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uaw strike
UAW Strike Put Us on Better Road to Energy Transition
We now know that job growth and electric vehicles can go hand in hand.
Nov 23, 2023
When the United Auto Workers (UAW) started its strike against Ford, GM, and Stellantis earlier this year, a grim storyline took shape in the press: This strike pitted President Biden’s push for a transition to electric vehicles (EVs) against his support for workers.
Writing about the strike and the transition to zero-emitting vehicles, the New York Times put it this way: “The political challenge posed by the industry’s transition to electric cars may be only beginning.” Politico was one of any number of publications issuing a simple warning: “UAW Strike Could Disrupt EV Rollout.” Two so-called facts were seemingly inarguable: Electric vehicles require far fewer workers to build, and none of the new battery plants could be unionized.
But now that the strike is over—more quickly than many assumed and on much better terms for workers than analysts had said was possible—a different set of lessons are clear, and they are the exact opposite of what many in the media and hot take marketplace had predicted:
- The Big Three automakers can invest in both their workers and the factories to make new EVs.
- Workers at many of the new battery plants can enjoy the same union protection as other autoworkers or have an easier pathway to join the union.
- Building EVs can create more jobs over the next few decades as the industry builds up its capacity and know-how.
Before examining each of these three points, it’s important to correct one misunderstanding.
While many commentators tried to pit union workers against electric vehicles, neither the UAW nor environmental groups ever did so. Just the opposite. Back in March of 2021, the UAW issued a white paper that called for specific ways the new EV industry could benefit workers: “The growth of EVs must be an opportunity to reinvest in American manufacturing, with union workers making the vehicles of the future.”
Meanwhile, NRDC was one of more than 100 green groups that sent a letter to the CEOs of the Big Three and specifically endorsed the UAW’s bargaining position: “Only through meeting these demands will the United States ensure a just transition to a renewable energy future.”
With the UAW contract in hand, autoworkers can get long-overdue pay hikes while automakers continue to make the investments they need to make (and frankly, should have made years ago) in building electric vehicles.
As the UAW strike began in mid-September, the Big Three executives and outside commentators pitted the workers’ demands for fair wages against the need for new investments in battery plants and EV factories. Ford CEO Jim Farley went so far as to warn that the workers’ demands would force Ford to scrap its investments in electric vehicles, saying the UAW’s contract demands would force the company to “choose between going out of business and rewarding our workers,” according to CleanTechnica.
But the reality was much different. The auto companies have billions of dollars in profits to draw from for these new investments, and worker salaries are just a small slice of their costs.
The Big Three made $21 billion in profits so far this year and $250 billion over the past decade. All of the CEOs have been raking in millions of dollars in their salaries and incentives. Worker salaries, on the other hand, make up just 5 percent of the cost of final assembly of a new vehicle, a study cited by the New York Times concluded.
And now, with the UAW contract in hand, autoworkers can get long-overdue pay hikes while automakers continue to make the investments they need to make (and frankly, should have made years ago) in building electric vehicles.
A big part of these investments is in building new battery plants. The auto companies have set up joint ventures to build many of them, and the UAW made it a top priority during bargaining to ensure these new plants are captured under each automaker’s master agreement or that the workers at these plants have other pathways to unionization. At first, the automakers balked, and outside analysts said this would be a bridge too far.
The Associated Press reported: “Ford’s Farley accused the union of holding an agreement hostage over union representation of battery plant workers. On a conference call with industry analysts, he said high wages at battery plants would raise the price of Ford’s electric vehicles above those from Tesla and other competitors.”
But then the ground started to shift. In a dramatic, Friday evening announcement in the midst of the strike, UAW President Shawn Fain announced that GM had agreed to unionize its battery plants. “We have had a major breakthrough that has not only dramatically changed negotiations but is going to change the future of our union and the future of our industry,” Fain said.
Stellantis soon followed, and even Ford agreed to create strong pathways for workers at future battery plants to fast-track union representation. There will be hard work ahead to ensure that all of these plants get union representation, but the agreement goes a long way toward making it happen.
Last, while this wasn’t part of the strike itself, one thing we learned along the way is that job growth and electric vehicles can go hand in hand. For years, a shadowy estimate has circulated around this transition: EVs, it was said, require 30 percent fewer workers to make; the reason being that an EV has fewer moving parts and fewer parts means fewer workers.
Except that it’s just not accurate. A stunning story from Emily Pontecorvo at Heatmap concludes: “Whether or not the U.S. is able to build up domestic battery production, early evidence of the EV transition in the United States shows that EVs may require more labor, even in the final assembly stages.” If you include the battery production figures, this new industry could create thousands more good manufacturing jobs in this country. (Pontecorvo’s full article is worth taking the time to read. There is a lot to it.)
So, the results are in, and the conclusion is clear: With a union agreement in place that includes new measures to help unionize battery plants, the predicate is set to ensure that workers benefit while the United States transitions to electric vehicles. Yes, as we have seen recently, the road ahead isn’t flat and straight. There will be twists and turns, ups and downs. But the general direction is crystal clear. We are on the road to a better tomorrow.
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Big Three Autoworkers Approve Contracts After UAW Strike
"It's a good contract, you just can't get around that," said one UAW local president. "You look at the investment we got in 2019 compared to now, it's not rocket science. It's just better."
Nov 17, 2023
As voting wrapped up on Friday, United Auto Workers members at Ford, General Motors, and Stellantis were all on track to approve contracts finalized during a six-week UAW strike demanding improved pay, benefits, and working conditions from the "Big Three."
