The United Auto Workers’s historic stand-off with Detroit’s three car-making giants is centred on an age-old tension: The union says corporate greed is keeping workers from earning fair wages while Ford Motor, General Motors and Stellantis say they cannot afford union demands.
While both arguments have some merit, one fact stands out: The 10 people who have served as chief executive officers of the companies since 2010 have collected more than $1 billion in compensation. Meanwhile, the wages of US car workers – unionised or not – have declined by about 17 per cent in that time frame.
This reality underpins the strike now entering its fifth week that is playing out against the backdrop of growing income inequality and rising executive compensation.
“We went backward in wages in the last 15 years,” UAW president Sean Fain told reporters last month. “Hell, most of our members can’t even afford to buy what we make.”
The $1 billion total that Detroit automotive chief executives have taken home includes salaries, bonuses, the value of stock awards, fringe benefits and special payouts linked to retirement or corporate transactions.
A representative for Stellantis noted that recent mergers resulted in large one-time pay packages for the previous chief executives.
The median worker at GM and Ford earned $80,034 and $74,691 in 2022, respectively. Stellantis, which is based in the Netherlands, paid its average employee €64,328 ($67,800) last year.
At both GM and Ford, that puts chief executive-to-worker pay ratios higher than the average among the biggest publicly traded US companies, according to data compiled by Bloomberg.
Stellantis said that it has distributed more than €2 billion in profit-sharing to employees under the current chief executive Carlos Tavares.
In filings, each of the companies say that most chief executive awards are tied to performance targets. If results worsen, payouts shrink. GM chief executive Mary Barra said as much in a recent interview, noting that 92 per cent of her pay was based on performance of the company.
However, each of the current chief executives gets an annual salary of at least $1.7 million, regardless of performance.
While the amounts make for good picket-line material, they are not unique. Corporate boards across industries have for decades doled out bigger and bigger packages to chief executives, leading to a growing divergence between how corporations in the US and beyond have rewarded workers relative to their top bosses.
Wages are one of the major sticking points in union negotiations. The UAW initially asked for 40 per cent increases and wants to emerge from its strikes with at least 30 per cent raises, sources said.
So far, Ford says its offer of a 23 per cent raise is as high as it can go while GM and Stellantis have been reluctant to offer much more than roughly 20 per cent increases.
There is good reason for the ask: Since 2003, the average hourly wage for US car workers has declined about 30 per cent, according to the Bureau of Labour Statistics.
Among the factors contributing to this trend was the rise of non-unionised car production in the US and the UAW agreeing in 2007 to lower wages for new hires at the Detroit Three's plants.
While Fain has described what some of his members make as “poverty wages”, those employed in vehicle manufacturing still make more than the average private-sector worker – albeit by a narrowing gap.
UAW members also make more than non-unionised workers in the sector.
GM’s chief executive Barra has said the company’s labour costs are already $22 an hour more than electric-vehicle leader Tesla, and that this competitive disadvantage would only grow as a result of the UAW’s requests.
Fain has made it part of his mission to undo concessions agreed to during the Great Recession. Among the benefits sacrificed were pensions – any worker hired before 2008 has one; anyone who has joined since does not.
Legions of companies across industries have scrapped or frozen pension plans because they are costly. One study found that companies save 13.5 per cent on long-term employee payroll costs when they freeze defined pension benefits.