Detroit and the Future of Labor

November 21, 2019 mariatus 1656 Views

By: Kalena Thomhave

LATE LAST MONTH, the United Autoworkers (UAW) strike against General Motors (GM) ended after five weeks. Workers on the strike line took massive pay cuts, earning just $275 per week from the union in order to fight for a better contract. Since the strike began in mid-September to its end, estimates suggest that GM lost $2 billion. Yet a few weeks out from a new contract agreement, not all workers are satisfied with the terms. Perhaps this is a signal that we should re-imagine what labor could look like in the United States.

While the union won better wages, part of the motivation for the strike concerns the concessions that the union made a decade ago when GM was struggling. The union agreed to a “two-tiered” wage structure in order to keep the company afloat: now, contract workers doing the same job as permanent employees get paid much less and have little chance of promotion—and they’re not members of the union, diluting the power of a collective workforce.

“I thought this strike was going to be revolutionary, a history-maker,” a UAW worker told The Guardian. “I thought America was due for a revolution and our strike was going to be it.”

One of the primary reasons for the strike, the two-tiered structure, remains mostly intact—temporary workers now have a “path to employment.”

Yet today, GM is no longer struggling, boasting profits of $8.1 billion in 2018 alone. Even so, about a year ago, GM announced it was laying off 15 percent of its salaried workforce and closing four North American plants (one of these plants, Detroit-Hamtramck, will remain open due to the terms of the new contract).

Where does the city of Detroit stand in all of this? Of course GM employs workers not merely in Detroit but across Michigan and the country at large, yet it was the auto worker jobs largely based in and around Detroit that set the standard for well-paid, “middle-class” employment after World War II. This was thanks to wins from the union movement. And in so doing, Detroit flourished.

There is more than one reason to point to for Detroit’s decline, but in light of the UAW returning to the picket line for the first time since 2007, we should focus on U.S. automobile companies. In their relentless search for profit, and after suffering blows from Japanese and European competitors, these corporations expanded outside of Detroit so they could pay lower wages to non-union workers, like those in the U.S. South and abroad. As a result, Detroit’s population fell drastically.

With a decline in union density comes a decline in union power, partly responsible for the overall wage stagnation that has affected low- and middle-income workers in the U.S. over the past several decades. But the federal government can strengthen unions and also strengthen the cities that so relied on their power—namely, Detroit.

There are obvious solutions like patching the holes in the National Labor Relations Act—but the U.S. should also take a page out of European workers’ playbook. Instead of allowing employers to fear unionization because it would disadvantage them against their competitors, the federal government could institute sectoral bargaining on a national level.

Currently, the U.S. system of unionization is what’s called contract unionism: there are different union “shops” that agitate for their own interests. But sectoral unionism, as the name suggests, expands these protections across an entire sector, like, say, the auto industry.

Basic worker protections, like wages and health care, could have minimum guarantees under GM, Ford, and Chrysler. If they are all required to do so, none of these companies would be at a competitive disadvantage for treating their workers well. Workers in these industries would be able to bargain collectively and likely avoid the two-tier wage structure that currently plagues GM’s plants.

Such a system would reduce economic inequality much more than contract unionism, according to a report by the Center for American Progress. Happily for the employers themselves, a system of sectoral bargaining also reportedly increases productivity among workers. Just ask Europe.

What are the costs for something like this? It would require a Department of Labor that is decidedly pro-worker—perhaps something the next administration, if Democratic, might be interested in pursuing. The auto companies would of course be opposed, and would likely spend a great deal of money to lobby against such action.

However, these companies have the money to pay their workers more—especially if they have no choice. By raising wages and decreasing income inequality, we could begin to transform jobs available in the city of Detroit.

“The workers just want to be acknowledged that they are a big part of why GM is where it is today. If it wasn’t for their employees and the taxpayers of this country—I don’t want anyone to forget that—the taxpayers bailed GM out,” said striking UAW worker Steve Frisque in an interview with In These Times.

“We sacrificed for GM, and now it’s time for GM to share the wealth.”

Kalena Thomhave is a first-year Master of Public Policy student at the University of Michigan’s Gerald R. Ford School of Public Policy. She is a freelance writer on poverty inequality and a research assistant at Poverty Solutions.