Even if striking United Auto Workers don’t get everything they want, experts say, now is a great time to try.
The Detroit Three automakers – Ford, General Motors and Stellantis – are generating big revenues and profits, fueled by consumer appetites for pricey, tricked-out trucks and SUVs. A pro-labor president sits in the White House. Public favor for organized labor runs high, as evidenced by outpourings of support for striking Hollywood screenwriters and actors.
“This is as much about timing as it is about anything. The union sees an opportunity, and they’re trying to use it,” said Susan Schurman, distinguished professor of labor studies and employment relations at Rutgers University in New Jersey.
She added, “If not now, when?”
Why is UAW striking?
Autoworkers walked off their jobs across three Midwest plants at 11:59 p.m. Thursday, staging the first UAW strike in history to target simultaneously three big automakers who have a sizable foothold in Detroit. Workers sought a 40% pay raise (or 46%, depending on how you do the math), a shorter workweek, the elimination of a multitiered wage system and the restoration of a 1980s-style pension plan, among other demands.
The 40% figure was partly symbolic. Shawn Fain, the UAW president, says the CEOs of GM, Ford and Stellantis (formerly Chrysler) have seen their own pay rise by that much in the four years since autoworkers inked their last contract.
Executive compensation is complicated to calculate, but the three companies' CEOs earn big pay packages. Mary Barra, chief executive of GM, received total compensation of $29 million in 2022, a 34% bump since 2019, according to an AP analysis. Total compensation for James Farley of Ford reached nearly $21 million, 21% more than his predecessor made in 2019. Carlos Tavares of Stellantis took home 23.5 million euros ($25.2 million in today's dollars), a 77% increase over compensation paid to the CEO of Fiat Chrysler four years earlier. Stellantis formed with the 2021 merger of Fiat Chrysler and the French PSA Group.
More broadly, the union wants to draw attention to the profitability of the three automakers. GM earned $10 billion in net profits in 2022. Ford reported increased revenue and earnings, although one-time charges left them with a net loss. Stellantis reaped net profits of almost $18 billion.
'Cheering for the workers'
“I think the overall tenor of the time is that people are cheering for the workers and think that the billionaires, Jeff Bezos of Amazon and Elon Musk, are ripping off people,” said Harry Katz, a professor of collective bargaining at Cornell University in Ithaca, New York. “I’d say the UAW has exceptional bargaining power.”
The three automakers were reeling in the Great Recession of 2007-2009 when autoworkers sacrificed much of the pay and benefits they now seek to recover.
Pandemic-era shutdowns and shortages slowed production. Demand outstripped supply. For the first time in recent memory, the auto industry became a seller’s market.
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The pricier models reap larger profits. Customers are paying more, loading up on teeth-rattling sound systems, futuristic navigation screens, leather seats and other options that push prices beyond what the average American earns in a year. Between 2017 and 2022, the share of new auto sales priced above $60,000 tripled from about 8% to 25%, according to Cox Automotive.
“There’s no question that the automakers can afford to share, fairly, with their workers,” said Seth Harris, a senior fellow at the Burnes Center for Social Change at Northeastern University and former labor official in the Biden administration. “They can afford generous wage increases. They can afford cost-of-living adjustments.”
Drive the company into bankruptcy
The automakers contend they have already offered workers an "unprecedented economic package," to quote a GM release, including "historic wage increases" totaling 20%. Farley, the Ford CEO, suggested that meeting the UAW's terms might drive the company into bankruptcy.
And there will be economic fallout, starting with the 13,000 striking autoworkers, whose $500 weekly strike pay falls well short of their lost earnings. The impact on the full U.S. economy depends "very much on how long the strike lasts, and exactly who's affected by it," Treasury Secretary Janet Yellen said Monday.
A strike by all autoworkers could cost the economy $5 billion after just 10 days, according to an analysis by the Anderson Economic Group, which looked at the estimated impact on workers, suppliers and the wider auto industry. This 5-day-old strike involves about one-tenth of the membership, but Fain has warned that it could easily escalate. The last UAW strike, in 2019, lasted 40 days.
Autoworkers launched their strike knowing they could expect support from President Biden, a Democrat who has called himself history’s most pro-labor president.
Following the strike announcement last week, Biden urged the companies to share profits with workers and dispatched aides to Detroit to spur talks.
The autoworkers union was “expecting some political help, and they’re already getting it,” said Raymond Gibney Jr., an associate professor of management at Penn State Harrisburg.
Public support for labor unions stands near a half-century high. Sixty-seven percent of Americans approve of labor unions in 2023, according to an August Gallup survey of 1,014 adults from every state.
“The polls show that people are more pro-union now than they’ve been in decades,” said Kenneth Dau-Schmidt, a professor of labor and employment law at Indiana University in Bloomington.
Labor's big year
Labor has had a big year. In July, UPS and the Teamsters reached a landmark deal to avert a massive strike. Workers won higher wages and the end of a two-tier pay system, among other concessions.
Celebrities who have dared to cross picket lines have faced swift backlash. Over the weekend, actress Drew Barrymore reversed a plan to resume her talk show in the face of withering criticism.
Then again, the writers' strike hasn’t appeared yet to inconvenience the American viewer, who can fill Drew Barrymore’s silence by streaming old “Suits” reruns. The walkout unfolded in an era of seemingly limitless film and television content as well as a wealth of video content on social media platforms from Instagram to TikTok and YouTube.
See the picket lines: UAW launches a strike, targeting big three Detroit automakers
What if cars don't show up at dealerships?
The UAW strike encompasses only about 13,000 of the nation’s 146,000 autoworkers. If it drags on, consumers could see shortages of vehicles within several weeks, raising already-high prices at a time when car buyers are paying more to borrow. And then, they might look harder at the union’s audacious demands.
While the public largely supports the autoworkers, Dau-Schmidt said, “If we have a big strike and cars stop showing up at dealerships, people may change their minds.”
Asking for more than one expects is standard practice in negotiations. Fain, elected on a promise to get tough on the three automakers, proffered a list of demands so bold, some experts say, that he risks alienating the pro-labor public.
The union is asking for more money for less work, a weekly schedule shortened to 32 hours. The UAW also seeks an old-fashioned pension plan, a retirement vehicle that has largely given way to the 401(k).
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“They are not going to get a 32-hour workweek,” said Erik Gordon, a clinical assistant professor at the University of Michigan Ross School of Business. “They are not going to get a defined-benefit pension. They’re not going to get the 46% wage increase that they first asked for. They’re not going to get the 36% increase they’re now asking for.
“But they’re going to get a lot.”
This article originally appeared on USA TODAY: UAW strike sees workers walk out of assembly plants: Why now matters