How UAW Negotiations with Ford, GM, and Stellantis Usually Work
In two previous blog posts, I’ve talked about the backdrop and environment for 2023 UAW negotiations with Ford, GM, and Stellantis, recent contract history, and how that history has impacted hourly labor costs, wages, and other conditions of work. In this post, I cover the typical process for these contract talks, which is largely guided by the UAW’s constitution and existing organizational structures. In the first post in this series, I also mentioned how 2023 might be different, so in this post I explain some of those differences and list what the UAW has publicly said are its bargaining demands this year.
This article is one in a series discussing UAW auto contract negotiations. Read the companion pieces here:
Preparations for the UAW bargaining process begin late in the year before the Ford, GM, and Stellantis contracts expire. The first step is the election of a national negotiating committee and collection of members’ bargaining resolutions (demands) through their local unions. The national bargaining committees meet to review these resolutions and prepare for the bargaining convention and future council and sub-council meetings.
The next step is to hold the Special Collective Bargaining Convention—usually in March during the year in which the contracts with Ford, GM, and Stellantis expire (often the year after the union’s Constitutional Convention). This year’s Special Bargaining Convention was held on 27–29 March in Detroit.1 In the months leading up to the convention, members submit resolutions to be considered by the Bargaining Convention delegates (local union presidents and negotiations committee chairs). The delegates meet to review the union’s bargaining priorities for all sectors where UAW members work and approve resolutions around the UAW’s goals for wages, profit-sharing, benefits, health and safety, work schedules, and related issues. This year’s bargaining resolutions focused on the following topics:
- Improving wages and salaries,
- Ensuring earnings “keep pace with or exceed inflation and productivity increases, whether through general wage increases, bonuses, profit sharing, cost-of-living adjustments (COLA), or other means,”2
- Reducing wage disparities within classifications (commonly called “tiered wages”),
- Reducing the use of temporary workers and improving working conditions,
- Insourcing new and outsourced work,
- Securing new investments,
- Investing in training,
- Protecting health care and retirement security,
- Protecting workplace health and safety,
- Committing to fair and inclusive workplaces, and
- Organizing new employers to increase union density.
After the Special Collective Bargaining Convention, the national Ford, GM, and Stellantis councils meet to compile demands, determine strategies, and prepare for open bargaining with the companies.3
Formally begin bargaining
While the UAW and automakers continue to talk and jointly administer their existing agreements throughout the contract term, the formal opening of bargaining with each employer signals a shift to begin negotiating the next agreement. This year’s quadrennial UAW labor talks with the three unionized U.S. automakers formally kicked off on July 13–18. This timing is typical for the parties to open national negotiations.
For many years, these kickoff ceremonies involved the lead negotiators for each side meeting for a press event, handshake, and photo opportunity. The UAW met with Stellantis (13 July), Ford (14 July), and General Motors (GM, 18 July) with no press in attendance and no handshakes. UAW President Fain had previously said, “I’ll shake hands with the CEOs when they come to the table with a deal that reflects the needs of the workers who make this industry run. When the 150,000 autoworkers at Ford, GM, and Stellantis receive the respect they are due for their sacrifice in generating the historic profits of the past decade, then we can proceed with a handshake.”4 Instead of shaking hands with the company CEOs and lead bargainers, the UAW leaders went to three metro Detroit auto assembly plants on July 12, 2023, for a “members handshake.”
After talks open, it is customary for the national bargaining sub-committees to begin to meet regularly to present what are called “noneconomic” bargaining proposals (examples of noneconomic demands include job classification structures, the process for transferring between jobs or between plants, or increased input on company technology or sourcing decisions),5 review current contract language, determine what text can carry over to the next contract, and identify areas where the negotiators might want to make improvements based on the UAW’s bargaining priorities and demands submitted by members. These sub-committees consist of the UAW and automaker representatives who serve on the bargaining teams. The UAW side is represented by a national negotiating committee elected by members who work for each of the automakers (typically local union leaders), an international vice president assigned to each automaker, and the union’s international president. Management is represented on the committee by labor relations and manufacturing staff, an executive-level lead bargainer (generally a corporate vice president or executive director), and the automakers’ top executives (CEOs and presidents). Both sides have professional staff who support the negotiations with expertise in law, economics, benefits, health and safety, and related disciplines. The committees work throughout the bargaining, and both sides must sign off on language that is passed out of committee.
