnings are straight-time pay, Cost of Living Allowance (COLA), night-shift premiums, overtime premiums, holiday and vacation pay. In 2003, GM workers logged 41,363 (hours in 000′s) in overtime hours for an average of 371 hours per worker; in 2004, 39,409 overtime hours for an average of 374 hours per worker; in 2005, 33,555 overtime hours for an average of 337 hours per worker; and in 2006, 27,265 overtime hours for an average of 315 hours per worker.

Benefit/government required programs in 2006 added an additional $33.58 for each active hour worked. These costs include: group life insurance, disability benefits, and Supplemental Unemployment Benefits (SUB), Job Security (JOBS), pensions, unemployment compensation, Social Security taxes, and hospital, surgical, prescription drug, dental, and vision care benefits.

MP: Note that the $73.26 per hour was for 2006, and it’s probably higher now, so if the $73.26 per hour labor cost was incorrect, it was probably too low, not too high.

Here are some links for additional sources for the $73.26 per hour cost for GM at Business Week and USA Today, both of which I assume do strict and careful fact-checking.

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