What a UAW strike could mean for labor

Members of the United Auto Workers on Friday voted overwhelmingly to authorize a strike at the so-called Detroit Three automobile manufacturers — Ford, General Motors, and Stellantis — should those companies fail to offer a competitive contract by the time the current one expires September 14.

The strike authorization is the latest in a series of high-profile labor actions in the US over the past year, including the ongoing SAG-AFTRA and Writers Guild of America (WGA) strikes, a UPS strike authorization that resulted in a fair contract, and a threatened US railway strike thwarted by the government in December. While all of these actions point to a more visible labor presence in the economy, the UAW strike authorization — much like the SAG-AFTRA and WGA strike — is about more than just the conditions under which workers will perform their duties. What the UAW wants, too, is a say in what the industry looks like as it changes with technological developments like the switch to electric vehicles.

The UAW represents about 150,000 workers at the three companies — 97 percent of whom voted to authorize the strike. Shawn Fain, the president of the UAW, indicated that the union would not extend the September 14 deadline to ratify a new four-year contract. Union talks with the automakers started in July, according to Reuters, but have progressed slowly since then, Fain said. “We have a lot of options that we are looking at but extension on the contract is not one of them.”

Fain and the UAW are asking for a series of wage increases and improved or reinstated benefits that would offset labor concessions over the past few decades, and eliminate the two-tiered employment system that the Detroit Three factories have had in place since 2007.

US labor unions enjoyed power and popular support until the 1970s and 1980s, when a combination of a series of corruption scandals and the Reagan administration’s breaking of the Professional Air Traffic Controllers Organization (PATCO) strike in 1981 greatly weakened collective bargaining. Globalization, especially after the North American Free Trade Agreement (NAFTA) came into effect in the 1990s, also weakened worker power since companies could — and did — move their operations to countries where labor was cheaper, decimating entire industries and swaths of the country.

That’s led to depressed wages despite high inflation, as well as a decrease in benefits like pensions, even as the cost of living increases. And in 2023, companies can now use the specter of artificial intelligence and automation as a bargaining chip against workers’ futures.

The UAW’s proposed contract aims to rectify the past

Like all union contracts, the UAW’s is extremely ambitious; unions go into negotiations knowing they’ll have to compromise on some elements of what they’re asking for, so they aim high. In the case of the UAW, as well as in other striking industries, the contracts are trying to both regain lost ground and protect workers for the future.

“We’re fed up,” Fain told Reuters. “We’ve sat back for decades while these companies continue to just take and take and take from us.”

Real wage growth, representing actual purchasing power, has stagnated since the 1980s, only reaching 1983 levels during the Covid-19 pandemic. Overall, wages haven’t grown at the same rate as the cost of living, and 401(k) plans replaced pension benefits, putting more pressure on the worker to save for retirement — despite a boom in worker productivity over the past 50 years.

US Bureau of Labor Statistics

The UAW is striking to reverse some of these changes, by including in its contract a demand for a defined-benefit pension and to reestablish the retiree medical benefit program. The union is also demanding a 46 percent wage increase over the life of the contract to keep up with the increased cost of living, as well as reinstituting a cost-of-living allowance which was eliminated in 2009 following the auto industry bailout. With major auto producers on the brink of bankruptcy, the UAW renegotiated its contract at the behest of the federal government.

But a major driver of the strike is actually a two-tiered wage system first instituted in the UAW’s 2007 contract; workers hired before that are in the first tier and started at about $28 per hour, while second-tier workers start at between $16 and $19 per hour — a rate that has barely increased over the past decade. The second-tier class of workers grows as first-tier workers retire and are replaced by new second-tier workers, ultimately bringing down wages for an increasing number of workers — who also increasingly make up the UAW membership.

A UAW strike would seriously impact the auto industry — and labor overall

There are several reasons that labor has become more visible over the past few years, and workers seem increasingly willing to demand more from their employers. That doesn’t necessarily mean the US is in a new era of labor power, and even that phrase doesn’t mean what it did in the first half of the 20th century.

Amazon’s Chris Smalls has been a visible figure demanding the right to unionize and better conditions for his fellow workers, and the combined SAG-AFTRA and WGA strikes have been highly visible because they target the entertainment industry, putting people’s favorite TV shows and movies on hold until studios and the unions can agree to fair contracts — including the use of generative AI in writing and shooting films and TV shows.

Similarly, the UAW strike is not only about raising individual standards of living but also looking forward to the effect that technology could have on jobs in that sector. As the industry shifts from combustion engines to battery-powered electric cars, manufacturing will need fewer workers with different skills, as Michigan State University professor of employment relations Peter Berg told Michigan State University Today.

If the strike action does move forward — and Berg told Vox in an interview that he believes it will in some form — it could cost each company as much as $500 million per week of stopped work, according to Deutsche Bank analyst Emmanuel Rosner.

The moment is right for labor to try and claw back losses of the past few decades and try to gain protection and benefits for the future; there is a tight labor market, an aging workforce, high consumer demand, and political and popular support for trade unions. “These strike actions on the part of labor unions [are saying], ‘Alright, we have to renegotiate the fundamentals of how work is done,’” Berg said, and “using their power to redefine the working conditions going forward.”

Correction, August 27, 2 pm ET: A previous version of this story misstated how much a strike could cost each auto company. It could cost as much as $500 million per week.