[Peace-discuss] Wages and Health Care

[David Green]

>From Dean Baker's weekly Economic Reporting Review:
www.cepr.net

Labor Compensation at Delphi 

Auto-Parts Supplier Files for Chapter 11
Sholnn Freeman
Washington Post, October 9, 2005, Page A18
http://err.c.topica.com/maad6ZYablhorbpnt1wbaeQBpp/

Auto Supplier Delphi Nears Bankruptcy
Danny Hakim
New York Times, October 9, 2005, Page A14
http://err.c.topica.com/maad6ZYablhosbpnt1wbaeQBpp/

These articles report on plans by Delphi, the
country’s largest auto 
supplier, to file for bankruptcy. The Post article
quotes an auto 
industry analyst as saying that Delphi’s total
compensation package for an 
average worker is “close to $125,000 to $130,000 per
year.” It is 
important to note that this measure includes all labor
costs incurred by 
Delphi, including costs for providing wages and
benefits to laid off workers 
and retirees, averaged over the number of active
employees at Delphi. 
While workers at Delphi receive substantially more pay
and better 
benefits than most workers in the United States, only
about half the sum 
mentioned in this article actually refers to wages or
benefits seen by 
current workers. (The Times article places wages in
the range of $26 to $30 
an hour.)  

At one point the Times article notes that the U.S.
auto industry is at 
a disadvantage competing against Japanese firms
because they have 
nationalized health care. While this is true, it is
important to note that a 
nationalized health care system only provides an
advantage because it 
is far more efficient than the U.S. system. The
nationalized health care 
system also must be paid for, and if the Japanese
system were as 
inefficient as the U.S. health care system, then
Japanese firms would be 
paying roughly the same amount in taxes to the
government to support the 
health care system as U.S. firms pay to private
insurers. However, 
because the Japanese system costs less than half as
much per person (and 
allows the Japanese to enjoy substantially longer life
expectancies than 
people in the United States), health care imposes a
much smaller burden 
on Japanese firms than it does on U.S. firms.  

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