One in 10 Jobs Tied to Autos? Not so Fast

As recently as last week, a General Motors executive sought to justify a government bailout because of the large number of people in ancillary industries, including advertising and hospitality, who would be affected if the automaker were allowed to fail.

"I would guarantee there will be a lot of job losses in the automobile industry. A lot of job losses in the supplier industry, advertising industry, hotels… the one in 10 Americans that [are] somehow, directly or indirectly dependent on the auto industry," GM Vice Chairman Robert Lutz told Fox Business.

Both the Detroit Free Press and the New York Times have in recent weeks credited the one-in-10 statistic to the Center for Automotive Research (CAR), though the Times hedged a little bit when it wrote "the figure appears to come from a 2003 study" conducted by the center.

Officials at the center deny having published a report that cited the figure.

"Our best guess," said Menk, the researcher at CAR, "is that a figure from a 2003 report was totally misinterpreted."

Some 2.1 Million, Not 13 Million to be Affected

Menk said that the center often researches what is called a "job multiplier," a calculation based on computer models that determines how many jobs outside the auto industry are affected by the industry.

A 2003 report, she said, would have been based on data from 1999 or 2000, the "industry's best year ever and would have shown a robust industry with a broad impact on the economy."

"As recently as 2005, we were showing a jobs multiplier of 7.5. That means for every job in the auto industry, 6.5 others were created in the economy," she said. "It is possible someone saw a multiplier of 10 from 1999 data and turned that into a fraction."

The multiplier this year, she said, was about 6 based on an econometric computer model.

CAR estimates 2.1 million jobs will be affected by multiplying the 350,000 people employed by "original equipment manufacturers," which includes the Big Three -- GM, Ford and Chrysler – as well as foreign companies operating in the US.

When contacted for comment regarding Vice Chairman Lutz's recent one-in-10 comment in light of CAR's distancing itself from the figure, a GM spokesman said they knew of CAR's figures and said the statistic came from the Auto Alliance, an industry trade group.

"CAR tends to be a little more conservative in their estimates. [The one-in-10] figure comes from the Auto Alliance," said GM spokesman Tom Wilkinson.

But when the Auto Alliance, which quotes the figure on its Web site, was asked where it came from, spokesman Charles Territo, said they got it from CAR.

"They're the ones that we're getting the research from," said Territo. "They're the economists."

When told CAR had denied that 13 million American jobs would be affected, Territo said the "2 million jobs is just a small piece."

"Millions of people are dependent on this industry. That number includes things like carwashes, drive-throughs, and restaurants near plants. This is a very broad analysis," he said.

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