LONG READ
2023/10/26
Jesse Jackson, bottom center, after a rally for striking workers at UAW Local 551 on Saturday, Oct. 7, 2023, in Chicago. - John J. Kim/Chicago Tribune/TNS
The United Auto Workers' tentative agreement with Ford Motor Co. marks significant steps toward the Detroit-based union's stated goal of winning back concessions made during the automotive bankruptcies and Great Recession.
The record deal that would last through April 2028 would secure double-digit wage increases, hike starting pay, reintroduce cost-of-living adjustments, shorten the timeline to the top wage, and boost retirement contributions. The union's Ford council is expected to vote on the agreement on Sunday to send to the roughly 56,000 members employed by the Blue Oval for ratification.
Autoworkers' wages haven't kept up with inflation — a fact touted by the union and acknowledged by the automakers themselves. In previous negotiations to help the companies survive, the union gave up COLA, instituted an eight-year timeline to get to the top wage and gave up pensions and retirement health care coverage in exchange for 401(k)s for employees hired after 2007.
Workers say they want and deserve those items back, though the companies have warned they can't go back to pre-bankruptcy labor costs, or else they won't be able to compete with nonunionized manufacturers.
"It’s really good compared to the other contracts I've been a part of," said Brittany Eason, 38, of Romulus, a 12-year UAW member who works as a team leader at Ford's Michigan Assembly Plant in Wayne. "The strike has lasted long, but it's OK because we were fighting for what we believe in.
"It's partially there," she continued about the gains. "This is Shawn Fain's first time. He may not be able to sweep everything through. They succeeded on some points. They've been fighting for COLA as long as I've been there. It’ll help build our economy."
Ultimately, she hopes the tentative agreement will allow her to give up her Instacart side hustle and accelerate her plans to get a food truck or brick-and-mortar space to expand her cooking and baking business. She currently works as an in-home chef on the side.
UAW President Shawn Fain had said he understood the union wouldn't get everything it wanted in one round — and it didn't in the Ford deal, even though there is more value for members in each individual year of it than the entirety of the 2019 agreement, according to the union.
"For months, we've said record profits mean record contracts," Fain said in a video announcing the agreement. "And UAW family, our stand-up strike has delivered."
Following years of major profits, an employment rate below 4%, high rates of inflation and an EV transition that represents significant uncertainty, the environment was a perfect storm to make some big moves in pursuit of its demands.
"A couple of the companies already have revised production plans for EVs downward," said Marick Masters, a management professor at Wayne State University. "The growth and demand for it is unclear, certainly. It doesn’t appear to be as profitable. They may very well be in a difficult situation four years from now where they might not get anything. That’s got to be the fear."
The union announced the deal with Ford on Wednesday, the 41st day of its unprecedented simultaneous strike against the Detroit Three. At Ford, it had directed workers to walk out of the Bronco and Ranger Michigan Assembly Plant in Wayne on Sept. 15, Explorer and Lincoln Aviator plant in Chicago on Sept. 29 and the Super Duty, Expedition and Lincoln Navigator plant in Louisville, Kentucky, on Oct. 11. The union sent those workers home after announcing the tentative agreement to keep up pressure on General Motors Co. and Stellantis NV.
In a statement on Wednesday, Ford said it was pleased to have reached the deal, and it was working to return its 20,000 employees affected by the strike back to work. It declined to characterize the specifics of the contract.
The UAW, in previous talks, had bargained back some concessions. Full-time workers hired after 2007 have the same health care coverage while employed as legacy workers do. Lost holiday and legal aid benefits returned in 2015. Additionally, new and improved benefits in previous contracts included better health care coverage, stronger, uncapped profit-sharing formulas and full-time conversion commitments for temporary workers at GM and Ford.
Perhaps the biggest miss for the union was the hope to extend pensions and health care coverage in retirement to all autoworkers. Workers hired after 2007 have 401(k)s. The request alone would have cost the companies billions of dollars, according to analysts. Ford agreed on improvements for current retirees, workers with pensions and those who have 401(k) plans.
"It isn’t a surprise," said Cindy Schipani, a business law professor at the University of Michigan. "That gets to be so expensive and so unpredictable. It sounds like a fair settlement.
