The argument about wages can be characterized by the position that:
At $55 wages + $15 pension/benefits GM cannot deliver a product that makes them money. Whereas, at $45 wages + $8 benefits Honda can. $70 vs $53 or about 24% disparity.
Another way to look at this position is: What kind of auto does GM have to make to be profitable when the cost of production of any auto is more-or-less the same, i.e it costs about the same to make a Cavalier as it does an SUV, but the revenue is 2-3x on the SUV. Implying, that the cost of labour is THE factor in either making money on the kind of cars that are needed, or not. And that Honda can sell smaller cars with smaller margins, because they have lower labour costs. (Quality just means Honda can get more revenue, that then increases the margin). Whereas GM must make pricier larger cars to make the same margin, because they have bigger labour costs. Its this pressure on GM that forces them to continue to make the cars we don't need.
The counter-arguement is:
We know that labour is about 45% of the cost of the auto. A huge piece, and the single largest piece, which makes it an obvious target. But think about all the contributing factors. First, the auto cost disparity (e.g. between GM and Honda) attributable to wages is therefore about 10% (45% of 24%). Second, there is no reason, other than greed that margins even need to be at parity. GM can operate at a lower margin and still make obscene profits. They have indeed been forced, ever so slightly, to lower their margins over the last few years.
Then there are the components of the markup, such as risk, currency inflation, exec overhead, admin overhead, dealership overhead, etc. etc., that raise the cost by another 50% (approx). When wage cost disparity is applied against the MSRP, it reduces to about 6-7% of the price. You have to ask what are the bare essential markup components versus those that are applied. In other words, is GM taking excess profit? Can they sell a car for 6%-7% less to offset the wage disparity? How obvious is it that the answer is a resounding "Of course".
GM has not kept up, not because of wage disparity, but because the elites refused to acknowledge the changing world, refused to participate in austerity measures at their end, refused to place profits into retooling and distribution reform, refused to focus on meaningful technology (a better ashtray or a curvier fender is not meaningfull), and refused to tell their buddies at big oil to shove it. The result is not a margin/expense problem, its a revenue/sales problem. They have a market share problem - their cars are simply not selling. As the emperors of their domain (they sold more cars than all others combined, at one point in time), they had lost touch with this problem 30 years ago, and haven't regained it, just as the French rulers did right before the revolution.
The real problem is that by hitting the workers, GM would be refusing to support American workers, in favour of larger profits, and they still wouldn't regain market share. The company that said "What is good for GM is good for America" would have to eat those words, the last shoe would drop...and the beheading would begin. Oh, the indignity. After all, they are entitled to be chiefs, they have made no mistakes, and will continue to rule in this manner ad infinitum. (yah, right) The irony, is that one way or another, the GM chiefs will be ousted. They simply refuse to entertain the thought that mere US Senators would have the audacity to do it.
US autoworker wages should not be the scapegoat. If anything, the USA should be concentrating on how to raise the wages in the countries it does business. That was the supposed benefit of globalization, wasn't it?
