Why auto workers are asking for a 46% pay raise
Unionized workers from United Auto Workers demonstrated near a Stellantis factory in Detroit on Wednesday, August 23, 2023. Some of these workers put up signs as they marched to show their support for the union's cause.
Workers who are part of the United Auto Workers group walked in procession while displaying placards at a union gathering that took place near a Stellantis factory on Wednesday, August 23, 2023, situated in Detroit.
The United Auto Workers union is seeking a significant salary increase for its members during a possible strike scenario involving the Detroit Three automakers. The proposal includes a four-year contract with a rise of 46%.
Marcelina Pedraza, an electrician at Ford in Chicago, believes that an increase in pay is necessary and should have been implemented earlier.
According to Pedraza, prices of everyday necessities such as food, gas, and mortgage interest rates are on the rise. As a result, many individuals are unable to keep aside any emergency funds for unforeseen circumstances.
The UAW speaks for 150,000 laborers at General Motors, Stellantis, and Ford who are demanding significant pay hikes throughout their contract. They are not the only ones seeking substantial wage increases, as employees across different fields have been battling for and clinching an approximate 50% surge in pay for a period of four to five years. This is an attempt to bring attention to the prolonged period of no pay rises despite substantial earnings of the companies.
The union is making daring requests, supported by a strong job market and dissatisfaction caused by the COVID-19 outbreak. As a result, certain areas are experiencing pay rises that are much higher than what was forecasted for inflation.
Following a long and difficult negotiation period, which saw 340,000 UPS workers come close to striking, the Teamsters union was successful in securing a five-year contract with an average total wage increase of 48% for current part-time employees. Sean O'Brien, the general president of the Teamsters, believes this agreement represents a new benchmark for labor movements.
During August, the Allied Pilots Association, who speak for 15,000 pilots at American Airlines, effectively pushed the airline to increase the pilots' salaries by over 46% in a span of four years, while also providing an initial salary increase of more than 21%.
According to the union's spokesperson and American Airlines 737 pilot, Dennis Tajer, the increase in pay compensates for the past few years of fixed salaries. Tajer noted that the last time pilots experienced a salary increase was back in 2019.
Tajer commented that it has been a significant period since there has been any monetary benefit. Despite the four-year agreement, there have been no advancements in compensation since January 2019.
In the span of five years, the average salary experienced a rise of 48%.
The income will go up by 46% in the next four years.
The salary will go up by 34% in a span of four years.
The wages will see a rise of 32% in a span of six years.
Kaiser Permanente nurses located in the Northern region of California.
There has been an upward surge of 22.5% in the salary level over the span of four years.
The offers in these deals have clauses that allow immediate acceptance in order to equal the salary rates established by rival companies.
Decades-long Trend Reversal
In the previous year, there was a significant change that took place: the union agreements approved in 2022 allowed for employees to receive the largest increase in salary on average in the past thirty years, according to labor information obtained by Bloomberg Law.
It seems like that pattern is continuing. According to wage information gathered by Bloomberg Law, the labor agreements approved during the first three months of 2023 included a typical salary increase of 7% for workers during their first year on the job. This increase is the biggest recorded in a single quarter since at least 2007.
UAW is indicating that car manufacturers' newfound income displays their capability to enhance employees' earnings. By combining their profits, the three prominent automakers in Detroit have gained $21 billion merely in the initial six months of 2021.
The labor union, Teamsters, emphasized the huge earnings of the delivery service company, UPS, during the COVID-19 crisis while advocating for better pay for regular union members. UPS achieved over $13 billion in profit in the year 2022.
According to Jennifer Hancock, who works part-time as a package sorter for UPS in Richmond, Virginia, receiving substantial salary hikes is necessary in order to keep pace with the rising cost of living.
Hancock shared with NPR that when she began working for UPS, she was paid $8 per hour back in 1991. To match the purchasing power she had back then, a current part-time worker would need to earn approximately $25 per hour.
UAW's Leverage May Not Be Exceptional
According to Harry Katz, who is a collective bargaining expert at Cornell University, even though UPS workers and pilots are receiving significant salary boosts, not all unions have equal bargaining power.
According to Katz, the UPS workers and airline pilots hold a strong position in negotiations because they hold special skills that cannot be easily replaced. This gives them an advantage and more power to negotiate for better pay and benefits. Even though UPS is facing competition, they are still able to provide their workers with higher wages and benefits without significantly reducing their workforce.
According to Katz, these two situations involve capital that cannot be easily moved. Many companies can operate in non-union southern states or outsource production to foreign countries, but these situations are unique and do not allow for such flexibility in relocating.
According to Katz, assembly line auto workers cannot be quickly substituted, and they possess influence due to their unity in the union. However, he mentioned that these workers are more vulnerable to challenges in the automotive sector, such as rival factories with non-unionized staff located in the Southern region of the US. This weakens the bargaining ability of UAW.
According to Katz, their leverage is not outstanding due to the numerous competitors in the market.
According to Katz, the UAW is likely to achieve a significant rise in earnings that corresponds to the around 3% rise in base salary which the union regularly secured in discussions prior to the 1980s concessionary discussions. Additionally, the union is expected to receive adjustments for the cost of living.
However, he believes that UAW is unlikely to achieve salary increases that are comparable to the agreement between Teamsters and UPS.
According to Katz, the power of workers has increased compared to the past two or three decades, but he does not consider it a major change. Management still has many ways to exert control.
According to MIT's professor of work and employment, Tom Kochan, the year 2023 will be a crucial time for adjusting wage standards. Even though the UAW faces opposition from non-union auto factories, Kochan stated that the union still holds considerable influence.
According to him, UAW may not receive the requested 46% pay raise for four years. However, the fact that the union has made this demand shows that they are determined to secure significant wage hikes.
Kochan stated that the union, including its members and leaders, are strongly committed to using this opportunity to make up for the financial setbacks caused by inflation. They also aim to improve the fair allocation of the company's profits.
"Striking: The Team's Alternative To Winning"
In a statement released on August 3, General Motors replied to the UAW's request for a 46% pay increase. The company acknowledged the need for improved wages for its unionized staff, however, felt that the UAW's demand would impede GM's ability to make decisions that are in the best interests of the company and its employees in the long run.
This summer has seen a surge of worker dissatisfaction that is manifesting in strikes when their union’s requests are not met by companies. According to data collated by Cornell University’s School of Industrial and Labor Relations, participating in over 250 strikes this year, hundreds of thousands of workers have taken part in these actions.
For several months now, the Hollywood celebrities and authors have been on strike in Los Angeles. Furthermore, thousands of workers from hotels in the city have also started a series of strikes in the beginning of July. Their main cause has been to demand for improved salaries.
At present, Kaiser Permanente medical staff members are in the process of deciding whether or not to grant approval for a strike when their agreement concludes towards the conclusion of the current month.
The head of the UAW, Shawn Fain, has emphasized that his union is ready to strike if the car manufacturers fail to meet their requests.
All three car manufacturers must come to a formal understanding no later than September 14th, according to Fain's statements to reporters. If they do not adhere to this deadline, there will be consequences.
