What Do UAW Members Make? What About the Big 3 Executives?

What are UAW workers on strike demanding?

*Better pay: The union wants a wage increase of 36 percent over four years. The automakers have presented offers ranging from 17.5 percent to 20 percent over a 4-year contract, but the union described those increases as insufficient after years of inflation.

*Better benefits: The demands include a 32-hour workweek and company-financed health care in retirement. They also want all workers to receive a defined-benefit pension. Currently, full-time workers hired after 2007 get 401(k) accounts with a 6.4 percent company contribution.

*Eliminating tiered employment: The union wants to end the tiered system that puts newer workers on lower pay scales with lesser benefits. It has also called on the companies to depend less on temporary workers, while the manufacturers say hiring them allows them to operate factories efficiently.

The UAW has an easily understandable case to be made to the public watching this impasse play out: If the Big 3 can boost the compensation of their CEO's by 40% since their last contract 4 years ago, then they should treat workers exactly the same way.

And while a 40% bump over 4 years seems high now, the workers demand is based on inflation we're already experienced - that they've had to withstand without remedy - and wherever inflation takes costs/prices over the next 4 years. The Big 3 can always raise prices as market/economic conditions allow, but workers only get one chance every 4 years, and after taking it in the shorts in 2019, they damn sure won't make that mistake again as profits have climbed to all-time highs as they've fallen far behind.

When the financial crisis of 2007-09 jeopardized the automakers, the union agreed to give up its annual cost-of-living adjustments, which had begun in 1948. It also accepted expanded use of a two-tier wage structure. Today the starting wage is $18.04 an hour, which is lower than the 2007 starting wage of $19.60, Fain said. If the starting wage had kept up with inflation it would be around $29 today, he noted.

Meanwhile the automakers rebounded from the financial crisis and began to make a lot of money - $250 billion from 2013 through 2022, according to the Economic Policy Institute. G.M. and Chrysler were prohibited from issuing big dividends or stock buybacks to reward shareholders as a condition of the federal bailouts they received, but soon after the government sold the last of its shares (in 2011 for Chrysler and 2013 for G.M.), they resumed big payouts in earnest. They also boosted top executives' pay.

Garrett Nelson, a senior equity research analyst for CFRA, told me this week. He said that among expenses for automakers, labor is a distant second to the cost of materials, such as steel. "So they do have some room" to pay more, he said. "It is digestible."

Another analyst, Daniel Ives of Wedbush Securities, disagreed, saying that big pay increases would "make the Detroit Three put one hand behind their back in a fist fight against Tesla." He said it would be impossible for the companies to give the U.A.W. the raises it wants and "keep the same profit margin that they've promised to the Street."

Therein lies the problem. The companies are more worried about the shareholders than they are in actually producing goods at a profit that is fairly shared with those who create what is being sold.

There is a solution for this problem and it's fairly simple: Sell equity shares of the company to the workers over time and take Wall Street out of the equation.

It's not hard to empathize, but their companies already underperform compared to competitors.

You keep overlooking that this action is not based on the future as much as it's based on the past.

Profits at the "Big 3" auto companies - Ford, General Motors, and Stellantis - skyrocketed 92% from 2013 to 2022, totaling $250 billion. Forecasts for 2023 expect more than $32 billion in additional profits.

CEO pay at the Big 3 companies has jumped by 40% during the same period and the companies paid out nearly $66 billion in shareholder dividend payments and stock buybacks.

Autoworker concessions made following the 2008 auto industry crisis were never reinstated, including a suspension of cost-of-living adjustments. As a result, workers' wages in the union and nonunion sector alike are falling farther behind inflation: Across the U.S., auto manufacturing workers have seen their average real hourly earnings fall 19.3% since 2008.

www.epi.org

The fact of the matter is this: the profits, dividend payments, and stock buybacks were made with revenue generated by the workers because they bit the bullet for the companies since 2008. Each company should have factored in that they owed the workers and increased bonuses and incentives to at minimum keep pace with inflation instead of shoveling tens of billions to investors with no sweat in the game.

I know that's not how it works, but the problem is that it SHOULD work that way, and this strike is the moment for changing that paradigm and reorienting what should be viewed as business as normal. The workers are trying to regain the 20% they've lost over the last 15 years and gain about another 5% annually for the next 4 years. Looking at it that way, it's hard not to understand the union's position.

I've also got what I think is a reasonable compromise solution: Agree to a contract more towards the terms of the union, but place a reopener clause within it that allows a renegotiation in two years if indeed the companies run into problems not of their own making.

IOW, your solution is for workers to 'buy" shares of stock in their employer?

A little different. I want the workers to buy stock from the OWNERS and become defacto partners across the board. Worker reps would be on the board and in on the decision-making from the ground up.

If non-union autoworkers don't understand what UAW is doing for their future, they'd better clue in and support their brethren. Because what comes around, goes around. For all the bellyaching over non-union EV manufacturing, can you imagine what'll happen when the BIG 3 ramp up for EV production with jobs paying significantly higher wages? Where do you think the cream of experienced non-union EV workers will go?

As unionized auto wages fell behind, so did non-unionized auto wages. This spillover effect whereby wage suppression of union workers filters out into the broader economy and damages the wages of non-union workers as well is a key dynamic driving U.S. inequality in recent years. Bureau of Labor Statistics data in Figure A show that production and non-supervisory workers across the broader motor vehicle industry, union and non-union, have taken it on the chin since the 2009 deal. Those working in motor vehicle manufacturing saw their average hourly earnings fall a staggering 19.3% since 2008, after adjusting for inflation. Including the broader motor vehicle parts industries - where outsourcing strategies have long compressed industry wage structures and thus didn't have as far to fall - average earnings fell 10% in real terms.

www.epi.org

What has been true for decades is still true today: When unions negotiate higher wages and better benefits for their workers it eventually leads to the same for non-union workers as well. In this case a rising tide does indeed lift all boats.