At Work

UAW contract and the middle class

Following is the text of a New York Times editorial 10/26/2015, read it and you might conclude this contract is a breakthrough of some kind, that the wage agreement sets a new milestone. In fact, it amounts to an annual average wage increase of about 1.7%. The average survey reported planned salary increases for 2016 is between 3% and slightly over 4% depending on industry and type of work. 

The op-Ed also says “The new contract implicitly defines $30 an hour as a decent middle-class wage.”  Actually, when you add in the benefits and other perks these workers will earn more like $75-80,000 a year. 

Does higher pay, especially via a $15.00 minimum wage, create a higher living standard? Perhaps; if you believe rising wages have no impact on inflation and hence prices. 

What’s your opinion?

The nearly one million people who work in the auto industry in the United States may soon be getting a nice raise. The United Automobile Workers and Fiat Chrysler have reached a new contract for the company’s 40,000 workers. Under the deal — which will be a template for talks with Ford Motor and General Motors — the hourly pay of veteran workers will rise from $28 to almost $30 over four years, while pay for new workers will rise from about $16 to $19 to about $29 over eight years. Non-union foreign carmakers in the United States and suppliers are now likely to feel pressure to move closer to the new industry standards.

Therein lies the real power in the new contract: It halts the long downward pull on wages in the auto industry that has persisted even as the industry recovered from the recession. In so doing, it reaffirms the power of unions to use the threat of a strike to demand a fairer share; U.A.W. members at Fiat Chrysler had rejected an initial contract and were ready to walk out, which could have slowed the company’s recent progress.

There are also broader lessons here for policy makers. The new contract implicitly defines $30 an hour as a decent middle-class wage. That is well above the recent average of $21.08 for most workers, but below the nearly $32 that would be the norm if wages had kept pace with net labor productivity in recent decades. Clearly, unions can lift middle-class wages to a point, but more needs to be done. Higher federal spending on necessary public projects would lift pay by creating jobs; stricter laws on worker classification would ensure that employees are not wrongly denied overtime and benefits. In general, Democrats support such proposals, Republicans don’t.

Equally important, efforts to raise the median wage would strengthen the case for a federal minimum wage of $15. Opponents argue that $15 is not feasible with the average in the low $20s. But if steps are taken to raise middle-class wages to at least $30, a minimum of $15, phased in, would be feasible. Politicians need to follow where the autoworkers are trying to lead: Toward a future of higher pay and rising living standards.


1 reply »

  1. Apparently this contract fight was over the two tier pay scale. Although with 0.0% inflation for the last 12 months any raise is great but I wonder, at about 50 cents an hour raise I wonder how much more per pay check they have to pay for health insurance. I am sure it is still a net loss for take home pay. Yes the overall compensation may be more but the real buying power of the workers wages is probably still going down. The economy which is so dependent on consumer spending is not going to improve very fast with raises like that. I think that this is not just a UAW issue either.

    I am sure that the union is offered at least one Cadillac health plan so I am sure that 50 cents is not going to make up for the tax that they are facing.

    Now that I think about it, I am sure they have a Cadillac health plan since they make Cadillacs don’t they. (Sorry, I could let that one pass.)


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