Today, Explained - Autoworkers slam the brakes

Episode Date: September 18, 2023

The United Auto Workers union is on strike at three different factories. We ask the Wall Street Journal's Nora Eckert what the union workers want, and management professor Marick Masters explains why the Detroit Big Three are reluctant to give it to them. This episode was produced by Jon Ehrens and Miles Bryan, edited by Miranda Kennedy, fact-checked by Amanda Lewellyn with help from Hady Mawajdeh and Amina Al-Sadi, engineered by Patrick Boyd and hosted by Noel King. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

Every once in a while you realize there are one or two things that our deeply divided country agrees on, or at least pretends to agree on. We've been thrust into one of those moments by the United Auto Workers strike. President Joe Biden is on the side of labor. Over generations, auto workers sacrificed so much to keep the industry alive and strong, especially through the economic crisis and the pandemic. Workers deserve a fair share of the benefits they helped create for an enterprise. Former and would-be-again President Trump sounds pretty much the same. The autoworkers are not going to have any jobs when you come right down to it, because if you take a look at what they're doing with electric cars, electric cars are going

to be made in China. The autoworkers are being sold down the river by their leadership, and their leadership should endorse Trump. Ahead on Today Explained, a strike becomes a sign of the times. The all-new FanDuel Sportsbook and Casino is bringing you more action than ever. Want more ways to follow your faves? Check out our new player prop tracking with real-time notifications. Or how about more ways to customize your casino page

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Now! Nora Eckert, I'm an auto reporter for The Wall Street Journal. I'm in Detroit, Michigan. There's a lot happening in Detroit. I'd say that there's a lot of energy and a lot of anxiety right now about the ongoing auto strike. What do the auto workers want? The auto workers want better quality of life, better pay, and more paid time off. So they've logged really long hours during the pandemic. A lot of them even worked through the bankruptcies during the Great Recession,

and they want to see some form of that back, whether in their wages or in their benefits. We are committed to winning an agreement with the big three that reflects the incredible sacrifice and contributions UAW members have made to these companies. We must show the companies you are ready to join the stand-up strike at a moment's notice. And we must show the world that our fight is a righteous fight. The union initially came out with a 40% pay increase demand. That's budged slightly as negotiations have continued, but we're right down to like the 35, mid-30s range now.

So a pretty significant wage increase, But the union actually looked at, they said, how the big three CEOs have dodged a similar pay increase over the last four years. You know, the CEOs gave themselves a 40% pay increase over the last four years. Our members deserve a hell of a lot better than where they are. We've went backwards in wages in the last decade. And they looked at how other unions have secured some pretty substantial double-digit pay increases outside of auto, and they arrived at this number. Okay, so they're saying the CEOs have gotten a 40% pay raise. We should get the same. What about with respect to benefits? So folks are really interested in more paid time off of work.

So not necessarily like a medical benefit, but for this, they wanted 32-hour work week for 40-hour pay. The UAW president, Sean Fain, has said, our workers have spent way too much time inside of these factories, and it's time that they have a little more of that space to spend with their families. The talking heads have lost their shit every time I talk about the 32-hour work week. But you know what? They and their coworkers were working from home all throughout the pandemic. And that's been very important for workers, just the sense that we need more time to ourselves.

Folks are also looking for retiree benefits, specifically improved retiree medical benefits. They're looking for the return of cost of living adjustments. This is sort of more along the lines of pay, but they're also looking to eliminate what they call the tier system, which is a system where newer workers start off making a lower wage and then grow into the top wage. So let me ask you this. How would you feel you come in and you make $15 an hour and they place you right next to someone making $31 an hour and you guys are doing the same job? That's a horrible feeling on both sides.

The union is saying these workers are doing the same job. They deserve the same pay. So they're looking to equalize that playing field. The union has framed this by saying, we'd like to go back to the way we were paid and the way we were treated before the financial crisis. Chad Favreau with UAW Local 598, which services Flint Assembly, says this negotiation stems from the 2008 recession, when automakers were bankrupt and UAW workers made concessions to help.

