Americans from all walks of life are demanding better from U.S. auto manufacturers—including improved working conditions, cleaner vehicles, and safer, pollution-free communities. These demands have come into focus this year as unionized workers fight for a fair shake from several automotive employers, including Ford Motor Co., Stellantis, and General Motors Co. (GM), that are benefiting from federal infusions of cash, and public interest advocates are calling on the Environmental Protection Agency (EPA) to clean up pollution from vehicles to save lives and fight climate change.
Despite skyrocketing profits, automakers are attempting to weaken proposed pollution standards and are opposing the better conditions that workers represented by the United Auto Workers (UAW) union are seeking. This seemingly “we can’t do it” attitude has the potential to pose a significant threat to the health of millions of Americans, the livelihood of autoworkers, the growth of the middle class, and the strength of the U.S. economy. With automakers benefiting from the Biden administration’s historic investments in electric vehicles (EVs) and transportation infrastructure through the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act, they should instead reinvest in their workers and recommit to reduce the pollution from their vehicles.
Below are five reasons U.S. automakers need to step up on good jobs and expand the production of clean vehicles.
1. Workers deserve to benefit from the wealth they are helping to create
Ford, Stellantis, and GM predict earning billions in profits this year. Stellantis earned $12 billion in net profit in the first half of 2023 alone—a new record for the company. Meanwhile, Ford announced in July that it expects a profit of $11 billion–$12 billion in 2023, and GM similarly stated that it expects its 2023 net income to reach up to $10.7 billion.
Yet autoworkers are seeing little reward for the wealth they help create. Instead, current and past employees at the Big Three automakers are living under austerity measures adopted during the Great Recession, weakening their financial well-being and eroding the sector’s status as an engine of middle-class job creation. In 2008 and 2009, the federal government provided loans and financial assistance worth billions of dollars to pull GM and Chrysler back from the brink of collapse as overall industry employment fell by more than one-third. Workers agreed to concessions to ensure the companies could secure the loans, including the elimination of cost-of-living wage adjustments; the elimination of health coverage and inflation-protected pay for retirees; and the establishment of a two-tier wage system that allows for many new workers to be paid considerably less than others and slows their progress to middle-class jobs.
The existing four-year contracts expire on September 14, and workers represented by the UAW are negotiating new contracts with the Big Three major automakers: Ford, GM, and Stellantis. If workers are successful, the new contracts could greatly improve the lives of hundreds of thousands of workers through better pay, job security, and participation in a just transition to EVs.
While CEO salaries have climbed significantly, UAW President Shawn Fain reports that many autoworkers are earning less today, in inflation-adjusted dollars, than they did in 2007. Moreover, many new industry jobs—such as EV battery production workers—earn less than $20 per hour. Moving forward, it’s essential that negotiations between the UAW and these automakers result in contractual standards that allow unionized workers across the supply chain, and particularly in the emerging EV sector, to earn middle-class wages and benefits that increase with rises in the cost of living; eliminate job categories that slow career progress and relegate too many to low-wage work; and increase financial stability for retirees who have dedicated their careers to the industry.
2. Automakers must ensure new auto jobs are good jobs
Over the next several years, Ford, Stellantis, and GM are expected to benefit from billions of dollars in tax credits and other incentives to spur the expansion of domestic EV production—particularly EV battery components. For example, Ford is expecting to save more than $7 billion from 2023 to 2026 due to Inflation Reduction Act credits. These three automakers are responding to these investments by announcing new battery plants that will create tens of thousands of new jobs in states including Michigan, Ohio, and Kentucky.
There is little doubt that the Biden administration’s investments will help to accelerate the domestic transition to EVs and secure the United States’ position in the auto sector for decades to come. However, unlike the last administration’s signature investment—the $1.9 trillion Tax Cuts and Jobs Act that cut corporate tax rates but did not benefit workers—at the core of the Biden administration’s growth strategy is the commitment that new federally supported jobs will be good jobs for all workers—and unions are key to this effort.
For example, workers at the new GM-backed Ultium Cells facility in Lordstown, Ohio, a joint venture with LG Energy Solutions to produce EV batteries, reported poor wages, little training, and dangerous working conditions. However, following a vote to unionize late last year, as well as pressure from federal policymakers and worker advocates, Ultium began to live up to its job quality commitments as a recipient of IIJA loans worth billions of dollars. The workers, members of the UAW, recently ratified a contract securing an immediate 20 percent wage increase at the facility, labeled as a good “first step” by UAW leadership. In order to ensure that the sector supports good jobs for decades to come, automakers should commit to ensuring that EV workers enjoy the same wages, benefits, and working conditions as other assembly workers.
Learn more about the Ultium Cells facility:
Read more about the contract negotiations between the UAW and autoworkers:
3. Good union jobs make good business sense
Companies across the auto manufacturing sector are struggling to attract and retain well-qualified workers—with current employee turnover rates as high as 39.9 percent; industry analysts predicting more than 2 million manufacturing jobs will remain unfilled until 2030; and auto manufacturers including Stellantis and GM pointing to issues, such as chronic absenteeism, that compound worker shortages.
Poor job quality is driving much of these hiring woes—but research shows that supporting good union jobs and fostering a good relationship with unionized workers can help companies overcome existing turnover issues and support a more productive workforce. One recent study found that increasing pay by just $1 per hour is associated with an increase in retention of 2.8 percent. Moreover, research has long shown that unionization is associated with lower turnover and high productivity—and that much of the productivity benefit is predicated on a healthy relationship and open dialogue between labor and management that allows them to work together to raise and solve problems.
