Striking Autoworkers’ Wage Demands Reflect Inflation’s Toll

Striking United Auto Workers members are applying more pressure in their fight for higher wages, as several years of soaring inflation have eroded their buying power. The union is demanding a 36% increase in wages over a new four-year contract to make up for lost ground since the old agreement took effect in 2019, as well as to keep up with inflation over the next four years.

The autoworkers are exploiting what they view as maximum leverage given the tight labor market combined with a stretch of historically high inflation.The United Auto Workers union targeted a profitable Ford Motor Co. truck facility in Louisville, Kentucky on Oct. 11, threatening industry-wide disruptions and expanding their weeks-long walkout of more than 40 facilities across the U.S.

In the last 15 years, hourly wages increased by just $3 for some UAW workers, or a little over 10%, while consumer prices jumped by more than 40%. Compounded with the devastating effects of the pandemic, discontent by labor is boiling over. Striking autoworkers are demanding a 36% wage raise in their next four-year contract to replace the one that expired last month. In the four years since the union received a 6% boost, inflation unexpectedly rebounded from decades-low levels and ballooned by 20%.

“The price of everything went up a lot except for our paychecks,” Sean Nell Martin, a 51-year-old Ford assembly line worker striking in Chicago, said in a telephone interview. Now, he said, he has “to penny pinch and count every dollar.”

The strikes are now in their fifth week, with reportedly now over 34,000 workers, according to Reuters, walking out at facilities owned by Ford, General Motors Co. and Stellantis, the parent of Chrysler, Jeep and Ram.

UAW President Shawn Fain has defended the union’s demands. “The Big Three have made record profits,” he said at a rally in Detroit last month when the strike began, while union members have failed to keep up economically. The Big Three automakers “have failed to recognize the contributions that our workers made, the sacrifices we’ve endured,” he said. The companies have countered the workers’ demands with offers ranging from 20% to 23% raises over four years.

Ford has called the latest strike expansion into Kentucky “grossly irresponsible” and warned of “painful aftershocks” to a dozen additional Ford operations and “many more supplier operations that together employ well over 100,000 people.” The company also said its employees represented by the UAW are already among the best compensated hourly manufacturing workers anywhere in the world.

This has been a prolific year for job actions nationwide. The walkouts at the auto companies may embolden workers in other industries.

Actors and writers clashed with Hollywood studios for months. The Screen Actors Guild actors have been on strike for three months and the Writers Guild went on strike for four months, with the former breaking off negotiations citing no progress even after writers agreed to a new pact. Some union workers at American Airlines and United Airlines received pay raises of 46% and 30%, while UPS workers won a 55% pay bump. Auto wages have long been seen as pacesetter for other industries, although their influence has decreased as more of those jobs moved overseas or have been lost to automation.

Several factors have created the right conditions for the uptick in strikes, according to Arthur Wheaton, director of labor studies at Cornell University. “Firstly, high inflation recently means demands for wages are really high,” he said. “Second, you have very low unemployment, so there’s less risk to go on strike now,” since companies cannot readily find replacement workers to staff their plants. Record support for unions from both the public and President Joe Biden, who visited a picket line of striking autoworkers in Michigan — a first for a U.S. president – has buoyed worker confidence.

Ford’s and GM’s last contracts in 2019 with the UAW guaranteed workers around $32 an hour by this September, but some workers say these raises weren’t evenly distributed over the period. For Martin, nearly half of what he needed to reach the top rate of $31.65 didn’t arrive until one week before the contract expired. As a result, his wages hadn’t kept up with inflation for most of the past four years.

Union members also hold grievances about the faster growth of compensation for chief executive officers. Fain, the UAW leader, says CEO pay has increased 40% in the past four years, although much of executive compensation is tied to performance-linked stock awards. Mary Barra, GM’s CEO, disputes Fain’s claim about executive pay.

Martin, the Ford autoworker, put it in personal terms. “I think it’s absurd that the CEO can make $28 million, and we are the ones that make the product and sacrifice our bodies, struggling from paycheck to paycheck,” he said. “I’ve broken my ankle on the job, I have back issues when I come home, I have to use a heating pad and soak my hands in Epsom salt.”

Looking into the future, GM has offered concessions to allow electric vehicle battery plants to be included in the UAW contracts. “That would be huge,” Wheaton said, citing worker concerns about job security with the shift to EVs.

“If they phase out the combustible engines, they phase us out as well,” said Martin, who works as a Ford product assembler. “Until we are awarded EV, we don’t know what our future looks like,” he said. “We think about whether this plant is going to survive.”

Workers would like changes in their wage tier systems, which dictate an increase in hourly rate based on years on the job. According to Wheaton, people hired after 2007 have been making $16 to $24 an hour, and many are temporary employees. “Once they hire you as permanents, it could take you eight more years” to reach the top tier, he said. Ford has agreed to improve the status of its tiers and reduce temporary workers. If the other automakers follow suit, Wheaten predicts the strikes could be settled in a matter of weeks.

The Big Three have laid off thousands of workers since the UAW strike began, as they are forced to reduce production. The work stoppages could snarl supply chains, hurting “the ongoing immaculate disinflation in the labor market,” J.P. Morgan said in a research report. This could put workers in a tight spot, as port suppliers and parts distributors also start to feel the pinch.

For now, Martin and other autoworkers are determined to stand their ground. “It’s not really asking for too much when the companies are making record profits,” he said. “We build the cars that we can’t even afford,” he said.

About the author(s)

Vivian has worked in Hong Kong and China for most of the past decade as a breaking news reporter, and is currently studying business and economics journalism at the J-School.