U.S. automakers are struggling – but not because worker wages are too high. A comparison of basic wages and cost-of-living adjustments for U.S. autoworkers shows they’re only about 10% more per hour than their Japanese counterparts ($29 vs. $26 per hour). But the total average hourly cost to U.S. and Japanese employers is $71 and $49 per hour, respectively – a $21 per hour difference.
So what gives?
The reason U.S. workers cost automakers (and other employers) more is simple: the companies are on the hook for costs that their foreign counterparts don’t have to cover.
An estimate from the New York Times shows Japanese automakers effectively pay an average of $49 per hour for each employee; in the U.S., it’s about $71. The difference: health care and pension payments to retirees. In countries with universal health care and strong pension plans (like Japan), businesses have much lower costs, and correspondingly higher profit margins.
If the U.S. had single-payer health care system, General Motors could have saved $22 billion in profits over the past decade – roughly 48% of their total health care expenditures. That’s $9 billion more than the proposed (and now failed) bailout for all three automakers. Just imagine how much a such a plan could save Ford, Chrysler, and thousands of other U.S. corporations and small businesses.
Universal health care is the best way to help return our auto giants to profitability, and rebuild our economy with a prosperous and growing middle-class.