Early in the process, the UAW makes a request for financial and other data from the automakers. This information helps the union better understand each company’s situation and helps shape the economic bargaining demands. After the data request is fulfilled, the UAW and the automakers pass economic demands across the table (generally in late July or early August). Some topics—wage rates, investments and job security, health care benefits—are discussed at the main table and often involve the international UAW president, UAW vice president, company CEO, and lead executive bargainer. These “main table” talks generally intensify in mid- to late August.
- “Eliminate tiers”—The term “tiers” refers to the different classifications of work and workers that earn different pay and benefits.
- “Big wage increases”—Current wages range from $16.67 per hour for temporary workers to a top production wage of $32.32 per hour. While Fain did not reveal the exact wage demands in his initial presentation, later reports revealed the ask to be a 20% raise upon signing of the new contract and 5% annual raises for the four years of the contract.
- “Restore COLA”—COLA (or cost-of-living adjustment) was suspended in 2009 bargaining and later eliminated from the Ford and Stellantis contracts (it remains suspended in the GM agreement). COLA provisions provide quarterly increases to base wages based on a formula tied to the Consumer Price Index (CPI) and would be in addition to any base wage increases the union and company may have negotiated.
- “Defined benefit pension for all workers”—Workers hired before the effective date of the 2007 UAW contracts have defined benefit pensions and those hired after 2007 have defined contribution plan pensions with a 6.4% company contribution.
- “Re-establish retiree medical benefits”—Workers hired before the 2007 agreements have access to retiree medical benefits through a Voluntary Employee Benefit Association (VEBA) funded by the companies; workers hired after 2007 get $1 per hour worked paid into a 401(k) with which they may purchase health care in retirement.
- “Right to strike over plant closures”—Ford, GM, and Stellantis have idled or closed many plants over the years as they have adjusted production to meet their smaller market shares.
- “Working family protection program”—This demand is similar to a job security program colloquially known as “jobs banks” that the UAW and Ford, GM, and Stellantis had in place prior to 2009 bargaining. If employment dipped below an agreed level, those workers placed on layoff would receive pay and benefits.
- “End abuse of temp workers”—Temporary workers at Ford, GM, and Stellantis plants are union members, and the UAW wants to improve their wages and working conditions. All automakers, not just Ford, GM, and Stellantis, use temporary workers to backfill for absences and leaves and to boost production in times of peak demand.
- “More paid time off to be with families”—UAW workers currently receive between 40 and 200 hours of annual vacation plus 16 or 17 holidays per year.
- “Significantly increase retiree pay”—The basic pension benefit was last increased in 2007. It stands at a maximum of $54.30 for each year of credited service per month.
The UAW’s public statements have included other demands, such as bringing workers who work at the joint venture battery plants or automaker subsidiaries under the master agreement, health care benefit improvements without further cost sharing, and a moratorium on plant closures. The UAW is seeking to keep all of its plants open and secure product6—especially at the Stellantis assembly plant in Belvidere, Illinois, which was idled in February 2023.7
The companies’ demands have not been officially released, but based on past negotiations, media reports, and sources with knowledge of current negotiations, company priorities may include:8
- Limiting labor cost growth,
- Retaining flexibility in staffing and footprint decisions,
- Maintaining wage tiers and separations between the master agreement and other workers—including in JV battery plants, and
- Improving productivity, quality, and attendance.
Strike authorization votes
In August, the UAW generally takes a strike vote at each of the companies. Members will vote to authorize their bargaining representatives to call a strike after their contract expires if they cannot reach a satisfactory agreement. These strike authorizations generally pass with 90% or more approval; in 2019, the strike authorization votes were 96% or more at each of the three companies. Voting to authorize a strike does not mean the workers will strike—just that they will go on strike if their leaders decide that it is the best strategy for the union to reach a favorable agreement.
Lead or “target” company selection
When the UAW gets a sense of with which automaker they think can make the most progress, they often (though not always) select that company as a “lead” company. The lead company designation is generally announced after Labor Day. UAW President Fain has declared that “the Big Three” will be the collective target this year—with no one company selected as the lead.
