Explainer: United Auto Workers UAW Strike 2023- What you need to know

Published on 20 September 2023 at 23:56

A labor dispute is currently underway involving the United Auto Workers (UAW), a union representing approximately 145,000 employees in the automotive industry.

The UAW members have expressed dissatisfaction with their working conditions and compensation, prompting them to initiate a work stoppage, commonly referred to as a "strike." This is not the first time they have taken such action; in 2019, they went on strike against General Motors, resulting in significant financial losses for GM and some economic challenges in Michigan.

Fast-forward to 2023, and the UAW is once again engaged in a strike, but this time it carries even greater significance. It marks the first instance in history where the UAW has simultaneously struck against all three major automotive companies: Ford, General Motors (GM), and Stellantis. These three corporations collectively manufacture approximately half of the vehicles produced in the United States and are Collectively refered as BIG THREE

The primary reason behind this strike is the discontent voiced by UAW leader Shawn Fain. Fain has expressed concerns about the inadequacy of workers' wages relative to the rising cost of living (inflation). He is also critical of a compensation system that pays new employees less and is advocating for improved benefits, including overtime and retirement plans. Additionally, Fain aims to secure job stability for workers as the automotive industry transitions to producing more electric vehicles.

On the flip side, the automotive companies are apprehensive about the rising labor costs compared to non-unionized competitors. This concern is amplified by their ongoing efforts to shift towards electric vehicle production, a significant transformation within the industry.

In essence, the current situation can be likened to a substantial disagreement between the workforce responsible for vehicle manufacturing and the corporations that produce these automobiles

So here is all you need to know about the issue!

So What does UAW want in the latest UAW Strike 2023?

The United Auto Workers (UAW) union is currently engaged in a strike at major car companies, including General Motors, Ford, and Stellantis. The strike has been initiated by the UAW to press for specific demands in their negotiations with these automakers. Here are the four key demands put forth by the UAW:

  1. More Pay: The UAW is advocating for increased wages for workers. They are specifically requesting a 36% wage hike over the course of four years. Currently, employees at these large car companies earn hourly wages ranging from $18 to $32, depending on their tenure. The UAW argues that these wages have not kept pace with the rising cost of living. Additionally, they highlight the substantial earnings of top executives within these car companies and the substantial profits generated by the corporations.
  2. End to Tiered Employment: The UAW opposes the practice of paying some workers lower wages and providing them with fewer benefits based on their status as newer employees. They are seeking to eliminate this tiered employment system. Car companies argue that they utilize temporary workers to maintain the efficiency of their factories and adapt to shifts in market demand.
  3. Worker Protections in the Electric Vehicle Era: As the production of electric vehicles becomes more prevalent, the UAW expresses concerns about the potential closure of factories and the resultant job losses. They are seeking the right to initiate strikes if car companies plan to shut down factories while transitioning from manufacturing gas-powered vehicles to electric ones
  4. Improved Employment Benefits: The UAW aims to reinstate certain benefits that workers lost during contract negotiations in 2008, a period marked by a significant economic crisis. Employees hired after 2007 currently receive less generous benefits, and the UAW is advocating for improved benefits for all workers.

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Do UAW  Workers get a pension ?

Here is what happened to the retirement pension plans for hourly and skilled trade employees at Ford, General Motors (GM), and Stellantis (formerly known as Fiat Chrysler Automobiles).

  1. Ford Motor Co. UAW Retirement Plan:
    • Closed for hourly employees on Nov. 19, 2007.
    • Closed for direct hire skilled trade employees on Oct. 24, 2011.
    • As of Dec. 31, 2021, the plan had $25.7 billion in assets, as reported in its most recent Form 5500 filing.
  1. General Motors Hourly-Rate Employees Pension Plan:
    • Closed for collectively bargained employees on Oct. 1, 2007.
    • As of Dec. 31, 2021, the plan had $44.5 billion in assets, as reported in its most recent Form 5500 filing.
  1. Stellantis Pension Plan:
    • Stellantis, the parent company of Chrysler, Dodge, Jeep, and Ram, closed its pension plan in 2019.
    • The decision to close the plan was announced in August of that year.
    • The closure affected approximately 15,000 retirees and employees who were previously enrolled in the plan.
    • The reason cited for the closure was the high cost of maintaining the plan and the challenges of funding it.

In essence, these automakers made the decision to close their pension plans for various categories of employees due to financial considerations and the challenges associated with sustaining these plans. This meant that new employees or those not already enrolled in the pension plans likely had different retirement savings options, such as 401(k) plans, while existing plan participants continued to receive benefits according to the terms of their respective plans.

Where do negotiations stand between UAW and Automoakers in UAW strike 2023?

Initially, the union demanded an immediate 20% raise and four additional raises of 5% each over the course of a four-year contract. All three automakers have now stated that they are willing to offer a 20% raise during the contract period, with a 10% increase at the start.

The ongoing negotiations between the United Auto Workers (UAW) and the major automakers have exposed a complex web of issues at the heart of the American automotive industry. At stake are not just pay raises but also questions of economic sustainability, worker well-being, and corporate responsibility.

