ANALYSIS: The Big 3–UAW Pay Raise of (TBD)% Will Make History

No matter what wage increase the negotiators for the United Auto Workers and Big 3 automakers ultimately agree upon, the scope of that pay raise will likely tower over the pay structure that the parties have been building for decades.

Bloomberg Law’s analysis of the 10 most recent Big 3–UAW contract renewals shows that negotiated wage increases for workers have never topped 3% in a single year. The history contrasts sharply with the UAW’s current demand of a 36% wage hike over four years (which would average 9% annually), and even with the automakers’ current offers of about 20% (about 5% annually).

Historically, the wage increases have been as rare as they are modest. In 21 of the 36 years covered under these contracts, workers received no annual wage increase at all.

The contracts have been carefully constructed so that years without wage hikes are offset by one-time lump-sum payments. As a result, no year since 1987 has come and gone without either a pay raise or a cash payout (or, in the case of 1999 and 2015, one of each).

In renewal years, when workers receive hefty signing bonuses, the size of the lump-sum payment has been larger than 3% when calculated as a percentage. In 2015 and 2019, in fact, the lump-sum equivalent was higher than even the 9% average raise that the UAW is currently demanding.

But lump sums are not raises. Cash, on its own, is not ideal remuneration for workers. Management often prefers to provide one-time payouts in lieu of costlier, compoundable annual percentage increases. And in the Big 3, lump sums have become the norm: All but four years since the Great Recession (2015, 2017, 2020, and 2022) have been strictly cash-only.

It would take a lot for UAW negotiators to switch this model back to a system based primarily on wage increases, as it was in contracts ratified in 1996 and 2000. It would be even harder to do so while demanding raises averaging 9% per year.

Based on the parties’ negotiating history, it’s safer to expect that the 2023–2027 contract will instead follow suit, providing a combination of lump-sum years and wage-hike years, regardless of how historically high the agreed-upon percentages will be.

Bloomberg Law subscribers can find negotiated wage and benefit changes other labor data and content on our Labor Relations & Collective Bargaining resource.

Bloomberg Law subscribers can track, search, and run reports on negotiated wage and benefit changes in union contracts by using our Labor PLUS resource.

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