With perfect timing, Musk made a couple of taunts at striking UAW workers. His goal is obvious.
Data from the BLS, chart by Mish
Earnings Per Hour Notes
The Motor Vehicle hourly rates are for Michigan workers only. The BLS did not have nation-wide numbers.
The data series for construction workers and production workers starts in March of 2006 so that is where I started the chart.
Understanding the Chart
The chart does not tell the full story. UAW workers get far more benefits and huge bonuses that are not factored into hourly earnings.
UAW workers also get annual bonuses that are not factored in.
The motor vehicle decline from $28.35 per hour to $20.65 per hour stems from UAW renegotiations after GM and Chrysler went bankrupt.
To survive at all, the UAW granted concessions and put in a tiered wage structure where new employees were paid less. Factor in retirements and hourly wages fell.
Total UAW Unit Labor Costs vs Tesla
Big Three: Analysts estimate $66 an hour
Tesla: Roughly $45 at Tesla
UAW Demands: Meeting Fain’s initial demands would boost costs to $136 according to Wells Fargo analysts.
Tesla does not pay more in hourly wages, but via stock options, Musk has made millionaires out of many workers.
Stock options are not a company expense. Stock options come out of shareholders pockets.
Whatever the UAW Strike Outcome, Elon Musk Has Already Won
“Any wage increase further advances Tesla’s already tremendous cost advantage in EVs over its older U.S. peers, which are contending with generations of legacy expenses while trying to steer a costly transition to electric from gas-powered vehicles.”
💥 "Any wage increase further advances Tesla’s already tremendous cost advantage in EVs over its older U.S. peers, which are contending with generations of legacy expenses while trying to steer a costly transition to electric from gas-powered vehicles." https://t.co/8NLlungrPb— James Pethokoukis (@JimPethokoukis) September 16, 2023
The Wall Street Journal comments Whatever the UAW Strike Outcome, Elon Musk Has Already Won
Musk won before the strike began early Friday. He won before negotiations started two months ago. From the get-go, General Motors, Ford Motor, and Chrysler parent Stellantis were expected to spend more on wages because of the union’s pressure. The question is just how much of an increase, and so far their offers haven’t pleased the union, igniting this past week’s work stoppage.
Fain this past week sounded annoyed when asked about Tesla’s cost advantage.
“Competition is code word for race to the bottom, and I’m not concerned about Elon Musk building more rocket ships so he can fly in outer space and stuff,” Fain told CNBC on-air Wednesday.
“Our concern is working-class people need their share of economic justice in this world.”
In the name of “economic justice” Fain would bankrupt the Big 3 again.
Here’s the math: $136 * 32 hours per week * 52 weeks = $226,304. Note the UAW demand for a 32 hour workweek. At a 40-hour workweek, pay would be $282,880.
Sorry guys, that will never fly. Whatever does fly, plays into Musks hands.
Musk has suggested that employee stock options make his factory workers the highest compensated in the industry, saying “quite a few” line workers have become “millionaires over the years from company stock grants.”
At Tesla, the average pay for a manufacturing technician can range from $23 to $32 an hour, according to estimates by Glassdoor. Tesla advertises factory jobs in California with expected pay ranging from $24 to $67 an hour plus cash and stock awards and other benefits.
Tweet of the Day
Walter spent a lot of time with me in meetings, but much less time walking the factory floor.— Elon Musk (@elonmusk) September 14, 2023
Tesla and SpaceX factories have a great vibe. We encourage playing music and having some fun. Very important for people to look forward to coming to work!
We pay more than the UAW…
Perfectly Timed Taunt
“Tesla and SpaceX factories have a great vibe. We encourage playing music and having some fun.
Very important for people to look forward to coming to work!
We pay more than the UAW btw, but performance expectations are also higher.
Quite a few of our factory techs who work on the line have become millionaires over the years from company stock grants.”
