I wonder if they'd settle for a (retroactive relatively) reduction in CEO Pay, coupled by an increase of at least the CEO's pay increase or better relative to the last contract period.
## HYPOTHETICAL EXAMPLE ##
+ Prior to contract CEO made 10,000,000 per year. Since then they (currently) make 14,000,000 per year.
+ Union is asking for 40% increase to match CEO's increase.
? Would the union accept CEO's total compensation package, including retroactive to cover the same period, decrease to E.G. 20% (CEO now makes 12,000,000 per year in this hypothetical) with a union member INCREASE of 20% or greater (possibly including a one time contract signing bonus to cover the back period)?
The article points out how union members are still affected by concessions they made in 2008 to help auto companies then. It would therefore be inappropriate to use "relative to the last contract period" as the baseline.
If it were about simple disparity, that disparity has grown for far longer than the most recent contract period. Back in the 1960s the average ratio between CEO pay and average worker pay was 20x, and now it's close to 400x.
Extending your argument to the longer baseline, if the CEO's pay were reduced by 20x and the worker pay increased to 20x, retroactive to 1970, then I'm pretty sure they would agree.
But the point isn't simply that the CEO made X% more since the last contract so union workers should get X% more too. If it were, then consider GM CEO Mary Barra, who made nearly $29 million in 2022. She could cut her income by 30% and still make good money - Ford CEO Jim Farley "only" makes $21 million.
Cutting her compensation wouldn't justify cutting the salary for everyone at GM by 30% for the next contract period.
"The Big Three CEOs saw their pay increase by 40% over the last four years, while our pay only went up by 6%," UAW President Shawn Fain said at a news conference last week.
As of Tuesday, the UAW is proposing an approximately 40% compounded wage increase over the course of a four-year contract, a tad lower than its opening bid of 46%.
Also, as an indication of how looking only relative to the recent contract period isn't enough:
The average hourly wage for workers manufacturing motor vehicles and parts, adjusted for inflation, has dropped by more than 20% in the past two decades, according to data from the U.S. Bureau of Labor Statistics.
0.8 * (1 + 0.4) = 1.12 so what the union wants would be about a 10% gain since 2000.
Would you prefer the term "sacrifice"? That's how GM described it. ("Importantly, the Plan requires considerable sacrifices from all stakeholders—unions, bondholders, dealers, suppliers, retirees, active employees and executives." - https://www.sec.gov/Archives/edgar/data/40730/00009501520900... )
Switching to GM's preferred term seems only a surface detail. Compare "Time to make up for 15 years of concessions" with "time to make up for 15 years of sacrifice".
Given the decades of "it's your fault! no it's your fault!" in the antagonistic corporate/union relationship, do you really think it can be resolved in an HN comment?
In any case, my point is the imposition of an arbitrary date means asserting without evidence that the relevant parties will accept that as a fair starting point.
You’re missing the point entirely. I said I wouldn’t call them that, and the reasoning behind that is the important part. Get your head out of the pedantic sand.
My point is that mjevans's proposal would not work.
You jumped in with a personal opinion about one word choice, in what I believe is a tangential point making a jab at the union.
That personal opinion on the matter shouldn't carry much weight as 1) many others refer to it as "concession", 2) using GM's term of "sacrifice" doesn't affect the logic behind my point, 3) you haven't explained your reasoning, making it hard for me to understand how it has anything to do with my point.
Is the CEO cut in pay to cover the costs of pay raises? The article mentions that 13,000 workers will be striking but if we round that down to 10,000 a 2 million dollar CEO pay cut would cover a 10 cent per hour pay raise for those workers. This strike is against all three major US automakers so matched between all three CEOs would be a 30 cent per hour raise. And there are 150,000 UAW members.
I imagine the workers are asking for more than a few hundred dollar in annual salary raise. A 20% pay raise of 10,000 people making $50,000 a year would cost 100 million dollars.
The point is, if company has enough to give thr CEO a raise, they have enough to give the average employees raises.