How do these asks compare to the wages and benefits of the time before the financial crisis? Is this essentially just going back to normal because the companies are now out of trouble, their stock price is doing well, their CEOs are well paid? Is this just kind of like a return to the golden age? The union has said, we don't want concessions. We want to return to that level where we were before the financial crisis. But they didn't have a 32-hour workweek for 40-hour pay at that period, too. So I think it's fair to say that these demands return them to the level they were at pre-financial crisis. But there's some added asks on top of that baseline. Certainly, when you think about pay, the union has said, we're just trying to account for inflation over the last few years, that the peer wages that we're earning now are much less than we earned decades ago because they

haven't accounted for inflation appropriately. So in that respect, they are looking to return to what they earned in the past. But there are some really interesting new demands that they're putting on the table that reflect sort of the labor movement's evolving conversation around work-life balance and how life on the job should look. What you're describing are negotiation tactics. Yes. It seems as though the union does not think it's going to get all of these demands met. And it seems as though the big three know there are certain places where they will have to give in, but they won't have to give in to everything. You wrote that the UAW strike strategy

is start small and keep them guessing. What does that mean? What does that look like? Yeah, so we're seeing this really unusual strike strategy for the UAW. It might not be unusual when you look at tactics that other unions across different industries have used. But for the union, this is really a departure from their traditional pick one company as the target and strike all the workers there. So what Sean Fain and his team have developed is this tactic where they take out specific plants at each automaker. We are using a new strategy, the stand-up strike. And let's just say as a baseline, the union hasn't had strikes at all three automakers simultaneously ever. So that is unprecedented in itself. But this tactic takes down these very targeted specific plants

at each automaker and impedes production in specific ways. But the beauty of it is they don't have to pay as many workers out of their strike fund. So for example, if they took 146,000 autoworkers down across all three automakers, that would deplete their strike fund much more quickly than if they have a few plants down and they're paying, like right now, about 13,000 workers to be on strike. This strategy will keep the companies guessing. It will give our national negotiators maximum leverage and flexibility in bargaining. And if we need to go all out, we will. Everything is on the table. Tell me about Sean Fain.

Sean is, he's been sort of a character that I think a lot of people in Detroit have been fixated on. So I was following him, you know, before he was elected, obviously, and he ran against the incumbent, Ray Curry. And the union has had this sort of ruling caucus for decades. You know, while my opponent likes to talk about great experience and great opportunities, I have actually been doing the work. So Sean Fain is the first challenger in more than 70 years to unseat a incumbent from that caucus.

And the conversation around him was, you know, he's got this base that's really supportive, but it's going to be very hard to unseat Ray Curry, the incumbent. Well, in March, he did through a runoff election. And I think he really surprised a lot of people here. And throughout his campaign, and even after being elected, obviously,

he's run this like very social media centered platform. He connects with members directly through live streams on Facebook, on X. Good evening, UAW family. Tonight we're going to cover a lot of ground. And he has like a very savvy team around him that is constantly pumping out videos, informative videos about how they're handling negotiations. And he's doing all of this. He's bargaining in a much more public way. So typically these sorts of conversations between executives on the auto side and the union leaders would happen behind closed doors. They would hash out their differences at the table. And Sean has really

done it through members. He has displayed to members, this is our ask, this is where the companies are, and this is not enough. In some cases, he has a flair for the companies have called theatrics. He threw one proposal from Stellantis in a trash can that's been sort of talked about for weeks around here. I'll tell you what, brothers and sisters, when we get things like this from the company and they want to sit there and talk about they're not asking for concessions or looking for concessions, everything they're looking for in this document is about concessions. So I'll tell you what I'm going to do with their proposal. I'm going to file it in its proper place because that's where it belongs, the trash, because that's what it is.

