Labor costs is probably the main reason that lead General Motors (GM) into bankruptcy. The total of the employees at GM is nearly 300,000 in 2008.However, retired employees are up to 500,000. Hiring a large number of employees to keep the whole operation stable is not rare in auto industries, but the payment and pension are becoming a serious issue for GM. For example, through the policy of GM, a basic worker who worked for 30 years can get living allowances, approximately 3, state that 000 dollars monthly and also have standard health care benefits. A recent analysis from UBS (2008), GM annually lost 250 billion to pay their welfare to its employee. Moreover, GM hired hourly workers that are highly paid but are low-skilled jobs. According to Forbes (2013), the payment for a worker used to be $73 per hour, which is much higher than $52 from Toyota and $48 from Hyundai. Compared to Toyota and Hyundai, the price of cars in GM are not higher than those; GM put too much money on employee benefits. Therefore, the company lost much money though they make great money in selling their products.
After 2008, GM tried to cut its cost on payments by reducing their hourly wages to $56, but still GM has the highest labor costs in the auto industry. Furthermore, GM also froze its pension plan and health care benefits to its salaried employees for longtime white-collar workers to reduce their costs. GM changed its plan into a 401(k), a retirement investment plan that allows an employee to put a percentage of earned wages into a tax-deferred investment account selected by the employer, and this actually reduce
