Is the UAW determined to win this battle at all costs?
GM-UAW Negotiations Update
According to the Center for Automotive Research (CAR), GM’s all-in labor costs exceed those of their international producer competitors by $13 per hour. Absent any economic offsets, GM’s current economic offer to the UAW will only serve to increase this competitive labor cost gap. GM’s competition enjoys lower all-in labor costs largely as a result of utilizing a higher proportion of temporary employees coupled with a higher employee cost share for healthcare. These two issues appear to be exactly what the two parties are grappling over.
Let’s look at a few more facts. At $30 per hour before the proposed new economics of this deal, GM’s non-skilled workforce is likely making at least 10% more than the average manufacturing wage in the United States. By the way, these figures reflect base wage rates only and do not include incremental pay such as $10,000 plus profit-sharing checks. In addition, at ~3%, UAW employee cost share for healthcare appears to be about one-tenth of what others are paying in the industrial sector. Finally, thousands and thousands of job seekers routinely apply for the temporary jobs that the Detroit 3 automakers post when staffing expansion. These candidates must be quite comfortable with the wage and benefit package being offered. In addition, they are likely fairly confident that they will ultimately be part of the feeder pool that will be utilized to staff full-time positions once available. Do any of these facts even remotely suggest that autoworkers are not being compensated fairly, if not well-above market?
I have read many comments from UAW members who are trying to rationalize significant compensation increases this contract since they made sacrifices during 2009 and/or because the company is making billions of dollars. I do understand some of their frustrations but others, including many non-union employees, made sacrifices in 2009 as well. There have been two sets of contract negotiations since 2009 (i.e., 2011 and 2015) that were both ratified by the UAW membership. Are we going to continue to talk about the sacrifices that were made in 2009 during the next round of contract talks in 2023 as well? In addition, we must remember that companies are actually in business to make money, not necessarily to pay above-market wages and benefits to their employees. We must also remember that automotive manufacturers burn through significant amounts of cash and the automakers are now operating in a relatively unknown environment full of disruptors such as electrification and autonomous driving. On top of that, we all know that a downturn is coming, it is just a question of when. GM has made some pretty significant profit-sharing payments to its UAW employees over the past few years. Perhaps, we are forgetting that the UAW leadership negotiated modifications to the profit-sharing formula in 2011 so that their UAW members were in a position to share in the future success of the company. It seems to be working well – I don’t know too many people who would be disappointed with a $10,000 plus profit-sharing check. If that is not enough, how much money constitutes a fair share of GM’s profits?
I am sure that I sound like a broken record but I firmly believe that the solution to this standoff must include meaningful cost offsets such as healthcare modifications and an agreement on the expanded utilization of temporary employees. The UAW must recognize that the competitive labor cost gap is real and they are at risk of pricing themselves out of the market if they stand firm on their principles. If the negotiators cannot find common ground on these two key issues, then they must get creative and find solutions elsewhere to keep labor costs competitive. Failing that, I am concerned that both sides may fail at some point – the risk is that the UAW may win this battle but they will ultimately lose the war. And that would be a shame given everything that both sides have been through over the past decade…..