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January 31, 2024

UAW Wins Big Contract After Bold Strike Approach

The UAW agreed to a host of concessions including a second tier of wages for incoming workers.

The UAW agreed to a host of concessions including a second tier of wages for incoming workers.

The United Auto Workers (“UAW”) entered into negotiations and ultimately struck the Big Three automakers (General Motors, Ford and Chrysler’s parent company Stellantis) this summer, leading to dramatic changes in the union’s master agreement with the Big Three. The agreement includes approximately 25% to 33% in raises, shorter timelines for employees to reach top wages, and a pathway for employees at future battery plants to become unionized.

Most notably, the UAW also won the elimination of a tiered wage system that segregated workers in the same worksites performing the same job into separate wage and benefit scales, with new employees placed on lower wages scales with limited benefits compared to existing employees. Tiered wage schemes in collective bargaining agreements began in earnest in the 1980s as employers sought labor concessions in an increasingly deregulated and globalized economy. According to an interview in The Nation with the AFL-CIO’s Glenn Perusek, by 2013, about 20 percent of all union contracts contained two-tier wage arrangements. The tier system foments a generational divide within unions, giving senior members higher wages and a pension while limiting newer, younger members to lower wages, a longer journey to reach top pay, and limited or non-existent retirement benefits.

The tier system was introduced in the UAW in 2004 when the UAW agreed to a two-tier wage system with American Axle, a former GM subsidiary turned independent supplier. The deal kept several plants open and granted new employees a $5,000 signing bonus but brought in new workers at a lower wage rate than existing employees. The tier system expanded significantly within the UAW in 2007 when the Big Three teetered towards collapse at the beginning of the Great Recession. The UAW agreed to a host of concessions including a second tier of wages for incoming workers. Since then, the tier system has proliferated in UAW contracts.

Both supplier subcontracting and the tier system proved profitable to the Big Three. According to a 2023 article by Adam Hersch of the Economic Policy Institute, aggregate profits for the companies increased by 92% between 2013 and 2022. Hersch reported that the automakers brought in $31 billion in profit in 2021, $37 billion in 2022, and $33 billion in 2023 as of September of that year. Consumer prices have also increased 40% since 2009, but autoworker wages fell over 19% in that same time.

But in recent years, the UAW experienced stark institutional changes. After a significant scandal involving two former UAW presidents, the UAW entered into a consent decree with the U.S. Department of Justice that established direct voting for UAW leadership. The direct voting system replaced a longstanding elector or delegate model, in which members voted for representative delegates who ultimately cast votes for leadership. The delegate system has been credited with keeping the powerful Administrative Caucus in leadership since the time of Walter Reuther in the 1940s. The current UAW President, Shawn Fain, is the union’s first president in seven decades not affiliated with the Administrative Caucus. In their campaign, Fain and his slate promised that if elected they would take a more aggressive approach to bargaining than previous UAW leadership. The central promise of their campaign was that they would end the two-tier wage system entrenched in the UAW’s contracts with the Big Three.

To accomplish his self-proclaimed “audacious” goals, Fain utilized several novel strategies. First, he opened up bargaining with all three automakers simultaneously. In recent years the UAW would typically bargain with one of the automakers, reach a deal with that company, and use that deal as leverage to get the other two companies to sign on to the same terms. Here, the three simultaneous bargaining processes, along with the vast number of possible strike locations, granted the UAW flexibility and enhanced its unpredictability.

The strike style itself was also novel for the UAW, though not new in the broader labor movement. The UAW drew inspiration from the “Create Havoc Around or System” (“CHAOS”) method, popularized by the Association of Flight Attendants. The CHAOS method calls for both intermittent and rolling strikes. The National Labor Relations Act, which governs the autoworkers, prohibits intermittent strikes. So instead of calling for intermittent strikes, the UAW used a rolling strike strategy, beginning with a few strike locations and ramping up work stoppages as bargaining continued. Worksites were targeted for their profitability and effect at disrupting the greater operations of the employer for maximum leverage.

Finally, UAW treated each employer differently depending on the union’s progress in bargaining with that employer. In September, Fain expanded the strike against GM and Stellantis but not Ford, citing particular progress in the Ford negotiations. A few weeks later, it was Stellantis that was spared from strike expansion, also due to alleged progress in negotiations. In October, the UAW expanded its strike only at Stellantis, with Fain stating that it had the “worst proposal” on the table of the Big Three.

The UAW’s approach appears to have worked, with its recent agreements lauded as the most significant advances made by the UAW in decades. In an announcement celebrating ratification of these contracts, Fain heralded the UAW’s campaign as a model, calling on UAW members to “take our strike muscle and our fighting spirit to the rest of the industries we represent.”

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Emma Woods

Associate Attorney

Emma Woods is an associate attorney with the Previant Law Firm, S.C., in Milwaukee, Wisconsin. She represents local and international labor unions in arbitrations, administrative proceedings, and state and federal litigation. She also represents individuals in discrimination and wrongful termination matters.