The nearly 1 million people who work in the auto industry in the United States may soon be getting a nice raise. The United Automobile Workers and Fiat Chrysler have reached a new contract for the company’s 40,000 workers. Under the deal — which will be a template for talks with Ford Motor and General Motors — the hourly pay of veteran workers will rise from $28 to almost $30 over four years, while pay for new workers will rise from about $16 to $19 to about $29 over eight years. Non-union foreign carmakers in the United States and suppliers are now likely to feel pressure to move closer to the new industry standards.
The nearly 1 million people who work in the auto industry in the United States may soon be getting a nice raise. The United Automobile Workers and Fiat Chrysler have reached a new contract for the company’s 40,000 workers. Under the deal — which will be a template for talks with Ford Motor and General Motors — the hourly pay of veteran workers will rise from $28 to almost $30 over four years, while pay for new workers will rise from about $16 to $19 to about $29 over eight years. Non-union foreign carmakers in the United States and suppliers are now likely to feel pressure to move closer to the new industry standards.
Therein lies the real power in the new contract: It halts the long downward pull on wages in the auto industry that has persisted even as the industry recovered from the recession. In so doing, it reaffirms the power of unions to use the threat of a strike to demand a fairer share; UAW members at Fiat Chrysler had rejected an initial contract and were ready to walk out, which could have slowed the company’s recent progress.
There are also broader lessons here for policy makers. The new contract implicitly defines $30 an hour as a decent middle-class wage. That is well above the recent average of $21.08 for most workers, but below the nearly $32 that would be the norm if wages had kept pace with net labor productivity in recent decades. Clearly, unions can lift middle-class wages to a point, but more needs to be done. Higher federal spending on necessary public projects would lift pay by creating jobs; stricter laws on worker classification would ensure that employees are not wrongly denied overtime and benefits. In general, Democrats support such proposals, Republicans don’t.
Equally important, efforts to raise the median wage would strengthen the case for a federal minimum wage of $15. Opponents argue that $15 is not feasible with the average in the low $20s. But if steps are taken to raise middle-class wages to at least $30, a minimum of $15, phased in, would be feasible. Politicians need to follow where the autoworkers are trying to lead: Toward a future of higher pay and rising living standards.
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