“It’s not everything," she continued. "I don’t think the auto companies could give back what was lost. Look what happened. They went into bankruptcy. They can’t set themselves up to have a repeat of the disasters of the past. It does make sense to give more right now, especially in light of what CEO and executive pay looks like.”
The union also didn't win back the jobs bank, one of the policies blamed during the bankruptcies at General Motors Corp. and Chrysler LLC. It envisioned the Working Family Protection Program to pay laid-off workers to do community service in the event of a plant shutting down. The UAW, however, did get the right to strike over plant closures for the first time. Ford previously said it had committed product to each of its U.S. plants.
The union did get back COLA as it was in 2009 when it was suspended. It also returned the timetable to get to the top wage to three years, where it was until 2007, down from eight. It originally sought 90 days, the length of time it was until the mid-'90s.
There are issues unique to 2023 compared to previous negotiation years. Namely, the union wants to see workers at new electric-vehicle battery plants included in its master agreement with the automakers, receiving at least the same pay, benefits and protections as workers in assembly and powertrain plants. GM has offered to include Ultium Cells LLC battery plant workers in its master agreement, though details of that arrangement haven't been shared.
It's unclear where this issue stands in the Ford deal. The automaker doesn't have a battery plant up and running yet, let alone one with an organized workforce.
Some UAW demands also went beyond what it has ever had. It ended up withdrawing its request for a 32-hour work week, though discussions of such a proposal date to the 1970s in UAW publications.
“Because of the sacrifices that we made in the past, the company’s in a position that it is now to make these record profits," said Jeremy Ladd, 47, who has worked for GM since the mid-1990s, first at the now-shuttered Lordstown Assembly Plant in Ohio, and now at the truck plant in Fort Wayne, Indiana. "Now it is time for equitability. It's time for us to have the fair share of what we sacrificed to bring them.”
Autoworker wages
The issue top of mind for many workers on the picket line was wages. Ford agreed to a 25% not-compounded wage increase through April 2028. With COLA, it's estimated to bring the current top production pay up more than 30% to more than $40 per hour from the current $32.32, according to the union.
The UAW didn't provide a year-by-year breakdown except to say that there would be an immediate 11% wage hike upon ratification. That alone would bring that max rate to about $35.87.
In the 2019 contract, autoworkers got 3% raises in two of the years and 4% lump sums in the other two. Full-time workers, however, did receive a $9,000 signing bonus that year.
The UAW's original request was for a 46% compounded wage increase (40% not-compounded). That broke down to a 20% immediate wage increase upon ratification, and 5% additional wage increases over the next four years. That would've brought the max wage to $47.14 per hour before the end of 2027.
Randy Harvard, a quality driver at Stellantis' Sterling Heights Assembly Plant in Michigan, has worked for the company for 36 years. Rising costs in recent years, he said, are hard on families.
"We pay $36 for two steaks," said Harvard, 66. "You've got a family of four; you've got to split the steak. And that's still not enough."
In the 1980s and '90s, autoworkers generally received wage increases annually between 2.25% to 3% or lump-sum bonuses of a similar size. The contract in 2003 marked the first agreement with a two-year base wage freeze, followed by a four-year wage freeze in the 2007 contract, which instituted "the second tier." Workers hired after ratification started at about half of what legacy workers were making and didn't have a pension, retirement health care coverage or, at the time, the same health care benefits.
The top wage then at GM for those legacy workers was $28.69 per hour and $28.12 at Ford, which would be $42.10 and $41.27, respectively, today when adjusted for inflation. That year, the union and automakers agreed to a four-year base wage freeze for legacy autoworkers, but ultimately, they wouldn't see a wage increase until the 2015 contract.
In 2019, UAW top-wage production earners received $30.46 per hour — $36.25 today adjusted for inflation. That means even with the immediate raise that production workers would see if they ratify Ford's agreement, top wage earners still would have less buying power than they had four years ago.
With some of the best health care coverage in the country and thousands of dollars in additional profit-sharing and bonuses, however, wages only represent a part of autoworkers' compensation.
Ford's total labor costs for an hourly worker in 2007 were $68.35 per hour, which was $100.31 in 2023 dollars. Last year, its hourly labor costs were $64 per hour ($66.54 this year), according to a Ford source, similar to the costs at its crosstown rivals.
