Autos

'Strike pay' kicks in at $250 a week for GM union members as work stoppage hits home

Key Points
  • Monday, the 15th day of the union's strike, marks the first week union members will receive $250 in "strike pay."
  • The weekly pay is in lieu of weekly paychecks that can range between $630-$1,220 a week before taxes.
  • Industry analysts expect the increased financial burden on the striking workers could be a "double-edged sword" for the negotiations.
United Auto Workers members on strike picket outside General Motors' Detroit-Hamtramck Assembly plant on Sept. 25, 2019 in Detroit.
Michael Wayland / CNBC

DETROIT – The financial burden of the United Auto Workers' strike against General Motors is expected to begin weighing more heavily on union members this week.

While the work stoppage is estimated to be costing the Detroit automaker up to $100 million a day in lost production, Monday marks the first day union members will receive "strike pay." The payments, up to $250 a week, are in lieu of company paychecks for the roughly 48,000 UAW members who have been on picket lines since Sept. 16. Friday marked the first payday without a check from GM since its union members went on strike two weeks ago.

The strike pay is far less than the weekly compensation members usually receive. The starting wage for hourly assembly workers ranges between roughly $16 to $30 an hour, or $640 to $1,200 a week, before taxes and any overtime pay. Strike payments under $600 aren't taxed, according to the union. They are paid out of the UAW's "strike fund," which totaled more than $721 million in 2018.

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Industry analysts expect the increased financial burden on the striking workers, some of whom have been saving months in anticipation for a potential work stoppage, could be a "double-edged sword" for the negotiations.

Art Wheaton, a labor expert with the Worker Institute at Cornell University, said striking workers may push or agree to a deal more quickly now that the work stoppage is hitting their pocket books but it also could lead some to have higher, potentially unrealistic, expectations of what the deal will achieve.

Colin Lightbody, a labor consultant and longtime negotiator for Fiat Chrysler, agrees. In a blog post Monday, he said it may be "prudent for the UAW leadership to begin managing the expectations of their members as soon as possible."

"I would assume the strikers are going to start feeling the pain this week and unfortunately there's no guarantee that the economics of the deal will improve from the original GM offer," Lightbody said Monday during a phone interview.

GM, following the union calling the strike on Sept. 15, released details of a proposed four-year deal that included over $7 billion in investments; creation or retention of 5,400 jobs; and wage or lump-sum increases each year. It's unclear if details of that offer, including the retention of the union's "nationally-leading health care benefits," remain on the table. Both sides have declined to comment on the ongoing negotiations.

United Auto Workers members on strike picket outside General Motors' Detroit-Hamtramck Assembly plant on Sept. 25, 2019 in Detroit.
Michael Wayland / CNBC

The UAW said it takes "the sacrifice of strikes very seriously." GM declined to comment directly, citing negotiators "continue to talk and our goal remains to reach an agreement that builds a stronger future for our employees and our company."

Shares of GM have remained relatively stable after falling more than 4% on Sept. 16, the first day of the work stoppage. The stock opened Monday at $37.53, up 11.7% for the year.

Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research, said morale appears to remain high among union members, despite the missed pay.

"I think workers have been preparing for this strike," she said. "They're missing paychecks, that's not good, but I don't know if it's a financial impact that weakens their resolve yet."

UAW Local 22 President Wiley Turnage, who oversees the automaker's Detroit-Hamtramck plant in Michigan, said morale of his members "is still good" as the union enters its third week of the strike, now in its 15th day.

"So far, people are hanging in there pretty good," he said Monday during a phone interview. Nobody wants to be out of work and we all have to make do with what have.

"We are doing it for a good cause and people understand we have to remain committed to get a good contract."