The United Auto Workers (UAW): Who Are They? Why Are They On Strike? Why Does It Matter?
Economic Policy Brief #55 | By: Arvind Salem | October 2, 2023
Photo taken from: clickondetroit.com
The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) is one of the largest and most diverse unions in North America, with members in virtually every sector of the economy.On September 15th, The United Auto Workers (UAW) implemented a targeted (“Stand Up”) strike after the expiration of their 4 year contracts. The Union is on strike against Ford, General Motors, and Stellantis: the first time that the union has struck against all three simultaneously in its history.
The UAW is implementing a targeted strike , where they call certain plants to strike, not all of them at once. This is an incredibly calculated decision, which allows the UAW to inflict the most harm by having the workers of the most profitable plants go on strike, while everyone else works. This means that the strike represents less of an expense for UAW (i.e. less money needed to support these workers from the strike fund) but inflicts the most damage on the auto companies. If all members of the UAW went on strike it would cost them $70 million a week: quickly draining their $825 million strike fund within three months, but now the UAW can support their workers for much longer (strikers currently get $500 per week in addition to health benefits). Additionally, if the companies attempt to cut costs by closing down facilities, the union members at those facilities will be eligible for unemployment benefits and not deplete the UAW strike fund.
UAW initially targeted GM’s Wentzville, Missouri (3,600 UAW members), Ford’s Michigan Assembly plant in Wayne, Michigan (3300 strikers),and Stellantis’ Toledo Assembly complex (5,800 strikers). This represents less than 1300 of UAW’s 145,000 members: less than 1% of UAW members.
The UAW strike comes at a time of record union activism: most prominently the strikes by Hollywood screenwriters and actors and raises for United Parcel Service employees in an agreement negotiated by the International Brotherhood of Teamsters.
Additionally, these car companies are experiencing record profits, but essentially keeping in place the same agreements that workers took to help these companies stay afloat in 2008. The UAW argues that now is the time to pay back the concessions they made in 2008 and protect them in the future, while a key argument the automakers make is that they need to use their profits to invest in the costly transition to electric vehicles, where they are already behind non-unionized companies like Tesla.
The union’s specific demands relate to four main categories: wages, cost of living adjustments, eliminating the two- tiered payment system, and job security in the transition to electric vehicles.
The first demand, wages, is a demand for a 40% general wage increase for UAW members over a four year contract. The companies have offered a raise of approximately 20% due to pressure from the strike, but are still well short of the union’s demands. The union points to the Big Three’s profits of $21 billion total in just the first half year and the fact that they agreed, in 2007, to freeze their base wages for 4 years to help the company survive. Now that the company is doing good, the UAW argues that they should be compensated for all they gave up, especially given the fact that the highest paid CEO of the three (GM CEO Mary Barra) makes 362 times the median GM employee’s salary and the average hourly worker’s salary has dropped over 20% in the last two years when adjusting for inflation.
The second demand is for a robust cost of living adjustment (COLA) system to ensure that the gains are not eaten away by inflation. COLA was something that the UAW gave up in the 2007 negotiations, but has sorely missed throughout the last decade, particularly with the high inflation in 2022. If the workers had the old COLA formula, estimated to provide a 90% protection against inflation, their base pay would’ve increased almost the exact same amount as the crippling 9% inflation in the United States during the summer of 2022. The automakers have put a version of COLA on the table, but the union does not believe that it would meaningfully protect against inflation like the old formula did.
The third demand is to eliminate the two-tiered wage system. Workers who joined after 2007 were paid less than those hired before to do the exact same job. They also receive less healthcare and pension. In 2019, UAW and the companies agreed to an 8 year progression, where a new hire can work their way up to the pay of their pre-2007 peers over the span of 8 years. UAW is advocating for a 90 day progression, while the auto companies have countered with 4 years.
The fourth major demand is job security with the arrival of EVs. The UAW wants a guaranteed right to strike over plant closures and some compensation if plants shut down. The auto companies’ precise counter offers on this issue is unclear, but they are demanding the unilateral right to close and sell 18 facilities, which the UAW refuses to accept.
A week after the initial strike, on September 22, the UAW expanded their strike against GM and Stellantis to include all of their spare parts distribution centers, but notably excluding Ford from these extensions. The union said that Ford showed progress in their talks by notably reinstating a cost of living adjustment and granting the union the right to strike over plant closures. This new extension will add another 5,600 distribution workers to the 13,000 auto workers already on strike.
A strike of this magnitude has multiple downstream effects on the economy at large and represents a key political moment for both parties to court the support of the UAW by showing solidarity at this time and make their position on organized labor clear through their actions.
Of course, the effects of the strike depend on how long it lasts and what actions the unions are willing to take, which is impossible to know at this time. However, even in such a short time, the strike could hinder economic growth, especially when the country faces other economic obstacles such as higher oil prices and higher mortgage rates. This strike may further short term inflation in the auto market and incentivize consumers to buy cars from non-union companies (many of which are foreign). The United States economy lost over $5 billion in the first 10 days of the UAW auto strike.
Most of the damage will not be done on a national level: but concentrated at the local level. Businesses around Detroit that typically serve these workers, such as restaurants, are adversely affected, since the workers do not have as much money to spend there. There is the danger that if this becomes a particularly long and expensive strike, automakers may start to move away from Michigan, taking countless jobs with them, which is what Boeing did in 2008: moving some production to anti-union South Carolina after a long strike.
Despite the economic hardship that this strike causes, it’s worth noting that overall support for the UAW strike has been trending upward, while support for the exact demands has been trending downwards, indicating that the American public has a broad pro-union sentiment, at least for now, despite not agreeing with their demands.
Both President Biden and Trump have used this strike to court the union’s support. President Biden joined the picket line on the 26th: the first modern president to visit a picket line, and a significant show of his support for organized labor. Notably, the union has not yet endorsed Biden in the 2024 election and while many workers appreciate his support, they said a visit from the president would not necessarily change their vote. The day after, in lieu of the Republican debates, Donald Trump visited a non-union auto parts supplier, looking to capitalize upon the UAW’s discontent with the Biden administration’s push for electric vehicles, which they believe will cost them many jobs. The autoworkers represent a powerful interest, which both presidents narrowly won and carries with it a great prize in the Electoral College. Both Trump and Biden are clearly trying to cement themselves in the UAW’s good graces before the general election. Biden seems to be courting union leadership by picketing with them, while Trump is mainly trying to court the vote of the union’s blue-collar base, by giving a speech that aligns with their interests but does not gain him favor with union leadership, as he gave it in a non-union manufacturer.
- UAW The UAW is the union organizing this strike. Those who sympathize with their cause may wish to donate to this organization.
- Ford Ford has been determined to be the most union friendly out of the three companies. Those who would like to reward them for that practice may wish to support them.
- Joe Biden for President Joe Biden has shown support for these workers and the union. Readers who agree with his actions in this issue may wish to donate or otherwise contribute to the campaign.