High UAW Wages Shrink Detroit’s Room to Maneuver

livemint.com:

Even before the raise they are striking for, Detroit’s unionized auto workers are probably the best paid in the world after factoring in benefits such as healthcare. Their employers can afford it for now, but high labor costs box them in strategically. Whatever the outcome of continuing negotiations with the United Auto Workers union, General Motors, Ford and Chrysler owner Stellantis will have to pay a lot more for factory staff.

GM published highlights of its latest offer on Monday, including a 20% wage increase over four years that will bring the yearly earnings of almost all the company’s UAW-represented staff to about $82,000 for a full-time schedule. There were also higher employer pension contributions and better terms for temporary workers. While such proposals haven’t been enough to end the strike, they have led to a bit more optimism in recent days.

UAW President Shawn Fain didn’t escalate a walkout last Friday as had been expected. GM’s shares have since risen about 4%. But even today’s UAW wages are high by global standards.

Kristin Dziczek, an automotive analyst and policy adviser to the Federal Reserve Bank of Chicago, has estimated them at $66 an hour for 2023 on average, including nonwage costs such as pensions and healthcare. In Germany, which is also heavily unionized, all-in labor costs last year were about 59 euros an hour, equivalent to $62 at current exchange rates, according to an analysis by the German Association of the Automotive Industry. The difference likely has more to do with the high cost of U.S.

healthcare than with headline wages. Costs elsewhere in Europe are lower—considerably so in the former Soviet bloc. In Japan, the other big developed-world hub for car production, they averaged