UAW losing pay edge
The UAW is losing its edge in pay compared with nonunionized U.S. assembly
plant workers for foreign companies, even as Detroit automakers aim for
deeper benefit cuts to trim their losses.
In at least one case last year, workers for a foreign automaker for the
first time averaged more in base pay and bonuses than UAW members working
for domestic automakers, according to an economist for the Center for
Automotive Research and figures supplied to the Free Press by auto
In that instance, Toyota Motor Corp. gave workers at its largest U.S. plant
bonuses of $6,000 to $8,000, boosting the average pay at the Georgetown,
Ky., plant to the equivalent of $30 an hour. That compares with a $27 hourly
average for UAW workers, most of whom did not receive profit-sharing checks
last year. Toyota would not provide a U.S. average, but said its
7,000-worker Georgetown plant is representative of its U.S. operations.
Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay
levels. Comparable wages have long been one way foreign companies fight off
UAW organizing efforts.
But Toyota workers' pay topping that of UAW members comes as the union faces
contract negotiations this year with struggling Detroit companies that will
seek billions in concessions, partly because they face higher costs for
retiree health care and pensions than their foreign-owned competitors.
Who's to blame?
UAW Region 8 Director Gary Casteel said if Toyota workers were paid more
than union workers last year, the blame lies with Detroit's auto executives.
The companies have lost market share because of past mistakes, which have
translated into fewer bonuses for workers, said Casteel, who is on the
union's executive board.
"Our profit-sharing formula, I know, is better than theirs -- if our
vehicles are selling," Casteel said.
Ron Lare, a 59-year-old Ford employee on preretirement leave, said Toyota
workers shouldn't get too excited about their wages because bonuses
fluctuate. The only thing consistent, Lare said, is union protection.
"The floor beneath their feet is basically what the UAW has won," said Lare
of Detroit, who has worked at Ford for 28 1/2 years. "If the UAW gets beaten
down, their pay is going to come down. You let there be a real recession in
the auto industry -- that bonus won't be there for Toyota, either."
Union perks vs. nonunion perks
The pay comparisons reflect the relative profitability of the foreign and
domestic companies more than shortcomings of the UAW. But the situation
chips at the argument that workers united in solidarity can get better
wages, benefits and job security -- especially as the UAW shrinks and
growing foreign companies continue to ward off organizing efforts.
"How do you convince someone you're better off with the protection of a
union when they're making more money than the union employee?" asked Alfred
McLean, a 66-year-old hourly UAW member at General Motors Corp.'s Warren
Tech Center. He has 28 years of experience.
Workers for foreign automakers don't pay union dues, but they do share the
costs of insurance and retirement plans. UAW-represented autoworkers get
health insurance and a full pension after 30 years -- valuable perks they
will fight to keep during contract negotiations this year.
But even accounting for Toyota employees' health care spending -- $700 per
year on average, according to the company -- the Georgetown workers still
made more in 2006.
General Motors Corp., which lost $10.6 billion in 2005 and didn't issue
profit-sharing checks last year, paid its production workers an average of
$27 an hour, GM spokesman Daniel Flores said. That would be a base of about
$54,000 a year, based on a 2,000-hour work year. The $30 average at Toyota's
Georgetown plant, which includes a bonus, equals $60,000 a year.
Ford Motor Co. and Chrysler Group representatives said GM's base pay figures
are similar to theirs. Only Chrysler, which had a 2005 profit, paid a bonus
last year. The $650 bonus was not enough to surpass Toyota's pay.
Unknown in the calculation is overtime, which boosts UAW workers' pay. The
auto companies would not release overtime data.
Lack of overtime hurts
Ron Harbour, president of Harbour Consulting and the publisher of a
respected ranking of plant efficiency, said domestic overtime is dropping
because of improved quality and recent production cuts.
"Because there was so much overtime for so many years, they got used to that
level of pay," Harbour said. "And it built the economy around here that's
collapsed so much -- second homes, boats, snowmobiles and all of that."
Toyota's bonuses are comparable to the record profit-sharing checks earned
by Chrysler and Ford workers in the late 1990s. That puts the pay of
Toyota's workers ahead of that of UAW workers for the first time, said Sean
McAlinden, chief economist for the Center for Automotive Research in Ann
But when massive profits rolled in, Detroit executives squandered them, he
"There were certainly years back then at the profit peak of the truck boom
when we could gaily march out the door and buy Volvo, or Jaguar, or Saab --
brilliant moves -- with our truck profits, rather than invest in hybrids,"
McAlinden quipped about GM's and Ford's spending decisions.
GM's aim is to resume profit-sharing, Flores said.
"When profit is generated in the U.S., employees share in the profit," he
When asked about salaried workers earning bonuses because of UAW sacrifices
last week, Ford CEO Alan Mulally said that all employees must be compensated
The 'union threat effect'
Harley Shaiken, a professor at the University of California, Berkeley, who
specializes in labor issues, said Toyota's high wages are somewhat expected.
"Toyota pays high wages in part to avoid the UAW," Shaiken said, adding that
economists would refer to Toyota's high wages as the "union threat effect,"
meaning companies pay union-comparable wages to fend off organizing efforts
and the risk of a strike.
"But what Toyota inadvertently shows," he added, "is that you can compete
paying higher wages."
Assembly workers for Detroit automakers last year remained a bit ahead of
Honda's U.S. hourly workers, who made an average $24.25 an hour, or $26.20
with the $4,485 bonus they received. In November, Honda paid bonuses for the
21st consecutive year, the longest streak in U.S. auto history, said Ed
Miller, Honda spokesman.
Nissan workers are paid $24 an hour in Mississippi and $26 an hour in
Tennessee, but company officials would not disclose employee bonuses.
Hyundai Motor Co. pays its U.S. production workers less than other
automakers. Wages at its Alabama plant start at $14 an hour and grow to $21
an hour after two years on the job, according to a January 2004 company
release. Hyundai declined to say whether those wages have increased since
But the UAW's Casteel, who is working to organize autoworkers in southern
states, said the UAW's recruiting strategy of comparing union and nonunion
checks doesn't work in less-developed parts of the South. In Alabama and
Mississippi, for instance, the U.S. Department of Labor says wages average
less than $11 an hour.
"If you start looking at where they put these plants, they go out to the
most desolate places you've ever been in your life," Casteel, an Alabama
native, said of foreign automakers. "And they make sure there are no other
competitive wages with any other industry. You'll drive through these piney
woods for an hour and all of a sudden you run upon this major manufacturing
A person just good enough to hinder the retreat made necessary by their