I have complained in the past about reporters' willingness to accept corporate numbers uncritically. My favorite example is the widely reported claim that the compensation of Delphi's unionized workers averaged $65 an hour. This implied a benefits package worth more than $70,000 a year. Anyone believe that?
We have another example from the Times today. Its article on GM's buyout offer to workers reports that getting rid of 35,000 workers will save GM $8 billion a year. Hmmmm, my calculator puts that at a savings of just under $230,000 per worker.
If you think this number sounds a bit high, you would get confirmation by the end of the article. The last paragraph reports the assessment of a stock analyst that GM earnings will rise $1.25 a share for each 10,000 workers who accept the offer. With 565.6 million shares outstanding, this implies additional earnings of $707 million for each 10,000 workers, or $2.47 billion for the 35,000 workers who accepted the buyout. That comes to a more pluasible gain of $70,700 per worker.
I am not an expert on the auto industry and cannot assess how much GM will actually benefit from this buyout (the net gain will depend on whether GM can lose one-third of their workers and still produce the same number of cars, or will have to hire replacement workers), but the $8 billion figure reported in the Times article is obviously ridiculous. Someone involved in the publication of this article should have been able to recognize this fact.
You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)