"I Think It's Great" - Biden Praises GM 'Tentative' Deal With UAW To End Strike
Stellantis NV, maker of the Jeep, Ram and Chrysler brands, reached a tentative agreement with the UAW on Saturday, which included the same 25% hourly pay raise plus cost-of-living allowances over the more-than-four-year contract included in a similar deal reached by Ford last week.
Those agreements still need to be voted on by the companies’ union members.
And now, after more threats from the UAW, Bloomberg is reporting that GM is said to have reached a tentative agreement with UAW to end the strike that is costing them billions.
GM Chief Executive Officer Mary Barra and UAW President Shawn Fain reportedly spoke on Sunday, people familiar with the discussions said.
Bloomberg reported that the automaker and UAW made progress on the status of temporary workers but still needed to agree on retiree benefits, the people said.
With 300,000 retirees - the most of any automaker - a $500 annual payment would cost the company $150 million a year for the life of the deal.
The deal reached Monday includes a 25% hourly pay raise plus cost-of-living allowances over the more-than-four-year contract, according to the person, who wasn’t authorized to speak publicly.
The agreement still needs to be approved by GM’s union members.
For context:
Detroit automaker unionized labor costs, including wages and benefits, are estimated at an average of $66/hour.
That compares with $45 at Tesla, which isn’t unionized, and $55 for Asian automakers.
Meeting all of Fain’s initial demands would boost average hourly labor costs to an estimated $136/hour.
Fein claims to be matching the roughly 40% compensation gains automaker CEOs have realized in the past decade.
Ford’s CEO made $22mm last year. Stellantis’s $24.8mm. GM’s nearly $29mm.
“Competition is code word for race to the bottom, and I’m not concerned about Elon Musk building more rocket ships so he can fly in outer space and stuff,” Fain told CNBC, defending his demands.
“Our concern is working-class people need their share of economic justice in this world.”
As Eric Peters warned over the weekend: "The secular trend toward ever rising inequality is turning."
"In August, UPS settled its labor dispute with the Teamsters 340k drivers who on average now make $170k in wages and benefits. That same month, Yellow failed to come to agreement with the Teamsters and ceased operations after nearly a century of trucking delivery -- it awarded ten executives $4.6mm in special retention bonuses, laid off all 30k drivers and went into liquidation. A secular trend reversal to how society divides its economic spoils is not all that different from revolution. Bitterly fought, treacherous for all involved.
And this latest episode promises to be particularly so.
Because in the timeless conflict between capital and labor, it is extremely rare for the imbalance to be so extreme.
The wider the gap, the bigger the stakes.
And the last time the chasm was so great was at the height of the Roaring 1920s."
GM shares are up in the pre-market, but not very impressively - perhaps on the reality of what this will do to the company's bottom line...
As Eric Peters exclaimed yesterday, in the end its the taxpayer that will foot this giant bill:
“We hit the companies to maximum effect,” said UAW President Shawn Fain in a Facebook livestream. GM and Stellantis [and now GM] had just agreed to provide a 25% wage increase to United Auto Workers members, matching the same offer by Ford to end the six-week strike.
The gains are valued at more than four times those won in the last UAW contract in 2019 and provide more in base wage increases than Ford workers have received in the past 22 years.
The deal will reinstate major benefits lost during the Great Recession, including cost-of-living allowances. Some lower paid workers will receive an immediate 85% wage increase.
This is the sort of thing that happens in a relatively free market when capital owners have extracted such a large share of the nation’s economic spoils that labor revolts.
Government workers got a 4.6% raise this year. And 70mm Social Security recipients received an 8.7% benefit increase in 2023.
Such gains are mechanical, mathematical, removing the need for union strikes to extract more money.
The cost is simply added to the Federal deficit, which is funded through the issuance of bills and bonds, the supply of which is expanding at an accelerating rate.
Politicians can dampen the trajectory of this parabolic trend. Theoretically. In practice, they are the ones responsible for its remarkable shape.
And after six weeks of paralysis in the republican congress, a new House Speaker was selected, hailing from Louisiana, the 3rd most federally dependent state government in the union. Ahead of what will be the most chaotic presidential election in modern history, Mike Johnson will lead, having circulated an amicus brief - signed by more than 100 Republican lawmakers - and filed it in a Texas court case to contest the 2020 election results in four swing states.
It thus seems unlikely that our politicians will be focused in 2024 on restoring our national finances to a sustainable trajectory. There will be no Union boss to fight that fight. Only bond markets, which are ultimately built upon faith. And this is fading."
The full terms of the deal are unknown but we are President Biden will give it another 'thumbs up', because, after all, it's not his money.
Sur enough, President Biden just told reports, "I think it's great." Great for whom we are not 100% sure.
