Ford, UAW Reach Tentative Labor Agreement

Improve the News Foundation -

Facts

  • The United Auto Workers (UAW) union and Ford Motor Company reached a tentative labor agreement Wednesday night, potentially ending the six-week auto workers' strike — the longest of its kind in 25 years — if a majority of Ford's 57K union members ratify the deal.1
  • The deal will reportedly see wages raised by 25% over the next four-and-a-half years to a top pay of $40 per hour, includes an immediate 11% pay bump, and improves retirement benefits for current retirees, workers with pensions, and those with 401(k) plans.2
  • If passed, workers will further receive cost-of-living adjustments to protect wages against inflation, a benefit the company had suspended in 2009. Temporary workers, too, are expected to see pay bumps of more than 150% over the course of the contract. Ford originally offered a 9% pay bump compared to the union's 40% bump request.3
  • JP Morgan estimates the deal would add roughly $1.5B to Ford's annual labor costs, or about 13% of its global operating profit, with its per-hour labor costs immediately reaching $67 and then $88 by the contract's end — higher than Tesla's estimated $45-$50 an hour.3
  • The strike, which includes workers from General Motors (GM) and Stellantis, saw 45K walk out, including 8.7K from Ford's largest plant in Louisville, Ky., and almost 10K from its plants in Illinois and Michigan. More recently, 6.8K Stellantis workers walked out from a factory in Michigan on Monday and 5K GM workers walked out from a plant in Texas.4
  • UAW Vice President Chuck Browning has urged all Ford union members to go back to work, with a vote reportedly expected Sunday on whether to send the deal to the membership for approval. Meanwhile, Stellantis and GM have yet to come to an agreement.2

Sources: 1Forbes, 2CBS, 3The Wall Street Journal and 4The New York Times.

Narratives

  • Narrative A, as provided by Washington Post. This agreement is more than generous, given that the UAW's original demand of 40% would have doubled Ford's labor costs and crushed their competition with foreign companies. While it's true that workers deserve fair pay while their bosses make millions of dollars, it's wrong to make a direct comparison between the thousands of factory workers and the far smaller number of executives. If GM's CEO were to give her entire $29M salary to every worker, for example, it would only add pennies to each rank-and-file worker's paycheck.
  • Narrative B, as provided by NPR Online News. Dividing a CEO's million-dollar salary by the number of employees is a nice gimmick, but it doesn't touch the heart of the issue at hand. The truth is that these three car companies made a combined $21B in profit in just the first half of this year. Meanwhile, first-time workers would likely have to be paid $25 per hour to have the same buying power that less than $10 dollars did in the early 1990s. While an agreement is good news, it shouldn't be forgotten that, given the impact of inflation in recent years, the UAW's original demand was actually quite fair.

Predictions