American workers are tired and tired of being overlooked while struggling to make ends meet. Meanwhile, corporate profits are soaring to unheard-of heights. According to the Economic Policy Institute, profits at Ford, General Motors, and Stellantis almost doubled between 2013 and 2022, totaling $250 billion.
Is that money trickling down to the workers in the automotive plants? Not exactly. Over the past four years of the now-expired UAW contract CEO pay increased 40% while worker pay increased 6%.
Let’s hear from the UAW president, Shawn Fain, for more context:
Income Inequality Can Be Fixed
The historic autoworkers strike kicked off with 9% of the UAW’s nearly 150,000 union members walking off their jobs. Three auto plants—the General Motors assembly plant in Wentzville, Missouri, a Stellantis assembly plant in Toledo, Ohio, and part of a Ford plant in Wayne, Michigan—were the first to join the picket lines.
As of late Wednesday, Ford had proposed a 20% wage increase. General Motors had offered 18% and Stellantis 17.5%. The UAW is demanding a 36% pay increase.
“We’ve had over 1000 demands,” said GM CEO Mary Barra. “I’m extremely frustrated and disappointed. We don’t need to be on strike, right now. We put a historic offer on the table.”
Fain said, “We’re not going to wreck the economy. We’re going to wreck their economy because it only works for the billionaire class. In their economy, one of our workers would have to work 400 years to earn what a CEO earns in one year.”
I enjoy the rhetorical flourishes from Labor’s spokespersons much more than the boardroom blahs that emanate from careful corporate mouths. Yet, it’s not quite true that “their economy” only works for them. If this strike lasts for months, the entire supply chain will feel this pain directly, including thousands of non-unionized people who work in advertising and marketing.
Running the Numbers
Fain mentioned how new car prices are up 34% and how the American car buyer is being gouged. Let’s consider for a moment what it takes for a person to buy a new car and a house today.
The average monthly car payment for new cars is $716. The average cost of car insurance is about $168 per month. There are also gas, tolls, and maintenance costs to consider, which brings the cost of owning a new car well over $1000 per month. Many households have more than one car or truck.
Additionally, housing prices are soaring along with interest rates. Ten years ago, the median cost of a home was $248,800. The current median price is $416,100 and interest rates are over 7% which produces a monthly payment of about $2700/month, depending on your local tax rates. Plus, any HOA fees, remodeling costs, monthly utilities, and maintenance.
The median salary in the US is $89,000 per year—half of the population earns less than this amount, while the other half earns more than the median figure. If you make $87,000 a year and live in Texas (which has no state income tax), your net pay will be $68,437 per year or $5,703 per month.
When a family has two car payments and a median house payment to make, it’s more than $5K per month out the door before they eat, go to a movie, or do anything else.
According to employment website ZipRecruiter, the average UAW compensation is $25 per hour or $52,771 per year. At that rate, it would be hard to afford a new 2024 GMC Sierra 1500 AT4, which costs $78,200 without a lot of add-ons. Monthly payments on the new truck would be $1395/month, considering a $1000 down payment, a 72-month term, and a 9% rate.
Plus, Toys! Don’t Forget the Toys
“Tow hitches of the world, prepare for glory.” Provided that you’re able to afford a new truck, the assumption in GMC’s advertising is you’ll use it to tow your very expensive toys.
https://youtu.be/xOiUFZvjKzU?si=me9SYx958qxBY1eF
The boat featured in the GMC ad is right off the showroom floor and has three new outboard motors. I can’t tell which brand of motor they are, or which brand of boat, but new 300-horsepower Mercury outboard motors go for $34,300 each (not including the cost of the propellors). Now, you just need the boat, the gas, the insurance, and so on. Here’s a used 2021 Boston Whaler for $279,500. The advertised package costs a half million dollars, give or take a few grand.
To bring it back around to the strike and the income inequality at the center of it, the union’s request for a 36 percent pay increase, if provided, would boost the average UAW worker’s pay by $18,997—still well below the national mean of $89,000 and not nearly enough money to afford the new cars and trucks that they manufacture.