Further than that, they should prioritize the average employee. Meaning, if they have extra money, give it to the average employees first, then if there is leftover, give it to the management.
More my point is that the shareholders need to accept less profits.
It would cost Ford, if they had all 150,000 UAW, only 4% of their profits from last year to give out the 6 billion dollars necessary to give a 40% raise if those workers made 100,000 per year. And the CEO’s raise of 4 million is a fraction of a percentage of that.
I understand your point but the math doesn’t make sense when you talk about a few million dollars for the CEO. The 4 million dollar raise is 1% of the money necessary to give 10,000 workers 40,000. Yes the workers deserve a raise, and so that’s why they are striking. The CEO’s raise at this time is simply poor taste but not an apples to apples comparison.
If instead of a union, these companies had a codetermination model like in Germany this whole matter wouldn’t happen.
It would cost Ford, if they had all 150,000 UAW, only 4% of their profits from last year to give out the 6 billion dollars necessary to give a 40% raise if those workers made 100,000 per year
Ford's net income (aka profit/loss) in 2022 (FY23) was ~ -$2.1B Billion [1]. The raise would effectively add an additional $6B loss.
Think about it this way - how often do you see a brand new Big 3 car? At least in the Bay Area it's not often - it's mostly Tesla, Japanese (Toyota, Lexus, Honda, Acura, Nissan), Korean (Hyundai, Kia), and German (BMW, Mercedes, Volkswagen) automakers. And I've see a similar split both across the west and east coasts.
Eg. In 2022, the big 3 represented ~40-45% of new car sales in the US, with an average of 10% decreases in sales across the board [0]. And unlike Japanese, Korean, or German players, the Big 3 are shut out or divested out of the Asian market (eg. China, India, ASEAN) meaning no growth market in the horizon.
There isn't that much money left for the Big 3 to generate profits when enough people aren't buying their products.
According to your link the big three are 4 out of the top 5 brands being sold. Ford and GM being #2 and #3 respectively.
And by model[0], they make up 8 of the top 25, 5 of the top 10 with the F150 being the #1 selling vehicle.
Not everyone lives on the coasts. While the Japanese brands are very common here too (and I personally prefer them) my work parking lot probably has Ford trucks as the most used vehicle.
The auto industry needs to pivot to survive the next few decades for sure but some sliver of profits going to the workers is only reasonable. My hypothetical was Ford having to fund a high raise for all UAW workers when they would in reality not need to.
By market share yes. Yet even at 42% market share they are operating at a loss in 2022.
All carmakers in the US saw around a 10% drop in sales in FY23. The difference is Big 3 carmakers are very US-centric, while other Japanese/Korean/German carmakers have growth markets that they can further leverage or that can cushion bad sales in the US.
The Big 3 simply don't have a strong long term outlook nor enough money to give a raise, as they are not selling enough to break even.
By model isn't a relevant enough number simply because we need to see at the macro-level how a company is actually operating.
An additional issue with the UAW strike is EV/Battery related jobs do NOT fall under the UAW's Union [0].
At the end of the day, this is just low level politicking in a few swing states (Michigan, Pennsylvania) and one former Swing State (Ohio)
They don’t employ all 150,000 union members and a 40% raise is on average likely to be less than 40,000 but the points are still the same. Reducing the CEO’s salary to give the workers a raise of more than a few cents would require the CEO to pay hundreds of millions of dollars. So it has to come from profits or costs have to go up.
This[0] statement from Ford does align with what you are saying, I clearly misread the 150 billion number which was revenue. However they claim to have over 30 billion in cash it looks like. 2 billion of that could cover $40,000 raises for up to 50,000 employees for the next 15 years. Even splitting that by raising costs by some fraction of a percentage, taking out half a billion from the cash and then 1 billion from the profits is more mathematically sound than just saying the CEO should take a cut to cover the costs of the raise.
Comments
I wonder if they'd settle for a (retroactive relatively) reduction in CEO Pay, coupled by an increase of at least the CEO's pay increase or better relative to the last contract period.
