Rick Haglund: Decline of wages, jobs and Detroit Three market share fuel UAW strike
As President Barack Obama’s “car czar” in 2009, Steven Rattner played a crucial role in saving the collapsing domestic auto industry.
Rattner, a former journalist and investment banker, engineered the sale of a flat-broke Chrysler to Italian automaker Fiat and fired General Motors CEO Rick Wagoner, who resisted putting GM into bankruptcy.
Those moves, combined with concessions from the United Auto Workers union and the offloading of automaker debt, allowed the two companies to successfully navigate unprecedented taxpayer-financed bankruptcy restructurings.
But today, as the Detroit automakers and their nearly 150,000 UAW-represented members are engaged in a contentious strike, Rattner is again worried about the future of the domestic industry driving Michigan’s economy.
The walkout has brought to a boil long-simmering issues involving Ford, GM, Stellantis (formerly Fiat Chrysler), their employees and supplier base. While the companies have rung up huge profits over the past decade and UAW workers have pocketed record profit-sharing checks, wages have stagnated, employment has plunged and the domestic automakers have lost considerable ground to their foreign competitors.
Appearing recently on “Morning Joe,” Rattner displayed a series of charts that demonstrate the serious challenges Ford, GM, Stellantis and their workers face in an industry making a historic transition to electric vehicles.
The Detroit Three were rightly known as the Big Three when they captured 90% of the U.S. vehicle market in the mid-1960s. But they now control just 40% of the market. Ford, GM and Stellantis have almost steadily lost share over the past 60 years to foreign competitors that attracted American buyers with higher-quality, more fuel-efficient vehicles.
American automakers have largely closed quality and fuel economy gaps with Asian and other automakers, but it’s highly unlikely they will ever again dominate their home market. (One notable exception is highly profitable, gas-guzzling, full-size pickups and SUVs, where Detroit automakers blow the competition away.)
Detroit’s huge loss of market share over the past six decades has resulted in the closing of dozens of assembly plants, devastating the UAW’s ranks.
In 1980, 60% of U.S. workers in auto factories were represented by the UAW. Now, just 18% of autoworkers wear the union label, according to Bureau of Labor Statistics data cited by Rattner.
That’s because of the rapid buildup of non-union auto plants, primarily in the South. Among those automakers are Hyundai, Nissan, Tesla, Toyota and Volkswagen.
U.S. auto manufacturing jobs are growing, just not in Michigan where no foreign automaker has located an assembly plant.
Overall, there were 278,049 workers in U.S. auto assembly plants last year, according to the BLS quarterly census of employment and wages data compiled by University of Michigan economist Donald Grimes. That’s a 7% increase from the 260,882 assembly jobs in 1990.
But Michigan lost more than half of its auto assembly plant jobs in the same period, falling from 98,258 jobs in 1990 to 44,900 jobs last year.
And in an industry where perpetual cost cutting is a mantra, inflation-adjusted pay has flattened for unionized and nonunion workers alike.
The average real auto manufacturing wage of $22 is about the same as it was 30 years ago, according to Rattner’s data. (Pay for hourly UAW workers at the Detroit Three ranges from about $18 an hour for entry-level workers to top pay of about $32 an hour.)
Rattner’s charts also show workers in general aren’t fully being rewarded for the fruits of their labor.
Between 1960 and 2010 wages and productivity grew rapidly on the same trendline. But since then the lines have diverged, with productivity far outstripping real wage growth.
Looking at these downward trends in jobs and wages, it shouldn’t be surprising that someone like new UAW President Shawn Fain has come along and said, “Enough!”
He’s emerged as a leader in a reawakened labor movement that’s demanding better pay, benefits and working conditions for America’s workers. Fain is characterizing labor negotiations with the Detroit Three as a righteous crusade against “corporate greed” and “the billionaire class.”
Even he has described the union’s demands, which include a 40% pay hike over four years, the end of automakers’ two-tier wage system and a 32-hour workweek for 40 hours of pay as “audacious.” But Fain has found wide support among the public and across the political spectrum for striking the automakers.
Democratic and Republican leaders back the workers for different reasons, though. President Joe Biden has said automakers need to “ensure record corporate profits mean record contracts for the UAW.”
Republicans, including former President Donald Trump, are blaming Biden for pushing automakers to invest billions of dollars in electric vehicles, putting pressure on wages and killing jobs related to gas-powered vehicles.
Those supporting the automakers, including Rattner, say UAW workers should get a big raise and a reversal of some concessions they gave to automakers in the Great Recession.
But they caution that a lengthy strike resulting in an uncompetitive labor contract could give further advantage to nonunion automakers like electric vehicle leader Tesla and permanently shutter small suppliers.
Fain, no doubt, knows this. As the first UAW leader elected directly by the union’s membership, his future, as well as that of his members, depends on winning a healthy contract for workers that also allows the Detroit Three to prosper in the coming era of electric vehicles.