The UAW's initial demand for a 20% immediate pay raise and subsequent incremental raises speaks to the economic concerns of its members. In an era of rising inflation and soaring living costs, it's no surprise that workers are seeking substantial wage increases. Moreover, the UAW's emphasis on ending tiered employment and securing benefits aligns with its commitment to workers' rights.

On the other side of the bargaining table, automakers are navigating a rapidly changing landscape. The shift toward electric vehicle production presents significant challenges, with considerable investments required in research, development, and infrastructure. In this context, the automakers' offer of a 20% pay raise over the contract's duration reflects their willingness to address workers' concerns while acknowledging the need for fiscal responsibility.

The blame game surrounding the negotiation's progress underscores the tensions inherent in such high-stakes discussions. Both sides have valid points. While the union contends that automakers can afford these wage hikes given their profits, the automakers express concerns about cost management and competitiveness.

Shawn Fain's perspective—that labor costs account for a mere 5% of vehicle production expenses—raises questions about how pay raises might impact vehicle prices. However, the broader economic context, including supply chain challenges and inflation, complicates this picture.

As this negotiation unfolds, it is clear that the outcome will have far-reaching implications. It's not just about wages; it's about the future of work in the automotive industry, the viability of electric vehicle production, and the delicate balance between corporate profitability and worker prosperity. The resolution will shape the course of labor relations and industry dynamics, making it a pivotal moment for all stakeholders involved.

What will be the financial Impact if UAW Strike of 2023 Continues?

Targeted strikes by the  union currently have a limited impact on the U.S. economy. But the threat of a full walkout looms over negotiations with auto giants Ford, General Motors and Stellantis. 

  • Impact on Automakers: The strike is affecting the Detroit Three automakers at a critical time when they are trying to increase the production of both gasoline-powered and electric vehicles to meet the demand for new cars. If the strike continues and leads to a complete halt in production, it could cost each automaker between $400 million to $500 million per week according to Reuters. This estimate is based on the assumption that no production takes place during the strike.
  • Potential Recovery: While some of these losses could potentially be recovered by increasing production schedules once the strike ends, this becomes less feasible if the strike drags on for weeks or even months.
  • Past Example - GM: General Motors (GM) experienced a 40-day strike by the United Auto Workers (UAW) in 2019, resulting in a $3.6 billion hit to GM's fourth-quarter profit. This demonstrates the significant financial impact that labor strikes can have on automakers.
  • Impact on Suppliers: The strike's effects aren't limited to automakers alone. It can also affect companies that supply parts to the automotive industry. This includes companies like Aptiv, Lear Corp, and Magna. A broad strike could squeeze the quarterly profits of these auto part suppliers.

What Other Financial Experts Say about UAW Strike of 2023 ?


The ongoing strike by the United Auto Workers (UAW) and its potential financial impact has garnered attention from various experts and stakeholders. Here's what experts and key figures are saying about the potential consequences of the strike:

  • Anderson Economic Group: An analysis by the Anderson Economic Group, a consulting firm, estimates that a 10-day strike by the UAW could result in costs exceeding $5 billion. This figure takes into account the financial impact on manufacturers, workers, suppliers, and dealers within the automotive industry.
  • Oxford Economics: According to Oxford Economics, the strike is not expected to significantly bolster labor power or lead to a substantial increase in prices. However, it could potentially reduce the nation's economic output by approximately 0.2% to 0.3% due to a slowdown in car production.
  • ING's Chief Economist: The impact on car prices may not be severe if the issues are resolved quickly. However, the strike could have broader economic repercussions, particularly in the Midwest, where numerous auto-related jobs are concentrated. It may also affect suppliers and dampen consumer spending.
  • Bernie Sanders (Senator): Senator Bernie Sanders expresses support for the UAW's demands, emphasizing that auto workers deserve a fair share of the profits generated by their hard work.
  • Moody's Analytics Economist: The strike has the potential to disrupt the progress made in car production throughout the year and could lead to higher car prices, potentially making it more challenging for people to purchase new vehicles.
  • Anderson Economic Group CEO: Even a short strike could impact Michigan's economy and potentially the nation's as well. A previous strike in 2019 resulted in a recession in Michigan. If this strike involves a greater number of workers and plants, its impact could be more severe.
  • S&P Global Market Intelligence: While a strike might increase car manufacturing costs, the gains in productivity over the years may help offset some of the impact. Nevertheless, it could potentially result in American-made cars becoming more expensive compared to alternatives.
  • D. Vance (Senator): Senator J.D. Vance expresses hope that the strike can be avoided, as it could harm both the economy and individuals dependent on the auto industry for their livelihoods.

What can be other Potential Consequences of the UAW Strike of 2023 ?

  • Local Businesses: Businesses in proximity to the strike sites may experience reduced revenue as striking workers may not spend as much.
  • Layoffs: Prolonged strike action could lead to companies near affected auto plants having to lay off workers due to reduced production.
  • Suppliers: Car manufacturers might delay or cancel orders with parts suppliers, potentially resulting in layoffs among these suppliers, impacting additional workers.
  • Tax Revenue: A decrease in the number of people working could lead to reduced tax revenue for the government, which could affect funding for various programs.
  • Car Prices: If the strike persists, it might contribute to a shortage of cars, potentially driving up prices for consumers.

