Four key issues in the UAW-Detroit 3 contract talks

DETROIT — The past several rounds of UAW contract negotiations with the Detroit 3 have given workers incremental raises, moderately improved benefits and job commitments from automakers looking to lock in future product plans.

This year, however, the UAW is seeking nothing short of wholesale changes to pay structures and work schedules that would redistribute corporate wealth and reset the standard of living for roughly 150,000 blue-collar employees.

The union's first-year president, Shawn Fain, says he's determined not only to claw back concessions made in 2009 during the financial crisis, but also to establish new employee protections born from a pandemic-era shift in thinking around work-life balance. He's demanding raises that are more than seven times what the union won in 2019, a 32-hour workweek at 40 hours' pay and a host of other gains.

Part of the union's aggressiveness stems from what Fain views as a failure of past leaders — two of whom were imprisoned for embezzlement as part of a wide-reaching corruption scandal — to push the automakers for more amid a prolonged period of high profits.

"It's unfortunate that our leaders in '15 and '19 didn't pursue the things they should have, such as getting cost-of-living reinstated and more equitable wage increases, but this is our time," Fain told Automotive News. "The economy is right, the profits have been through the roof for over a decade, and our members deserve their fair share. This leadership is willing to fight for it alongside the membership."

Marick Masters, a labor expert and professor at Wayne State University, says the union is trying to change the narrative since the Great Recession that its members must sacrifice to keep the automakers financially viable.

"They're moving toward the notion that workers don't need to apologize and shouldn't be bashful about asking for more," he said.

The UAW's fight for new contracts with General Motors, Ford Motor Co. and Stellantis is likely to come down to a handful of key economic issues, including the automakers' tiered wage system, their use of temporary workers, cost-of-living adjustments and reinstatement of pensions.

The UAW in 2007 agreed to implement a two-tier wage system as a means of saving the automakers money by creating a lower pay scale for new hires without reducing legacy workers' paychecks. Today, the earnings gap between an entry-level employee and a top earner is roughly $14 per hour.

In 2015, the union and Detroit 3 negotiated an eight-year grow-in period for new full-time workers to reach top wages. It was hailed at the time as a way to eventually end the tier system.

In 2019, further progress was made, as the union got the path to four years for workers hired before that point to reach top wages.

Now, the union wants to put everyone on the same scale again.

Before the two-tier system, it took workers three years to reach top pay. In the 1960s and 1970s, it took just 90 days, a time frame Fain said he'd like to return to.

"That's the target," he told Automotive News in July. "We have to get back to setting the standard. Everybody in there does the same work. It shouldn't take eight years to understand how to do that work or how to get there."

A vast majority of Detroit 3 hourly workers will be making top wages by September because of the 2019 contract.

Stellantis said 87 percent of its full-time work force will be making top wages by then, while Ford said 80 percent will be. GM's figure is believed to be above 70 percent.

There is some recent precedent for abolishing pay tiers that UAW bargainers could rely on in negotiations. Last month, a tentative deal between UPS and the Teamsters successfully eliminated a lower-paid tier of drivers. Union members are in the process of voting on that tentative agreement.

Another employee classification exists beneath the second tier: temporary workers. The union wants to end what it calls an "abuse" of temps, whom automakers use to cut costs and safeguard against absenteeism by full-time workers or to help during busy product launches. Temps often allow full-timers to take vacation or medical leave.

Ford employs about 1,700 temps, while Stellantis has around 5,160 and GM has between 2,300 and 4,600. Levels are much higher at foreign-based automakers, labor experts say.

UAW-represented temps make less than full-timers, starting at about $16 per hour instead of $18, and they receive lesser health care benefits. Still, they're eligible for some bonuses, as well as overtime and premiums for working weekends and holidays.

But working as a temp can be challenging. Schedules are never assured, and the companies in recent contracts have expanded the amount of time per week they can be used.

Fain has called for all current temporary workers to be immediately converted to full-time status and for them to make as much as regular workers.

"We have temporary workers working seven days a week, 12 hours a day, and have been for years," Fain said. "That's not temporary work, that's full-time work, and the company is robbing these workers of their fair share and their stake in this economy."