An hourly labor cost hasn't been shared for the new Ford tentative agreement. Industry sources have said the union's original demands for the 46% wage increase, COLA, pensions and retirement health care coverage and more would've raised costs to more than $150 per hour.
The United Auto Workers' tentative agreement with Ford Motor Co. marks significant steps toward the Detroit-based union's stated goal of winning back concessions made during the automotive bankruptcies and Great Recession.
The record deal that would last through April 2028 would secure double-digit wage increases, hike starting pay, reintroduce cost-of-living adjustments, shorten the timeline to the top wage, and boost retirement contributions. The union's Ford council is expected to vote on the agreement on Sunday to send to the roughly 56,000 members employed by the Blue Oval for ratification.
Autoworkers' wages haven't kept up with inflation — a fact touted by the union and acknowledged by the automakers themselves. In previous negotiations to help the companies survive, the union gave up COLA, instituted an eight-year timeline to get to the top wage and gave up pensions and retirement health care coverage in exchange for 401(k)s for employees hired after 2007.
Workers say they want and deserve those items back, though the companies have warned they can't go back to pre-bankruptcy labor costs, or else they won't be able to compete with nonunionized manufacturers.
"It’s really good compared to the other contracts I've been a part of," said Brittany Eason, 38, of Romulus, a 12-year UAW member who works as a team leader at Ford's Michigan Assembly Plant in Wayne. "The strike has lasted long, but it's OK because we were fighting for what we believe in.
"It's partially there," she continued about the gains. "This is Shawn Fain's first time. He may not be able to sweep everything through. They succeeded on some points. They've been fighting for COLA as long as I've been there. It’ll help build our economy."
Ultimately, she hopes the tentative agreement will allow her to give up her Instacart side hustle and accelerate her plans to get a food truck or brick-and-mortar space to expand her cooking and baking business. She currently works as an in-home chef on the side.
UAW President Shawn Fain had said he understood the union wouldn't get everything it wanted in one round — and it didn't in the Ford deal, even though there is more value for members in each individual year of it than the entirety of the 2019 agreement, according to the union.
"For months, we've said record profits mean record contracts," Fain said in a video announcing the agreement. "And UAW family, our stand-up strike has delivered."
Following years of major profits, an employment rate below 4%, high rates of inflation and an EV transition that represents significant uncertainty, the environment was a perfect storm to make some big moves in pursuit of its demands.
"A couple of the companies already have revised production plans for EVs downward," said Marick Masters, a management professor at Wayne State University. "The growth and demand for it is unclear, certainly. It doesn’t appear to be as profitable. They may very well be in a difficult situation four years from now where they might not get anything. That’s got to be the fear."
The union announced the deal with Ford on Wednesday, the 41st day of its unprecedented simultaneous strike against the Detroit Three. At Ford, it had directed workers to walk out of the Bronco and Ranger Michigan Assembly Plant in Wayne on Sept. 15, Explorer and Lincoln Aviator plant in Chicago on Sept. 29 and the Super Duty, Expedition and Lincoln Navigator plant in Louisville, Kentucky, on Oct. 11. The union sent those workers home after announcing the tentative agreement to keep up pressure on General Motors Co. and Stellantis NV.
In a statement on Wednesday, Ford said it was pleased to have reached the deal, and it was working to return its 20,000 employees affected by the strike back to work. It declined to characterize the specifics of the contract.
The UAW, in previous talks, had bargained back some concessions. Full-time workers hired after 2007 have the same health care coverage while employed as legacy workers do. Lost holiday and legal aid benefits returned in 2015. Additionally, new and improved benefits in previous contracts included better health care coverage, stronger, uncapped profit-sharing formulas and full-time conversion commitments for temporary workers at GM and Ford.
Perhaps the biggest miss for the union was the hope to extend pensions and health care coverage in retirement to all autoworkers. Workers hired after 2007 have 401(k)s. The request alone would have cost the companies billions of dollars, according to analysts. Ford agreed on improvements for current retirees, workers with pensions and those who have 401(k) plans.
"It isn’t a surprise," said Cindy Schipani, a business law professor at the University of Michigan. "That gets to be so expensive and so unpredictable. It sounds like a fair settlement.
“It’s not everything," she continued. "I don’t think the auto companies could give back what was lost. Look what happened. They went into bankruptcy. They can’t set themselves up to have a repeat of the disasters of the past. It does make sense to give more right now, especially in light of what CEO and executive pay looks like.”
