The United Auto Workers’ strike against the Big Three U.S. carmakers has given rise to a lot of talk about the future of the auto industry, and the fate of autoworkers in a world of electric vehicles. Republican politicians have tried to pin the autoworkers’ grievances on the Biden administration’s proposal for an electric-vehicle mandate (a proposal yet to be adopted). Ford, GM, and Stellantis (which owns Chrysler), meanwhile, have warned that the UAW’s demands could jeopardize their future EV investments.

The reality, though, is that this strike is not about the future. In an important sense, it’s a battle over the past. The UAW is looking, in effect, to win back the concessions it made in the late 2000s, which fundamentally transformed work at the Big Three, even as the companies insist that they cannot afford to return to the way things were.

The UAW’s first round of concessions came during contract negotiations in 2007, when the Big Three were losing billions of dollars a year, and watching competitors gobble up market share. The union agreed to let the companies establish a two-tier wage system, which meant that starting pay for workers hired after 2007 would be significantly lower than it had been for current employees. New workers would also have less generous health benefits, and would not get defined-benefit pensions or health care as retirees.

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Two years later, the financial crisis and recession of 2008–09 nearly put the Big Three out of business altogether (and did force GM and Chrysler into bankruptcy), while high unemployment reduced whatever leverage the union had. So, as part of the government bailout of GM and Chrysler, the UAW agreed to further concessions designed to narrow the labor-cost gap between the Big Three and their international competitors (whose plants in the U.S. are all nonunion). The union also agreed not to strike for the next six years. Older workers were offered buyouts, enabling the companies to bring in younger (and cheaper) workers. And automatic cost-of-living wage increases were suspended.

Over the 14 years that followed, the UAW won small wage increases in contract negotiations, and smoothed the path for workers hired after 2007 to reach top-tier status. Even so, the premier wage today—about $32 an hour—is worth considerably less, in real terms, than it was in 2003, while new workers begin at roughly $17 an hour (which is about the starting wage at my local Target). And, largely because older workers make up a declining share of the overall workforce at the Big Three, autoworkers’ average real hourly earnings have fallen almost 20 percent since 2008, according to the left-leaning Economic Policy Institute.

The UAW wants to change all that. It’s looking for a 40 percent across-the-board pay increase over the next four years, a restoration of cost-of-living increases, and enhanced pensions and retiree health care for all autoworkers. And the union’s not stopping there: It’s also demanding that autoworkers get a 32-hour workweek (while still being paid for 40 hours). The UAW is asking, in other words, for something like a return to the pre-financial-crisis bargain, plus a little more.

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The UAW’s president, Shawn Fain, has acknowledged that these demands are “ambitious.” But tight labor markets have given unions more leverage than in the past—as evidenced by the Teamsters recently winning a 48 percent pay increase over five years for part-time workers at UPS, and the American Airlines pilots’ union gaining a more than 46 percent pay increase over four years for its members. And the UAW’s strategy for the strike—which has so far involved walkouts at only three factories, with the threat of escalating the action to other plants if no deal is reached—has so far minimized the economic costs of the dispute for its members.  

Still, few observers expect the union to get the automakers to return to anything like the old status quo, particularly when it comes to pensions and retiree benefits. That’s because—despite a recent return to profitability—the past decade has been dismal not only for labor at the Big Three, but also for capital.

That may sound improbable. After all, Ford, Chrysler, and GM now have much lower labor costs, thanks to a combination of downsizing, their greater reliance on entry-level workers, and automation. The gap between the Big Three’s hourly-wage costs and those of their nonunion rivals, such as Toyota and Honda, has narrowed dramatically. (Estimates suggest that the discrepancy now stands at about $9 to $12 an hour, largely because of the cost of paying for retirees.) And the automakers have made hefty profits over the past decade: Ford posted a 34 percent increase since the last round of contract talks, in 2019; GM realized a 50 percent jump over the same period (comparable figures for Chrysler are hard to come by, because it’s a single company within the Stellantis conglomerate, which also includes Jeep and Dodge). The Big Three have also spent billions on share buybacks and dividends.

Those profits, though, have not translated into any real benefits for shareholders. Even with the buybacks, the annual return on GM’s shares since 2013, including dividends, has been just 1.9 percent, while Ford’s has been just 1.5 percent. (Stellantis stock has done better, though, again, Chrysler’s impact on that is hard to determine.) The S&P 500, by contrast, has risen by an average of more than 10 percent a year over that period, and just buying a 10-year government bond would have given you a better return than investing in Ford or GM stock.

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Upper management at the Big Three has done very well over this period, as the UAW regularly points out. GM’s CEO got a salary package last year valued at nearly $29 million; Ford’s CEO got one worth almost $21 million. As the UAW’s Fain put it during a Facebook appearance in August, “While Big Three execs have used those extreme profits to pump up their pay, our members have fallen further and further behind.” This seems unlikely to be a convincing argument to shareholders who have seen their investments in GM and Ford go almost nowhere.

Stagnant stock prices are not the fault of workers; nor is it the UAW’s job to worry about shareholder interests. So the union is right to be using this moment when it has maximum leverage to try to get all it can. (That’s especially true given that no one knows what the transition to electric vehicles will mean for the UAW, whose master agreement with the Big Three does not cover their battery-cell factories.)

Arguably, the union has the easier message to sell to the public, though it will probably need more than that to move the automakers. A good compromise is one that leaves both sides unhappy, runs the maxim, but the trouble here is that both sides are already unhappy. That’s why finding a compromise could take longer, and inflict more economic pain, than anyone wants.