So he's shown that he's not afraid to make bold statements like that. On the whole, though, he's kind of a muted guy. I spent a few hours with him when we were writing about him, and he's very subdued, almost. Like, when you talk with him at a table, he's not pounding his fists. He's quite soft-spoken, And he's got this like calm, measured, thoughtful manner that is really, really sort of clashes with his public persona, I would say. So Sean Fain's plan is we're going to have certain people strike at certain times. That will allow us to extend the life of the strike fund. It's an interesting tactic and seems like a smart one. But it also indicates that the union expects this to go on. The union expects this to be a strike with some legs.

The last time the UAW went on strike back in 2019, it went on for 40 days. We're more or less in day four now. For people like you who have some expertise, what do you think we're looking at here in terms of length? Yeah, I think that's totally fair to consider this as a strategy that could be drawn out. But I also think it's important to consider that one of the reasons the union took this approach was they wanted to show to the automakers that they were interested in continuing to bargain. So if they had gone out and just taken down all plants at all three companies, it would have been a sign that this is sort of as intense as we can be. And it doesn't really show to the automakers that they're willing to budge on anything, if that makes sense. So with this approach, the union is signaling in some ways to the automakers that we're putting a little bit of heat on you now. And if you propose us some like compelling offers in the coming days, we could put an end to this or we could ramp up that heat.

So I think it could go both ways. I think we could see a quicker deal at maybe one or more of the automakers and perhaps others would dig their heels in, or we could see a swift resolution across all. But the beauty of this strategy is that the union has the ability to adjust as the companies respond. So they're giving themselves the bandwidth to have a drawn out strike, but I don't think that the strategy means that inevitably there will be a drawn out strike. Nora Eckert of The Wall Street Journal on what the UAW and President Sean Fain want. Coming up the raw, what do the CEOs of the big three want? support for today explain comes from aura aura believes that sharing pictures is a great way to keep up with family and aura says it's never been easier thanks to their digital picture frames they

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It's Today Explained. I'm Noelle King. Go ahead, Professor, just give me your full name and tell me what you do. Merrick Masters, Professor of Business at Wayne State University in Detroit. Once upon a time, I mean, we would think of Detroit and we would think of the big car companies. Obviously, there's been a lot of evolution in the economy in the past couple of decades, but does Detroit still see itself as an autoworker kind of town? Well, I think Detroit still sees itself very much as a working class town. The auto industry is a shell of its former self, but it's still heavily concentrated in this area. We consider ourselves very much dependent on the auto industry, and it is very much a signature of our city, you know, being the workers want.

Broadly, why are they not getting what they want? Well, I think their ask is very high. That's the number one reason. And the union has put itself in the position where it really wants to go back and get many of the things that it gave away about 15 years ago during the bankruptcy era. You know, we gave up a lot of stuff when auto industry had its crash a few years ago. You know, we gave it up willingly. Now it's just time for them to give it back willingly. And the companies are just not willing to do that. Now, the question is whether on some of the other items they can find common ground.

And so far, they haven't got close enough to reach that point. The UAW president, Sean Fain, is playing a big part in all of this, of course, as you would imagine. And he's asking what seems to be a relatively simple question. If profits for these companies are soaring, these companies are doing well by most metrics. When you look at the Q3 report from General Motors, really every metric was better than expected, better than analysts were expecting. Why is that not reflected in the paychecks of the people who work for the company? Well, I think the companies would respond and say that it is reflected in the paychecks. They do give profit sharing. And so they look at this as they have generous packages now.

And it's also important to remember that they have gold plate medical care. So from the company's perspective, they think this is a very good package that they already have. They're willing to embellish it in many significant ways, but they're not willing to double their hourly labor costs and go from $65 an hour to $140 or even more. That would just be, to them, unsustainable. In 2019, General Motors workers went on a strike that lasted for about 40 days. Nearly 50,000 United Auto Workers striking against General Motors this morning. 55 plants all around the country shut down.