## HYPOTHETICAL EXAMPLE ##
+ Prior to contract CEO made 10,000,000 per year. Since then they (currently) make 14,000,000 per year.
+ Union is asking for 40% increase to match CEO's increase.
? Would the union accept CEO's total compensation package, including retroactive to cover the same period, decrease to E.G. 20% (CEO now makes 12,000,000 per year in this hypothetical) with a union member INCREASE of 20% or greater (possibly including a one time contract signing bonus to cover the back period)?
No. Why should it?
The article points out how union members are still affected by concessions they made in 2008 to help auto companies then. It would therefore be inappropriate to use "relative to the last contract period" as the baseline.
If it were about simple disparity, that disparity has grown for far longer than the most recent contract period. Back in the 1960s the average ratio between CEO pay and average worker pay was 20x, and now it's close to 400x.
Extending your argument to the longer baseline, if the CEO's pay were reduced by 20x and the worker pay increased to 20x, retroactive to 1970, then I'm pretty sure they would agree.
But the point isn't simply that the CEO made X% more since the last contract so union workers should get X% more too. If it were, then consider GM CEO Mary Barra, who made nearly $29 million in 2022. She could cut her income by 30% and still make good money - Ford CEO Jim Farley "only" makes $21 million.
Cutting her compensation wouldn't justify cutting the salary for everyone at GM by 30% for the next contract period.
BTW, this sort of question works better with actual numbers. From https://www.npr.org/2023/09/13/1198938942/high-ceo-pay-inequ... :
Also, as an indication of how looking only relative to the recent contract period isn't enough:
0.8 * (1 + 0.4) = 1.12 so what the union wants would be about a 10% gain since 2000.
UAW were a huge reason Detroit was in such bad shape in 2008. I wouldn’t call those concessions.
Hmm, who to trust - an HN commenter or an NPR reporter.
Or the NYT reporter at https://www.nytimes.com/2008/12/04/business/04auto.html . Or the WSJ reporter at https://www.wsj.com/articles/SB122832097499675993 .
Would you prefer the term "sacrifice"? That's how GM described it. ("Importantly, the Plan requires considerable sacrifices from all stakeholders—unions, bondholders, dealers, suppliers, retirees, active employees and executives." - https://www.sec.gov/Archives/edgar/data/40730/00009501520900... )
Switching to GM's preferred term seems only a surface detail. Compare "Time to make up for 15 years of concessions" with "time to make up for 15 years of sacrifice".
Given the decades of "it's your fault! no it's your fault!" in the antagonistic corporate/union relationship, do you really think it can be resolved in an HN comment?
In any case, my point is the imposition of an arbitrary date means asserting without evidence that the relevant parties will accept that as a fair starting point.
You’re missing the point entirely. I said I wouldn’t call them that, and the reasoning behind that is the important part. Get your head out of the pedantic sand.
No wonder you don’t understand.
My point is that mjevans's proposal would not work.
You jumped in with a personal opinion about one word choice, in what I believe is a tangential point making a jab at the union.
That personal opinion on the matter shouldn't carry much weight as 1) many others refer to it as "concession", 2) using GM's term of "sacrifice" doesn't affect the logic behind my point, 3) you haven't explained your reasoning, making it hard for me to understand how it has anything to do with my point.
Is the CEO cut in pay to cover the costs of pay raises? The article mentions that 13,000 workers will be striking but if we round that down to 10,000 a 2 million dollar CEO pay cut would cover a 10 cent per hour pay raise for those workers. This strike is against all three major US automakers so matched between all three CEOs would be a 30 cent per hour raise. And there are 150,000 UAW members.
I imagine the workers are asking for more than a few hundred dollar in annual salary raise. A 20% pay raise of 10,000 people making $50,000 a year would cost 100 million dollars.
Not the point.
The point is, if company has enough to give thr CEO a raise, they have enough to give the average employees raises.
Further than that, they should prioritize the average employee. Meaning, if they have extra money, give it to the average employees first, then if there is leftover, give it to the management.
A rising tide raises all ships.
More my point is that the shareholders need to accept less profits.