The union also didn't win back the jobs bank, one of the policies blamed during the bankruptcies at General Motors Corp. and Chrysler LLC. It envisioned the Working Family Protection Program to pay laid-off workers to do community service in the event of a plant shutting down. The UAW, however, did get the right to strike over plant closures for the first time. Ford previously said it had committed product to each of its U.S. plants.
The union did get back COLA as it was in 2009 when it was suspended. It also returned the timetable to get to the top wage to three years, where it was until 2007, down from eight. It originally sought 90 days, the length of time it was until the mid-'90s.
There are issues unique to 2023 compared to previous negotiation years. Namely, the union wants to see workers at new electric-vehicle battery plants included in its master agreement with the automakers, receiving at least the same pay, benefits and protections as workers in assembly and powertrain plants. GM has offered to include Ultium Cells LLC battery plant workers in its master agreement, though details of that arrangement haven't been shared.
It's unclear where this issue stands in the Ford deal. The automaker doesn't have a battery plant up and running yet, let alone one with an organized workforce.
Some UAW demands also went beyond what it has ever had. It ended up withdrawing its request for a 32-hour work week, though discussions of such a proposal date to the 1970s in UAW publications.
“Because of the sacrifices that we made in the past, the company’s in a position that it is now to make these record profits," said Jeremy Ladd, 47, who has worked for GM since the mid-1990s, first at the now-shuttered Lordstown Assembly Plant in Ohio, and now at the truck plant in Fort Wayne, Indiana. "Now it is time for equitability. It's time for us to have the fair share of what we sacrificed to bring them.”
Autoworker wages
The issue top of mind for many workers on the picket line was wages. Ford agreed to a 25% not-compounded wage increase through April 2028. With COLA, it's estimated to bring the current top production pay up more than 30% to more than $40 per hour from the current $32.32, according to the union.
The UAW didn't provide a year-by-year breakdown except to say that there would be an immediate 11% wage hike upon ratification. That alone would bring that max rate to about $35.87.
In the 2019 contract, autoworkers got 3% raises in two of the years and 4% lump sums in the other two. Full-time workers, however, did receive a $9,000 signing bonus that year.
The UAW's original request was for a 46% compounded wage increase (40% not-compounded). That broke down to a 20% immediate wage increase upon ratification, and 5% additional wage increases over the next four years. That would've brought the max wage to $47.14 per hour before the end of 2027.
Randy Harvard, a quality driver at Stellantis' Sterling Heights Assembly Plant in Michigan, has worked for the company for 36 years. Rising costs in recent years, he said, are hard on families.
"We pay $36 for two steaks," said Harvard, 66. "You've got a family of four; you've got to split the steak. And that's still not enough."
In the 1980s and '90s, autoworkers generally received wage increases annually between 2.25% to 3% or lump-sum bonuses of a similar size. The contract in 2003 marked the first agreement with a two-year base wage freeze, followed by a four-year wage freeze in the 2007 contract, which instituted "the second tier." Workers hired after ratification started at about half of what legacy workers were making and didn't have a pension, retirement health care coverage or, at the time, the same health care benefits.
The top wage then at GM for those legacy workers was $28.69 per hour and $28.12 at Ford, which would be $42.10 and $41.27, respectively, today when adjusted for inflation. That year, the union and automakers agreed to a four-year base wage freeze for legacy autoworkers, but ultimately, they wouldn't see a wage increase until the 2015 contract.
In 2019, UAW top-wage production earners received $30.46 per hour — $36.25 today adjusted for inflation. That means even with the immediate raise that production workers would see if they ratify Ford's agreement, top wage earners still would have less buying power than they had four years ago.
With some of the best health care coverage in the country and thousands of dollars in additional profit-sharing and bonuses, however, wages only represent a part of autoworkers' compensation.
Ford's total labor costs for an hourly worker in 2007 were $68.35 per hour, which was $100.31 in 2023 dollars. Last year, its hourly labor costs were $64 per hour ($66.54 this year), according to a Ford source, similar to the costs at its crosstown rivals.
An hourly labor cost hasn't been shared for the new Ford tentative agreement. Industry sources have said the union's original demands for the 46% wage increase, COLA, pensions and retirement health care coverage and more would've raised costs to more than $150 per hour.
