The following extract is from an article discussing the problems faced by General Motors in 2008 and compares the full cost of labour with the wages paid.

Management and the union are under pressure to bring labour costs into line with those at non-union plants, mostly in the southern states, operated by Toyota, Honda and other foreign carmakers.

UAW members have a long reputation as the aristocrats of US labour. Their generous pay and benefits are credited with bringing blue-collar workers into the middle class.

GM estimates its labour costs at $69 per worker per hour, compared with $53 at Toyota. But these bald numbers, the ones most cited by Detroit’s critics, do not tell the full story. While a gap remains, it is closing. Ron Gettelfinger, the UAW’s president, used a baseball analogy to make his case that the union had made more than its fair share of sacrifices to keep the carmakers afloat. ‘We’re on third base and the other stakeholders are not even in the ballpark,’ he said.

GM and Toyota workers earn similar wages of about $29 an hour. The big difference is in fringe benefits, such as healthcare insurance and pensions. The overall labour-cost figures also include retiree benefits. Thousands of GM, Ford and Chrysler workers were on pensions with generous healthcare benefits – foreign carmakers have a fraction of the number of retirees.

Questions

1 Why is the hourly cost of labour for a business higher than the amount stated as wages paid to employees?
2 How could a self-employed person establish a personal labour cost that would be comparable to the cost of an employed person?