The United Auto Workers union is pressing the Detroit car companies to give its factory workers a 40% pay hike in the next labor contract, an increase that would be the largest in recent memory.
The union conveyed this demand to the automakers this week, along with a list of other items it plans to push for at the bargaining table.
The UAW is negotiating new four-year labor agreements for about 150,000 hourly workers at General Motors GM -1.26%decrease; red down pointing triangle, Ford Motor F 0.46%increase; green up pointing triangle and Jeep-maker Stellantis STLA -0.51%decrease; red down pointing triangle.
Currently, unionized factory workers at the Detroit car companies start at about $18 an hour. The top wage, achieved over a period of years, is about $32 an hour.
The 40% pay hike would be a general increase over the life of the next four-year contract. It would be broken up into a 20% increase upon the contract’s ratification, and four additional 5% wage increases given each year, according to a person familiar with the matter.
A UAW spokesperson said that during the current contract, the average CEO salary at the Detroit car companies has increased 40%. “We believe UAW members deserve the same if not more.”
UAW President Shawn Fain has already taken an aggressive stance with the automakers, pledging to take a different tack than past UAW leaders and make significant gains for members, particularly on wages and benefits lost in previous rounds of talks.
In a speech to members Tuesday, he vowed to secure double-digit pay increases for members, without specifying an exact percentage.
He also outlined a list of 10 demands that he plans to bring to automakers, including the right to strike over plant closures, the re-establishment of some retiree benefits and a defined pension plan for all workers.
“Yes, we’re demanding double-digit pay raises,” Fain said during the address, which was broadcast via a Facebook livestream event.
Wages are typically a focus during bargaining between the UAW and the car companies, but this year, they have taken on greater prominence, following a period of high inflation. The union is also demanding a return of cost-of-living adjustments and other benefits given up in previous negotiations to help the car companies survive financially.
Still, a 40% pay increase is unusually large, compared with previous contracts. In the last round of talks, which concluded in late 2019, the union secured two sets of 3% increases over the life of the contract, along with lump-sum payments.
The car companies have historically resisted big pay increases, preferring to instead offer workers bonuses and other one-time payments that don’t add to their fixed costs.
Fain, a reform-minded leader elected to lead the 87-year-old union earlier this year, has taken a more militant tone in his dealings with the automakers and has made clear he is willing to strike.
He has argued that all three automakers are coming off a period of robust profits and that it is time for workers to share in the success.
GM said it plans to increase wages for workers, but that the union’s demands as they currently stand would threaten the company’s ability to support its hourly workers long-term.
Ford said it looks forward to working with the UAW, while Stellantis said it had a productive meeting Tuesday with the UAW leader and it is reviewing the union’s demands.
Along with higher wages, the UAW is also seeking greater job security for its members, particularly as the auto industry transitions away from the gasoline vehicles that have long supported factory jobs to building a new generation of electric vehicles.
Some auto executives say battery-powered vehicles require fewer workers to assemble than traditional gas-engine cars, and jobs for those who work at engine and transmission plants are at risk in a future that is more focused on EVs.
Ford, GM and Stellantis have all funneled billions of dollars into building new electric-vehicle plants and battery-making facilities in a collective bet that the technology will attract new customers.
For their part, they want more flexibility from the union to navigate this shift and reassign workers to new areas that support their long-term objectives on EVs.
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