History of United Autoworkers Union (UAW):

 The United Auto Workers (UAW), founded in 1935, is an organization dedicated to representing employees at prominent American automobile companies such as Ford, General Motors (GM), and, previously, Chrysler (now part of Stellantis). In the past, working in the automotive industry was highly sought after, as it provided regular individuals with the opportunity to secure stable jobs and achieve middle-class status.

At its zenith in 1979, the UAW boasted a membership of nearly 1.5 million individuals, a substantial figure. However, the composition of the UAW has evolved over the years. Today, the UAW represents over 400,000 workers engaged in a diverse array of occupations, extending beyond automotive manufacturing. Some of its members work in healthcare facilities or educational institutions. Nonetheless, more than 140,000 UAW members continue to be employed at Ford, GM, and Stellantis, the very automakers for which the union was originally established to advocate.

Historically, auto workers in the United States, especially those affiliated with the UAW, faced significant challenges in securing pension benefits. This struggle is outlined below:

  1. Pension Struggle (1949): In 1949, many auto workers toiled in demanding conditions without access to retirement pensions, a benefit enjoyed by company executives. The absence of retirement security compelled these workers to labor until they were physically incapable of continuing.
  2. Role of UAW: Under the leadership of Walter Reuther, the UAW vigorously championed improved working conditions, including pension plans for auto workers. They insisted that companies like Ford incorporate pension provisions into worker contracts.
  3. Pro-Pension Rallies: The UAW organized nationwide rallies to garner public support for pensions, employing the slogan "Too old to work and too young to die."
  4. Ford Strike: In 1949, Ford workers voted for a strike to demand pensions. This strike ultimately resulted in a significant breakthrough in September 1949, when the UAW secured a $100-a-month pension for auto workers aged 65 with 30 years of service.
  5. Impact on Social Security: The UAW's success influenced Congress to swiftly increase Social Security benefits for all Americans immediately after Ford signed the pension agreement. This underscored the broader influence of the labor movement.
  6. Business Support: Business lobbyists recognized that raising Social Security benefits could be a cost-saving measure for their employers, aligning their interests with those of the UAW.
  7. Pension Principles: The UAW established crucial pension principles, including joint administration, full company funding, and guaranteed benefits through a secure fund. These principles have endured for decades.
  8. Expanding Pensions: The UAW aimed to extend pension benefits to workers at other companies, and the patterns set at major corporations like Ford and General Motors shaped negotiations at smaller firms as well.


The funding mechanism for the United Auto Workers (UAW) and its ability to support its members during strikes is facilitated through a system involving union dues and a strike fund. Here's an overview of how this funding process works:

  1. Union Dues: UAW members regularly contribute dues and fees to their union as a requirement of their membership. For instance, UAW members typically pay an amount equivalent to about two hours' worth of their monthly wages. Additionally, new members may be required to pay a one-time initiation fee, which can be relatively substantial.
  2. Building Strike Funds: A portion of the dues and fees collected from members is allocated to establish a strike fund. This strike fund essentially functions as a financial reserve for the union, serving the specific purpose of assisting members in times of strikes or labor disputes.
  3. Receiving Strike Benefits: When a strike is initiated, UAW members in good standing with the union have the option to apply for financial assistance from the strike fund. These funds are intended to help cover essential expenses such as housing, food, and basic necessities. It's important to note that while these strike benefits provide financial support, they do not fully replace the income lost during a strike.
  4. Distribution: In the past, members typically had to physically visit their local union office to collect their strike benefits. However, some unions are exploring electronic methods to distribute these funds, which can be more convenient for members.

The significance of having a substantial strike fund lies in its ability to demonstrate to employers that workers have the financial means to sustain a strike for an extended period. This can make strikes more effective by pressuring employers to take workers' demands more seriously during contract negotiations.

While strike funds are a critical source of financial support for union members during strikes, alternative sources of assistance are limited. In a few states like New York, New Jersey, and recently California, workers may be eligible to collect unemployment benefits while on strike. However, this is not the case in most parts of the United States. Occasionally, charitable organizations, including those in the entertainment industry, step in to provide financial aid to workers during strikes, with contributions from celebrities and nonprofit organizations aimed at helping workers who are not receiving their regular paychecks during a strike.

Whats the Bottom Line?

The United Auto Workers (UAW) strike of 2023 represents a significant moment in the history of labor relations within the American automotive industry. The demands put forth by the UAW reflect the concerns of its members regarding wages, job stability, and worker benefits in the face of a rapidly changing industry landscape. On the other hand, the automotive companies are grappling with the challenge of balancing rising labor costs with their transition toward electric vehicle production. The financial implications of this strike are substantial, potentially costing automakers hundreds of millions of dollars per week and impacting related industries. While both sides have made efforts to reach a resolution, the strike's duration and outcome remain uncertain. Ultimately, the UAW's strike serves as a reminder of the complex dynamics and economic consequences that underlie labor disputes in one of America's cornerstone industries.

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