UAW Demands "Largest Pay Hike In Recent Memory" From Big Three Over 'Bidenflation'

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by Tyler Durden
Friday, Aug 04, 2023 - 03:20 PM

Expectations for the United Auto Workers and Detroit's Big Three automakers to finalize a new labor contract before the current labor pact expires in mid-September soured on Thursday evening when the union demanded 40% pay hikes for its workers over four years. 

Bloomberg reported that the new demands are part of UAW's opening proposals in contract talks with General Motors Co., Ford Motor Co., and Stellantis NV. The union's current labor agreement with the automakers expires on Sept. 14. 

The Detroit-based union has 150,000 workers producing Chevrolets, Fords, and Jeeps, called for an automatic 20% general wage increase upon ratification of a new contract "to offset the severe impact of inflation" over the last two years of negative real wage growth, according to a write-up obtained by The Detroit News. 

The Detroit News described the new proposal as "the largest pay increase in recent memory." 

Following this, the union asked for 5% wage increases every year for the duration of the agreement, which extends through 2027. This would mean the top wage for workers would be around $47 per hour, nearing the $49 mark recently achieved in a tentative agreement by the International Brotherhood of Teamsters with United Parcel Service Inc.

On Tuesday, UAW President Shawn Fain revealed an overview of the "members' demands" that called for "double-digit" wage increases. He also suggested the union would secure a 32-hour work week. 

"Big Three CEOs saw their pay spike 40% on average over the last four years.

"We know our members are worth the same and more," Fain said on Tuesday during a Facebook live stream event. 

Then on Thursday, in response to Fain's comments, GM said the company expects to increase wages but said the union was asking too much. 

"The breadth and scope of the presidential demands, at face value, would threaten our ability to do what's right for the long-term benefit of the team," the company said in the statement.

Marick Masters, a business professor at Wayne State University, called the new proposal "audacious" but "probably out of line with what the conventional expectations were."

"The UAW has embarked on an ambitious campaign to reclaim what they believe is lost ground and to reinstate prior economic conditions that were considered during the Great Recession and bankruptcy era.

"And this is a part of their new bargain, new philosophy toward a just and fair transition to electrification, and that requires higher wages, more job security and the reinstatement of certain benefits that were made in the past.

"This is a new reality, and the question is whether in this new reality they can find a path for a bold agenda of the UAW that enables the companies to remain competitive. That is an extremely difficult task."

Meanwhile, Ford, GM, and Stellantis have plowed billions of dollars into electric-vehicle plants and battery-making facilities. Ford recently announced that its EV venture would lose more than a billion dollars amid price wars with Tesla this year. 

Automakers have historically resisted significant pay increases, especially this unusually large one. All eyes are on UAW and Big Three as the contract deadline looms.