Union autoworkers had seen real wage declines over the past two decades and were overdue for a pay increase. President Biden joined a UAW picket line, an unprecedented tilt to labor that reflected both his political interest in winning Michigan next year and his oft-stated position that “green” jobs, such as those making electric vehicles, can and should be union jobs. Mr. Biden probably benefits politically from the settlement and was quick to hail it as a “testament to the power of unions and collective bargaining to build strong middle-class jobs while helping our most iconic American companies thrive.” Mr. Fain says this is just the beginning of a labor comeback that will also organize nonunion, foreign-owned companies and EV leader Tesla. As a sign that those automakers take him seriously, Toyota just announced a pay increase for its U.S. workforce, perhaps defensively in light of the UAW contract.
But whether this victory for organized labor is also a good deal for the United States as a whole is an open question. The public has an interest both in strong wage growth and an internationally competitive automotive industry, capable of sustaining large, job-creating investments — including those in an impending transition to electric vehicles that will help the country meet its climate goals. That transition has hit a rough patch lately, as sales growth for expensive EVs has slowed. U.S. automakers have lowered EV-production expectations as a result: Ford recently announced it was losing $36,000 on every electric vehicle it sold and must cut $12 billion in planned EV investment.
Just settling the strike helps in that regard by ending the possibility of a long-term walkout that could have done permanent damage to the auto companies. Also, the union did not achieve some of its most expensive demands, such as a 32-hour workweek and de facto reinstatement of a “job bank” that had contributed to the industry’s past financial difficulties by forcing companies to pay laid-off workers.
On other scores, the balance could be less positive. Ford has said the settlement will add between $850 and $900 to production costs per vehicle. The UAW — for the first time — won the right to strike against proposed plant closures, which can only reduce the flexibility with which the companies deploy investment capital in response to changing consumer demand. Again, we can see why the UAW wants to make it harder to shift, or end, production that provides jobs for their members; but nonunion firms, unburdened by such concerns, can use the advantage to capture market share. That could mean fewer jobs for union workers in the long run. Less flexibility could also complicate efforts to build new EV facilities, making the green transition harder.
Indeed, a less-flexible, higher-cost U.S. industry could, in a worst-case scenario, mean fewer jobs for everyone — quite apart from the workforce shrinkage that was going to occur anyway with the shift to EVs, which require fewer hands to build. Cars are unlike health care and other services; you do not usually have to produce them where they’re consumed. Much auto manufacturing has already shifted to Mexico, and China’s industry is booming, as well. Even with subsidies and mandates for domestic production, such as those provided in the Inflation Reduction Act, companies will move factories out of the United States if that’s what the economics dictate.
Zero-sum thinking predominates in collective bargaining, which by its nature pits union and management against one another, for shares of one company’s finite resources. But as Detroit’s new labor deal reallocates power between the two sides, they should remember that they both — and the American public — have an interest in ensuring U.S. automakers are profitable, competitive and, increasingly, green.
Credit: Source link
