The ongoing United Auto Workers (UAW) union strike has dominated the nation’s headlines for the past several weeks, with no apparent end in sight.
The UAW, in fact, expanded its strikeOpen in a new tab strategy over the weekend to GM’s and Stellantis’s 38 parts and distribution centers spread across 20 states.
And while the UAW strike is the largest and most recent labor dispute, union activity has been on the rise and compensation is the major sticking point in the vast majority of union actions. According to the Economic Policy InstituteOpen in a new tab, in 2022 more than 16 million workers in the United States were represented by a union — an increase of 200,000 from 2021. The same report found that evidence suggests that in 2022 more than 60 million workers wanted to join a union but couldn’t for a variety of reasons.
According to Stacy Parker, director of compensation practice at OneDigital, factors that have fueled growing interest in unionization include:
“Executive pay growth surpassed worker pay growth substantially,” Parker said, citing the example of GM CEO Mary Barra’s compensation, which grew by 32.5% from 2018 to 2022. During the same period, the median GM employee’s pay grew by 2.8%, public filings show. Also, Parker points out, Ford appointed a new CEO in 2020, and the pay for that role jumped 18% from 2018 to 2022, while the median employee’s pay rose 16.1%.
David C. Miller, a labor and employment attorney with Bryant Miller Olive P.A., said unions also have been encouraged and emboldened by President Biden’s pledge to be the most pro-union president in history, and the current administration has energetically followed up on that promise — particularly through the NLRB.
“Compensation is the main issue in almost any labor dispute, but it has been even more prominent lately because of pent-up demand from the COVID lockdowns, when so many people were out of work,” Miller said.
He added that if a business has not rebuilt its workforce to pre-pandemic levels, it may have been able to increase productivity and, as a result, profits. Increased profits — which a business would regard as making up for lost earnings during the pandemic — can be exploited by unions that will claim that workers are entitled to a “fair share” of those profits.
“This is exactly the rhetoric exhibited by the UAW and echoed by politicians,” Miller said, pointing out that not all businesses will have recouped returns as seemingly large as those in the automotive industry.
In the meantime, OneDigital’s Parker said that among rewards, best practices and solutions to lessen the odds of a unionization effort one key starting point is to conduct competitive market analysis every 1-3 years to ensure pay and benefits are market driven.
Research: WorldatWork’s 2023-24 Salary Budget Survey
Parker said other potential action items for employers to consider if they have unionization concerns over rewards/compensation, include:
When it comes to compensation-related strategies to limit union issues/or a workforce looking to unionize, Parker said employers need to understand there are multiple generations in the workforce, and some generations value some rewards programs above others.
“Base salary is not the only piece of the puzzle — employers need to be competitive from a total rewards perspective to include base, incentive/bonus, benefits, retirement and non-monetary rewards as well,” she said.
Miller noted that employers are also well-advised to determine if employee wages have been lagging, and to address them before frustration builds to the level it apparently has in the auto industry.
“Most of all, foster good, open relations between employees and supervisors,” he said. “This is most critical at the first-line supervisor level.”
Manager Training and Communication
Nothing stimulates unionization as effectively as a supervisor who antagonizes employees, Miller said. Thus, he recommends that employers provide escape valves for employee frustrations — typically done via communication channels, with effective follow-up.
“We have to understand that the political situation right now is as favorable to unions as it has been in decades,” Miller said. “Unions are well aware that the pendulum will swing back, and they are making hay while the sun shines in Washington.”
Long-term, he said there is no guarantee and employers must stay attentive to the kinds of issues that make them vulnerable.
David Lewis, CEO at HR consulting company OperationsInc., said it’s clear that American workers are leveraging unions and the threat of unionization as a tool to secure better wages and benefits. He offers a few ways to buffer employers from future union activity.
“The easiest one is to talk to your employees, get their input and demonstrate you respected them enough to take their requests and put them in some measure into action,” he said. “Culture from the bottom up is winning the day in the post-COVID workplace.
“Consequently, culture from the top down is the biggest loser, especially when those rules and terms are not resulting in fair wages and work-life balance.”
Lewis said employers should look to leverage options such as sign-on bonuses, workplace flexibility and other lower/no-cost means in addition to standard compensation structures.
“Keeping a balanced compensation plan and structure is paramount,” he said, adding that employers will never have the luxury of reversing pay increases.