The UAW has long pursued a strategy of “pattern bargaining” with the automakers. Former UAW President Walter Reuther pioneered the strategy in the 1940s. In 1946, Reuther told the UAW’s International Executive Board that, “An industry-wide wage agreement based on the principle of equal pay for equal work without regard to products being manufactured or the geographical location of the plant is the most important economic objective.”9 Under a pattern-bargaining strategy, the union chooses the order in which it negotiates with firms in an industry and negotiates with each firm sequentially. The contract achieved at the first employer then sets the basic wage, benefit, and other terms for subsequent negotiations to level the labor costs across the sector so that employers cannot compete based on their employees’ wage and benefit differentials.10
From tentative agreement to a contract
If contract talks are on schedule, the UAW and at least one of the automakers will reach a tentative agreement on or just prior to the expiration of the current contract (September 14, 2023). The core economics of the deal often come together in the last days and hours of the negotiations, and the UAW and company sides will frequently enter marathon bargaining sessions to try to reach a deal. When they have an agreement at one automaker, the UAW usually announces that they have reached a tentative accord and then they formally extend the contracts at the other two automakers pending ratification of the agreement at the first company.
Ratification involves taking the agreement to the union’s council for the automaker (the council is made up of local union presidents and bargaining chairs) to vote to recommend passage by the membership. Then the UAW and the company generally work together to produce a summary of the contract language for members to review; they also make the full text of the agreement available for members to read if they so wish (since 2011, the full text of the tentative agreement—called the “white book”—has been posted online). Union leadership holds informational meetings at every local to present the agreement and answer members’ questions. The members will then vote by local on whether to accept the tentative agreement and make it a contract. The whole ratification process can take about two weeks.
If the agreement is ratified, the UAW then turns to one of the other two automakers to try to craft a pattern agreement with that company. When that company reaches a deal, the ratification process starts again. The final company usually completes bargaining of their contract only once the second agreement has been ratified. In 2019, it took eight additional weeks to negotiate and ratify all three agreements once the first tentative agreement was announced.
The UAW’s tentative agreement with an automaker is really a set of agreements—the main text, as well as appendixes for different aspects, such as pensions and retirement plans, health care benefits, supplemental unemployment benefits, profit sharing, personal savings plans, life and disability benefits, dependent care benefits, and salaried workers (for those who are also UAW-represented). The contract ratification vote is tallied for the membership overall, and skilled trades workers’ votes count for the main agreement and the separate provisions that apply only to them. If the overall membership votes in favor of the tentative agreement, it becomes a contract.
When they do not reach a tentative agreement
If the UAW does not reach a tentative agreement with at least one of the U.S. automakers by midnight on the expiration date of the contract, the leadership has a few options:
- If talks are productive and they feel like they just need a little more time, they can extend all three existing agreements and continue negotiating with the target company.
- If talks are stalled, they can “change horses,” extend the contracts, and turn to one of the other automakers to craft the first deal.
- If talks are at an impasse, they can call a strike. The UAW cannot call a national strike until after the current contract has expired.
If the UAW chooses to call a strike, it can do so company-wide (all UAW members at a company in all locations, as UAW-GM workers did in 2019) or through local strikes (all UAW members at a company in a specific location or locations, as UAW-GM workers did in Flint, Michigan, in 1998). Companies, too, can initiate a labor dispute by choosing to lock out workers (denying employment) or by hiring permanent replacement employees for striking workers. How workers are paid during a labor dispute in each of these instances depends on the nature of the dispute and the state in which they work.
In general, workers who are out of work due to an authorized strike11 receive weekly strike pay from the International Union Strike and Defense Fund. UAW leaders report that the current fund balance is around $825 million.12 While the UAW’s constitution defines the weekly strike benefit as $400 per week,13 the union’s International Executive Board (IEB) unanimously approved an increase to $500 per week in February 2023.14 The UAW strike fund also covers medical and prescription drug insurance for striking members (but not dental, vision, hearing, or sickness and accident insurances),15 so in the event of a strike, the weekly cost to the union would be somewhat higher than $500 per week per striking member. Strike benefits in excess of $600 per year are reported on IRS Form 1099-MISC and are taxable, but taxes are not withheld. Striking UAW members are entitled to strike pay and benefits assuming they are members in good standing, on active payroll at the target company at the time of the strike, and they perform their required strike duties (picket line or other strike support). Strike pay begins on the first day of the strike and is paid on day eight. The strike fund pays bonuses to workers who are on strike during the Thanksgiving or Christmas holidays.
