The Bureau of Labor Statistics says that, before benefits, the median wage for an American worker is $17/hour. The WSJ says that, before a recently negotiated pay raise, General Motors was paying $58/hour including benefits. As the benefits at GM are much better than typical benefits, perhaps the correct numbers for comparison are $20/hour ($17/hour plus the average benefits available to a median worker) and $58/hour (soon to rise to an as-yet-unknown number). The Journal article is interesting for a chart showing “profit/loss per vehicle built.” There was a quick change from loss in 2009 to profit in 2010, presumably due to the company being showered with tens of billions of tax dollars that didn’t have to appear in the accounting records in a standard fashion.
What’s interesting about this to me is that everyone seems comfortable with the idea of imposing taxes on median-wage Americans in order to support the continuing paychecks of Americans who earn about 200 percent more. If we model GM workers as government workers, perhaps this makes sense. Federal workers are paid about 78 percent more than the private sector workers whose taxes fund their paychecks (Cato). But on the other hand, it is theoretically possible that the federal workers are doing a better job than private sector workers and are therefore worth more. By contrast the job of a GM worker is easily compared to other manufacturing jobs in the U.S. BLS says that the median wage in “Production Operations” nationwide is only $15.25/hour.
In a market system (where most workers operate), wages are determined by supply and demand. In a mixed socialist/crony capitalist system (which in our country exists side-by-side with the market sector) wages are determined by political influence. Of course people are eager to exit the market sector and enter the higher paying crony system but there are high barriers to entry and the parasitic sector has to be kept small enough not to kill its host.
Should probably dig up after-tax wages, we do have a progressive (federal income) taxation scale after all.
local taxes like Sales taxes, gasoline taxes, etc, are of course regressive (they are flat, but in the sense they hit lower income people harder who spend more of their income on basics) so I’d be more worked up about local governments doing stupid things with taxes, eg: NJ lavishing taxpayers dollars on a fancy new Prudential building next to the slightly less fancy older Prudential building, Connecticut bestowing huge tax benefits on designer buildings for investment banks in Stamford, etc… (http://www.nj.com/politics/index.ssf/2015/05/njs_corporate_tax_incentives_by_the_numbers.html)
lvl: I didn’t say that I was “worked up” about the American public voting to tax themselves in order to help a relatively rich subset of Americans. Just surprised that this cashflow is perceived as populist. The difference between this and garden-variety corporate welfare/crony capitalism is that the cashflows to the wealthy cronies are not typically seen as a victory for the common person (i.e., the median wage earner).
@Anonymous #5: and the message we leave behind by the bail out is that it is OK to stay the course and keep paying GM workers about 200 percent more.
The few who are in this system, this includes government workers, are taking advantage of it, while the rest of us are paying for them.
[Anonymous posting above removed by moderator based on https://philip.greenspun.com/blog/comment-moderation-policy/ (“Attributed/real-name content is preferred to anonymous content.”)]
Removed Anonymous Comment (originally #4):
Why would “populists” worry about the relatively small amount of money that went to people of relatively modest means when a much larger amount of money went to much wealthier people?
Removed comment referenced by George A as “Anonymous #5”:
The purpose of the auto bailout was not to “to support the continuing paychecks of Americans who earn about 200 percent more” but to prevent a negative feedback loop which could have depressed the entire economy hurting everyone.
(I agree with George A’s comment, but when facing a major depression that would be a secondary concern.)