It would cost Ford, if they had all 150,000 UAW, only 4% of their profits from last year to give out the 6 billion dollars necessary to give a 40% raise if those workers made 100,000 per year. And the CEO’s raise of 4 million is a fraction of a percentage of that.
I understand your point but the math doesn’t make sense when you talk about a few million dollars for the CEO. The 4 million dollar raise is 1% of the money necessary to give 10,000 workers 40,000. Yes the workers deserve a raise, and so that’s why they are striking. The CEO’s raise at this time is simply poor taste but not an apples to apples comparison.
If instead of a union, these companies had a codetermination model like in Germany this whole matter wouldn’t happen.
Ford's net income (aka profit/loss) in 2022 (FY23) was ~ -$2.1B Billion [1]. The raise would effectively add an additional $6B loss.
Think about it this way - how often do you see a brand new Big 3 car? At least in the Bay Area it's not often - it's mostly Tesla, Japanese (Toyota, Lexus, Honda, Acura, Nissan), Korean (Hyundai, Kia), and German (BMW, Mercedes, Volkswagen) automakers. And I've see a similar split both across the west and east coasts.
Eg. In 2022, the big 3 represented ~40-45% of new car sales in the US, with an average of 10% decreases in sales across the board [0]. And unlike Japanese, Korean, or German players, the Big 3 are shut out or divested out of the Asian market (eg. China, India, ASEAN) meaning no growth market in the horizon.
There isn't that much money left for the Big 3 to generate profits when enough people aren't buying their products.
[0] - https://www.carpro.com/blog/full-year-2022-national-auto-sal...
[1] - https://www.macrotrends.net/stocks/charts/F/ford-motor/net-i...
According to your link the big three are 4 out of the top 5 brands being sold. Ford and GM being #2 and #3 respectively.
And by model[0], they make up 8 of the top 25, 5 of the top 10 with the F150 being the #1 selling vehicle.
Not everyone lives on the coasts. While the Japanese brands are very common here too (and I personally prefer them) my work parking lot probably has Ford trucks as the most used vehicle.
The auto industry needs to pivot to survive the next few decades for sure but some sliver of profits going to the workers is only reasonable. My hypothetical was Ford having to fund a high raise for all UAW workers when they would in reality not need to.
By market share yes. Yet even at 42% market share they are operating at a loss in 2022.
All carmakers in the US saw around a 10% drop in sales in FY23. The difference is Big 3 carmakers are very US-centric, while other Japanese/Korean/German carmakers have growth markets that they can further leverage or that can cushion bad sales in the US.
The Big 3 simply don't have a strong long term outlook nor enough money to give a raise, as they are not selling enough to break even.
By model isn't a relevant enough number simply because we need to see at the macro-level how a company is actually operating.
An additional issue with the UAW strike is EV/Battery related jobs do NOT fall under the UAW's Union [0].
At the end of the day, this is just low level politicking in a few swing states (Michigan, Pennsylvania) and one former Swing State (Ohio)
[0] - https://www.politico.com/news/2023/09/13/biden-labor-ally-th...
In that case, the CEO should not have given himself a raise.
If there isn't enough money to go around, don't just give it out to yourself.
Ford’s profit in 2022 was $24 billion. $6B represents 25% of that, not 4%.
They don’t employ all 150,000 union members and a 40% raise is on average likely to be less than 40,000 but the points are still the same. Reducing the CEO’s salary to give the workers a raise of more than a few cents would require the CEO to pay hundreds of millions of dollars. So it has to come from profits or costs have to go up.
This[0] statement from Ford does align with what you are saying, I clearly misread the 150 billion number which was revenue. However they claim to have over 30 billion in cash it looks like. 2 billion of that could cover $40,000 raises for up to 50,000 employees for the next 15 years. Even splitting that by raising costs by some fraction of a percentage, taking out half a billion from the cash and then 1 billion from the profits is more mathematically sound than just saying the CEO should take a cut to cover the costs of the raise.
[0]: https://media.ford.com/content/dam/fordmedia/North%20America...