UAW Strike Ends, but at What Cost?

Economic Policy Brief #58 | By: Arvind Salem| November 26, 2023

Featured Photo: npr.org

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Policy Summary:

The United Auto Workers (UAW) engaged in a 6 week strike that has had serious ripple effects across the U.S. economy at a critical moment for labor relations in the United States. The strike, focused mainly on recovering benefits lost from concessions auto workers made in 2008, has played out at a critical point: multiple other large unions also engaged in large strikes during this period (including perhaps most famously screenwriters  And actors in Hollywood) and both leading presidential candidates (Trump and Biden) are jockeying to establish their position on this issue. Readers interested in understanding in a deeper analysis of the context, demands, and political complexities associated with this strike may wish to refer to my earlier brief on the subject.

After 6 weeks of striking, the UAW reached a tentative agreement with all three “big three” automakers: Ford, General Motors (GM), and Stellantis. Importantly, all of the details discussed here are not finalized since they derive from the tentative agreements announced after negotiations between high level union leadership as well as company leadership, which have not been ratified by the union’s leadership and general member base, both of which would need to approve before the agreement is official. However, it is generally expected that these agreements would get ratified.

Ford was the first to reach an agreement, announced on October 25, and has been consistently identified by the union as the most cooperative automaker. The agreement reinstates benefits lost in 2008, including Cost-of-Living adjustments  (COLA) and a three-year Wage Progression, increased wages, as well as ending unfair wage tiers. Additionally, the agreement includes heightened retirement benefits and a right to strike over plant closures, which was the first time the union was able to obtain a provision like this in its history. The gains in the deal are valued at more than four times the gains from the 2019 contract, showing that this drawn out process appears to have led to increased gains for workers. Additionally, Ford’s workers will go back to work while the ratification process takes place. This is likely to pressure the other two companies, who wouldn’t want their competitor to have an advantage while they stall on union negotiations.

Stellantis was the second to reach an agreement, on October 28, 2023. The details of this deal aren’t as publicized, but they are mostly expected to mirror the Ford deal, especially in regards to wages and COLA, which in total could raise wages over 30% during the life of the contract. Most surprisingly, Stellantis agreed to reopen a plant in Illinois, which had closed February 28, costing the jobs of 1,200 workers. After this deal, the UAW expanded their strike on GM to pressure them to arrive at a quick agreement.

GM finally caved two days later on October 30th, and reached an agreement including broadly similar terms to those negotiated by Ford and Stellantis. The agreement includes a 25% hourly pay raise and COLA through April 2028. The agreement removes several wage tiers and brings additional workers into the agreement, including workers making batteries for GM’s electric vehicles. With this agreement, UAW declared that the strike was over, but did not give a definitive date for when workers would return.

Policy Analysis:

The resolution was a resounding win for the UAW and unions as a whole, especially coming days after the resolution of the strike in Hollywood, with President Biden using the opportunity to visit the Union leaders. In this visit, he emphasized his support for them, and used the occasion to paint a stark contrast with Donald Trump. Notably, the union leadership expressed positive sentiment for President Biden but has still refrained from endorsing the Preident, which they did in 2020, citing the fact that their first priority was on ratifying these deals and that endorsements would come later.

This also showed the power of concentrated union organizing to put big businesses on their heels. Ford said the work stoppage from the strike cost them $1.3 billion, GM said it cost them around $1 billion, and Stellantis didn’t release any figures, but Colin Langan, an auto analyst with Wells Fargo projects that Stellantis lost $750 million throughout the strike. A week before the strike ended, an analysis found that the strike cost the economy $9.3 billion, meaning that by the time it ended its cost to the U.S. economy was likely well over $10 billion. In particular, businesses around Detroit have been hardest hit as well as auto suppliers around the country.

Engagement Resources:

• UAW is the union organizing this strike. Those who sympathize with their cause may wish to donate to this organization.
• Ford has been determined to be the most union friendly out of the three companies. Those who would like to reward them for that practice may wish to support them.
• Joe Biden for President, Joe Biden has shown support for these workers and the union. Readers who agree with his actions in this issue may wish to donate or otherwise contribute to the campaign.