The United Auto Workers’ tentative deals with Detroit automakers mark the latest union victory in a year of multiplying strikes and sizable gains in a robust labor market.
The agreements could embolden other unions to take aggressive approaches to contract negotiations and fuel more strikes in coming months—as long as the economy stays strong.
If growth cools and unemployment rises, however, as many economists forecast, workers’ momentum could chill and tip the balance of power back toward employers.
“If there’s a recession or if the labor market gets loose again, will that interfere?” said Susan Schurman, a professor of labor studies at Rutgers University, referring to unions’ efforts. “History would predict that it would, but history has not been a good predictor in the last three years.”
Labor shortages since the pandemic hit in 2020 gave both unionized and nonunion workers more leverage than they had enjoyed in decades, driving big boosts in pay and benefits.
Union workers, however, have seen slower compensation growth than their nonunion counterparts because it takes time for multiyear union contracts to come up for renewal. Wages and benefits for union workers rose 3.8% in the July-through-September period from a year before, compared with a 4.4% gain for nonunion workers, according to the Labor Department.
One factor fueling unions’ demands is that they have seen pay rise faster for chief executive officers than for workers since the pandemic, said Kate Bronfenbrenner, a professor at Cornell University’s School of Industrial and Labor Relations. In the auto industry, CEOs now make about 300 times what rank-and-file workers make.
Strikes increase as unions see them work
More than 300,000 union members have walked off the job so far this year, the most since 2019, according to the Labor Department. The U.S. lost more than 11 million workdays to labor disputes this year through September, more than any full year since 2000.
Hollywood writers spent five months on strike before winning a new contract in September guaranteeing them higher royalty payments, protections against using artificial intelligence to write scripts, and mandatory staffing levels.
In October, 75,000 workers at healthcare giant Kaiser Permanente won pay increases and higher staffing levels after walking off the job for three days, the industry’s largest strike on record.
And in August, 330,000 drivers and package sorters at United Parcel Service represented by the International Brotherhood of Teamsters ratified a new five-year contract that would bring average pay and benefits for a full-time driver to $170,000. The deal averted a strike.
Public support for unions hit 71% last year, the highest level since 1965, before slipping slightly this year, according to Gallup polls. President Biden has been one of their most outspoken backers.
The UAW’s tentative agreements with General Motors, Ford Motor and Chrysler parent Stellantis included 25% pay increases over four years, cost-of-living adjustments to offset inflation, a shorter time before new workers reach maximum pay, better wages for temporary workers and the right to strike over plant closures.
If approved by union membership, the agreements would end a six-week strike that idled dozens of facilities across the country and kept about 45,000 workers off the job.
The UAW strike “raises people’s expectations,” said John Cakmakci, president of United Food and Commercial Workers Local 951, which represents 28,000 employees at Meijer grocery stores in Michigan. The union is one of hundreds negotiating a new contract next year.
Cakmakci said he hopes to win a 25% to 28% pay raise—roughly twice the wage increase in the last contract—as well as more paid time off and more generous health benefits.
“There’s a bit more confidence in getting it based on what other unions have done,” he said.
Successful strikes can be “contagious,” Cornell University’s Bronfenbrenner said. A wave of strikes also makes companies more willing to agree to worker demands just to keep them from walking off the job.
A big strike “makes every employer that has a contract coming up going, ‘you know, I don’t want that kind of fight’,” she said.
Labor’s momentum could depend on economy’s vigor
UAW President Shawn Fain wants to keep labor’s momentum going. The union will now focus on organizing nonunion plants, he said Sunday.
For all their headlines, unions represented just 6% of U.S. private-sector workers last year, according to the Labor Department.
Fain has also called on other unions to have their contracts expire on the same day as the UAW’s, April 30, 2028, “so that together we can begin to flex our collective muscles.”
But how long the strike wave lasts could depend on broader economic factors, such as the labor market’s strength, said Matthew Johnson, an economist at Duke University.
Many forecasters expect job and wage growth to slow and joblessness to rise over the coming year amid the highest interest rates in more than two decades.
Federal Reserve officials are likely to hold interest rates steady at a 22-year high at their policy meeting this week as they study the economic effects of their past increases. They also are likely to keep the door open to a future rate hike until they see a more convincing inflation slowdown.
“When that labor market cools, it will probably make it so that workers and unions have to temper what they bring to the bargaining table,” Johnson said.
Cakmakci, the UFCW leader, said the past few years of elevated inflation and low unemployment have made it easier for him to argue that his members deserve a big raise. If those conditions change, it might weaken his hand, he said.
“If the economy takes a nosedive or something like that,” he said, “it will kind of change the dynamic of negotiations.”
Write to David Harrison at david.harrison@wsj.com