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The United Auto Workers (UAW) have been on strike for nearly two weeks. The strike includes thousands of workers from the Big 3 U.S. car makers (G.M., Ford, and Chrysler/Stellantis). The union and their employers are both calling for a "fair deal," but what does that mean, exactly?
When most people think about what’s "fair," they often think about karma: You reap what you sew, you get out what you put in, what goes around comes around. In the world of moral psychology, that’s called proportionality. Every culture on earth understands this concept.
The crux of the UAW’s argument is that, for some time now, they haven’t been fairly compensated—they’ve not gotten out what they’ve put in. Fearful of Ford’s impending bankruptcy in 2007, the union agreed to an industry-friendly deal that paid new workers roughly half that of the top union wages ($15/hr. vs. $28). Union members feel, not unreasonably, that these past concessions entitle them to some sort of recompense. To that end, the UAW is asking for a 36% pay increase, a figure equal to the rise in CEO pay over the last several years.
The UAW is also asking for a 4-day workweek, retiree healthcare, and something called a jobs bank where employees who lost their jobs due to the shift to electric vehicles (which require fewer workers), can still come in and get paid for the day.
As with many other industries, a 4-day workweek is possible but not likely. Unless auto workers are willing to put in 10-hour days or something equivalent, this concept just isn’t something we traditionally embrace here in America—though it is more popular outside the U.S. and the subject of several books.
Retiree healthcare is also likely a nonstarter due to already exorbitant, ever-escalating healthcare costs. A previous settlement with the union involved the establishment of a trust fund for retiree health benefits. It’s hard to imagine that automakers would want to go back on that deal, as paying into a fixed fund offers some insulation from these rising health costs. It’s possible that the UAW’s asking for more generous healthcare would actually result in less money for other perks, like pay increases. In fact, there is a compelling argument that the high cost of employee health insurance has eaten into would-be raises for the past several decades. And until we get healthier as individuals and communities, this trend is unlikely to change. I digress.
At the risk of appearing overly sympathetic to corporations and CEOs, I’d argue that the final ask, a jobs bank, is the most controversial and should be removed. I want the UAW to reach the best deal possible and for auto laborers to be paid fairly for their hard work—the inclusion of a jobs bank could be detrimental to attaining that goal. Why? Because it violates our universal concept of fairness and proportionality. Psychology aside, history suggests this program will likely not end well. In the 1980s when U.S. car makers were trailing behind foreign competitors and several plants were forced to close, a similar deal was struck allowing newly unemployed workers to remain on the payroll. It was thought that this first iteration of a jobs bank would be a short-term solution (it was not).
The jobs bank can be seen as an attempt on the part of a dying union to cling to what few union jobs remain in a competitive global car market. UAW membership peaked at 1.5 million in the 1970s. Today that number is just 150,000 workers. How did they get there?
By the 1980s it was clear that American labor, especially in the unionized North, was too expensive. This drove manufacturing jobs—not just those for cars—to places where they could be done for less. One way in which foreign car makers outdueled their American counterparts was by opening plants in the (non-union) South. This was detailed on a recent podcast episode of “The Daily.” It didn’t help that at the time the once dominant Big 3 were making some terrible vehicles. Consumers noticed. Call it complacency, lack of foresight, or both, but the Big 3 spent decades trying to catch up to their foreign competitors.
Fast forward 30 years to the 2010s, and the American auto industry emerged miraculously like a phoenix from the ashes: The Big 3 started making reliable cars, CEOs enjoyed raises and bonuses, and profits reached record levels. But these earnings have yet to trickle down to factory workers. Union members point out that Ford’s CEO makes 365x a median employee’s earnings.
Meanwhile, real wages have actually declined for UAW members since this renaissance. Part of that 2007 deal meant union members would forgo cost-of-living adjustments, which left them especially vulnerable to the high levels of inflation over the last two years, a point made by Justin Fox of Bloomberg. From the workers’ perspective, money is going everywhere but their pockets: CEO salaries, health insurance, groceries. From the employers’ perspective, medical costs continue to outpace inflation and foreign labor is (still) cheaper. Something’s gotta give.
The (government-sponsored) decision to move into electric vehicles (EVs) only makes matters worse. If EVs require 40% fewer workers (per FORD’s CEO), then it is possible the union will lose substantial bargaining power at a time when they need it most.
We’ve reached another inflection point. It is worth asking what role the union serves in all of this. Ostensibly, it is their job to protect workers and secure the most lucrative deal possible. But at what cost? If the Big 3 agree to all of the UAW’s demands only to be beaten again by foreign carmakers, or if they miss the boat on EVs (think Kodak with digital cameras), then the union will have won the battle but lost the war.
My point, I suppose, is that negotiating a "fair deal" is complicated and can bring unintended consequences.
It’s hard not to conclude that external forces favor management: globalization, technological innovation, non-union labor. Workers face a seemingly impossible tradeoff: their dignity or their livelihood. Deep down, the UAW knows that there is always someone who will work for less. If a worker in some distant land doesn’t steal their job a robot will.
This is the reality for many blue-collar Americans, who increasingly doubt that the quality of their lives will exceed that of their parents. As they grapple with the world they were promised and the world as it is, there are no easy answers, only tradeoffs.
