Tesla Anticipates UAW Pressure, Adjusts Wages For Its Factory Employees

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News out of the Tesla Gigafactory in Fremont is that workers there that they are getting a raise, as are other Gigafactory employees across the US. This means Tesla, as a nonunion car manufacturer, has acquiesced to UAW pressure to adjust labor pay. The move comes after the never-before, separate-and-conquer UAW strike strategy in 2023 which prompted living wage contracts for its members.

UAW pressure, it seems, is hard to beat.

All of Tesla’s production associates, material handlers, and quality inspectors will receive a “market adjustment pay increase.” At this writing, the amount of the increase has not yet been disclosed. The company has about 140,000 employees globally, roughly half of which are in the US. Tesla’s factory in Fremont alone employs more than 20,000 workers, and employees there had been gaining momentum to form a UAW organizing committee.

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Tesla’s History of UAW Pressure to Unionize

“Tesla is now following in the footsteps of Toyota, Hyundai, Volkswagen, and almost every other car company in raising wages in the wake of our historic victory,” UAW President Shawn Fain said in a statement Thursday.

Tesla CEO Elon Musk has been the consummate symbol opposed to organized labor, critical of the UAW and unions in general. His antipathy has caused concern at the National Labor Relations Board (NLRB).

Musk has countered efforts to unionize by emphasizing the importance of cost-cutting, saying many consumers still can’t afford the company’s electric vehicles because rising interest rates have offset repeated price cuts. Higher pay for production workers will make the company play a “game of pennies,” Musk described on Tesla’s last earnings call.

Tesla workers earn on average about $55 an hour in wages and benefits, compared to $66 to $71 an hour at Detroit’s Big Three, according to CNNresearch. Since the US legacy automakers came to agreement with the UAW, the gap between those unionized and non-unionized wages has continued to widen. According to Bloomberg, Tesla has held a labor cost advantage in the US of about $1.4 billion to $1.75 billion, or up to $2,700 per vehicle.

Up until recently, Musk has been hard pressed to see the benefits to Tesla workers of unionization. “But why pay union dues & give up stock options for nothing?#8221; he pondered. In a 2018 post on Twitter, Musk wrote that there is “nothing stopping Tesla team at our car plant from voting union.” The NLRB has declared that some of this type of social media discourse constituted an unlawful threat against workers as they consider exercising their legal right to organize.

Indeed, the NLRB ruled in 2021 that Tesla repeatedly violated labor law during the UAW’s prior organizing efforts, including by firing an activist and suggesting that joining the union would cost workers stock options. Tesla has denied wrongdoing and is appealing the ruling in federal court.

UAW pressure has had the most profound effect on Tesla since Q3 2023, following the UAW labor victories at the Big Three US automakers and commensurate UAW pledges to provide all necessary resources to organize Tesla’s Fremont factory.

Non-Union Factory Autoworkers Part of Mass UAW Organizing Efforts

With the ratification of historic agreements between UAW and the Big Three automakers in Detroit, thousands of non-union autoworkers are now publicly organizing to join the UAW. The union has introduced the largest labor organizing drive in contemporary US history, with Volkswagen, Toyota, and other nonunion car makers also in its sights.

In early January, US Senators Alex Padilla (D-CA), Laphonza Butler (D-CA), Gary Peters (D-MI), Debbie Stabenow (D-MI), and Sherrod Brown (D-OH) led 28 of their colleagues in urging 13 non-unionized automakers not to illegally block UAW unionization efforts at their manufacturing plants. The Senators wrote to the chief executive officers of major global car companies.

“We understand that UAW has begun organizing efforts at 13 non-unionized automakers: Tesla, Rivian, Lucid, BMW, Honda, Hyundai, Mazda, Mercedes, Nissan, Subaru, Toyota, Volkswagen, and Volvo Cars. We are concerned by reporting at numerous automakers that management has acted illegally to block unionization efforts.”

UAW President Shawn Fain applauded the Senators’ efforts.

“Every autoworker in this country deserves their fair share of the auto industry’s record profits, whether at the Big Three or the Non-Union Thirteen…It’s time for the auto companies to stop breaking the law and take their boot off the neck of the American autoworker, whether they’re at Volkswagen, Toyota, Tesla, or any other corporation doing business in this country.”

The UAW is now building upon its bargaining successes to enhance its organizing efforts, with Tesla and a dozen other manufacturers seeing significant union registrations within their worker ranks.

Next is UAW pressure to unionize the more than 1000 workers at the Volkswagen plant in Chattanooga, Tennessee. Over 30% of the plant’s workforce had already signed on by early December. Once a majority signs union authorization cards, the UAW can file for a union election with the National Labor Relations Board. Over 50% of workers in the bargaining unit must sign union authorization cards before requesting recognition as a union, at which point the employer can either recognize the union or request an election to be held.

The UAW explains its organizing strategy as a “30-50-70,″ which is “not just to win a union but to win a strong union and a strong union contract.”

• When 30% of workers sign cards in the plant, the UAW Volunteer Organizing Committee (VOC) will publicly announce that they are forming a union.
• When 50% of workers have signed cards, the union will hold a big rally with their co-workers, UAW President Shawn Fain, community leaders, and other allies, showing that a majority of constituents are willing to fight for the union.
• When 70% of workers have signed cards and the UAW has a VOC from every department, line, and shift, they will demand the company recognize the union – or take it to a vote — “and win.”

On Wednesday, the UAW announced that more than 30% of the workers at a Mercedes-Benz plant in Tuscaloosa, Alabama have signed union cards. Calling it having “just hit the first major milestone in forming our union,” the Alabama UAW website notes that Mercedes made $156 billion in total profits over the last decade and saw the average price of a US Mercedes car jumped 31% in the past 3 years. “But our pay has lagged far behind. Now we’re ready to fight for a better job, a better life, and a better future.”