Where the Teamsters Went, the UAW is not Following

From the bustling streets of cities to the quiet corners of rural America, the drumbeat of labor activism is growing, amplifying the demands of workers for fair wages, improved working conditions, and a greater say in the decisions that shape their lives.

?

However, in an era defined by rapid technological advances and a dramatically shifting economic landscape, the labor movement and employers must both understand that every company is different and what’s truly at stake requires new thinking, not inflammatory rhetoric.

?

We recently watched negotiations between UPS and the Teamsters, led by President Sean O’Brien, avert a potential strike through a lucrative and sustainable agreement. There is no doubt workers across industries deserve wage increases, as the middle class struggles to keep up with rising costs and the ripple effects of the Covid-19 years. And just as the Teamsters won the fight to share further in company profits, others are attempting to follow in their footsteps.

?

Today, the contract between the United Auto Workers (UAW) and the Detroit Three automakers (Ford, GM, and Stellantis, known as the “D3,”) will expire. UAW President Sean Fain has taken to publicly declaring his willingness to push these negotiations to a strike. Some are saying it is a repeat of the O’Brien playbook. The truth is that the UAW – D3 negotiations are entirely different, and the UAW’s initial demands are miles apart from the contract agreed to by the Teamsters and UPS.

?

First, the economic context is different. The Teamsters were negotiating with one company, whose domestic delivery service could not be outsourced to foreign competitors - delivering a package to someone’s home cannot be done from China. The D3, on the other hand, face a saturated market and more competition. Non-union and foreign companies produce vehicles for the U.S. consumer using cheaper labor, and this is only increasing with EVs, where Chinese companies lead. The D3 already have a $660/vehicle disadvantage relative to peers. The UAW’s wage demands would inflict an additional cost of $3,000/vehicle.

Ask yourself, as a U.S. Consumer, would you be willing to pay $3,000 more for a comparable American-made vehicle? Of course, no cars are actually 100% American-made anymore. ?

The proposed wage concessions are also disproportionate. While the percentage wage increase between the Teamsters deal and proposed UAW demands is roughly equal, the UAW’s 32-hour workweek proposal throws everything off balance. UPS workers are on the job morning to night, often clocking more than 40 hours in a work week – and still, UPS growth will be constrained under this new contract, with UPS committing to add 30,000 new Teamster jobs, compared to 100,000 in the last agreement.

?I want to be clear: increasing wages to strengthen the middle class and reduce the wealth gap is right. However, the UAW is being short-sighted by pushing for compensation and benefits at levels that would make its employers uncompetitive – and shorten the shelf-life of its members’ jobs. The harsh reality is that such increases would also decrease the relative cost of technology, strengthening the incentive to replace union jobs with automation.

?Jobs and the future are what’s truly at stake here. As the UAW’s demands stand, D3’s labor disadvantage relative to peers would increase by approximately $4 billion per year, equivalent to investing in one new EV plant, which could create over 2,000 new jobs and produce about 350,000 vehicles. Both the union and auto companies should be more focused on genuine upskilling programs for workers as the industry transitions to electrification. It is time to stop pretending all labor negotiations are apples to apples. We must acknowledge what is really coming down the pike: a future requiring new levels of skills and new approaches to ensure that American manufacturers remain competitive and provide well-paying jobs to American workers for years to come.

?