Reality Check: Union members are getting hefty increases this year. Here's why it's not shocking.
Most multi-year agreements being negotiated in 2023 are replacing contracts negotiated before the pandemic, Quiet Quitting, and the Great Resignation.
On Tuesday, CNN ran a glowingly pro-union article entitled “Unions are the strongest in decades. Nearly a million Americans got double-digit raises as a result.”
To read the article, one can rightfully assume that—with or without striking—unions are achieving remarkable gains at the bargaining bargaining table.
“Nearly 900,000 Americans sitting down to Thanksgiving dinner this week will have unions – and the double-digit pay increases they won – to thank,” CNN gushed. “That’s how many unionized workers have won immediate pay hikes of 10% or more in just the last year, according to an analysis by CNN.”
While the double-digit pay increases are indeed impressive if taken at face value, in most cases, unionized employers are just catching up to what other employers have been required to do—raise wages substantially—amid a very tight labor market since the end of the pandemic.
Many unionized workers missed out on the hefty increases given during the post-pandemic Great Resignation.
On social media, union acolytes are using the CNN article to tout the benefits of unionization.
However, they are not bothering to address the fact that many of the unions negotiating higher wages and benefits now have also been locked into multi-year contracts that had their increases frozen at lower percentage increase rates than their non-union counterparts.
For example, in June 2022, CNN noted that full-time workers “are making 6.2% more than they were in April 2021.”
”From December 2021 to December 2022, employer wage costs in private industry increased 5.1 percent,” the Bureau of Labor Statistics (BLS) noted in February this year.
Even California Governor Gavin Newsom weighed in on ‘X’ (formerly Twitter) this week, stating average hourly wages are up 18% from three years ago.
In September, the Society of Human Resources Management (SHRM) reported that salary increase budgets in 2023 reached their highest level in 20 years, and U.S. employers, on average, increased salary budgets by 4.4 percent in 2023.
Indeed, for many employers, the ability to increase wages in order to retain employees in the inflationary post-pandemic world has been a struggle that is only now starting to abate.
Meanwhile, in most cases, unionized employers who had contracts negotiated before the pandemic were mostly spared from the higher-than-normal increases.
Languishing under old contracts
As higher wage increases that had not been seen in decades became the norm for many employers—the majority of which are not unionized—in the years since the pandemic ended, many of the union workers CNN is celebrating currently languished under contracts negotiated prior to the pandemic.
In its article Tuesday, in several of the contracts with double-digit raises that CNN cited—like the UAW’s at the Big Three, the Teamsters at UPS, as well as a coalition of unions at Kaiser Permanente—the network fails to mention that, in each of those cases, their prior contracts were negotiated before the pandemic.
Good contracts…but ‘historic’?
Kaiser Permanente and its unions. In the case of Kaiser Permanente, while the unions and the employer raised starting wages in its newest contract, many pro-union media outlets praised the 21 percent increases that were negotiated into the agreement, even calling it ‘historic,’ yet seemed to gloss over the fact that the 21 percent is spaced out over the life of the four-year contract each year, as follows: 6%, 5%, 5% and 5%, according to a Kaiser summary.
In fact, the 2023 contract replaced a 2019 contract, which was negotiated pre-pandemic, that included across-the-board increases of 3% 3% 3% 3% for California workers, and 3% 2% 2% 2% increases for Colorado, Hawaii, Mid-Atlantic States and Washington, as well as 1% lump sum payments for certain states.
Obviously, the 2023-negotiated increases, like everywhere else, were higher than those negotiated in 2019. However, the question remains whether it was market forces or “union power.”
The Teamsters at UPS. In August, where the Teamsters negotiated a new five-year contract with United Parcel Service (UPS) to great media fanfare, union workers saw a 10 percent increase in the first year of the contract.
While the Teamsters agreement at UPS has also been called ‘historic,’ it is a “front loaded contract” according to Bloomberg, that will only “boost the cost of wages and benefits by an average of 3.3% over five years.”
"It’s a barbell structure where it’s heavier in the beginning of the contract," noted UPS CEO Carol Tome in an interview with CNBC. "We’ll go in the middle of the contract and it steps back down. This 46% of the cost increase happens in the first year, so imagine what the last four years of the contract are!"