Striking UAW members may find another job during the strike, and outside earnings are allowed without offset up to the amount of the strike benefit. For example, a striking worker who qualifies for $500 a week in strike pay can earn up to $499 a week for a total of $999 in weekly earnings. If the striker earns $500 or more per week, the entire amount is offset. These strikers would not receive strike pay for the weeks in which their earnings exceeded the strike benefit but would continue to qualify for medical and prescription drug insurance. During the 2019 UAW-GM strike, the union’s International Executive Board voted to allow outside earnings to exceed strike benefits without offset, which means workers were not penalized for outside earnings. That policy is not currently in effect, but the UAW IEB could again vote to allow workers to earn more than the strike benefit.
In general, striking workers at a location that is the target of a labor dispute are not allowed to collect unemployment insurance. However, a strike at one company may have the effect of idling workers—even other UAW members—who work at other companies or other locations of the same company. Workers idled because of a strike who do not work at the site where union members are striking generally qualify for unemployment benefits under usual eligibility rules. UAW members who work at the same company where the workers are striking at another site (or sites) and have a “direct interest” in the outcome of the dispute are sometimes disqualified from receiving unemployment benefits.16 For example, Michigan has language that disqualifies laid off workers from receiving unemployment insurance if they are idled as a result of a strike at a another “functionally integrated” U.S. establishment of the same employer17 and New York has a seven-week exclusion from receiving unemployment insurance benefits for any workers idled as a result of “industrial controversy” at other sites within the same employer.18 In many states, workers who work at the same company and are idled due to a strike at another location who are qualified for unemployment insurance benefits may lose eligibility if they participate in the strike through picketing, financing, or other forms of support for the strike.
A labor dispute could also arise because of an employer’s actions, such as contract or labor law violations or a lockout or hiring permanent replacement workers for employees who are on strike. For the most part, workers denied employment due to employers’ actions in cases where the union is engaged in good faith bargaining are eligible for state unemployment insurance benefits. If the workers had been on strike and were previously disqualified from receiving unemployment insurance due to the labor dispute, an employer’s contract or labor law violation or lockout may reinstate eligibility for these workers.
This post covers what typically happens in negotiations between the UAW and Ford, GM, and Stellantis, but as I explained in a previous post, 2023 is not a typical contract negotiations year due to a unique set of factors. The issues the two sides seek to solve at the negotiating table are large and highly complex and could have far-reaching implications for the U.S. economy—especially that of the Chicago Fed’s Seventh District. We will continue to follow these events and provide our analysis of their economic implications.
1 Because the direct election of UAW leadership led to a runoff election for three offices, UAW President Shawn Fain, Vice President Chuck Browning, and Region 9 Director Daniel Vicente were not installed until March 2023—just before the Bargaining Convention began. President Fain presided over the event.
3 Each department (Ford, GM, and Stellantis) within the UAW has a council with delegates who must approve a tentative agreement before it can be sent to the membership for ratification. Each council has several sub-councils that work on individual subject areas who meet to review and approve members’ demands to go to the council for adoption.
5 Some “noneconomic” demands are later determined to have economic significance, such as a demand for an additional job category that could limit a company’s staffing flexibility or a demand for higher representation ratios.
6 Securing product means means the company has allocated a new or renewed vehicle model (or engine or transmission or other product) for production in that plant. It means the company is investing in modernizing the plant and it’s a sign of longevity.
9 International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, 1946, A program for UAW-CIO members: workers, consumers, citizens, Detroit: UAW-CIO, from UAW President's Office: Walter P. Reuther Records, LR000261, Walter P. Reuther Library, Wayne State University.
11 UAW strikes must be authorized by the members of the union’s International Executive Board.
12 In the July 2022 Report of the Secretary-Treasurer to the UAW’s 38th Constitutional Convention, the International Strike and Defense Fund was listed at a value of $815.3 million on a modified cash basis. This accounting method does not account for current market valuation of the assets in the fund.