CEO and president pay
A 25% wage increase at Ford would accomplish the union's goal of besting the compensation increase of its CEO over the past four years.
The union said it had derived its original request for a 40% not-compounded wage hike from a 40% average increase in Detroit Three CEO compensation since 2019. It's a figure pulled higher by Stellantis' CEO following a 2021 merger that nearly doubled the company's size.
“They’re absolutely rolling in the money," Fain said in a UAW strike campaign video on CEO compensation. "They’re competing for who gets the biggest executive compensation package."
Across industries, CEO compensation fell 14.8% year-over-year in 2022, though CEOs were paid 344 times as much as a typical worker in contrast to 1965 when they were paid 21 times as much, according to the Economic Policy Institute, a Washington, D.C., think tank.
"The CEO job is nothing like a rank-and-file job in terms of the types of stress, the responsibilities, and the risks are completely different," said Schipani, the UM business law professor. "But a company can’t claim they are poor if they are able to give the CEO that type of raise. Extraordinarily, the CEO-to-average-worker pay has only been going up. It shows there is money there."
Ford
At Ford, total CEO compensation rose 21% between 2019 and 2022. CEO Jim Farley last year received a package valued at $21 million ($21.8 million today). That included a $1.7 million base salary ($1.8 million today).
In 2019, then-CEO Jim Hackett made $17.36 million in total compensation, or $20.66 million today. His base salary of $1.8 million was $2.1 million with inflation today.
"Since 2019, Ford’s CEO salary is down 6%," Ford spokesperson Dan Barbossa said in an email. "Total CEO compensation is up 21%, not 40%."
Ford CEO Alan Mulally's compensation in 2007 beats both Farley and Hackett when inflation is factored in. He received $21.67 million — $31.8 million today. His salary was $2 million, or $2.9 million today.
GM
At GM, though, CEO Mary Barra's compensation rose 34% between 2019 and 2022. Last year, she received $28.97 million ($30.12 million in 2023 dollars) in total compensation. Her base salary was $2.1 million ($2.2 million in 2023).
That was her same base salary in 2019, which would be $2.5 million today. Her total compensation that year was $21.6 million ($25.7 million today).
When asked about her compensation last month by CNN, Barra said: “When you look at the overall structure and the fact that 92% (of Barra’s compensation) is based on performance, and you look at what we’ve been doing with sharing of the profitability (with UAW-represented workers) when the company does well, I think we have a very compelling offer on the table.”
In 2007, GM CEO Rick Wagoner received total compensation of $15.7 million, which would be around $23 million today. Wagoner's compensation included a $1.6 million salary, or around $2.3 million with inflation.
Stellantis
Chrysler LLC split from DaimlerChrysler in 2007. Under majority owner private equity firm Cerberus Capital Management, Chrysler was private and didn't need to disclose publicly its CEO compensation, though it was reported widely that CEO Robert Nardelli's annual salary was $1, or $1.47 today. It, however, wasn't clear if Nardelli had received other income from Cerberus.
In 2006, Tom LaSorda, Chrysler president and CEO, had collected compensation of $3.175 million ($4.79 million today), including a $946,000 salary ($1.428 million today).
Following a bankruptcy and tie-up with Fiat SpA, Fiat Chrysler Automobiles NV CEO Mike Manley in 2019 received a remuneration package of $14.4 million, or $17.1 million today. His direct compensation that excluded retirement and fringe benefits was $12.46 million, or $14.83 million today. His base salary was $1.56 million, or $1.96 million today.
After FCA combined with French automaker Groupe PSA in 2021, Stellantis is now the fourth-largest automaker in the world by volume. The company recorded a 2022 compensation package for CEO Carlos Tavares totaling $24.8 million ($25.8 million today), which included stock grants that would only be vested based on future performance. That was 72% more than Manley's package in 2019 compared to a 64% increase in the company's annual revenue.
Tavares' cash and vested equity awards were $15.8 million ($16.4 million today), and his base salary was $2.11 million ($2.19 million today). Shareholders approved Tavares' compensation in April with more than 80% support.
In a statement, spokesperson Shawn Morgan noted that Stellantis last year achieved a record adjusted operating income margin of 13% that was among the best in the industry and resulted in $2.1 billion in payouts to workers around the globe.