Indeed, this research was illustrated in July when global shipping company UPS reached a contract agreement with 340,000 unionized workers that features several major job quality improvements—including wage increases, an abolishment of the company’s two-tier pay system, and a safety requirement for air conditioning in delivery trucks. Since the agreement was announced, searches on Indeed for UPS jobs climbed by 50 percent.
4. The Inflation Reduction Act cuts EV costs for automakers and consumers as demand rises
Many automakers claim they can’t make or sell enough EVs. However, sales are increasing rapidly, growing 70 percent in 2022 alone. Consumer Reports finds that demand for EVs continues to rise, with 45 interested buyers for every one EV produced. EV drivers avoid volatile gas prices and benefit from significantly lower overall fuel and maintenance costs. Meanwhile, automakers are benefiting from a menu of tax credits available through the Inflation Reduction Act. These incentives, which cut battery production costs by one-third and offer consumers up to $7,500 to buy or lease a new EV, make EVs more economical than ever and are a massive opportunity for automakers that take advantage of them. Ford—which, unlike its peers, has begun to aggressively electrify its fleet—expects to save $7 billion over the next three years by capitalizing on these credits, as discussed above. Automakers that don’t leverage these incentives to step up EV production stand to lose out in the future automotive market.
There will be enough EV chargers and critical minerals to meet demand by 2030
Many automakers have also decried the lack of EV chargers as a barrier to increasing EV sales—particularly in relation to the EPA’s recently proposed standards to reduce vehicle emissions, which they claim will force them to sell more EVs, straining existing charging capacity. These complaints ignore key policy instruments and automakers’ own capacity to drive change and innovation. Most charging happens at home or work, and public EV chargers are being built rapidly with state and federal assistance. The National Electric Vehicle Infrastructure (NEVI) program enacted through the IIJA is providing $5 billion over five years for states to strategically deploy EV chargers. Major automakers are demonstrating how impactful this program is; a coalition of seven major auto manufacturers have announced their intent to jointly develop a nationwide charging network leveraging NEVI funding. These automakers are recognizing that they can play a crucial role in developing the EV charging network, a move that Tesla made early and that has allowed the company to dominate the charging landscape. Overall, the number of EV chargers is growing rapidly, increasing from slightly more than 80,000 in the first quarter of 2020 to more than 140,000 in the first quarter of 2023.
Automakers have also claimed that there will not be a sufficient supply of critical minerals to support EV battery production. This argument ignores the Inflation Reduction Act’s advanced manufacturing credit (45X) for critical mineral production and the long on-ramp to increase critical mineral supplies, with the EPA’s proposed standards not taking effect until 2027. Globally, policies such as the Inflation Reduction Act credit are driving a massive surge in investment in critical mineral production: Investments in critical mineral production rose 30 percent in 2022. If successful, these recent investments will satisfy 75 percent of the world’s critical mineral needs related to clean energy in 2030, up from 50 percent in 2021. While not yet on target, this growth shows that the market is rapidly responding to increasing demand. The critical minerals identified today are also likely to evolve over time; federal investments made in the IIJA are helping by funding battery recycling and research and development initiatives aimed at reducing overall mineral use, finding alternative battery chemistries, and developing less resource-intensive batteries.
5. EVs and cleaner gasoline-powered cars are critical for public health
Car and light truck emissions are 17 percent of U.S. carbon emissions and a significant contributor to soot and ozone pollution. Despite cleaner technologies becoming widely available, several automakers,* including Stellantis, Toyota, and VW, claimed in comments submitted to the EPA that they cannot meet the emissions reductions standards proposed by the agency. And while automaker opposition to strong vehicle emissions standards is counterproductive and threatens to slow down the transition to cleaner vehicles, independent analyses demonstrate that even business-as-usual projections are on track to meet or exceed the EPA’s targets, largely due to the Inflation Reduction Act.
Reducing vehicle emissions brings substantial public health benefits. It is estimated that 17,000 to 20,000 deaths per year from 2008 to 2017 could be attributed to air pollution from transportation. EPA standards have played a crucial role in reducing this harmful pollution, and the agency’s most recently proposed standards would continue to reduce vehicle emissions of health-harming air pollutants. The EPA estimates that its currently proposed standards would provide between $150 billion and $290 billion in public health benefits resulting from less particulate matter (PM) pollution alone. These reductions are also crucial to addressing environmental injustice, as air pollution is concentrated in communities of color: Latino or Hispanic, Black or African American, and Asian Americans are exposed to 48 percent, 42 percent, and 63 percent more PM pollution from light-duty vehicles, respectively, than white Americans. Technology exists to reduce harmful emissions from vehicles, and it is a public health necessity that automakers deploy these technologies on all new vehicles.
Conclusion
Automakers can and must treat workers fairly and do their part to reduce pollution. It is critical that automakers’ “we can’t do it” refrain does not become a self-fulfilling prophecy. If it does, autoworkers, the American economy, and communities all stand to lose. By raising standards for all autoworkers and expanding the production of clean vehicles, the auto sector can support middle-class-led economic growth, ensure the country experiences a just transition to EVs and low-emissions vehicles, and support a globally competitive EV market for decades to come.
* Note: Ford and Zero Emission Transportation Association members supported the EPA’s proposed standards.