General Motors’ leadership shouldn’t budge in its negotiations with the United Automobile Workers union representing its employees. As with most unions, UAW have little interest in the high rhetoric of fairness they spout. They simply care about extracting maximum resources without regard to broader economic factors.
But GM workers are already getting a great deal — a far better deal than other automobile workers around the nation. Were GM to offer more than the extremely generous new contract it has presented, a contract which includes generous new profit-sharing offers, it would betray its shareholders and risk its economic viability. That is to say, it would act unfairly.
UAW sees things differently. Referencing GM’s current profitable status, the union says its members deserve fixed wage and benefit improvements. But their claims have a fatal factual flaw. As the Center for Automotive Research notes, “The automakers point out that the average U.S. worker pays 28% of their health care costs (Henry J. Kaiser Family Foundation, 2018), but UAW workers pay only about 3% (Naughton, 2019).” Considering healthcare inflation, this is absurd. It reflects a real increase in per-employee cost without any significant measure of cost sharing — and thus incentivized personal responsibility so seek more efficient care options.
What about wages?
Well, while production and supervisory staff wage growth has slowed, GM wages remain far higher than competitors. As this chart shows, GM workers earn an average of $13 more than U.S.-based foreign manufacturer employees.
CNBC also notes that out of the big three U.S. car manufacturers (GM, Fiat Chrysler, and Ford), GM provided employees with the largest profit-sharing payouts between 2015-2018: an average of $45,500. GM also uses far fewer temporary, non-union contracted workers (7% of total workforce) than the average for U.S.-based foreign car manufacturers (20%). And further indicating the UAW’s greedy malfeasance, its top leaders are under federal investigation, and one has been charged. CNBC also notes that “union leaders earlier this year also received 31% annual salary increases. That compares with two 3% wage increases for senior rank-and-file workers in 2015 and 2017.”
That’s why GM should tell the UAW to take a hike.
If GM yields, it will only invite fiscal self-destruction when an economic downturn inevitably comes. Or it will have to come begging for another government handout, funded by us, the taxpayers. That’s not acceptable. What we’re seeing here exemplifies the silliness of Sen. Elizabeth Warren’s pledge to force corporate boards to give seats to union members. Where unions are materially interested in short-term benefit, executive board members focus on long-term profitability.