General Motors should tell the UAW to hike

General Motors' leadership should not move in its negotiations with United Automobile Workers representing its employees. As in most unions, the UAW does not pay much attention to the high rhetoric of equity that it raises. They simply worry about maximizing their resources without taking into account broader economic factors.

But GM workers are already receiving a lot – a far better deal than other auto workers in the country. If GM offered more than the new, extremely generous contract it presented, a contract that includes new generous profit-sharing offers, it would betray its shareholders and jeopardize its economic viability. That is, it would act unfairly.

UAW sees things differently. In reference to GM's current profit status, the union says its members deserve salary improvements and fixed benefits. But their claims have a fatal factual defect. As the Center for Automotive Research notes: "Automakers point out that the average American worker pays 28% of his health care costs (Henry J. Kaiser Foundation, 2018), but that UAW workers do not Pay about 3% (Naughton, 2019). "Given the inflation of health care, it's absurd. It reflects a real increase in costs per employee without any significant cost-sharing measure – and thus encourages personal responsibility to seek more effective care options.

What about wages?

Although wage growth in production and supervisory staff has slowed down, GM's wages remain well above those of competition. As this graph shows, GM workers earn on average $ 13 more than employees of foreign manufacturers based in the United States.

CNBC also notes that of the three largest US automakers (GM, Fiat Chrysler and Ford), GM provided its employees with the largest profit sharing payments between 2015 and 2018: an average of $ 45,500. GM also employs far fewer contract temporary workers (7% of the total workforce) than the average of US-based foreign automakers (20%). And, which further indicates the greedy malfeasance of the UAW, its key leaders are under federal investigation and one has been indicted. CNBC also notes that "earlier this year, union leaders also received annual salary increases of 31%, which is comparable to two salary increases of 3% for senior executives in 2015 and 2017".

That's why GM should tell the UAW to go for a hike.

If GM produces returns, it will only promote tax self-destruction when an economic downturn will inevitably occur. Otherwise, we will have to come begging for another government document funded by us, the taxpayers. This is not acceptable. What we see here illustrates the stupidity of Senator Elizabeth Warren's promise to oblige boards of directors to give seats to union members. When unions are materially interested in short-term benefits, board members focus on long-term profitability.