"Both employees and shareholders depend on senior management, in particular the CEO, to successfully integrate a large, global merger and set forth a strategic direction for the ongoing company’s sustainability and future," Morgan said. "The annual remuneration report requires Stellantis to value the equity based on accounting costs, not received.
"Finally, it is important to underline that Stellantis’ executive compensation program is driven by performance — 90% linked to (key performance indicators) and reflects competitive market-based practices. When considering company performance, the total compensation of our CEO is competitively aligned with other CEOs in our peer group, which consists of a selected list of 12 U.S. and 12 European companies."
UAW president
Meanwhile, then-UAW President Ray Curry last year received $267,126 ($277,742 today), including his $219,996 salary ($228,739 today). Fain, an administrative representative in the Stellantis Department last year, received $160,130 ($166,494), including his $146,446 salary ($152,266 today).
The UAW’s president salary is listed at $206,676.77 in the union’s constitution, though a 3% increase supported by delegates for the international executive board members took effect in March. The hike brings the total to around $212,877. Fain was sworn in as the first directly elected international president on March 26.
The total articulated in the constitution would put Fain, who wore an "Eat the Rich" T-shirt during a Facebook livestream, in the top 10% of U.S. household incomes. In 2021, the 90th to 99th percentile averaged $167,639, according to EPI. Still, Fain's total is roughly 1% or less than the compensation packages of the Detroit Three CEOs.
In 2019, President Gary Jones received $340,539 in compensation ($405,314 today), including a $276,591 salary ($329,201). That compensation was 22% more than Curry's in 2022; however, Jones resigned Nov. 20, 2019, amid efforts by the International Executive Board to oust him over stealing member dues for personal luxuries, for which he has been convicted in federal court.
Rory Gamble took over from Jones after serving as vice president. He received $215,548 ($256,548 today) in compensation in 2019 for both roles, including a $197,600 salary ($235,185 today).
UAW President Ron Gettelfinger in 2007 received $163,075 in total compensation, which would be $239,323 in 2023. That included a $150,763 gross salary, which is $221,253 today.
Contract history
Wages are just one demand of the union. Here is a breakdown of what was gained and lost during previous auto talks.
2007: Second tier introduced
—Legacy workers saw a four-year base wage freeze
—Lump sums of 3% in the last three years of the contract
—Debut of the eight-year progression to the top wage for workers hired after the contracts were ratified. These workers became known as the "second tier." Starting pay was roughly half that of legacy workers, and the new hires weren't eligible for the same health care benefits, pensions or retirement health care coverage.
—Pension increase
—Independent UAW Retirees Medical Benefits Trusts created. The voluntary employees' beneficiary associations, or VEBAs, were funded by the companies but came under independent management starting in 2010.
—Companies closed eight plants, while product allocation was made to other plants
2009: Talks reopened at all three amid bankruptcies at GM and Chrysler
—Lump sums bargained in 2007 were suspended
—Cost-of-living adjustments were suspended
—The jobs bank program was suspended
—Legal aid benefits lost
—One holiday lost
—Buyouts and early retirement offers made
—VEBA cash commitments replaced with company equity
—Institution of strike moratorium until 2015
2011: Bargaining under strike moratorium
—Wage increases for the second year, but not for legacy workers
—Improvements in health-care coverage
—Improved profit-sharing formula
—Jobs bank was eliminated
—Buyouts for legacy workers
—Product commitments
2015: Legacy workers get a pay raise
—First pay increases for legacy workers since 2006 were 3% wage increases in the first and third years. The second tier also saw wage increases
—Four-percent lump sums in the second and fourth years
—Second tier health care coverage was brought to the equivalent of legacy workers at GM and Ford
—Lost holiday and legal aid benefits resumed
—COLA language cut in Ford and Chrysler agreements
—Plant and product investments
2019: GM workers strike for 40 days
—Legacy workers received 3% wage increases in the second and fourth years.
—Lump sums of 4% in the first and third years
—Full-time workers on payrolls upon ratification would be brought up to the top wage by the end of the four-year deal
—The second tier at FCA got health care parity with legacy workers
—Temporary employees at GM and Ford would become full-time workers after two years, while they received preferential hiring treatment at FCA
—Legacy worker buyouts
—Plant and product investments
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