Tesla does not pay more than the UAW, at least in hourly pay. But workers who have been at Tesla for a long time have made a killing on options with any kind of reasonable timing.
The taunt at the UAW is aimed at encouraging the UAW to not settle quickly. It has a decent chance of working.
Fain has already responded about economic fairness and the race to the bottom.
Automakers Announce Layoffs
UAW Statement on Reports of Layoffs of Non-Striking Workers— UAW (@UAW) September 16, 2023
UAW President Shawn Fain released the following statement following reports of planned layoffs of non-striking workers at GM and Ford.#StandUpUAW pic.twitter.com/Fi8Np9Yjgx
Chance of Rapid Acceleration
If workers have little to do because of a part shortage by a strike, the only reasonable thing to do is announce layoffs.
This has a good chance of escalating rapidly.
Reflections on What Sucks
They make $65 an hour in wages and benefits. Tesla workers make $45.— Mike "Mish" Shedlock (@MishGEA) September 15, 2023
How much do you want to pay for a car? Tell me that doesn't suck.
Inflation is what sucks and there is plenty of blame to spread including the Fed, Congress, and three stimulus packages.
But Biden’s Big EV push is behind much of this recent angst.
It takes fewer hours to build an EV. Biden is pushing them like mad despite the fact that consumers do not want them because the infrastructure isn’t in place. Ironically, increased mileage standards have negative benefits according to a government study (at long last getting something right).
So now the union wants a 32-hour workweek with a 36 percent raise (down from 40 percent) more benefits, and ability to strike over plant closures despite the fact it takes fewer workers to produce an EV.
There is no one other than Biden to blame for this latest round of economic and environmental madness.
This union battle was created by Biden, the EPA, the Labor Relations Board and other administration regulatory clowns.
Unprecedented UAW Strike, Where’s it Headed? Keep Em Guessing Says Fain
I discussed winners and losers in Unprecedented UAW Strike, Where’s it Headed? Keep Em Guessing Says Fain
Time Will Tell the Winner
There are two definitions of win, short-to-midterm and long term.
The long term view is easier to state. GM and Chrysler (now Stellantis) already went bankrupt once over untenable wages and benefits. It could easily happen again. And If the bondholders (not that I feel much sympathy for them) were not totally screwed in the last settlement, it would have been much worse for the unions.
Short term, I suspect everyone loses, but Fain and the UAW will temporarily cheer.
Record profits said Biden. Lovely. Then what? Then a preposterous deal, then bankruptcy?
The above discussion is from the point of view of the Big 3 vs the UAW. I left off a winner, Elon Musk.
Tesla benefits no matter what happens because the Big 3 costs are certain to rise.
The big loser is the consumer who will pay more for cars.
Meanwhile let’s discuss the benefits of improved gas mile standards.
National Highway Traffic Safety Administration Analysis of Gasoline Standards
The National Highway Traffic Safety Administration NHTSA did an impact assessment of 4 fuel standard proposals and compared them to the cost of doing nothing. Guess what.
Buried deep on Page 56,342 of volume 88 of the Federal Register, the agency makes this concession about its latest proposed rules: “Net benefits for passenger cars remain negative across alternatives.” In plain English, this means that mandating ever-more-stringent fuel economy for passenger cars will harm society.
Through 2040, the total reduction of greenhouse gas emissions from passenger cars and light trucks would be a mere 2.01 percent less vs doing nothing at all with emission standards!
The NHTSA also considers impacts on the economy including “consumer cost, national balance of payments, environmental, and foreign policy implications.”
Here is the NHTSA’s bottom line: “Net benefits for passenger cars remain negative across alternatives” vs doing nothing at all.
The Shocking Truth About Biden’s Proposed Energy Fuel Standards
For discussion, please see The Shocking Truth About Biden’s Proposed Energy Fuel Standards
Regardless of how we assess the winners and losers in the UAW battle, over the short and long haul we all lose from the push to pay more for the regulatory and environmental madness of this administration.
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