Auto workers’ grand slam in Detroit is a home run for the US workforce

The United Auto Workers union has just hit a grand slam. Instead of the World Series, we’re talking about the turbulent national auto talks between the Detroit Three and the United Auto Workers union. 

Ford tentatively settled a record contract last week and that pattern was adopted a few days later by its crosstown rival Stellantis and now General Motors.

This agreement is great news for UAW members, but the gains could resonate across the economy in two ways. First, auto talks historically have served as a benchmark for other unions, and non-union employers have improved wages and benefits to avoid unions. 

Second, Walter Reuther, the union’s legendary early president, famously said that UAW gains create “high-velocity purchasing power” which fuels economic growth.

Consider a few highlights of the new agreement: 

• A 25 percent wage increase over the next four-plus years.
• The return of the cost-of-living adjustment (COLA) protects workers against the ravages of inflation.
• Better work/life balance including five weeks of paid vacation, two weeks of parental leave and 17 paid holidays. We shouldn’t forget these are tough jobs that can extract a punishing physical and emotional toll.

At the end of this contract, a senior auto worker on the assembly line will earn close to $43 an hour, more generous profit sharing, and much-improved benefits among many other strikes from investment commitments to the right to strike over plant closures. 

As important, the new contract delivers dignity and fairness on the job. It jettisons “tiers” in which a new worker might work for half the wage of a senior worker doing the same job side-by-side. These tiers had lacerated the soul of a union whose unofficial anthem is “Solidarity Forever.”

This victory reflects bold new leadership led by Shawn Fain, the new reform-minded UAW president, and innovative “stand-up” strike tactics he introduced to ratchet up pressure at the bargaining table. He denounced stratospheric gains in executive pay, inspired UAW members and reached out to all working Americans.

Fain had a great partner at Ford in UAW Vice President Chuck Browning who is a tough, seasoned negotiator and deeply respected leader.

These auto talks are taking place amid an urgent multi-billion dollar shift towards electric vehicles. Climate change threatens the planet, and this transition is the most far-reaching technological change in the industry since the introduction of the moving assembly line in 1913 at the Ford Highland Park plant near Detroit.

Well, by now you may be thinking “Great for auto workers but won’t this deal cripple Detroit relative to its non-union rivals from Tesla to Toyota?”

In fact, this contract could make Detroit far more, rather than less, competitive. Labor costs are important, but competitiveness is also determined by rising productivity, improved quality and constant innovation on the shop floor.

When workers feel they are well treated and valued, productivity rises, absenteeism and turnover decline, and workers improve the production process. Ford seems to agree. As part of this contract, it announced a commitment of $8.1 billion in new U.S. investments over the life of the agreement; a strong vote of confidence. Ford said it expects to find efficiencies to offset the higher labor costs. GM and Stellantis will likely do the same.

This is hardly utopian thinking but reflects the history of the industry. Consider the example of Henry Ford introducing the moving assembly line. This revolutionary move initially drove the company into a ditch. Absenteeism soared, turnover hit 400 percent, and quality slid. Ford proposed a radical solution. He doubled the prevailing wage to $5 a day in January 1914. His competitors and editorial opinion howled.

What then happened? The following year, absenteeism and turnover disappeared, productivity soared and Ford slashed Model T. prices propelling sales to new heights. Profits soared and Ford called the move the best business decision he had ever made.

The Great Depression gutted these wage gains. President Franklin Roosevelt and the Wagner Act in 1935 gave workers the right to organize. After that, courageous autoworkers and organizers — the three Reuther brothers who initially organized UAW among them — capitalized on the situation to gain recognition for the union through the 44-day sit-down strikes of 1936-37 at General Motors. The 2023 stand-up strikes are meant to remind us of those sit-down strikes. After World War II, the union played a key role in building the road to the middle class for American workers and now is trying to restore it.

Today, this victory sets the stage for new organizing from Tesla to Toyota and Fain has already announced plans to seize the moment. What makes now different, when previous efforts sputtered? The context has shifted sharply. Recent polls indicate unions are enjoying near-record popularity among working Americans, particularly younger workers.

Recent strong gains from 48,000 striking UAW graduate students at the University of California to medical workers at Kaiser to screenwriters in Hollywood and Teamsters at UPS all show unions can deliver. And let’s not forget the president of the United States on a UAW picket line near Detroit.

When all is said and done, unions provide workers with a sense of dignity on the job and a better life for their families and communities. They are vital to a democratic society. They speak for their members but are also a crucial voice for all working Americans, including the most marginal and vulnerable.

A more green, prosperous America will have a union label.

Harley Shaiken is a professor emeritus at the University of California, Berkeley, specializing in labor and the global economy.