{"id":1213613,"date":"2023-09-15T09:47:19","date_gmt":"2023-09-15T09:47:19","guid":{"rendered":"https:\/\/jacobin.com\/2023\/09\/united-auto-workers-uaw-strike-big-three-automakers-stock-buyback-shareholders\/"},"modified":"2023-09-18T08:09:53","modified_gmt":"2023-09-18T08:09:53","slug":"big-three-autoworkers-are-striking-against-concessions-while-shareholders-reap-a-bonanza","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/09\/15\/big-three-autoworkers-are-striking-against-concessions-while-shareholders-reap-a-bonanza\/","title":{"rendered":"Big Three Autoworkers Are Striking Against Concessions While Shareholders Reap a Bonanza"},"content":{"rendered":"\n \n\n\n\n

This morning, the United Auto Workers launched a landmark strike against the Big Three automakers for their refusal to provide adequate pay and job security. Meanwhile, over the last year, the automakers have authorized $5 billion in stock buybacks.<\/h3>\n\n\n
\n \n
\n A United Auto Workers (UAW) supporter holds a sign in Detroit, Michigan, on September 4, 2023. (Jeff Kowalsky \/ Bloomberg<\/cite> via Getty Images)\n <\/figcaption> \n<\/figure>\n\n\n\n\n \n

This morning, the United Auto Workers have launched what may be the biggest strike in decades over their employers\u2019 refusal to provide adequate pay and job security. Meanwhile, in the past twelve months, the Big Three automakers \u2014 General Motors, Ford, and Stellantis \u2014 have authorized $5 billion in stock buybacks, effectively giving billions of dollars to shareholders that could have gone to autoworkers.<\/p>\n

On top of the stock buybacks, the Big Three have reported\u00a0$21 billion<\/u><\/a> in profits in just the first six months of 2023. Despite the enormous gains, the companies have cried poverty in response to union demands for wage increases to make up for decades of pay stagnation.<\/p>\n

In a statement\u00a0released<\/u><\/a>\u00a0last month, General Motors (GM) claimed that the United Auto Workers\u2019 (UAW) demands \u201cwould threaten our ability to do what\u2019s right for the long-term benefit of the team.\u201d<\/p>\n

As part of its efforts to force the auto companies to spend more on their workers, the UAW has taken aim at the corporations\u2019 stock buyback approach, in which companies repurchase their shares to drive up their short-term value. In their negotiations over a new contract, which expired on Thursday, the union proposed automatic payments to workers when the companies authorize buybacks or expand dividends.<\/p>\n

\u201cOur union has also proposed an enhanced profit-sharing formula that would provide workers $2 for every $1 million spent by Ford on stock buybacks, special dividends, and increases to normal dividends,\u201d said UAW president Shawn Fain in a Facebook Live event<\/u><\/a>\u00a0earlier this month. \u201cFord has responded with a concessionary proposal that would change the profit-sharing formula so that workers would actually earn less.\u201d<\/p>\n\n \n\n \n \n \n

Costly Buybacks<\/h2>\n \n

Last year, S&P 500 companies set\u00a0records<\/u><\/a> for stock buybacks, spending over $923 billion \u2014 far outpacing the $565 billion the top firms spent on dividends, which are profit-sharing payments made to shareholders. The US government banned such\u00a0stock buybacks<\/u><\/a>\u00a0as \u201cmarket manipulation<\/u><\/a>\u201d until 1982, when President Ronald Reagan\u2019s administration\u00a0legalized them<\/u><\/a>\u00a0as part of his deregulatory \u201cReagan Revolution.\u201d These expenditures, which artificially inflate value for shareholders, come at the cost of long-term investments that ensure a company\u2019s ability to exist, including compensation for their workers.<\/p>\n

For the automakers, the latest buybacks reflect an even stronger commitment to speculative payoffs for their shareholders. Ford spent $484 million on buybacks last year, its biggest\u00a0outlay<\/u><\/a> on the matter since 2014. GM, meanwhile, relaunched its buyback program in September 2022 after a\u00a0five-year hiatus<\/u><\/a> with a massive $1.5 billion expense and has issued nearly $3.4 billion in buybacks in the past twelve months.<\/p>\n

Stellantis \u2014 formed from the 2021 merger of Chrysler, Fiat, and Peugeot \u2014 funneled $1.6 billion in stock buybacks to its shareholders\u00a0starting<\/u><\/a>\u00a0in February. The most recent and final tranche of buybacks \u2014 totaling $536 million \u2014 was\u00a0announced<\/u><\/a>\u00a0Tuesday, just days before the impending strike.<\/p>\n

