Auto workers deserve more, not just in money by Marjorie Arons Barron

The entry below is being cross posted from Marjorie Arons Barron’s own blog.

It started with three sites. Now there are three dozen more places where auto workers have gone on strike, seeking a better contract. They follow by months the many writers and actors striking the entertainment industry for similar reasons. Changing technologies are putting all their jobs and futures at risk. Meanwhile, workers see the executives at the top reaping enormous rewards from their labor and want to be treated more fairly.

In its heyday, The United Auto Workers helped to fulfill an American Dream in which its lower-paid workers could move solidly into the middle class, owning homes, educating their kids and affording the automobiles they had made. Under the long-time leadership of Walter Reuther, followed by Leonard Woodcock and Douglas Fraser, the UAW became perhaps the most enlightened union in American history, spearheading fights for civil rights, human rights, women’s rights, health insurance and other benefits.

As today’s strikers look ahead, they see a world diminished and their future perilous. Decades of globalization moved jobs abroad and gutted many of their lives at home. In 2009, to save the auto industry, unions agreed to restructure contracts, dramatically sacrificing hard-fought gains, including generous benefits packages. Since then, while the industry has rebounded, productivity is up and profits are at record levels, average real wages for workers have been flat.

Outrage is understandable when the factory workers, whose pay has diminished by 19 percent (inflation-adjusted) in the last 15 years, see that executive compensation has skyrocketed into the tens of millions of dollars a year. Executive compensation is difficult to nail down precisely because of all the clever ways companies have of awarding and deferring portions of it. But the wealth gap has grown exponentially. The CEO to worker earnings ratio in 1965 was 21 to 1. In 2020, it was 366 to 1. Last year, the gap at General Motors was 400:1 with CEO Mary Barra receiving a $29 million compensation package.

Necessary industry incentives to deal with pressing environmental concerns have ironically made matters worse. Electronic vehicles require fewer parts than internal combustion engines and need fewer workers to assemble them. Indispensable batteries have been largely made abroad, and those made here are often in joint ventures with foreign partners not covered by these negotiations. Red states, whose representatives voted lock-step against the Inflation Reduction Act, have been the biggest recipients of clean energy investments. Manufacturers are increasingly building their EV factories in southern low-tax, right-to-work, non-union states. And, if the UAW overplays its hand, there’s a danger that increases would just strengthen the companies’ resolve to move south.

Fewer Americans are working in auto manufacturing than in 2006, increasingly outside the midwest. And auto parts manufacturers (mufflers, catalytic converters, etc.) are also migrating south.

All of which, from the UAW’s perspective, is not fair and, indeed, poses an existential threat to the security of their families. A proposed $4500 tax credit to consumers who bought electric vehicles built by union labor was eliminated by West Virginia Senator Joe Manchin as the price for his needed vote for the IRA.

Change is never easy, and the transition to a green economy is both fraught and necessary. Surely, at the turn of the last century, no reasonable person would have argued that companies making buggy whips should be preserved despite the nation’s move to horseless carriages.

Better contracts now are important to effecting a less painful transition to new times and changing circumstances. A substantial pay increase and restoration of benefits given away by the UAW in the 2009 restructuring seems the easy part. Preparing for the transformation of the industry will be a lot harder.

Analysts indicate that under the current UAW contract, production workers’ wages (before benefits) range from $18 to $32 an hour. In Mexico, at GM’s newly unionized factory, wages range from $9 to $33 a day, which is – sadly – substantially above wages at nonunion plants in Mexico. (And many car executives say that productivity there matches that in the United States.) Joe Biden’s appearance on the picket line today is not going to alter these realities.

Workers’ lives and their families’ futures are on the line. So, too, is the future for American automakers and for the environment. Is there a way out? Smarter folks than I must surely be in the hunt for solutions, including workable retraining programs, ones that are not just fig leaves. All sides must be open to burden-sharing strategies, used in Europe but rejected by our auto companies, and other creative ways to turn lose-lose-lose into win-win-win. Adjusting executive compensation increases so the gap is not so egregious might be only symbolic, but the gesture could improve the atmosphere for meeting these complex challenges together. The light at the end of the tunnel must not be that of an on-coming train.