- If You Thought Strike Was Bad for GM, Look at Ford and Chrysler
- New Faces
- Sparser Signing Bonuses
- Costly Care
- Temp Compromise
- Why Organized Labor Struggles in the American South
- A Long History of Anti-Union Sentiments in the South
- The Enduring Politics of an Anti-Union Generation
- The Legacy of Slavery and Institutional Racism
- Long-Standing Pride at Being a Union-Free Zone
- Political Forces Keep Defeating Union Drives in the South
- 3 Strategies for Unions to Break Through in the South
- Focus on the Groundwork of Starting a Movement to Unionize
- Appeal to Younger Workers
- Capitalize on the Momentum of the Recent UAW-GM Strikes
If You Thought Strike Was Bad for GM, Look at Ford and Chrysler
Spencer Platt/Getty Images
The outcome of the UAW strike on GM will have big implications on labor negotiations at its main American competitors, Ford and Chrysler.
There are plenty of puts and takes in the tentative deal the United Auto Workers struck with General Motors Co. (IW500/5) this week, but this much looks clear: Detroit carmakers dealing with already-higher labor costs than their international foes risk becoming even less competitive.
GM’s labor costs will rise $100 million a year just due to the increases in worker pay, which “could be an even bigger headwind” for Ford Motor Co.
(IW500/3) and Fiat Chrysler Automobiles, according to RBC Capital Markets analyst Joe Spak.
And that doesn’t even account for the cost of continuing the union’s generous health care coverage — a tab Ford expects to rise above $1 billion next year.
“The economics of the deal look really attractive for the GM workers,” said Colin Lightbody, a former labor negotiator for Fiat Chrysler who’s now a consultant in Windsor, Canada. “This agreement will increase the competitive labor cost gap.”
GM’s average hourly labor costs — including wages, benefits and other expenses — were already about $13 above what international automakers such as Toyota Motor Corp. and Honda Motor Co. pay workers at their U.S. plants, according to the Center for Automotive Research. Ford’s costs are $11 an hour higher, while Fiat Chrysler pays a $5 premium.
The UAW will begin the process of ratifying its proposed contract with GM on Saturday, with workers casting ballots at locals across the country through Oct. 25.
Assuming the deal goes through, the union will turn its attention to either Ford or Fiat Chrysler next.
While the two companies will look for ways to tailor an agreement to their unique needs, the union will seek to broadly follow the economic pattern established by the pact with GM.
GM is seeking to offset wage concessions with buyouts of higher-cost production workers. It’s offering $60,000 early retirement payouts to as many as 2,060 employees.
Even if overall labor costs still go higher, it may be worthwhile as long as the automakers’ deals with the union give them room to maneuver on where models are manufactured and when output needs to be curtailed.
“They got the ability to continue to run the company without the union telling them what they can produce and where,” said Art Schwartz, a former GM labor negotiator who is now a consultant in Ann Arbor, Michigan.
Ford’s bargaining team is ly going to understand that concessions are “part of doing business” with the UAW, said Arthur Wheaton, director of the Worker Institute at Cornell University.
“The wild card is Fiat Chrysler, because it’s all new people at the bargaining table,” he said.
Fiat Chrysler Chief Executive Officer Sergio Marchionne, who died last year, played an important role in past contract talks with the UAW. Other key negotiators for the company and the union have retired or been implicated in an ongoing corruption scandal.
Sparser Signing Bonuses
There’s no desire at Ford or Fiat Chrysler to stomach a strike of the sort UAW has staged at GM. That walkout will last almost 40 days if GM’s 48,000 workers ratify the proposed pact next week.
The UAW issued statements earlier this month citing progress they were making with Ford and Fiat Chrysler while the GM deal was being hammered out.
Should the two companies succeed in avoiding a strike, they might save some money by paying smaller signing bonuses — they wouldn’t have to essentially compensate workers for wages lost during a walkout, as GM is doing with its record $11,000 ratification reward.
Four years ago, Fiat Chrysler went first in negotiations and paid roughly half the signing bonus of its rivals. Now that the company is more financially fit, it’s unly to get away with as big of a discount.