The rise in stock buybacks and the decline of organized labor are linked. William Lazonick, a University of Massachusetts economics professor who has studied stock buybacks, traced GM\u2019s reliance on this sort of market manipulation to the company\u2019s downfall amid the 2008 financial crisis. The company\u00a0filed<\/u><\/a> for bankruptcy in 2009, in what was then the biggest manufacturing collapse in US history.<\/p>\n

\u201cIn the 1980s, when GM was still the biggest car company in the world, it started buying back stock,\u201d said Lazonick in an interview with the\u00a0Lever<\/em>. \u201cBetween 1986 and 2002, it bought back about $20 billion worth of stock.\u201d<\/p>\n

In a 2015\u00a0Harvard Business Review\u00a0<\/em>analysis on the matter, Lazonick\u00a0calculated<\/u><\/a>\u00a0that if GM had \u201csaved that money and earned a modest 2.5 percent on it, the company would have had $35 billion on hand when the financial crisis and Great Recession hit and probably would not have had to file for bankruptcy protection.\u201d<\/p>\n

Instead, because the companies were considered \u201ctoo big to fail,\u201d the United States spent<\/u><\/a>\u00a0$11 billion bailing out GM.<\/p>\n

At the same time, the UAW\u00a0agreed to<\/u><\/a>\u00a0$11 billion<\/u><\/a> in labor cuts, twenty-one thousand layoffs, a wage freeze for workers, a tiered wage system for new workers, a no-strike agreement until 2015, and the transfer of retirees\u2019 health care and pension benefit costs from GM to the UAW, in order to save GM $3 billion<\/u><\/a>. The union is still fighting to regain the ground they lost from these concessions.<\/p>\n

In 1986, GM employed nearly 900,000 people \u2014 today, they have just 167,000 employees.<\/p>\n

Effectively, Lazonick told the\u00a0Lever<\/em>, GM \u201cdistributed the downsides to the labor force and distributed the cash to shareholders.\u201d<\/p>\n

In 1982, when stock buybacks were first legalized, the UAW\u00a0had<\/u><\/a>\u00a01.2 million members. The UAW currently\u00a0has<\/u><\/a>\u00a0380,000 members.<\/p>\n

The recent buyback spree comes on top of extraordinary dividend payments made by the Big Three over the past year.<\/p>\n

Ford\u00a0announced<\/u><\/a>\u00a0an unprecedented $2.6 billion special dividend in February, on top of its typical quarterly dividend of about $600 million. All told, this year Ford has\u00a0spent<\/u><\/a>\u00a0over $4.3 billion on dividends.<\/p>\n

Stellantis has\u00a0issued<\/u><\/a>\u00a0about $4.1 billion in dividends this year, while GM is\u00a0set<\/u><\/a>\u00a0to distribute half a billion in dividends to its shareholders this year.<\/p>\n

On average, the CEOs of the Big Three have received 40 percent bumps in their salaries over the past four years. GM CEO Mary Barra\u00a0made<\/u><\/a>\u00a0nearly $29 million in 2022, Stellantis CEO Carlos Tavares\u00a0made<\/u><\/a>\u00a0$25 million, and Ford CEO Jim Farley\u00a0made<\/u><\/a>\u00a0$21 million.<\/p>\n

Lazonick argues that share repurchases, along with corporate governance, should be a focus for labor unions moving forward.<\/p>\n

\u201cThey should be after more influence on how companies are allocating resources, they should be going after board seats,\u201d he said. \u201cThey should be saying \u2018no more\u2019 to shareholder value.\u201d<\/p>\n

Fain\u2019s recent statements line up with Lazonick\u2019s recommendations.<\/p>\n

\u201cWhile the Big Three executives and shareholders got rich, UAW members got left behind,\u201d Fain said in a video update<\/u><\/a>\u00a0to members last week. \u201cA newly hired autoworker at the Big Three today makes less than what they made in 2007. Meanwhile, car sales are down while big profits are way up.\u201d<\/p>\n\n \n \n \n\n \n \n

You can subscribe to David Sirota\u2019s investigative journalism project, the\u00a0Lever<\/i>, here<\/a>.<\/p>\n\n\n\n

This post was originally published on Jacobin<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

This morning, the United Auto Workers have launched what may be the biggest strike in decades over their employers\u2019 refusal to provide adequate pay and job security. Meanwhile, in the past twelve months, the Big Three automakers \u2014 General Motors, Ford, and Stellantis \u2014 have authorized $5 billion in stock buybacks, effectively giving billions of [\u2026]<\/p>\n","protected":false},"author":138,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1213613"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/138"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1213613"}],"version-history":[{"count":2,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1213613\/revisions"}],"predecessor-version":[{"id":1216805,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1213613\/revisions\/1216805"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1213613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1213613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1213613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}