Why you shouldn’t be surprised auto workers are demanding a 40% pay raise

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Paul Sancia/AP

In this Wednesday, May 8, 2013 photo, Jeff Caldwell, 29, a chassis assembly line supervisor, monitors the assembly line at the Chrysler Jefferson North Assembly Plant in Detroit.

Paul Sancia/AP

With a potential strike at the Detroit Three automakers approaching, the United Auto Workers union is pushing for a substantial wage increase for its members: 40% over four years.

It’s the kind of increase that Marcelina Pedraza, a Ford electrician in Chicago, believes is long overdue.

“Everything is going up – food costs, gas, mortgage interest rates,” Pedraza said. “Many people no longer have a safety net.”

The UAW, which represents 150,000 workers at General Motors, Stellantis and Ford, is not alone in demanding a big wage increase over the course of its contract (it’s down slightly from its initial bid of 46%).

In recent months, workers across all industries have fought for a nearly 50% wage increase over the next four to five years — and, in some cases, have won, as they continue to expect years of stable wages and strong company profits. Are calling.

These bold union demands, driven by desperation during the tight job market and the COVID-19 pandemic, are paying off with inflation rising well above expected rates in some sectors.

After months of contentious negotiations that brought 340,000 UPS workers to the brink of a strike, the Teamsters union in July won an average 48% total wage increase over the course of a five-year contract for existing part-time workers. Teamsters General President Sean O’Brien said the contract “sets a new standard in the labor movement.”

In August, the Allied Pilots Association, which represents 15,000 American Airlines pilots, successfully pressured airlines to increase pilots’ pay by more than 46% over four years, including an immediate pay increase of more than 21%. Was.

Dennis Tajer, an American Airlines 737 pilot and union spokesman, said the pay increase is due to years of stagnant pay. He said, the last time pilots got a salary hike was in 2019.

“It’s been a long time since there’s been any financial gain,” Tajer said. “It may be a four-year deal, but nothing has happened in terms of salaries since January 2019.”

reversal of decades-old trend

Last year marked the beginning of a remarkable turnaround: Union contracts ratified in 2022 gave workers the highest average wage increase in more than three decades, according to Bloomberg Law labor data.

This trend appears to be continuing. Bloomberg Law pay data shows that labor contracts approved in the first quarter of 2023 gave workers a 7% increase in average first-year pay — the most in a single quarter since at least 2007.

The UAW is pointing to recent profits at automakers as evidence that these companies can afford to raise workers’ wages. Collectively, the Detroit Three automakers made $21 billion in profit in the first half of this year.

The Teamsters union similarly highlighted UPS’s profits during the COVID-19 pandemic as they pushed for higher wages for rank-and-file union members. The package delivery giant projects profits of more than $13 billion in 2022.

Jennifer Hancock, a part-time package sorter at UPS in Richmond, Virginia, said the big pay increase is important to keep up with inflation.

“I was making $8 an hour in 1991,” Hancock told NPR. He recounted his earnings when he was first hired at UPS. “A part-timer would now need $25 to achieve the same purchasing power.”

But the UAW may not have “extraordinary leverage.”

Harry Katz, a professor of collective bargaining at Cornell University, said while UPS workers and pilots are seeing big increases in wages, not all unions have the same types of gains.

The bargaining power for UPS employees and pilots at major airlines stems from the fact that they cannot be replaced, Katz said. Pilots have a particular skill-set that cannot be easily replaced; Despite the competition, UPS is performing so well that when the company raises workers’ wages and benefits, it does not result in a significant reduction in employment.

“Those are two cases where capital is not mobile – it cannot move to the non-union South and operate as many companies. It cannot move abroad and outsource production to foreign sources of supply. Can,” Katz said. “So it’s part of their particular situation.”

Katz said autoworkers on assembly lines cannot be easily replaced, and they get few benefits from solidarity within their union’s ranks. But he said these workers face greater threats from competition in the automotive industry, including factories with non-union workforces operating in the American South, which reduces the UAW’s bargaining power.

“They don’t have extraordinary leverage because there’s so much competition,” Katz said.

Katz estimates that the UAW will succeed in winning a “concrete wage increase” that aligns with the roughly 3% base wage increase – plus cost of living adjustments – that the union consistently won in negotiations until the 1980s, when concessions were made. Bargaining began.

But he doesn’t think the UAW is in a position to win wage increases equal to the Teamsters deal with UPS.

“We’re in a phase where workers’ power is certainly greater than it has been in the last 20 and 30 years — but it’s hardly a revolution,” Katz said. “Management still has plenty of sources of leverage.”

Tom Kochan, professor of work and employment at MIT, said 2023 is shaping up to be an important year for rethinking pay norms. While the UAW faces competition from non-union auto plants, Kochan said the union still has significant leverage.

The UAW may not get a 40% four-year wage increase, he said — but the demand still signals the union’s intent to win a larger wage increase.

“There is a great determination on the part of the union and its workers and its leaders to use this moment to say that now is the time to move forward in terms of better distribution, addressing the deficit caused by inflation. Company profits,” Kochan said.

When they’re not winning, they’re attacking

General Motors responded to the UAW’s wage increase proposal in an August 3 statement, saying it expected to raise wages for unionized workers — but that the union’s asking would “impair our ability to do the right thing for the long-term benefit of the team.” will be in danger.”

Fenn said during a Facebook Live on Wednesday that Ford, General Motors and Stellantis have all raised wage increase offers since their initial bids — but not by more than 20%, just half of the union’s 40% request.

This summer’s wave of labor unrest has shown how willing workers are to strike when companies refuse to meet their union demands. Hundreds of thousands of workers have participated in at least 250 strikes so far this year, according to data from the Cornell University School of Industrial and Labor Relations.

Hollywood actors and writers have been on strike in Los Angeles for months. Thousands of hotel workers in the city have also been on strike since the beginning of July to fight for better wages.

Kaiser Permanente Health workers are currently voting on whether to authorize a strike when their contract expires at the end of this month.

UAW President Sean Fenn has stressed that his union is prepared to go on strike from Friday if the automakers do not meet their demands. The union could target specific plants and gradually expand the walkouts to additional locations, depending on how bargaining with the companies progresses — what Fain calls a “stand up strike” strategy.

“We do not yet have proposals that reflect the sacrifices and contributions our members have made to these companies,” Fenn told union members Wednesday. “To win, we probably have to take action.”

–This story has been updated from a previous version,

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