Like the Kaiser Permanente contract, the 2023 contract negotiated between the Teamsters and UPS replaced a contract negotiated pre-pandemic, in 2018.
“A labor-friendly UPS contract was somewhat foreordained because the last agreement, in 2018, ended up allowing UPS to bypass much of the post-pandemic employment-cost spikes that brought higher employee costs on rival FedEx Corp., (NYSE: FDX) among others,” FreightWaves.com explained earlier this month.
In fact, the 2018 contract at UPS was so unpopular with the Teamsters’ members that they voted to reject the contract, only to have their votes overruled by Teamster officials and have the contract imposed on them by the union.
By the time the 2023 contract was negotiated, labor market shortage had also impacted UPS—so much so, infact, that the company and union agreed to Market Rate Adjustments (MRAs) that superseded the 2018 negotiated wage rates.
“‘Market Rate Adjustments’ or MRAs are adjustments made to the UPS wage rates meant to help the company keep up with competition,” one Teamsters local explained to its members in 2022.
UPS management introduced a significant wage hike for members throughout the pandemic in order to keep pace with high wages in competitor businesses like Amazon. This wage rate is not negotiated by the Union but implemented by the Company without the Union’s say. [Emphasis added.]
“The current contractual starting pay of $15.50 an hour is so low—even lower than nonunion Amazon—that in many areas of the country UPS has resorted to raising wages unilaterally using MRAs in order to attract enough workers into its facilities,” noted WSWS.org in early August [Emphasis added]. “Because the MRA is implemented solely at the company’s discretion, this means the company has the authority to raise, lower or eliminate them entirely as they see fit.”
While the Teamsters’ 2023 agreement with UPS brings the union’s members’ wages up, there are also critics to the deal.
"$21 is still poverty pay — it's $1.50 more than the In-N-Out, which is a two-minute drive away," Jose Francisco Negrete, a package handler in Anaheim, California, who has been working at UPS for 25 years told CBS News. "Is that really going to move the needle for you? Are you still going to be working two or three jobs? Are you still going to be on government assistance?"
While the tentative agreement is "leaps and bounds" better than previous contracts, "it does not close the gap of concessions part-timers have had forced upon them since the '80s," Holly Baca stated to CBS News. Baca is a part-time package sorter who has worked in an Oklahoma City facility for 11 years.
The UAW at the Detroit Three.
Like the union contracts at UPS and Kaiser Permanente, the United Auto Workers’ (UAW) contracts with the Detroit Three automakers Ford, General Motors and Stellantis are being touted as ‘historic’ as well.
However, like UPS and Kaiser Permanente, the contracts the UAW just ratified with the Detroit Three come on the heels of a post-pandemic fueled labor shortage that saw major wage increases everywhere else as the UAW’s wages languished behind the rest of America.
Additionally, the 2023 contracts come after UAW members lived under major concessions for the past 15 years, and a decades-long decline in wages after adjusting for inflation.
As with the UPS (to a larger extent) and the Kaiser Permanente contracts, the UAW new contracts with Detroit Three are also front-loaded, with an immediate 11% pay hike for hourly workers at Ford, for example, 3% in each of the next three years, and 5% in the final year.
“The contracts offer larger wage increases than UAW workers have received in the past 22 years combined,” the Washington Post gleefully reported. “Base wages for the highest-paid workers will grow by 25 percent over the 4½ year contract to more than $40 an hour. Cost of living adjustments will boost that wage further, to more than $42 an hour.”
However, what many—including the Washington Post—are not reporting is that the cost of the strike borne by UAW strikers eats up the entirety of the agreements’ first-year increase.
Notwithstanding the $500 per week provided in UAW strike pay, the union members who struck for six weeks lost more than 11.5 percent of their total wages for 2023, not counting any lost overtime pay.
Context matters.
While no one should discount the fact that contracts being negotiated in 2023 contain higher wage increases than have been negotiated in years past and are indeed good news for the unionized workers, one should also not forget that these contracts come after much of America’s workforce has already seen significant wage gains in the post-pandemic world.