The union has held up Sara Schambers, a member of UAW Local 182 working at Ford's Livonia Transmission Plant, as an example of temporary worker abuse.

Schambers was mentioned in a Detroit Free Press op-ed in July written by UAW Vice President Chuck Browning, and she joined a recent livestream with Fain and U.S. Sen. Bernie Sanders, I-Vt.

Schambers, hired in 2006, was a temporary worker for six years before being hired full time.

"Being a temp, you can't start your life," Schambers told Fain and Sanders. "You don't know one day to the next. Can I have a family? Can I buy a house? I couldn't buy a car; I got denied by Ford Credit because I didn't have a history of a job."

But Schambers' experience as a temp could not happen today, at least at two of the three companies. In 2019, the union won a guarantee at Ford and GM that temporary workers must be converted to full-time status after two years. Stellantis does not have an automatic conversion timeline but takes into account hiring date when full-time positions open.

Additionally, the UAW got Ford to agree that temporary workers cannot exceed 8 percent of its total work force or 10 percent at any individual plant. No such cap exists at Stellantis or GM, but the union must approve any use of temporary workers, according to their 2019 contracts.

GM has converted about 6,000 temps since signing its 2019 deal, while Stellantis has converted about 5,100. Ford has converted more than 14,100.

The UAW is insistent on winning back cost-of-living adjustments, a benefit that was first bargained with GM in 1948 and elsewhere in the 1970s but eliminated in 2009.

The union argues that COLA is a guard against inflation, which soared the past few years, while the automakers believe it's an unnecessary structural cost that will be less relevant as inflation levels moderate.

Before 2009, workers would receive payments involving a calculation that accounted for increases to the Consumer Price Index. For example, GM workers in 2006 got about $4,000 total, or $1.93 an hour extra, from COLA.

Since COLA was eliminated, UAW workers have received larger profit-sharing payments, which are flexible and provide more to workers when the companies are financially stable. In 2022, workers earned a record $12,750 at GM, a record $14,760 at Stellantis and a near-record $9,176 at Ford.

In addition, workers at all three companies have received $1,500 in bonuses each year under the current contract.

Ford's deal refers to them as "inflation bonuses."

The companies have argued that under the current profit-sharing and bonus structure, workers have made more than they would have from COLA.

The union, meanwhile, says the companies can afford to restore the benefit on top of the other payouts. Before its elimination, workers received COLA as well as profit-sharing, although the formula for profit-sharing was less generous than it is today. And when COLA was eliminated, the companies were losing money, so workers did not receive any profit-sharing payouts.

The union is demanding that the Detroit 3 go back to offering all workers defined benefit pensions, which they did before the Great Recession.

A small percentage of workers hired before 2007 still qualify for pensions, including 30 percent of UAW members at Stellantis.

Labor experts say this could be among the union's most difficult demands to win. The Detroit 3's pension funds during the recession became undervalued by tens of billions of dollars, and it's a structural cost the companies have no interest in reinstating.

"It's going to be a long shot," said Art Wheaton, a labor expert at Cornell University.

Today, most workers receive a 401(k) with an employer contribution of up to 6.4 percent of their salary. For a top earner, that contribution would equal about $4,260 per year.

Proponents of the 401(k) system say employees can direct how their funds are invested and that, unlike with pensions, an employee can take their funds with them should they leave the company before reaching full retirement eligibility.

Still, the 401(k)s are less generous than the former pension plans, which allowed workers to retire after 30 years of service.

Those plans had two components: a primary monthly benefit — around $1,500 in 2006 at GM — as well as a supplement worth what each worker's Social Security benefit would be on the earliest date they could join. Once they began receiving Social Security payments, the supplemental distribution would stop. Large pension obligations can be a burden on corporations, Wheaton said. The U.S. Postal Service, he said, is largely unprofitable because of laws requiring it to fund pensions 10 years in advance.

"It's a big issue, and it's put some [organizations] in bankruptcy," he said. "Almost everywhere in the U.S. [companies have] moved away from pensions, so bringing them back is going to be a real tough sell."

Editor's note: Most UAW workers receive a 401(k) with an employer contribution of up to 6.4 percent of their salary. An earlier version of this story did not correctly identify this compensation as a contribution.