UAW – GM Strike: Winners and Losers

By Lehr Middlebrooks Vreeland & Thompson, P.C.

November 4, 2019

So why did the strike occur among highly paid UAW employees and a highly profitable General Motors? There were several reasons for why the strike resulted in lost wages of $857 million per week by those employees and businesses affected by the strike and $200 million per week lost to General Motors.

It is no secret that the UAW (“Unemployed Auto Worker”) is struggling. UAW leaders have been sent to jail for illegal bargaining with Chrysler Fiat. Furthermore, Michigan became a right-to-work state, which increased the pressure on the UAW to “deliver” to employees in order for them to remain union members. GM widely used temporary employees as a way to keep average hourly costs down. Why would a temporary employee authorize approximately one week a year of pay to the UAW if the temporary employee wasn’t receiving better pay and benefits through UAW representation? So those were the issues on the table for the UAW. As far as GM was concerned, this was a matter of obtaining the best deal possible with the least amount of disruption to operations. There were no outstanding “must have” proposals from GM.

Each striker lost an average of $1,000/week. With an average weekly pay of $1,300/week, a strike benefit of $250/week to walk the picket line hardly closed the gap. Shortly after the strike began, the UAW authorized strikers to maintain part-time jobs, provided they fulfill their picket line duty. Ultimately, the UAW increased the strike benefit to a whopping $275 a week. Ironically, strike benefits are considered taxable income because the employee is “working” by walking the picket line in order to receive the benefits.

So, what was the outcome gained by the UAW as a result of the industry’s first major strike in twelve years?

1. An $11,000 ratification bonus, which will make most employees “whole” for the amount lost during the strike.
2. A pathway was established for temporary employees to move toward full time positions.
3. Employees received 3% pay hike and a shorter timetable to move toward the top scale of the wage structure.
4. The generous healthcare package was extended for four years with no increased costs to the employees.
5. GM committed to invest $3 billion in its Detroit – Hamtramck assembly plant that it had planned to close. The UAW failed to persuade GM to reverse its decision to close three other U.S. plants.

With $10.8 billion in profits, GM had the war chest to agree to a lush contract, with an outcome that enhances GM’s ambition to expand overseas and preserve GM’s flexibility to operate its U.S. assets. The UAW gained money, but GM retained its ability to control and direct the business.