This Friday, Denny Ramos is more excited than usual for payday. The 47-year-old autoworker just got a raise -- to $21 an hour, up from $17.86. Ramos works as a material handler at General Motors' Lansing Grand River plant in Michigan, moving parts to and from assembly lines that crank out the Cadillac CTS, ATS and Chevrolet Camaro models.
Thanks to a newly approved contract between General Motors and the United Auto Workers union (UAW), Ramos is slated to earn $30 an hour by 2019. He’s one of thousands due for a healthy pay bump under new labor deals finalized last month. The union inked similar contracts with Ford and Fiat Chrysler Automobiles, covering a total of 140,000 workers.
“It’s a contract with real gains for workers at a time when that’s become rare,” says Harley Shaiken, a professor at the University of California, Berkeley, and auto industry labor expert. “The question in recent years has been: How much will you have to concede in contract talks? This turns that around.”
With U.S. car sales on track to top a sales record reached in 2000, it’s arguably the best time to be an American autoworker in over a decade. As recent federal jobs reports show, employment is growing steadily and industry outlook remains positive. Many workers await pay raises. And while freshly-minted contracts at the Big Three do not apply to parts suppliers or the non-union, largely foreign-owned automakers based in the South, the deals could exert upward wage pressure on both those groups, according to industry observers. Either way, the landscape has not appeared as friendly to labor since before the most recent economic crisis.
Ramos lost his job as a sales representative during the last recession. In May 2012, he landed a job on GM’s assembly line in Lansing Grand River. Just three years before he arrived, the company had gone bankrupt after receiving billions in federal aid. Back then, the plant was not yet producing the Chevy Camaro. And, most importantly for Ramos, GM was hiring new workers at a fraction of the cost of senior employees.
“It’s the automotive industry, so naturally I had some reservations, some concerns,” says Ramos, who lives in Lansing and has uncles who worked for GM. “But I knew they would bounce back.”
His starting pay was $15.50 an hour. Some of the employees next to him -- doing the same work -- were earning around $30. The tiered wage system still exists at the Big Three, but it’s slated to be phased out under the new union contracts. Over the next eight years, new workers will be hired at wages progressively closer to what so-called “traditional” employees earn. Current employees will see the pay gap gradually disappear in a shorter time -- for Ramos, it’ll take four years.
“At least now I know that I have a definitive road to get to the top level, and I’ll be making the same amount as the guy next to me,” Ramos says. “Although it’s gonna take me longer than it took some of them, at least I know I have a road to get there.”
In the golden years of the UAW, the union’s contracts with Detroit-based carmakers set wage and benefit standards for private sector employers across the United States -- not just for the auto manufacturing sector. That hasn’t been the case for decades. But the new deals may well boost standards in other portions of the auto industry, according to Shaiken.
“How much that standard will be applied elsewhere, we will see in the coming months and years,” he says.
Hundreds of thousands work for parts manufacturers that aren’t covered by the contracts. Pay at these jobs tends to be lower than at the assembly plants: The former earn an average of $27.76 an hour, compared with $20.21 for the latter, according to the most recent data from the Bureau of Labor Statistics.
Others, meanwhile, are employed by foreign-owned automakers that have set up shop in the South, a region where labor costs are low, unions are rare, and the politicians tend to be more business-friendly.
Famously, the UAW has failed to organize a single one of these sprawling assembly plants. Still, union drives persist at Nissan in Mississippi, Mercedes in Alabama, and Volkswagen in Chattanooga, Tennessee. In the latter case, a small group of skilled trade workers are due to complete a vote on union representation Friday. The election comes more than a year after a larger group of the plant’s hourly workforce voted against joining the UAW.
Higher pay at the Big Three could lend a hand to these ongoing organizing drives by underlining what labor activists like to call the “union premium” -- the boost in wages and benefits workers typically receive from union representation. Under the new contracts, the gap in pay between unionized autoworkers in Michigan and non-union workers in Tennessee will likely widen over time. (Volkswagen did not provide an average wage for production workers in Chattanooga, but according to Glassdoor.com, assembly workers there make an average of $15.64 an hour.)
“I think for these workers [in the South], it’s going to clarify the importance of the union for setting standards in the industry,” says Bruce Nissen, a labor studies professor at Florida International University.
By the same token, says Harley Shaiken, creeping pay at the Detroit brands could encourage the foreign-owned plants to voluntarily boost pay in order to mitigate the threat of unionization.
Of course, the good times in auto manufacturing will not last forever.
“I grew up in an auto town, and if there’s one thing that’s certain, it’s what goes up must eventually come down in this industry,” says Kristin Dziczek, an industry labor expert at the Center for Automotive Research.
Most industry forecasters are not projecting a downturn within the next four years, although it will come eventually, according to Dziczek. Moreover, she says, U.S. employment is likely reaching its peak: The market is near a plateau and forecasts do not show large increases in American output.
Still, for an industry that only recently weathered one of its roughest patches in history, the new contracts bring welcome advances.
“What’s so impressive is they show you can have high profitability and high wages in a competitive industry,” says Shaiken. “That’s not a small achievement.”