UAW On Strike
The key issue is tiers.
The following piece was written by Mary Williams Walsh, who escaped The New York Times and is now our managing editor and columnist. This one is about what the UAW strike is about. If you read it, you’ll know.
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The United Auto Workers are now on strike at all of the Big 3 car companies, a first. For decades, the UAW would target just one company to bargain with and perhaps strike, and when there was a settlement, the other two companies would more or less copy it.
There are a lot of big changes in the UAW. The union recently weathered a long, painful corruption scandal that ended with multiple convictions, both of union leaders and of auto executives who gave them cash and gifts in exchange for swaying labor contracts. To avoid being put under federal control, the UAW agreed to reforms, starting with its first-ever direct election, last March.
Shawn Fain won the presidency by a narrow margin, and since then, everything he says and does seems aimed at showing that the old guard is really gone and things are going to be different.
When negotiations for a new four-year contract began in July, the union put forward demands including a 40 percent pay increase, a 32-hour work week, automatic cost-of-living adjustments, and the end of a much-loathed “tiered” compensation system.
A big ask, but Fain said it was justified by the Big 3’s profitability, which grew by 65 percent during the last four-year contract. Top executives were richly rewarded, he said, while blue-collar pay increased by just 6 percent. Time to settle the score.
The companies made counter-offers that would close the gap somewhat, like a wage increase of about 20 percent. They rejected cost-of-living adjustments, but GM and Stellantis (the successor to Chrysler) said they could pay “inflation bonuses.” The 32-hour work week was a nonstarter, but the companies offered to make Juneteenth a holiday.
But the issue closest to UAW hearts seems to be the toughest: the end of compensation “tiers.” Tiered systems are built around a cutoff date, with protection for people hired before it; all the pain falls on the people hired after the cutoff date, who get much skimpier compensation for doing exactly the same jobs.
For the legacy car companies, the cutoff date was in 2007. Workers hired after that start with lower pay and must work for eight years to reach the hourly wage the older-tier workers are paid. And no matter how many years they work, they can’t ever get into the older tier’s pension plan, or earn retiree medical benefits—for those you have to be in the first tier, and it’s closed.
Complicating things, the car companies have added new workplaces and processes that have their own mazes of sub-tiers. It can be hard to find out the details, but they always seem to go against the new tier.
The idea is that over time, the expensive people in the older tier will age, retire, and be replaced by more and more inexpensive post-2007 hires. Eventually there won’t be any more pensions to fund or retiree medical benefits to worry about. Labor costs at the Big 3 are well above those of the non-union plants in the South, to say nothing of Tesla. But as the UAW’s tiered workers march forward through time, demographics should bring labor costs into line.
It's a slow process, and in the meantime, 14 years’ worth of post-2007 hires have come on board. They work side by side with the older tier, who got their better deals from the union’s old guard, some of whom went to prison. You can see why the newer UAW members want to get rid of tiers.
But it’s hard to see how it could happen. The companies have offered to reduce the number of years it takes a second-tier worker to achieve the first tier’s hourly wage, but pensions and retiree health benefits are a no-go. Restoring them would close the Big 3’s path to competitive labor costs.
The thing the younger workers most want appears to be the thing the companies are least likely to give them. So the strikers may be at it for a while. The union has an $825 million strike fund and plans to stretch it by striking only a few workplaces at a time.
Americans may tolerate the disruption, at least for a while. At the end of August, Gallup released its yearly look at U.S. attitudes toward organized labor. Gallup found that public approval of unions is high, at 67 percent, after rising fairly steadily from a low point of 48 percent in 2009.
Gallup asked about the UAW, too, and 75 percent said they sided with the union, compared to just 19 percent for the companies. That was a little higher than the 72 percent who said they sided with the television and film writers, who have been on strike since May, seeking not just better compensation but also protection from Artificial Intelligence. AI isn’t an issue in the auto workers’ strike. Tiers are.
Americans, Gallup said, have become more likely to want unions’ influence to grow. The number who believe union activity can benefit non-union members is at a record high, 47 percent. And 61 percent of respondents said unions help the U.S. economy overall.
Just don’t ask them to grab a picket sign and walk the walk. When Gallup asked non-members if they were interested in joining a union, the overwhelming answer was no.