UNION WORKERS SCORE BIG PAY GAINS AS LABOUR ACTION SWEEPS U.S. / THE FINANCIAL TIMES

Union workers score big pay gains as labour action sweeps US

UAW’s tentative deal with Ford is latest to reflect revived power at the negotiating table

Eva Xiao and Taylor Nicole Rogers in New York 

Aya Konishi, a teaching assistant at the University of California Los Angeles, won a more than 50% pay increase under her new union contract © Allison Zaucha/FT

The United Auto Workers’ 57,000 members at Ford wrested a hefty pay rise from the US carmaker this week following a strike that squeezed its production and profitability.

Management agreed to a 25 pay rise over four years, including an immediate bump of 11 per cent, an offer far more generous than its initial bargaining position.

“We told Ford to pony up and they did,” said UAW president Shawn Fain. 

“We won things nobody thought was possible.”

The UAW’s victory at Ford is part of a trend towards higher wage growth among unionised workers in the US over the past year. 

Employers from airlines to freight railroads have agreed to new contracts with headline-grabbing pay increases. 

The gains come amid a resurgence of labour action in the wake of the pandemic.

Year-on-year wage growth for union members reached 4.6 per cent in the second quarter, according to the Bureau of Labor Statistics, catching up with higher pay rises that non-union workers had enjoyed since 2021.

For union contracts ratified in the first two quarters of this year, first-year pay increases were especially strong at 7 and 6.1 per cent, respectively, according to Bloomberg Law. 

The average increase over the preceding 10 years was 3 per cent, records compiled by the legal research platform showed.

The data, based on wage information from 425 contracts analysed by Bloomberg Law, provide an incomplete picture as companies are not required to make their agreements public. 

But they offer a snapshot of how workers have been able to command higher wages in the US’s post-pandemic economy.

“Since the economic shutdown of 2020, [workers] have realised the power that they have at the negotiating table,” said Robert Combs, a legal analyst at Bloomberg Law.

In August, the Teamsters union, representing 340,000 workers at delivery group UPS, ratified a deal that bumped up the average driver’s pay and benefits package to $170,000 a year from $145,000.

“I have not seen this type of increase in raw pay in many, many years,” said Scott Gove, a UPS driver in Manchester, New Hampshire who has been with the company for 35 years.

The boost rewards workers’ efforts during Covid-19 lockdowns, added Gove, who plans to use the extra money to pay for his children’s college tuition. 

“Delivery people were left out of the profits the company made during the pandemic.”

Shares of UPS fell 5.9 per cent on Thursday after it cut 2023 profit margin guidance for reasons including costs from the new labour agreement. 

“Recall that we had $500mn of expense related to our Teamster contract in the third quarter,” chief executive Carol Tomé told analysts.

She added, however, that with nearly half the cost of the five-year contract to be recorded in year one, “the margin is going to grow”.

Ford said the UAW strike had cost it $1.3bn in operating earnings and prevented it from manufacturing 80,000 vehicles. 

The strike continues against the other two Detroit carmakers, General Motors and Stellantis.

Workers picketed outside Ford’s Kentucky truck plant this month © Michael Swensen/Getty Images

Conditions for labour organising are “more favourable than anytime in decades”, said Aaron Sojourner, an economist at the W E Upjohn Institute for Employment Research. 

“The economics, culture, public opinion, and politics are sort of all aligned to make this moment.”

Public approval of unions climbed from a low of 48 per cent in 2009 to 71 per cent last year, according to a Gallup poll published in August. 

That fell to 67 per cent this year, but remained above long-term averages. 

The poll further found that more than three-quarters of Americans believe unions mostly help rather than hurt union members, while a record high 47 per cent believe unions help rather than hurt non-union workers.

More unions, from auto workers to actors, have been going on strike. 

According to data collected by Bloomberg Law, 317 strikes kicked off last year — the highest number in nearly two decades, and more than 250 have been declared in 2023. 

The labour bureau, which only tracks strikes involving 1,000 employees or more, shows the number of such large work stoppages is returning to pre-pandemic highs.

Several factors are at play, say economists, including a tight labour market that has strengthened workers’ leverage over employers. 

The pandemic was also a “wake-up call for how powerless workers have become”, said John Budd, a professor at the University of Minnesota.

Corporate leaders also continued to have “huge pay packages”, Budd noted. 

Profits remain at historically high levels, encouraging labour leaders to argue that employers can afford to pay more.

Inflation has also motivated workers to secure strong wage increases as the cost of living ate into their paycheques.

Aya Konishi, a sociology PhD student and teaching assistant at the University of California Los Angeles, struggled to afford groceries last year on her monthly salary of $2,600 before taxes. 

Konishi was one of 48,000 academic workers across nine University of California campuses who participated in a six-week strike after contract negotiations with the university fell apart.

“We just wanted to be able to lead a dignified life while we are researching at the University of California,” said Konishi, who is represented by the UAW.

Now that her union’s new contract has gone into effect, she makes $4,000 a month.

The past year’s high-profile union wins come amid decades-long declines in both union membership and wage premiums typically enjoyed by union workers over non-union counterparts. 

But the latter reversed slightly in 2022, according to an analysis of data from 1973 to 2022 by economists at Trinity University and Georgia State University.

From a peak of 23.5 per cent in 1994, the overall wage advantage across different sectors was 12.1 per cent in 2022, a drop that the economists attributed to “declining union density within industries and occupations”.

In heavily unionised industries such as aviation, workers are reaping the benefits. 

Nearly 15,000 Delta Air Lines pilots threatened to strike earlier this year, then secured a new contract with wage gains of 34 per cent over four years. 

The industry has struggled with a shortage of pilots since travel rebounded from the Covid crisis.

“This is a great time to be an airline pilot and a unionised employee,” said Jason Ambrosi, a Delta captain and the president of the Air Line Pilots Association union.