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GM, Ford, Chrysler finally near wage parity with Toyota

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GM, Ford, Chrysler finally near wage parity with Toyota

08:42 AM

After years of taking massive lossses because their U.S. manufacturing workers earned more than their foreign rivals, General Motors, Ford and Chrysler are now paying pretty close to the same on average.

But the closing of the wage gap still doesn't extend to management employees, who still earn a lot more, says an economist with the Center for Automotive Research.

Economist Sean McAlinden said wages and benefits now cost GM around $58 an hour, just $2 more an hour than Toyota, the Associated Press reports. But he said Detroit's wages will shrink further compared to Toyota's as it hires more workers at the lower wage and takes on fewer skilled-trades workers, who make more money than other factory workers. Now the wage pressure will be on Toyota:

McAlinden predicted that between 2013 and 2015, Toyota could even be paying $10 more per hour than GM unless the Japanese company reacts and lowers wages.

At least for the production workers, pay has made big changes from 2007 when GM was paying $1,400 more per vehicle than Toyota in North American labor cost. Most of the difference was due to a $950 charge for retiree health care coverage.

Detroit automakers were paying their hourly workers an average of $69,368 per year in 2008, while the biggest foreign-based competitors were paying $70,185, as reported by the Associated Press. But salaried workers were still making a lot more -- an average of $122,963 compared to $81,506 for foreign rivals.

Concessions by the United Auto Workers Union sliced the difference. Automakers made deals that transferred the responsibility for retiree health care to a trust run by the UAW. The UAW agreed to cut wages in half, to around $14 an hour, for new hires and reduce pension and health benefits. The concessions came both before GM and Chrysler filed for bankrutpcy protection last year, and during.



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