Why Nissan, Toyota workers can 'thank' the UAW for pay hikes
Foreign automakers are using a ‘union substitution' strategy in order to deter unionization, which means matching UAW contracts.
United Auto Workers (UAW) president Shawn Fain calls it the “UAW bump,” in which non-union auto workers are seemingly getting pay hikes thanks to the UAW’s contracts with the Big Three. Whatever workers are calling the phenomenon, they are likely very grateful for the extra pay this Thanksgiving holiday.
Nissan became the latest non-union automaker to hike pay for its US workers, with the Japanese company increasing top wages by 10% starting this January. Workers not at the top wage scale will also receive hikes, with 9,000 US workers in total receiving these wage gains. Nissan also said it is eliminating wage tiers across its workforce.
If some of the wage gains and changes sound familiar, it is because they echo some of the gains reached by UAW workers in their bargaining process. The pattern agreements the UAW struck with GM, Ford, and Stellantis include a 25% hike in base wages through 2028, including an immediate 11% bump as well as ratification bonuses among other benefits.
Nissan’s pay hikes follow similar moves made by Hyundai, Toyota, and Honda in recent weeks for their US workers, none of whom are unionized.
“Non-union workers can thank the UAW for their recent pay raises,” said automotive manufacturing expert Sam Fiorani of AutoForecast Solutions to Yahoo Finance. “It was entirely expected that wages would go up in the face of recent labor changes. There’s no reason for Toyota, Honda, Nissan, and the rest to raise their workers’ pay except for the pressure put on them from the union.”
Labor expert Marick Masters of Wayne State University calls what these foreign automakers are doing the “union substitution” strategy.
“Clearly, such actions by nonunion companies can be viewed as part and parcel of a ‘union substitution’ strategy, which seeks to deter unionization in specific companies by paying workers sufficiently comparable wages,” Masters said to Yahoo Finance.
Masters noted the non-union foreign automakers have “skillfully navigated” union avoidance in their US operations thus far. It also helps that these automakers have placed factories in states that are not generally union friendly, like Alabama (Honda), Georgia (Hyundai), Tennessee (Nissan), and Texas (Toyota).
While AutoForecast Solutions’ Fiorani said the foreign automakers needed to “narrow the gap” between the Big Three’s contracts with the UAW and their own workers in order to compete, there’s also the possibility that raising pay at these non-union companies helps them attract new labor from other industries as well.
“Raising their wages also enables them to recruit better for hourly workers, who compare wage offering not only to the unionized Big Three, but also other non-auto employers in their localities who may offer competitive compensation,” Wayne State’s Masters added. “This latter point is particularly important as wage rates have increased generally in the economy of the past couple of years after a long period of relative stagnation.”
For a union leader like Fain, moves by the Nissans and Toyotas of the world are music to his ears, in which the UAW hears a growing chorus of pro-union voices and new members.
"Even though you're not yet members of our union, that pay raise Toyota's giving you is the UAW bump," Fain said to Toyota workers. "UAW. That stands for, 'You are welcome.'"
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