We are standing up for fair wages. We are standing up for affordable, quality health care. We are standing up for our share of the profits. I have to think that the car companies are looking back at that strike and saying, what did we lose? Where did we end up on the other side of it? What did the losses on either side look like in 2019? Well, for General Motors, it lost about $3.6 billion in revenue. I think from the union side, it didn't have the heavy strike benefit payments that it does right now.

But for both sides, it was costly. And you have to ask yourself, did they really make back all that that they gave in terms of the costs that they suffered when they negotiated a new contract? I think right now they're facing this different dynamic. The competition, even though it was stiff then, is much stiffer now. They've got the advent of the non-union electrical companies in the U.S., the Teslas. 60% of the EVs that were sold in the first half of this year, according to Motor Intelligence, were Teslas. The rising influence of China in the electrical vehicle market.

At Shanghai's International Auto Show this year, the heavyweights aren't GM or Ford. They're Chinese brands. And the Europeans who are pursuing this aggressively. Welcome to the BMW i4 M50. The first ever all-electric car from BMW M. As well as the traditional foreign transplant companies that are investing heavily in electrical vehicles in the United States and producing them here. The real question is whether we'll lead or we'll fall behind in the race of the future, or whether we'll build these vehicles and the batteries that go in them here in the United States rely on other countries. Or whether the jobs to build these

vehicles and batteries are good paying union jobs. And it costs about four billion dollars to produce an EV plant. So it's expensive and they're all committed to going out of the internal combustion engine business. The union is pointing to something that I think is really interesting. Americans are increasingly concerned, and we have been for probably about a decade, about what CEOs are making, right? We know that CEOs used to make 10 or 12 times what an employee would make. Now, in some cases, it's 300 times, 1,000 times. Sean Fain, the president of the UAW, is saying, you guys, you guys at the CEO level, your pay has increased by XX percent. The same should be true of your workers. 16 years of work to make what the CEO makes in a week. It is criminal what's going on.

I'll tell you something. It kind of makes sense to me. It seems fair. Sean Fain, you're right, has cited that on average, the pay of the executives has gone up 40% over the life of the last contract, and he wants the workers to get the same amount. The workers today on average make about $30 an hour. And they're asking essentially in the UAW's original proposal to get up to about $43 an hour. So they weren't asking for too much of an increase over what inflation would have been if they'd had the COLA, the cost of living allowance, which they gave up in 2007. If they'd had that, that enabled them to keep pace with inflation. So the union is saying, we gave up an awful lot.

We had wage freezes. We gave up retiree health care. We gave up defined benefit pension plans. And we would like to make certain that we share in the distribution of wealth. And they have escalated this attack, which is reminiscent of what the labor movement was more like in the 1930s, 1940s, and 1950s, as a struggle between labor and capital, between rich and poor, and between the have and have-nots and actually between good and evil. I've heard talking heads saying our contract demands are class warfare.

That's laughable. I see you laughing already, Bernie. I am laughing because that is what we have experienced for 40 years, except the wrong class keeps winning. And so therefore, they view this as a just cause to increase the wages of the workers and also to make certain that the workers are not harmed during the transition to electrification. You are very informed. You're in the area. You've heard the discussions. You've seen the back and forth. Do you think this is more likely to be a short strike or a long strike?

I think it has a distinct potential of being a very long strike. And if that happens, what should we be looking at, both in terms of broader ripples in the American economy and what might actually happen in a town like Detroit and to the stock prices of these big three auto companies? Well, I would look for the companies to start losing revenue quickly. They could lose each roughly $500 million a week. They might be forced to lay people off. I think that you could see ultimately, you know, a crippling strike could force restructuring in the industry and you may see a different nameplate out in front of the company's buildings. Marek Masters of Wayne State University. Today's episode was produced by John Ahrens and Miles

Bryan. It was edited by Miranda Kennedy and fact-checked by Amanda Llewellyn and Hadi Muagdi. Our engineer is Patrick Boyd. I'm Noelle King. It's Today Explained. you