Analysis: With U.S. labor tight, union workers make bolder contract demands
23/06/2023 11:30
By Lisa Baertlein and Bianca Flowers
June 23 (Reuters) - Workers at aerospace supplier Spirit
AeroSystems SPR.N were the latest U.S. union employees to
reject a contract their leaders negotiated with their employer,
joining freight railroad employees, airline pilots and others
who are growing more fed up with stagnant pay, high healthcare
costs, scanty sick time and uncertain scheduling.
In the past two years, Spirit employees, pilots at American
AAL.O and United UAL.O airlines, factory workers at farm and
construction equipment makers CNH Industrial CNHI.MI and Deere
& Co DE.N and freight rail laborers have all rebuffed deals
despite pay raises that in some contracts appeared significant.
Union workers missed out on a frenzy of wage increases by
employers desperate for workers during the height of the
COVID-19 pandemic. U.S. government data shows that in the first
quarter of 2021, labor shortfalls helped push wages for nonunion
private sector workers higher than those of their
union-represented counterparts.
That pay gap has shrunk as the worker shortage helped
unions offset inflation and benefit from record corporate
profits, KPMG chief economist Diane Swonk said.
"You're going to see catch-up in many of those contracts,"
she said.
Inflation has soared 18% from May 2019, according to the
Conference Board, a business think tank. Low unemployment makes
it easier for union workers to stand firm during negotiations.
"If it was harder to get a job, they might feel otherwise,"
Conference Board senior economist Erin McLaughlin said.
Union workers also want more affordable healthcare, paid
sick time and more-flexible scheduling for greater work-life
balance.
"We aren't going to settle for an economic package that
doesn't recognize the heroic efforts and personal sacrifices" of
U.S. West Coast dockworkers, union leader Willie Adams said this
month ahead of reaching a new deal.
Those longshore workers will vote in coming months on a
proposed contract that includes a 32% pay increase over six
years and a one-time "hero" bonus.
DEAL BREAKERS: MEDICAL COSTS, SICK DAYS
Late Wednesday, about 6,000 workers represented by the
International Association of Machinists and Aerospace Workers
(IAM) in Wichita, Kansas, rejected Spirit AeroSystem's offer
that included a compounded average pay increase of up to 34%
through general wages increases, cost-of-living adjustments and
a guaranteed annual bonus.
Some workers said the base wage increase was insufficient
and balked at higher out-of-pocket medical costs.
There are cautionary tales even with finalized deals. For
instance, some Caterpillar workers were not happy with a deal
that they ratified in March.
Sam Johnson, 43, a machinist at Caterpillar's CAT.N
plant in Decatur, Illinois, voiced frustration that his union
did not fight harder to bolster pay and shelter members from
healthcare cost increases in the deal.
"Even with the pay increase, I'm pretty much still in the
same position that I was when I was making less money due to
inflation," said Johnson, adding that nonunion machinists in his
area can make almost $8 per hour more than his new hourly wage
of $27.55.
Late last year, U.S. freight railroad workers rejected a
five-year contract that included a 24% wage increase, citing
lack of paid sick leave. Workers were angry after the deal was
imposed by Congress and President Joe Biden. Unions later
reached separate sick-pay agreements.
Union workers at CNH Industrial factories in Wisconsin and
Iowa in January ended a nearly nine-month strike in return for
wage increases of up to 38% over four years. That deal was
sweetened after workers rejected the initial three-year deal.
In 2021, Deere workers in the Midwest rejected two contract
offers before ratifying a deal to end a five-week strike.
"As long as the economy is chugging along — we're going
to likely see these kinds of rejections," said Todd Vachon,
Rutgers assistant professor of labor studies.
SEEKING HEFTY RAISE
Record employer profits strengthened West Coast dockworkers'
position at the bargaining table. Other unions have taken note.
Some 340,000 United Parcel Service UPS.N workers
represented by the International Brotherhood of Teamsters want a
healthy raise. The union also aims to use the new contract terms
to recruit members, including at Amazon.com AMZN.O warehouses.
Another major contract negotiation set to begin is that
of the United Auto Workers with the Detroit automakers, General
Motors GM.N , Ford F.N and Stellantis STLAM.MI . That union
has cited record profits as well.
In-demand airline pilots are leaning on labor scarcity as a
bargaining chip.
FedEx FDX.N cargo pilots in July will vote on a tentative
deal to give them a 30% raise as well as a 30% increase to their
legacy pension.
American Airlines pilots rejected a company offer last year,
and last month reached a deal to increase the value of their
contract by about $8 billion.
Pilots at United, working without a new contract since 2019,
overwhelmingly rejected a tentative contract last year. They are
pressing for higher pay than what Delta DAL.N provided in its
new pilot contract and similar improvements in work-life
balance.
"The company's profitability certainly gives room for them
to address pilot concerns," said Garth Thompson, head of United
Airlines' pilot union. "The pilot marketplace has become more
competitive. That has given us some leverage."
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(Reporting by Lisa Baertlein in Los Angeles and Bianca Flowers
in Chicago; additional reporting by Rajesh Kumar Singh in
Chicago; Editing by David Gregorio)
((lisa.baertlein@thomsonreuters.com))