“I can’t see the UAW allowing FCA to go down 50% anymore, because their margins are pretty good now,” Lightbody said. “They’re gotten close to GM and Ford.”
Health care remains the most intractable cost as it reaches record levels of more than $20,000 a year for family coverage, according to a study by the Kaiser Family Foundation.
While the average American worker contributes 30% of the premium for family coverage, UAW members pay for just 3% or 4% of their insurance plans, according to the automakers.
During bargaining, GM quickly rescinded a request to have workers cover 15% of their medical coverage and have left it to others to cut that cost. The UAW zealously defends its health care benefits, viewing them as compensation for giving up raises and jobs for years as the Detroit carmakers struggled to survive.
Another concession the UAW won from GM is on the use and treatment of temporary workers, who’ve populated plants in greater numbers since GM and Chrysler reorganized in government-sponsored bankruptcies in 2009. They now represent almost 10% of the roughly 150,000 unionized workers at the Detroit Three.
GM agreed to give temps a path to permanent employment and more vacation days, and the highlights of the automaker’s agreement states the UAW will have stronger oversight over their use. While it’s possible the company negotiated wiggle room in this regard to keep a steady stream of at-will cheap labor on hand, the fine print of the proposed agreement hasn’t been made public.
The cost of this compromise could fall hardest on Fiat Chrysler, which has the most temporary workers, Wheaton said. In the end, though, both Fiat Chrysler and Ford are ly to settle for paying a little more than planned rather than risk disrupting the flow of fresh models into a shrinking U.S. auto market. Labor only accounts for 5% of the cost of a car, Wheaton said.
“When you’re fighting over only 5% of the cost, you have to ask yourself: ‘Why are we doing this?’” Wheaton said. “Why risk a billion to save $100,000?”
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The drop of 97,000 from the prior's week's upwardly revised figure was much better than analysts forecast.
New filings for regular unemployment benefits in the United States dropped to 684,000 last week, the government said Thursday, their first reading below 700,000 since the pandemic sparked mass layoffs.
The drop of 97,000 from the prior's week's upwardly revised figure was much better than analysts forecast and comes as COVID-19 vaccinations offer hope the economy can recover this year.
But, in a sign of the virus's ongoing toll, 241,745 new claims were received in the week ended March 20 under a special program for freelance workers, the Labor Department said.
That was nonetheless nearly 42,000 less than the week before, and though analysts acknowledged the crisis is far from over, the economy may finally be on the path to a sustained decline in joblessness.
“We're guessing that each week sees some firms either downsizing further or throwing in the towel, unable to hang on until the economy reopens,” Ian Shepherdson of Pantheon Macroeconomics said.
“This gradual attrition should not last much longer; we expect claims to fall sharply as the economy reopens fully across the second quarter.”
Regular claims nonetheless remained above the worst level of the 2008-2010 global financial crisis more than a year into the pandemic, and totaled 925,745 last week if those filed under the Pandemic Unemployment Assistance program for gig workers are included.
As of the week ended March 6, the latest for which data was available, almost 19 million people were receiving some form of aid, the data said.
The data also showed continuing claims, meaning people actually receiving benefits, dropping 264,000 in the week ended March 13 to nearly 3.9 million, and the four-week average of claims dropped 137,250 to nearly 4.1 million.
“Progress in jobs recovery is assured over coming months on wider vaccine distribution and a resumption of more normal business operations, especially in the COVID-sensitive service sector, which will bring back jobs,” Rubeela Farooqi of High Frequency Economics said.
However, she warned that the recovery could be lengthy, “given permanent job loss from business closures and a shift to technology could be constraints in a post-pandemic economy.”
Copyright Agence France-Presse, 2021
Why Organized Labor Struggles in the American South
Ken Green CEO/Founder
Union membership in the American South is half that of the national average. That’s according to data from the Bureau of Labor Statistics, which shows that only 5 five percent of Southern workers belong to a union.
