Throughout his presidency, Joe Biden has touted himself as the "most pro-union president in history."
That claim is being tested as the president juggles two priorities at the center of his economic policy: accelerating the transition to clean energy and creating well-paying, union jobs.
As the threat of a strike looms amid negotiations between the United Auto Workers union and major US automakers, the White House faces increasing pressure to deliver on its promise of better wages and benefits for workers at electric vehicle facilities.
On Thursday, the Department of Energy announced it would provide up to $12 billion in loans to help carmakers retrofit existing manufacturing facilities for EV production and encourage those factories to create high-paying union jobs. The Energy Department stressed that the priority for federal grants would be given to "projects that are likely to retain collective bargaining agreements and/or those that have an existing high-quality, high-wage hourly production workforce."
"Under Bidenomics building a clean energy economy can and should provide a win‑win opportunity for auto companies and unionized workers," Biden said in a prepared statement.
The announcement, coming just weeks away from the Sept. 14 deadline for UAW and Detroit automakers to reach a new contract agreement, points to the delicate balance the administration is attempting to maintain between keeping its promise to the industry’s 150,000 unionized employees and accelerating the transition to clean energy.
UAW’s president Shawn Fain has publicly called for GM (GM), Ford (F), and Stellantis (STLA) to hike pay by 46%, return to traditional pensions, and implement a 32-hour workweek.
Some Wall Street analysts estimate the wage increases alone would increase the cost of EVs by roughly $1,500 to $2,000, creating a headwind to mass adoption and putting American carmakers behind foreign automakers that operate in "right to work" states to avoid unionization.
EV leader Tesla (TSLA) is the only American automaker that is not represented by a union.
"The UAW is certainly looking for all of the opportunities that as old school manufacturing of [internal combustion engine vehicles] closes down or shifts, that they have a seat at the table regardless of where those plants are opened," David Undercoffler, editor in chief at Autolist, said.
UAW’s demands point to a larger fear among auto workers about job security, as a move towards an all-electric future prompts a retooling of decades-old plants.
The absence of gas engines and transmissions makes EVs much simpler to manufacture, according to Undercoffler, triggering concerns about the need for fewer workers and fewer hours.
In its most recent round of layoffs, Ford attributed the cuts to a growth plan largely focused on a transition to electric, saying: "Delivering on the plan includes adjusting staffing to match focused priorities and ambitions, while raising quality and lowering costs."
"The critical issue in that transition is going to be wages," said Seth Harris, a professor at Northeastern University who served as acting secretary of labor under President Barack Obama. "Can workers earn the same quality wages in an electric vehicle battery plant that they were working?"
Robert Bruno, a professor of labor and employment relations at the University of Illinois, said UAW is well positioned to push for aggressive demands, largely because of the scale of investments going into the clean energy transition, stemming from Biden's landmark climate legislation, the Inflation Reduction Act.
Last month, the union successfully pushed to ratify an interim agreement at a GM factory that manufactures Ultium battery cells that immediately raised wages by $3 to $4 an hour.
"This is probably when their leverage is at its greatest because the domestic manufacturers really don't want to be shut down," Bruno said. "There's too much federal money that's available. There's too much investment that is now pouring into the United States."
The UAW has maintained that pressure on the president as well, holding back its endorsement of Biden’s reelection, citing concerns around electric vehicle policy. And there are signs that pressure may be spreading beyond Detroit now.
On Monday, a coalition of labor unions and civil rights groups launched a pressure campaign targeting Hyundai’s EV plant and suppliers, calling on the South Korean automaker to "enshrine high-road commitments to workers and their communities in an enforceable agreement."
"I think there will be pressure on all of these companies, particularly using the leverage of the electric vehicle credits in the Inflation Reduction Act to push them to provide good quality union jobs to their workers," Harris said.
This post was edited by Grace O'Donnell.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita.
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