We understand the political reasoning behind President Joe Biden joining the United Auto Workers picket line in Michigan on Tuesday: Michigan will be a key swing state in the next presidential election, as it was in the prior election, and Democrats need to shore up support.
Biden’s poll numbers over the weekend were not exactly inspiring confidence, and the dispute between the UAW and Detroit’s auto giants clearly represented a golden opportunity for Biden to shore up support among a key yet politically wobbly constituency: blue-collar workers. The Democrats know they have can count on the loyalty of coastal elites, but the folks who work the line in Detroit and then head “up north” to fish on the weekend are a less secure constituency. Donald Trump, also headed to Michigan this week, is paying them plenty of attention, and even the UAW’s president, Shawn Fain, has not exactly been on Team Biden to date. Tuesday, we suspect, was much about securing his loyalty.
Still, we believe Biden should not have been there.
The main problem when the president of the United States stands on a picket line is that he loses the subsequent ability to act as an honest broker, to be able to pick up the phone and tell both sides to compromise for the sake of the American economy.
If, at this juncture, Biden is standing so visibly with the union, the automakers could hardly be expected to see the president as neutral and acting not for one side or the other but for the good of the nation. And given the centrality of General Motors, Ford and Stellantis to the economic health of the country, the good of the nation may well come into play in the event of a prolonged strike.
By joining picketers, Biden is tacitly supporting the current demands of the union. Yet, as we have noted before, an outsider looking without political prejudice at those requests would conclude they will damage Detroit and offer a serious boost to the likes of nonunionized Tesla, as well as Rivian, the electric trucks manufacturer in Normal, Illinois. Tesla and Rivian, to name but two of the global players in the EV market, would have a big cost advantage if the UAW were to get all it is asking for. Why would a president take sides like that?
What are those UAW demands? Even Fain calls them “audacious.” Among other things, the union is calling for wage increase of about 40% over the length of a four-year contract, an eye-popping pay raise; a return of so-called defined pensions, which very few Americans in the private sector have; and a four-day workweek likely to explode the costs of automakers. In essence, the UAW is proposing that its members work for four days but get paid for five. The Federal Reserve is no doubt eyeing all of this as a likely future inflation machine, keeping interest rates going up.
The union has zeroed in on the pay given to bosses such as General Motors CEO Mary Barra, the highest-paid chief executive among the Big 3. Berra made nearly $29 million last year. That’s because her pay is almost all performance-based and GM had a banner time coming out of the pandemic.
But the Democrats are gambling that most Americans now see these inequities as egregious, not good for shareholders and workers alike. If GM can pay Barra that kind of money, and Democrats are of course keeping quiet about issues of gender in this instance, the reasoning goes that someone on the line making $250,000 or $300,000 a year for four days of work each week is hardly out of line.
Experts in labor negotiations will tell you that even the UAW leadership does not expect to get all of this. These are opening salvos, a reminder of the UAW’s skill in “positioning,” the negotiating tactic arguing for high initial demands as a means of raising whatever compromise will inevitably follow. Whether the auto companies can come up with some, or all, of it, is a contested matter. The union argues it can (Barra being Exhibit A as to why); the Big 3 say that agreeing would make them noncompetitive and especially hurt the government-mandated transition to EVs, which are coming at a high development cost.
Whatever you think about all that from a point of view of the redistribution of wealth, it’s hard to argue that the UAW demands are good for Detroit’s EV transition, although Democrats don’t want to have that debate right now.
Plenty of moderate Democrats, though, can see that these demands are potentially catastrophic for a vital American industry, given all of the foreign investment in this sector.
And as Biden headed to the picket lines Tuesday, the White House tried to spin his presence as merely general support for better wages and working conditions for autoworkers and concern about the yawning pay gap between CEOs and workers, now so prevalent.
But all of that could, and should, have been achieved from a podium in the White House briefing room. By standing shoulder to shoulder with Fain on the picket line, Biden and his administration are at least symbolically saying that the UAW’s eye-popping demands, as they stand now, are legit.
We think the workers should do better and get decent pensions, and we think the pay gap is out of hand. But we also think this UAW position clearly is too much for the health of Detroit.
Even the political calculus is far from certain: Plenty of Americans prefer a president who retains more independence and balance.
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