While unions fight an uphill battle to increase membership across the United States, nowhere have they struggled to build support more than in the Southern states. Many have tried, and many have failed, to organize workers at workplaces throughout the South.
Recent unsuccessful, high-profile union drives at Nissan, Boeing and Volkswagen facilities have left labor unions frustrated at their inability to break through with workers in the region.
These votes continue to show “how incredibly hard it is to organize both in the South and at international firms,” says Kristin Dziczek, vice president of the Center for Automotive Research.
Why are unions continuing to fail to organize workers in the South? And how can unions break through these barriers to organize workplaces in the region?
A Long History of Anti-Union Sentiments in the South
There are a number of political and social reasons why workers in the South, in general, continue to reject unionization.
The Enduring Politics of an Anti-Union Generation
While the political intricacies that have long divided the North and the South are too deep to dive into here, it would be irresponsible not to mention the political beginnings of an anti-union South.
William Domhoff, distinguished professor emeritus and research professor at the University of California, Santa Cruz, details the political machinations of the Southern Democrats who set the South on an anti-union path. Domhoff explains that throughout the early 20th Century, organized labor was gaining power in the Northern states, which were growing more industrial.
Many Southerners saw industrialization and labor organization as a threat to their agricultural way of life. So, political leaders in the South used their power to ensure that unions couldn’t establish themselves in the region. That legacy of Southern agriculture vs. Northern industry continues to influence Southern workers’ opinions of labor unions and organization.
Domhoff also explains how the South’s union antagonism has roots in anti-civil rights sentiments, and the Southern Strategy that Republicans deployed in the mid-20th Century to seize power in Southern states by exploiting racial tensions.
The Legacy of Slavery and Institutional Racism
Racism has deep roots in the South, and the issue of race continues to play a role in the perceptions of labor unions.
Meagan Day, staff writer at Jacobin Magazine, explains that Southern employers have long taken advantage of racial divisions to pit workers against each other. When white workers would strike, companies would bring in black workers to replace them. This is how company executives would undercut any developing feelings of solidarity among workers.
Though maybe not to the same degree, many would argue that the idea of racial equality at work is still keeping workers from unionizing in the South. Unions operate under the premise of equal pay for equal work.
That hasn’t always been a universal truth in the South, where wealth and traditions were built by generations of slaves, and where Jim Crow ideas “have long undermined worker unity and infringed upon the ability of organized labor to stem falling worker wages and benefits,” as Calvin Schermerhorn, professor of history at Arizona State University, writes.
Race, not class solidarity, has historically been the primary unifier in the South, Schermerhorn writes.
Long-Standing Pride at Being a Union-Free Zone
After the United Automobile Workers (UAW) failed to win the union vote at the Volkswagen plant in Chattanooga, Tennessee, in 2014, former New York Times reporter Micheline Maynard surmised that one of the reasons unions were continuing to fail in the South was that the region brands itself as a union-free zone. She says Southern states court businesses with the message that they will keep unions industry.
That was the message from former South Carolina Governor Nikki Haley when Boeing workers tried to unionize in South Carolina in 2014. Speaking at an automotive conference, she said of unionization: “It’s not something we want to see happen. We discourage any companies that have unions from wanting to come to South Carolina because we don’t want to taint the water.”
Many Southern politicians, businesses and workers a are proud of the fact that they are anti-union. “We just don’t unions very much down here,” Volkswagen employee Mike Jarvis said after he and his coworkers defeated the 2014 unionization effort.
Political Forces Keep Defeating Union Drives in the South
Even in the face of these anti-union predispositions, unions continue to try to organize workers in the South because there is still a pro-union minority in the region. And labor needs their participation and their representation. To connect with these workers, however, labor leaders and organizers must overcome key roadblocks in this region.
One of the biggest blockades is the rise of right-to-work legislation. Data from World Population Review shows that all of the states in the Southern U.S. are right-to-work. This makes it especially difficult for unions to gain traction in a region that already has such a strong anti-union sentiment. The right-to-work laws limit the legal ability of unions to organize workplaces.
