The United Auto Workers want the Big Three automakers to share the wealth. The powerful union is poised to strike at midnight on Thursday, when its current contracts expire, unless the companies meet aggressive demands including big raises and a restoration of old benefits.
The stakes are high — and not just for the auto industry and its workers. The standoff is a challenge for Joe Biden, who needs the backing of labor in the midwest in 2024, but could lose politically if a prolonged strike hobbles the economy or worsens inflation.
Can new UAW president Shawn Fain pull off a big win for his workers, and how could a strike impact Donald Trump, non-union car-maker Tesla, and even Elon Musk? Here’s what you need to know:
How is business at the Big Three car companies?
The public bailouts of the Great Recession are a distant memory. The Big Three giants — Ford and GM and the European conglomerate Sellantis (which subsumed FiatChrysler in 2021) — have been rolling in it. They’ve made $20 billion in profit over the first six months of 2023 and roughly a quarter of a trillion in North America over the last decade. The companies have been returning cash to shareholders with lucrative stock buybacks and dividends.
What are the union’s demands?
In line with these sky-high corporate earnings, the UAW workers are seeking “double-digit” pay increases, of as high as 40 percent, as well as a restoration of union rights and norms that were negotiated away during the industry’s existential crisis more than a decade ago.
Representing nearly 150,000 workers, the UAW seeks the elimination of “tiers,” under which newer employees sign on for lesser pay and lower benefits than veteran workers. In these times of plenty for carmakers, the union also wants a return to a defined pension benefit instead of 401(k)s, and retiree medical benefits. Members are also seeking the reinstatement of a guaranteed cost of living adjustment, or COLA, to counter inflation, and broader strike rights, including over attempted plant closures. (Find a full list of the union’s substantive demands here.) “Record profits mean record contracts,” union president Shawn Fain told his members.
Is a strike inevitable?
The Big Three have been negotiating with the union, individually. The companies have been willing to bargain on wages, but top offers have maxed out the range of 20 percent over four-plus years, rather than the 40 percent the union has sought. The companies have been willing to look at ending tiers and improving wages for temporary employees. However, the companies have kept discussions of other key benefits off the table.
In a Facebook live event with union members Wednesday afternoon, Fain said UAW and the Big Three were “still very far apart on our key priorities.” He warned members that “we’re likely going to have to take action” while insisting, “I’m at peace with the decision to strike if we have to.”
Alternately quoting scripture and former UCLA basketball coach John Wooden for inspiration, Fain declared that any blame for the strike rests with the automakers who “chose to squander” weeks of negotiation time, while choosing greed over amicable labor relations: “The Big Three can afford to immediately give us our fair share.”
What would the strike look like?
The UAW is planning an historic strike. It is the first time the union could strike all of the Big Three companies simultaneously. Fain insists the automakers will find themselves confronting “a well organized and pissed off workforce.”
However, the union president made clear that, initially, this will not be a across-the-board work stoppage. Instead, UAW is plotting something akin to rolling blackouts, beginning with strikes on a “limited number of targeted locations,” Fain said, while vowing that the strikes “will continue to grow” if the companies “continue to bargain in bad faith or give us insulting offers.”
The strike is a big test for Fain, who became the union’s boss only five months ago. But he insists that UAW will win a favorable contract “by any means necessary.” If the Big Three “keep playing games,” he warned, “we have the power to keep taking plants out.” And if push comes to shove he added: “An all out strike is still a possibility.”
What are the stakes for Americans?
A short strike, particularly of limited factories, is unlikely to cause any nationwide economic distress. However a prolonged strike, and a full work stoppage, could quickly produce economic pain. A 10-day all-out strike, according to one recent estimate, could cost the economy $5 billion.
Perhaps more troubling, an extended strike could produce an inflationary jolt — by lowering vehicle supply and disrupting the car makers’ supply chains — at a time when both workers and Wall Street alike are eager for price increases to slow, and for the Fed to reduce interest rates.
This macroeconomic context is plainly shaping the standoff. In his address to workers, Fain sought to counter narratives that UAW workers “are the problem,” insisting that the auto companies exacerbated inflation by “price gouging the hell out of the American consumer.” Corporate America, he said, is going to “pretend that the sky will fall” in response to the strike, but he insisted that they don’t actually care about the working class: “It’s the billionaire economy, that’s what they’re worried about.”
What are the political stakes?
Despite low unemployment and the fact that America has so far skirted a formal recession, polls show Americans remain in a sour mood over the economy and the still-painful bite of inflation.
Biden — a lifelong “car guy” — has enjoyed strong labor support. But he has also been willing to take drastic measures to keep the economy on track, as when he signed a bill last December that blocked a strike by rail workers that could have further fouled the nation’s supply chains.
Biden and Fain spoke on Labor Day, and the president recently expressed optimism about avoiding a strike. But the president has stopped short of fully backing autoworkers, pressing the Big Three to remain at the negotiating table. The UAW, in turn, has not yet endorsed Biden for 2024, and Fain has pointedly insisted: “Our endorsements are going to be earned and not freely given.”
GOP frontrunner Donald Trump has sought a political opening amid the labor strife, blasting Biden’s “Green New Deal crusade” to electrify the U.S. vehicle fleet and increase mileage standards, and warning of a coming “slaughter” of autoworker jobs. He appealed to the UAW, saying: “I think you better endorse Trump, because I’m going to grow your business.” (Fain — in response — advised union voters to steer clear of Trump, whom he painted as anti-worker and “part of the billionaire class.”)
What does the unrest have to do with electric cars?
The threatened strike comes at a moment of transition for the auto industry as it moves aggressively into electric vehicles. Tesla — which the UAW has so far failed to unionize — pays workers substantially lower hourly wages even as it has built a huge lead on the Big Three in terms of electric vehicles, controlling roughly 60 percent of the U.S. market.
Biden’s signature Inflation Reduction Act has steered billions into electric car and battery development. But labor guarantees have not been linked to that cash infusion. Workers in factories that produce batteries for electric cars are generally not unionized and/or pay is well below prevailing union wages.
Electric car manufacturing also requires less labor than assembling internal combustion vehicles, posing a long-term threat to the size of the carmakers’ workforce. The UAW is not opposing the transition. “We support a green economy. You know, we have to get behind this,” Fain said recently. But he has insisted that the electric automotive workforce needs union protection: “If we don’t secure this work … it’s not going to be a good future for anyone.”
If a strike is called, there will be no negotiations Friday. Fain and other top UAW will be at a rally in Detroit — with Sen. Bernie Sanders.
Sanders recently spoke to Rolling Stone about how Biden can pitch himself to the working class in 2024, and why high tech advances must benefit labor. “If we are increasing worker productivity — and we are, that is what technology does,” he said. “I want workers to benefit from that.”
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