The union's online trackers had the ratification vote results as 68.2% to 31.8% at Ford, 54.7% to 45.3% at GM, and 69.6% to 30.4% at Stellantis as of press time. The UAW and companies have not yet commented on the results.
The UAW launched its "Stand Up Strike" in mid-September, and increased walkouts at various U.S. locations throughout the talks. Rutgers University labor studies professor Rebecca Givan told The New York Times that the strategy "really upended a lot of conventional wisdom" in the labor movement and helped reverse some concessions the union had previously accepted, showing that "if workers build enough power, they can win things back."
The pending agreements, which were reached over a few days at the end of last month, don't deliver on all worker demands but celebrated provisions include 25% wage increases and cost-of-living adjustments through April 30, 2028.
As Bloomberg reported:
Workers at Ford's Dearborn, Michigan, truck plant voted 78% in favor of ratifying the agreement Friday, putting Ford over the top, according to UAW Local 600 President Nick Kottalis.
"It's a good contract, you just can't get around that," Kottalis said. "You look at the investment we got in 2019 compared to now, it's not rocket science. It's just better."
The contracts' expiration date sets up a possible mass action around International Workers' Day on May 1, 2028. The UAW said last month that "we invite unions around the country to align your contract expirations with our own so that together we can begin to flex our collective muscles."
Also framing the Big Three battle as part of a bigger effort, UAW president Shawn Fain declared last month that "if we are going to truly take on the billionaire class and rebuild the economy so that it starts to work for the benefit of the many and not the few, then it's important that we not only strike, but that we strike together."
Fain on Tuesday testified at U.S. Senate Health, Education, Labor, and Pensions Committee Chair Bernie Sanders' (I-Vt.) hearing about how unions raise up working families and take on corporate greed. The UAW leader stressed the "essential role" of federal lawmakers, calling on them to not only support "our fights and other fights like ours," but also "finish the job for economic and social justice for the entire working class."
Already, the historic Big Three deals are leading to "UAW bumps" at other automakers including Honda, Hyundai, Subaru, and Toyota. The union is also aiming to help organize workers at Telsa, the electric vehicle company of billionaire Elon Musk.
Democratic U.S. President Joe Biden, who is seeking reelection next year, became the first sitting president to join striking workers on a picket line in late September, when he rallied with UAW members outside a GM plant in Belleville, Michigan.
The Biden campaign's Ammar Moussa said in a statement Friday that "Joe Biden isn't just saying that he'll always have workers' backs—he's proving it. After President Biden made history by standing with striking autoworkers, unions have notched historic wins and even nonunionized auto companies are taking note, increasing workers' wages.
"This is what happens when you have a president who cares about working people," added Moussa. "Workers win."
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UAW Fails to Win Back Pension Plans for Newer Workers
Amid other impressive gains, this one got away. But organized labor must keep up the fight for defined pension benefits.
Nov 16, 2023
The UAW strike against Big Auto succeeded in winning impressive wage gains, but it failed to obtain a little-reported demand: that the auto companies reinstate defined benefit pension plans for new employees that had been suspended as a concession during the 2008 Great Recession.
Instead, as a consolation prize the auto companies offered and the unions took larger company payments to employee 401(k) plans.
This was a significant loss for newer workers who were not grandfathered into the preexisting pension plans. They will receive employer contributions that will rise to ten percent of salary. While that is significantly higher than what most 401(k) plan participants receive from their employers, it will fall far short of what would be needed to provide retirement income equivalent to that of a pension plan. That would require contributions of 25 to 30 percent of salary. Put differently, they will receive one-third to one-half of what workers with equivalent careers received from pension plans.
Pension plans also produce more income because they minimize drainage of fees and profit-taking to the financial services industry which gains much more from managing 401(k) plans.
Defined benefit pension plans produce much more income for retirees because they incorporate risk sharing among participants while 401(k)s shift all the risks to individuals. If the market tanks, it’s the employer’s problem with pension plans, the worker’s problem with 401(k)s. Pension plans guarantee set amounts of life income according to sizes of employee salaries and lengths of time worked. 401(k) retirement incomes depend on sizes of accumulated individual investments. These in turn depend on amounts invested and the skill or luck of the investors.
Pension plans also produce more income because they minimize drainage of fees and profit-taking to the financial services industry which gains much more from managing 401(k) plans.
Many people have been led to believe by the financial services industry and conservative think tanks that pension plans are old fashioned, impractical, and unsustainable. This is simply not true. The country has over 50,000 healthy pension plans covering over 60 million active and retired workers. Most public employees have pension plans. And, the largest source of retirement income for most retirees comes from a pension plan: Social Security.
Private employers don’t like pension plans because they don’t want the responsibility and risk involved in sponsoring them. Yet, if an employer is worried about providing adequate retirement income for his workers, it is much cheaper to do so by investing in a pension plan than by providing enough payments to 401(k) accounts. A dollar invested in a pension plan will produce far more retirement income than one contributed to a 401(k).
Private employers don’t like pension plans because they don’t want the responsibility and risk involved in sponsoring them.
It was a victory that the UAW raised the demand to allow newer workers into the pension plans. It challenged the belief that the loss of pension plans was irreversible with 401(k)s being the only alternative. The UAW should not abandon that demand for future contract negotiations.
In the meantime, UAW workers should hold onto their 401(k) accumulations with the hope that in the future they can be rolled into a pension plan for credit for time worked. That is all possible actuarily and there are precedents for it.
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