Anti-union campaigns by political leaders during a union drive have also been a roadblock for union organizers. For example, before the union vote at Volkswagen in Tennessee, the state’s governor, Bill Lee, took the unusual step of visiting the plant to discourage workers from voting for the union.
“It’s not unusual for governors and U.S. Senators to vociferously oppose unions in private companies,” says Daniel Cornfield, professor at Vanderbilt University, editor-in-chief of Work and Occupations, and a fellow at the Labor and Employment Relations Association. “What is unusual is this governor went inside the plant and directly talked to the workers.”
Interventions by politicians, such as those by former Governor Haley in South Carolina and Governor Lee in Tennessee, have proven to be difficult for union organizers to counter.
Company leadership has also been accused in nearly every failed unionization campaign of threatening the jobs of those who try to organize or vote to unionize. Unions have attempted to fight back with unfair labor practices lawsuits, as the UAW did ahead of the 2017 Nissan vote, but the lawsuits have had little effect on the outcomes of the votes.
But unions are trying, and some of their new strategies may help them be more successful in the future.
3 Strategies for Unions to Break Through in the South
Union organizers are finding new ways to garner support and win union drives in the South. Here are three strategies that labor leaders are making progress with among Southern workers.
Focus on the Groundwork of Starting a Movement to Unionize
The Southern Workers Assembly is “committed to building rank-and-file democratic social movement unionism as a foundation for organizing, uniting and transforming labor power throughout the South.” It is doing this by promoting the formation of minority unions, which lack collective bargaining power but can build collective support for unions in the South.
“Rebuilding the labor movement in the South is going to require us to get back to the basics of what a union is,” says Saladin Muhammad, cofounder of the Southern Workers Assembly. “A union is about workers building power through organization.”
By starting at the ground floor, union leaders and organizers are engaging workers in the labor movement by showing them how much power they could potentially exert as a collective.
Appeal to Younger Workers
In 2018, Brian Dew at the Center for Economic and Policy Research reported that 75 percent of new union members in 2017 were under the age of 35. Another poll by Gallup in 2018 showed that 66 percent of workers between the ages of 18 and 34 approve of labor unions, more than any other age group.
This pro-union sentiment of millennial and Gen Z workers presents unions with an opportunity for growth, especially in areas the South where organizing is difficult.
The trick will be figuring out how to appeal to those younger workers, says Zane Dalal, executive vice president of the union benefits administrator Benefits Program Administration. “Millennials are incredibly adaptable, and people think of them as this sort of vague group, yet they are activists, and they’re incredibly sure of what they want,” Dalal notes.
And they are ready to get involved. Efforts those of the Service Employees International Union’s (SEIU) youth-focused recruitment program show that programs targeting younger workers “are paying off and that young people are a key part of creating a strong and sustainable future for unions,” notes former UCLA Labor Study researcher Hugo Romero.
By appealing to younger workers at Southern workplaces, unions may be better able to rally support and win union drives.
Capitalize on the Momentum of the Recent UAW-GM Strikes
Mike Elk, cofounder of union advocacy and news site Payday Report, posits that the recent UAW-GM strike victories for workers could be an inspiration to workers in the South to fight harder to organize.
Elk spoke with union activists at the Volkswagen plant who say that workers who voted against the union are asking more questions about what unions and strikes can do after they saw how much support the GM strikers received.
“Seeing the UAW workers fight back against GM, it opens their eyes a little bit because they don’t realize the power you have as a labor if you withhold labor,” says Billy Quigg, a union leader at the Volkswagen plant in Chattanooga.
Quigg continues: “One of the best things about it is to see all the anti-union points and all the points they’ve always made and seeing how you are able to show, point-blank, these are lies, they are all false, and they are all there to scare you. So all the talking points that anti-union groups use are being debunked right in front of workers’ eyes by this strike.”
Perhaps this could be the event that compels workers in the South to rethink unionizing as a means to better pay and working conditions.
Union leaders can’t necessarily take the same approach to organizing Southern workers as they do in other regions. Organizers who take the time to develop new strategies for connecting with workers in the South stand a better chance of succeeding in their future union drives.
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